Governance: recruiter's study finds change, and progress.

Spencer Stuart, a global executive recruiting firm, says that its 20th Spencer Stuart Board Index (SSBI) study and survey of boards of directors in the S & P 500 shows three significant findings: Progress has been made on corporate governance changes mandated by the Sarbanes-Oxley Act; lead directors are now standard in boardrooms; and active CEOS/COOs are more reluctant to serve as directors.

Despite calls for more independent chairmen, less than 10 percent of all S & P 500 boards have independent chairmen. The CEO is still chairman on 71 percent of S & P 500 boards, and on 140 boards where the CEO is not chairman, 67 percent of the chairs are not independent.

On the other hand, boards have recognized the need for lead or presiding directors. Some 94 percent of all S & P 500 boards now have a lead or presiding director, compared with 85 percent last year; just 36 percent reported having this position in 2003. The increase represents the strengthening board leadership by independent directors, even if not in the chairman role.

Given the increasing time commitment required for board service and a perception by some of greater financial and reputational risk, it is becoming harder to recruit active CEOs/COOs as directors, although companies prefer them. Active CEOs, on average, now serve on less than one outside corporate board, down from two in 1998. Active CEOs/COOs account for 32 percent of new board appointments, down from 53 percent in 2000. Perhaps as a result, boards are increasingly turning to retired CEOs or active executives at the next level down (such as division and subsidiary presidents) for directors.

A long-term trend toward boards with fewer directors continued during the past year. In 1998, average board size was 12 directors; that fell to an average of 10.7 in 2005. Two-thirds of S & P 500 boards now have between nine and 12 members.

And, while 20 percent of newly appointed directors are women, the total number of women on S & P 500 boards remains the same as last year: 15 percent. There are still 58 companies, or 12 percent, with no women directors. Forty-three percent were technology firms, and 62 percent of boards without a woman director had annual revenues below $4 billion.

Spencer Stuart added that the most visible result of Sarbanes-Oxley in terms of board composition was an immediate increase in the number of new independent directors. Annual appointments of new independent directors rose from 278 in 2001 to 401 in 2002, 393 in 2003 and 443 in 2004, though the 2005 SSBI revealed that the number of new independent directors dropped by almost 25 percent, to 333. The authors said this drop represents a "return to traditional levels."