Survey: Average SOX Compliance Bill is $16M

November 15, 2004 (PLANSPONSOR.com) - It's costing corporate boards a pretty penny these days to comply with Sarbanes-Oxley (SOX), a new survey found.

A press release said that a survey of 266 board directors at US corporate boards by RHR International and Directorship found that annual SOX compliance costs average $16 million, some 77% over last year.

Sarbanes-Oxley requirements have caused companies such as GE to spend a reported $30 million on internal control requirements alone. Last May, AIG chairman and CEO Maurice “Hank” Greenberg indicated that the world’s largest insurer was spending $300 million a year fulfilling the new requirements, the news release said.

Of the directors surveyed, almost two-thirds (64%) reported that the new regulations have changed their participation as a director. One major change is highlighted in the compensation of the company CEO where nearly two-thirds (63%) of the directors indicated plans to change either the CEO salary or salary relative to bonus.

“It’s clear that not all board directors are fully engaged,” J.P. Donlon, editor-in-chief of Directorship, said in the news release¬†“For example, almost one-fourth do not visit with employees, customers or suppliers, which means their only source of information is what management tells them.”

Survey results also suggested that most directors express a high degree of confidence in the judgement of their fellow directors, but only a third say the level of dissent at board meetings is high.

Ninety-five percent of directors report they are “mostly” or “absolutely” confident in the current CEO and an almost equal percentage (90%) note that they provide frequent, candid CEO feedback.

Among other findings:

  • 65% of directors say they evaluate individual board members
  • 30% of board members feel they always have adequate time to prepare for board meetings
  • 30% of board members meet four times per year without the CEO present
  • 24% report they never visit the company’s constituencies.

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