Fewer than 15 percent of S&P 500 index companies have an independent board chair, according to a new report from The Corporate Library. The report examines trends in board leadership over the past five years and is the second in a series examining corporate governance practices in the S&P 500, Russell 1000 and Russell 3000.
In recent years, companies increasingly have placed an independent director in the role of chairman of the board, with more than 22 percent of Russell 3000 firms having what The Corporate Library defines as an independent chair. However, in sharp contrast, only 14.8 percent of S&P 500 companies have independent chair positions.
The report also discusses trends in the numbers of companies with a combined chair/CEO position, a lead independent director position, and a chairman who previously served as CEO.
It was found that many directors who meet listing exchange requirements for independence have significant relationships with companies in addition to their board service. For example, a director may be a relative of a company founder or current executive and still be considered independent by listing exchange standards. To provide a nuanced assessment of director independence, The Corporate Library has developed a three-category system, under which directors who have such significant relationships with the companies on whose boards they serve are not counted as independent.
The report, “2009 Governance Practices Series: Board Leadership,” is available for $45 from The Corporate Library’s online store.
