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Boards becoming more activist, demanding

Sept. 16, 2006 at 10:21 AM   |   Comments

WASHINGTON, Sept. 16 (UPI) -- Activist members and greater legal responsibilities are changing the demeanor of boardrooms across the United States, it was reported Saturday.

Since the collapse of Enron Corp and WorldCom Inc. and directors of both companies held personally liable for investor loss, laws shifting responsibility to boards and pressure from shareholders united to change how directors view their jobs, the Washington Post said.

Since early 2005, directors of some of America's biggest companies ousted their chief executives. Hewlett-Packard Co.'s Patricia Dunn is the latest, although she can remain chair until January and retains her board seat.

Independent directors have 81 percent of board slots at companies on the Standard & Poor's 500-stock index, reported the Post, up from 77 percent in 2001. Former regulators and retired executives, who have been welcomed by longtime directors and management for their expertise, are the new outsiders.

Decision-making at some public companies is complicated by pressure from large activist shareholders -- hedge funds or private equity funds, for example -- to add directors with a specific mandate to push for change. As a result of this newfound outspokenness, board decisions are taking longer, the Post said.

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