CHICAGO, Feb. 23 /PRNewswire/ -- More than 80 percent of directors serving on the boards of Illinois' largest public companies are now outside independent directors, as companies comply with governance requirements meant to promote greater board independence, according to a study conducted by executive search firm Spencer Stuart. Just as importantly, CEOs of these companies are reducing their outside board commitments. Mirroring the trend seen among S&P 500 companies, CEOs of Illinois' leading public companies are serving on an average of just one outside board, as board work becomes more strenuous and time-consuming. "CEOs and directors are serving on fewer boards today than they have in the past and are being required to work harder and devote more hours to each board," said Bob Heidrick, a member of Spencer Stuart's Board Services Practice in the firm's Chicago office. "Directors tell me the time they are spending on each board is two to three times what it was in the past," he said. The Illinois S&P 500 boards had 11 directors on average with nine of those directors being independent, or 82 percent. Spencer Stuart's analysis found that, on average, the CEOs of the 33 Illinois companies included in the S&P 500 served on one outside board, versus 0.9 outside boards for the S&P 500 overall. The firm analyzed proxies of the 33 Illinois companies published as of July 15, 2004, and compared the results to data for S&P 500 companies, which were included in the recently published 2004 Spencer Stuart Board Index. It revealed that the number of inside directors for most companies varies between one and three, with only three companies having more than three inside directors. The study of Illinois companies indicated that retainers for Illinois directors average $50,848 per year, not including stock options. A little more than half the companies (18) pay director meeting fees, averaging $1,427 per meeting. Total compensation minus stock options averages $57,079. Overall, boards are moving increasingly to cash compensation versus meeting fees and stock options. Nationally, S&P 500 directors receive an average retainer of $50,000 per year, according to the Spencer Stuart Board Index. Director compensation rose 14 percent last year and is up 48 percent from five years ago. "The rise in director compensation reflects both the degree to which Sarbanes-Oxley corporate governance reforms have placed additional responsibilities on board members and the need for boards to attract new directors with specific skill-sets such as finance," according to Heidrick. "Boards are having to work harder and improve their strategies for recruiting the right slate of talent," he said. Board size ranged from nine to 15 directors. Illinois boards had on average 1.58 female directors compared with 1.51 nationally. The average age for outside board members in Illinois is 60 years old versus 61 nationally. Spencer Stuart also analyzed the boards of the 123 S&P 500 companies located in the Midwest. Significant findings for those companies are highlighted below. -- The average annual retainer was $47,654 versus $50,000 nationally. Meeting fees averaged $1,113 versus $1,700 nationally. -- Midwestern companies had on average 1.57 women directors versus 1.51 nationally, but had no female CEOs versus 10 in the overall S&P 500. (Note: This has now changed with the recent appointment of Brenda C. Barnes as CEO of Sara Lee.) -- Midwestern companies were more likely to combine the CEO and chairman roles, with 78 percent doing so versus 72 percent nationally. Among Illinois boards, 76 percent combined the CEO and chairman roles. -- The number of board meetings averaged eight in both the Midwest and nationally and both the average age of directors (60 in the Midwest versus 61 nationally) and average retirement age (71) are similar. About Spencer Stuart Spencer Stuart is the foremost privately held, global executive search firm, spanning over 50 offices in 25 countries. Since 1956, Spencer Stuart has been providing select clients with a range of human capital solutions, including senior-level executive search, board director appointments and strategic leadership services. The firm conducts nearly 4,000 assignments each year, partnering effectively with clients ranging from the Fortune 500, to mid-cap, to emerging growth companies across a broad range of industries and sectors.
SOURCE Spencer Stuart