CEO Survey Shows Continuing Improvements in Corporate Governance Practices

The Business Roundtable, an association of CEOs of 150 leading U.S. companies, today released its second
annual survey of corporate governance practices among its members.

The new results show strong progress from the solid findings in the initial CEO corporate governance survey last July. In addition, the new survey shows that, after implementing significant corporate governance measures in 2003, companies are planning further steps for 2004 on issues such as director education and evaluation, compensation and executive sessions.

"The results in this survey reveal a growing trend towards greater board independence and oversight, more transparency and increased communication with shareholders," said Steve Odland, Chairman, President and CEO of AutoZone, Inc., and Chairman of the Roundtable's Corporate Governance Task Force.

Key findings in the survey include:

  • 81% of the Roundtable companies report that their board is at least 80% independent, compared to 79% at that level in the July survey. Nearly 4 in 10 companies are 100% independent, other than the CEO. The New York Stock Exchange listing requirements call for only a simple majority of the board to be made up of independent directors.

  • 71% of the companies have an independent chairman, independent lead director or presiding outside director, an increase of 16 percentage points over the previous survey in July 2003.

  • 87% of the companies have established a procedure for shareholder communications with directors, up from 66% in last summer's survey.

  • About 90% of companies have taken action over the past two years to increase the amount of materials that all directors and committee members receive before board and committee meetings.

  • Nearly 85% of those responding said their companies had adopted new standards of board independence in the past several years, and another 2% plan to adopt these standards in 2004.

  • 37% of companies said that director involvement at board meetings had increased significantly or dramatically in the past two years.

The survey also indicates that 40% of the compensation committees have increased the performance element of CEO compensation, and more than 70% of compensation committees retain their own compensation consultants.

"The Roundtable has long played a leading role in advancing meaningful corporate governance reform, and we believe this survey indicates that our companies are moving aggressively to improve governance and restore investor confidence and the public trust," Odland added.

The Roundtable has a record of commitment to promoting the highest standards of accountability and ethical behavior. The Roundtable published Principles for Corporate Governance in May of 2002, endorsed passage of the Sarbanes-Oxley Act and supported the efforts of the Securities and Exchange Commission to implement the law.

In November, the Roundtable issued new Principles for Executive Compensation that call for linking CEO pay with performance and promoting a greater role for independent compensation committees in determining executive

In January, the Business Roundtable Institute for Corporate Ethics was launched. The Institute, which is housed at the Darden Graduate School of Business Administration at the University of Virginia, will conduct research, create a cutting-edge business ethics curriculum, lead executive seminars on business ethics, and develop best practices in corporate and business ethics.

"The results of this survey show that the CEOs and boards of America's largest companies have taken corporate governance reforms seriously, and are strongly committed to promoting investor confidence," said John. J. Castellani, President of the Roundtable.

For more information about the survey results, please visit

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