|Majority of Corporate Directors Do Not Want to Increase Minority Representation On Boards|
"This timely survey of directors covers many of the major issues under discussion among corporate board members today, especially given the new administration about to take office in Washington, D.C., the TARP program and related discussions of CEO compensation limits," said Ted Dysart, Managing Partner, Americas, Heidrick & Struggles' Global Board of Directors Practice.
Of the respondents who said that they would like to increase board diversity, 30 percent of them are giving special consideration to women, 21 percent to African Americans, 17 percent to Hispanics/Latinos and nine percent to Asian Americans.
"Given that we are working in very different times it is surprising that directors' reactions to the issue of minority representation have not advanced from our study 12 years ago," said Dr. Ed Lawler, CEO Director and a distinguished professor of business at USC Marshall. "We expected an increased appetite for minority representation. Having said that, while there is little commitment to increasing representation on the board, many directors (82 percent) recognize that having a diverse board can be beneficial to the company because diversity contributes to a broader range of decision options for consideration."
The survey, conducted in September 2008 and now in its 12th year, also covered:
* Sustainability * CEO compensation * Human capital
Among the respondents surveyed, 35 percent were internal directors while 65 percent were external. The average annual revenue of participating companies was $1.67 billion.
Key survey findings include:
Directors' Interest in Sustainability Efforts is Strong
On the subject of sustainability, 72 percent of the respondents said they believe sustainability is important to profitability, and 78 percent said it is important to public relations. Of the respondents, 53 percent said that sustainability is on the board's agenda at least once a year. Only 7 percent of the respondents said sustainability is on the board's agenda in every meeting. Regarding a board level sustainability committee, only 15 percent said their board has one, and 17 percent said they have a social responsibility committee.
"The survey demonstrates that board members in the U.S. are beginning to recognize that they need to play a stronger decision-making role when it comes to sustainability issues," said Mr. Dysart.
The Level of CEO Compensation Is Still an Issue
On the subject of CEO compensation, 31 percent of the respondents said CEO compensation is too high, somewhat higher than the 25 percent that felt this way in 1998 when the question was first asked.
Forty-seven percent said CEO compensation is about right except for a few high profile cases. Another 22 percent said it is in line with CEO performance, competitive conditions and good economics. Board members were much more positive about the pay of their CEO; only 14 percent said it needed to be changed. According to Ed Lawler, "Board members believe they are doing the right thing so they are not changing the way they compensate CEOs, even though they believe many CEOs are overpaid."
Human Resources Executives Lack Representation on Boards
Although human resources are an increasingly important corporate asset, 78 percent of the respondents said that they have no HR experts on the board. Only 16 percent said their boards have a committee on human capital, while 75 percent said their boards have never considered having one.
About the University of Southern California's Center for Effective Organizations
The University of Southern California's Marshall School of Business is a private research and academic institution committed to educating tomorrow's global leaders and is ranked as one of the country's top schools for accounting, finance, entrepreneurship, and international business studies.
The Center for Effective Organizations (CEO) in the Marshall School of Business actively involves corporations in developing new and useful knowledge about how organizations can be more effective in highly competitive environments. CEO's pioneering research in the areas of organizational design and effectiveness has earned it an international reputation for research that bridges the gap between academic theory and management practice. For more information about CEO, please visit http://ceo-marshall.usc.edu.
About Heidrick & Struggles International, Inc.
Heidrick & Struggles International, Inc. is the world's premier provider of senior-level executive search and leadership consulting services, including talent management, board building, executive on-boarding and M&A effectiveness. For more than 50 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit http://www.heidrick.com.
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SOURCE: Heidrick & Struggles International Inc.
Heidrick & Struggles