We all know that Sarbanes-Oxley has been a bonanza for accountants and risk managers. Their fees have gone through the roof. The other group is company directors.
As BusinessWeek reports, Sarbanes-Oxley has pushed the pay of some directors up to more than $1 million. According to compensation consultants Pearl Meyer & Partners, the typical director of a large corporation made $216,000 last year. That's a 67% pay rise on the average $129,667 they were making seven years ago.
Nanette Byrnes from BusinessWeek writes: " Directors can thank the Sarbanes-Oxley Act. SarbOx was created to protect shareholders by reining in corporate executives; before, many boards had become rubber stamps for everything from merger strategy to executive compensation – to disastrous effect in the cases of Enron Corp., WorldCom Inc., and Tyco International Ltd. SarbOx and other regulatory efforts sought to protect shareholders by empowering directors and making them more accountable. As one consequence of SarbOx, many directors work harder. A decade ago a typical director attended four board meetings a year and spent about 100 hours a year on board tasks, according to the National Association of Corporate Directors. These days, directors spend an average of 225 hours a year on board duties, attending an average of six board meetings a year and convening at other times for committee meetings."
That might be, but many big corporations like Lehman Brothers, Bear Stearns and Citigroup, which last month reported a $7.6 billion loss , went off the rails because of poor governance and directors asleep at the wheel.
For investors around the world who have been doing it tough, the Sarbanes-Oxley induced pay hike for directors is an insult.
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