"You have to wonder, why does anyone even want to be on a board?" Corporate governance expert, Stanford law professor and former SEC commissioner Joseph Grundfest told Fortune in 2004. "The pay is lousy, there's potential legal liability, the workload has gotten much heavier, and your reputation can be tarnished by something you had no way of knowing about." This is still true despite many changes that have taken place in how boards operate today.
In a Directorship/RHR International survey conducted in late 2005 of 120 board members, most of whom are independent, directors say the rules of the game are tougher and that greater demands are causing some to rethink the number of boards and type of company they choose to serve. Compared to last year, board members are spending 15 percent more time on board activities. The typical directorship now requires about 134 hours a year as compared to 117 hours last year.
Two years ago, most directors, including many CEOs, conceded that the Sarbanes-Oxley Act provided a needed prod to shake things up. But sentiment has changed and not just due to Section 404 compliance. Most say SOX is not just a financial burden like other compliance obligations; it's becoming a drag on company productivity. The most damning indictment is that some believe that SOX has made their CEO more risk-averse — a direct consequence of what some regard as the “comply or be hanged” mentality among the regulators and business media.
An overwhelming majority (72 percent) of board members do not believe the benefits of Sarbanes-Oxley are worth the cost.