McDonald's leads the pack in a governance capacity study released today, called "The Weight of America's Boards," ahead of other Fortune 500's such as Baker Hughes and Honeywell International.
The fast-food chain topped the list for its composite weight rank, which is the average of total board weight (the combined business acumen of all the directors on board), and average director weight (level of business acumen of individual directors), according JamesDruryPartners (JDP), which conducted the study. McDonald's was followed by Baker Hughes, Honeywell International, and US Bancorp. Meanwhile, Dole Food Company and Icahn Enterprises rounded out the list.
"Our research shows that an ideal board weight does not exist in an absolute sense," said James Drury, chairman and CEO of JDP, in a press release. "What is appropriate for one company may not be appropriate for another. However, a company's board weight ranking should not be significantly out of sync with its revenue ranking or scale. Large-scale companies cut the widest swath in our economy — accounting for the most employees, shareholders, customers, suppliers, etc. Such large corporations owe their stakeholders equally significant governance capacity."
Other findings show that in 2010, 45% of active Fortune 500 CEOs served on outside boards, filling only 288 seats. This marked a 63% decline from 1990, when 70% of CEOs served on outside boards. The most weighted industries in overall governance capacity were consumer products, industrial manufacturing, and consumer packaged goods, while the lightest were healthcare services, industrial services, and utilities.
The study narrowed in on America's 500 largest companies, and based rankings on 2009 revenue recorded in annual reports released in 2010. More than 4,750 directors, which were listed in each company's proxy statement and/or website during the length of the analysis (March 1, 2010 to September 1, 2010), were studied.