The Bigger The Company, The Bigger The Board

Jan. 13, 2005
Compiled By Dave Schafer Large public companies rely on larger boards of directors and more board committees to provide guidance than do small-to-midsized public companies, a new study finds. Eighty-one percent of large company boards examined in "The ...
Compiled ByDave Schafer Large public companies rely on larger boards of directors and more board committees to provide guidance than do small-to-midsized public companies, a new study finds. Eighty-one percent of large company boards examined in "The Annual Study of Small-to-Midsize and Large Company Boards: 2001" have at least 10 directors, while 84% of small-to-midsized companies have fewer than eight. The study examined 189 large public companies with median annual sales of $17 billion and 180 small-to-midsized companies with median annual sales of $154 million. Of the large companies examined by The Segal Co., New York, 86% have three to six committees, while only 51% of small-to-midsized companies were in that range, the study finds. The median number of committees for large companies is five. For small-to-midsized the median is two. While 71% of large companies have executive committees, just 25% of small-to-midsized companies have one. Of the large companies, 59% have a nominating committee compared with just 21% for small-to-midsized companies. And 46% of large companies have finance committees, but only 3% of small-to-midsized companies do. Furthermore, 37% of large companies have a governance committee compared with just 2% of small-to-midsized companies. However, more small-to-midsized companies have stock committees (17% compared with 11% of larger companies), audit committees (100% compared with 99% of larger companies), and compensation committees (98% compared with 95% of larger companies). The purpose of the annual study is to examine and compare key aspects of the composition and operation of boards of directors at such companies, says Segal, benefits, compensation, and human resources consultants. Of the companies studied, 37% of the large companies and 35% of the small companies were in the manufacturing industry.

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