The third annual "What Directors Think" study measures the opinions of directors and CEOs of the top 2,000 publicly traded companies. The 2004 survey findings, which the magazine will highlight in its special year-end "What Directors Think" issue, reveal continuing changes in directors' attitudes and actions.

As boards' time demands continue to increase, the unofficial title of "professional director"  in which individuals sit on several boards is quickly fading. In 2003, only 33 percent of CEOs and 16 percent of outside directors were limited to additional board seats, compared to 43 percent and 29 percent, respectively, in the 2004 survey findings.

For many directors, increased time demands coupled with new risks call for an increase in pay, particularly for lead directors and audit committee chairs. Of survey respondents, 98 percent said audit committee chairs should receive additional compensation, compared to 81 percent who said so in 2003 and only 54.1 percent in 2002. In addition, 68 percent of this year's survey respondents said lead directors should receive additional compensation. 

Board evaluations are becoming more commonplace. In the 2004 survey, 73 percent of respondents said their boards were formally evaluated, compared to 50 percent in 2003 and only 33 percent in 2002.

The survey asked directors how much time -- more, the same, or less -- they think their boards should devote to 14 different subjects. Strategic planning was the number one action item, with 58 percent of respondents saying they'd like more time to discuss it. The other top responses were succession planning, meeting key managers, visiting work sites, and discussing the competition. While executive compensation and governance are hot topics in the press today, only 17 percent of respondents thought their boards need to spend more time on compensation issues, and only 11 percent said they should devote more time to governance guidelines. Last on the list of board priorities was compliance and regulatory issues, with only eight percent of respondents saying they want to discuss these issues at any greater length.

"There is a clear movement from form, structure and checking boxes to issues of substance, like planning and growth, in the boardroom," said TK Kerstetter, president of Corporate Board Member. "In that light, boards are taking a step back and determining what are the important issues to spend time on going forward."

Even with Section 404 looming, confidence is increasing. Eighty-two percent of directors believe their company is prepared to implement Section 404 on internal control reporting. However, only 50 percent of directors surveyed think Section 404 internal control reporting requirements will make a difference in the quality of their company's financial statements; and less than half (44 percent ) think Section 302 certification of financial statements by the CEO and CFO will make a difference. 

"Reporting on internal control is a watershed event for many companies, especially those that had decreased their focus on control systems over the years," said Garrett L. Stauffer, partner and corporate governance leader at PricewaterhouseCoopers LLP. "The significant efforts required for first year compliance have, in some cases, shifted directors' and management's focus away from addressing corporate strategy and performance. The challenge in future years will be to ensure 404 compliance efforts don't divert management's attention from growing shareholder value."

Three-fourths of directors surveyed think the Sarbanes-Oxley Act should be revisited by Congress to correct some of the unintended consequences.