SEC May Give Board Rebels Some Help

Overall, total average compensation for directors was $133,326, Glass Lewis found.

Patrick McGurn, senior vice president at proxy adviser Institutional Shareholder Services, says MCI got it right when it switched directors to a novel compensation plan that pays cash but requires directors to invest 25% of that cash in restricted options that must be held until the directors leave the company.

"Options encourage a fairly short-term view," says McGurn. "Directors should be thinking longer term."

Indeed, some reformers believe directors should be required to hold restricted stock for as long as three years after they leave a company.

Although there is a good deal of momentum behind the SEC reforms, there is serious opposition.

The Business Roundtable, an association of CEOs, leads the opposition, arguing that the proposal may be too liberal.

In a letter to the SEC, the group said: "This will result in substantial disruption and significant costs to a company, which will be borne by all the company's shareholders. It also may cause the loss of well-qualified directors who do not want to routinely stand for election in a contested situation."

SEC Chairman William Donaldson has said he wants to see reforms in place before the next proxy season. Chances are the SEC will act quickly, and chances are someone will take the commission to court, Minow says.

This fight has a long way to go.

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