More Retired CEOs Being Tapped for Corporate Boards

The average age of directors at U.S. businesses is increasing, partly because current CEOs, who were typically asked to serve on multiple boards, are paring back.

Reuters reported that the average age of independent directors at companies in the Standard & Poor's 500 index stands at 60.8, up from 60 in 1998. That's according to the 20th annual "Board Index" that included 478 companies analysed by Spencer Stuart, the executive search firm.


Advertisement


Click Here
A total accounting solution for client data management! Allows you to offer “Software as a Service”! Clients have access to a complete, fully integrated accounting software suite, while you can review and report real time financial data. SinglePoint combines the power, flexibility and security of software from Cougar Mountain Accounting with the advanced technology of a dedicated application server from Applianz Technologies. Learn more!


Cougar Mountain Home Cougar Mountain Accounting
Sign up for a Web Demo Cougar Mountain Point of Sale
Request a Call Cougar Mountain FUND



Membership on an outside board has become more intense in light of corporate reforms outlined in the Sarbanes-Oxley Act. General Electric Co., for example, tries to restrict their CEOs from sitting on any other boards because they think such outside commitments can take up too much time.

More retired CEOs are therefore being recruited to sit on boards at big companies, said Julie Daum, Spencer Stuart's U.S. board practice leader.

"We have more companies talking about waiving the retirement age or extending it," she told Reuters. Many companies "think it's hard to get directors. If they have people they think are good, they want to hold onto them."

Retired corporate chiefs often bring experience to the table but it's also critical that they have stayed involved with current business matters, Daum said.

Chief Information Officers are finding it hard to get a seat in the corporate boardroom, according to a study by a public-relations firm, Burson-Marsteller, which reviewed Fortune Global 500 companies. It said just 8 percent have a CIO on the board.

Heidi Sinclair, European CEO at Burson-Marsteller told Silicon.com: “After Y2K and the dot-com crash, CIOs went from heroes to dogs overnight and this research shows there's still a fundamental lack of understanding of the importance of technology for businesses.”

In another study on corporate boardrooms, researchers found a link between good governance practices and solid financials.

"There does appear a strong correlation between governance and performance," Gavin Anderson, President and CEO of GovernanceMetrics International, told MarketWatch.

The average three-year total shareholder return for the consistently poorly rated companies was 8.73 percent versus 15.93 percent for the highly rated companies through Sept. 1. During the same period the S&P 500 had an average return of 11.91 percent, the firm said.

GovernanceMetrics also said Tyco International Ltd. has made huge improvements since the firm began rating companies in 2002 when it rated 1.5, "and reflected many of the governance deficiencies associated with the prior leadership," the firm said. This time around Tyco earned a rating of 9.

"It's taken almost three years of progress to get there. It's not like it was overnight," Eric Pillmore, senior vice-president of corporate governance, told MarketWatch. He attributed the progress to a fresh management and board team taking a critical look at the company's governance flaws. "It took a lot of hard work."

You may like these other stories...

Remember the old joke about the devil showing a guy around Hell? There were great parties, swimming pools, and sumptuous food. The guy liked what he saw, lived a bad life and went to Hell when he died. Upon arrival the devil...
Due to fierce competition in the accounting industry, some CPAs may feel pressure to compete for business using pricing alone. However, this is a losing battle in the long run: Competing on price will lead to the need for...
If the thought of blogging makes you as nervous as an executive facing an IRS audit, stop worrying. You can overcome your challenges with these tips.1. Blogging is good for business. You'll benefit as your blog displays...

Already a member? log in here.

Upcoming CPE Webinars

Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.