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Competition Shaping Utility Boards

January 25, 1999
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Competition Shaping Utility Boards

Deregulation and competition continue to spark changes in utility company boards, from increased use of stock to compensate directors to growing numbers of directors from the financial field to greater frequency of board meetings. These are key findings in the just-released fourth annual Spencer Stuart Utility Board Index (UI) report, which analyzes the proxy statements of 50 leading utility companies nationwide. The report focuses on membership and practices of the nation's utility boards, and this year highlights that many utility boards are becoming more like their counterparts at Standard &amp Poor 500 companies.

"Clearly, utility boards are continuing to adjust to competition and remaking themselves to more closely resemble the shareholder ideal," said Robert Shields, director of Spencer Stuart's electric utility practice. "For example, stock ownership plans for directors are on the rise, up 60% since 1996. This is because stock-based pay is an effective way to lure top board talent, which utility companies especially need in these times of great change."

In addition, Shields notes most new utilities directors come from the finance sector, pointing to utilities' increased focus on costs, profits and public market reputation. "This year's report also reveals that utility boards are meeting much more frequently than their S&ampP 500 counterparts," said Shields. "It suggests that the move into deregulation is demanding more active leadership."

Chicago-based Spencer Stuart's Utility Board Index provides a reading of utility governance trends and practices and has become a reference for utility boards. This year's UI report compares 1998 findings with those of previous surveys and also against the Spencer Stuart Board Index (SSBI), which examines the board practices of Standard and Poor's 500 companies.

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
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