Shearman and Sterling conducts periodic surveys of corporate governance practices among the 100 largest companies that have shares traded on an exchange.  The firm has come out with one for 2008.  It is a highly useful survey.  The data allows those debating corporate governance issues to operate on a firm empirical footing.

With respect to independent directors, the report notes as follows:

• Independent directors constitute 75% or more of the boards of 89 of the Top 100 Companies surveyed this year.

• The CEO is the only non-independent director at 44 of the Top 100 Companies.

• CFOs were members of the board at seven of the Top 100 Companies.

• Fifteen of the boards have at least one director who serves on more than five public company boards

• The position of chairman and CEO are separated in 28 of the top 100 companies.  Of that number, only eleven companies have an independent director in the position of chairman.

• The boards of 52 companies met eight times or less.

What sort of picture does this provide?  For one thing, in contrast to the practice outside of the United States, the CEO of large public companies insists on retaining the position of chairman of the board.  The chairman can call special meetings and sets the agenda for the board.  It is the chairman who decides what information will be given to the other directors and what matters will be considered.

In other words, the body that is supposed to have an oversight role with respect to the CEO is in fact under the organizational control of the CEO.  Under the Delaware model (excessive deference to the board as a means of protecting shareholders), it would be laughable to even try to argue that it violates the board's fiduciary obligations to allow this to occur.  Yet in fact shareholders do not benefit from this arrangement.

Add in that for the largest public companies, where the typical director compensation is somewhere around $250,000 (but can climb to around $700,000), the average board still meets eight times or less.  In other words, there is not much supervisory activity going on.  But that's no surprise.  It is the CEO (as chairman) who determines the frequency of meetings and he (rarely she) prefers to avoid the active supervision of the board.

These dynamics certainly contributed to the current financial turmoil.  They remain unadressed in the efforts to remedy the crisis.