The Nonattraction of Boards

It used to be that serving on multiple corporate boards was considered an executive’s rite of passage, a welcome sign that you’d secured your place at the top of corporate America. Not anymore. Activist shareholders, increased S.E.C. scrutiny, and Sarbanes-Oxley’s onerous rules all make serving on today’s boards more of a hassle than an honor. Being a board member is now a job with relatively little reward, and invitations to sign up are rarely being accepted, says Mader. “Nobody is looking forward to that call anymore.”

The numbers tell the story. About 71 percent of S&P 500 companies rank “active C.E.O.” as the most important qualification for membership on their boards, according to a recent survey by Spencer Stuart. The reason for populating a boardroom with the chief executives of other companies is obvious: Companies want their sitting C.E.O. to be judged by a roomful of peers who understand the day-to-day challenges of the job. Finding those people is getting harder, though. Last year, only 29 percent of new directors fit that bill—down from nearly 50 percent five years ago.

Read the rest of Adam Piore's Portfolio article here.