NGI The Weekly Gas Market Report
Deregulation and competition continue to spark changes inutility company boards, from increased use of stock to compensatedirectors to growing numbers of directors from the financial fieldto greater frequency of board meetings. These are key findings inthe just-released fourth annual Spencer Stuart Utility Board Index(UI) report, which analyzes the proxy statements of 50 leadingutility companies nationwide. The report focuses on membership andpractices of the nation’s utility boards, and this year highlightsthat many utility boards are becoming more like their counterpartsat Standard & Poor 500 companies.
“Clearly, utility boards are continuing to adjust to competitionand remaking themselves to more closely resemble the shareholderideal,” said Robert Shields, director of Spencer Stuart’s electricutility practice. “For example, stock ownership plans for directorsare on the rise, up 60% since 1996. This is because stock-based payis an effective way to lure top board talent, which utilitycompanies especially need in these times of great change.”
In addition, Shields notes most new utilities directors comefrom the finance sector, pointing to utilities’ increased focus oncosts, profits and public market reputation. “This year’s reportalso reveals that utility boards are meeting much more frequentlythan their S&P 500 counterparts,” said Shields. “It suggeststhat the move into deregulation is demanding more activeleadership.”
Chicago-based Spencer Stuart’s Utility Board Index provides areading of utility governance trends and practices and has become areference for utility boards. This year’s UI report compares 1998findings with those of previous surveys and also against theSpencer Stuart Board Index (SSBI), which examines the boardpractices of Standard and Poor’s 500 companies.
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