www.boardalert.net
BOArDALERT
Y O U R N E W S F R O M O T H E R B O A R D R O O M S
OCTOBER 2004
VOLUME 8 NO 10
INSIDE
Scrutiny Drives Growth in Emeritus Positions
IN AN EFFORT to benefit from the counsel of
aging directors while maintaining indepen-
dent majorities, more and more boards are
establishing director emeritus positions.
These honorary titles allow former board
members to contribute to their boards while
not counting as active members, thereby
maintaining an independent majority and
adhering to mandatory retirement policies
some companies would rather not enforce.
According to The Corporate Library, the
number of companies establishing emeritus
positions increased nearly 20%, to 78, in 2004,
up from 64 last year. The current total is 107 if
honorary directors are counted.
The majority of directors who become
emeritus don’t draw a salary for their services.
According to The Corporate Library, only 32
out of the 78 emeritus directors currently serv-
ing on boards receive any sort of retainer. It’s
something that directors can use to rebut
claims that the emeritus position is just anoth-
er way to lard an outgoing director with extra
cash.
Despite the position’s in-between status and
some
EMERITUS DIRECTORS (continued on page 9)
CORPORATE GOVERNANCE RATINGS that
are based on board structure are losing
validity among academics, institutional
investors and independent directors. Bearing
the brunt of that criticism is the rater with the
highest profile: Institutional Shareholder
Services.
“There is no evidence that scorecards map
into better corporate performance or better
behavior by managers,” says
Wharton professor David
Larcker.
Larcker and two col-
leagues studied more than
2,100 public companies.
They wanted
to know
whether the measures typi-
cally used by institutional
ratings services are predic-
tive of fewer accounting
restatements, better credit
ratings or fewer shareholder
lawsuits. The study conclud-
ed that there’s no proof of a
link between such measure-
ments and better gover-