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.