Boards of directors are becoming much more knowledgeable about and actively involved in their companies' core performance and valuecreating activities, according to the executives who responded to the latest McKinsey Quarterly survey.¹ However, in one controversial area of corporate governance—compensating executives with stock options and bonuses tied to earnings growth—these more active board members have effected relatively little change.

In a previous survey, conducted in early 2005, directors expressed an eagerness to spend more time on topics such as their companies' talent, skills, and current performance.² Directors appear to have made significant progress: nearly twothirds of all respondents to the current survey say that boards have become more actively involved in strategy, finance, and other core areas of corporate performance and in value creation than they were five years ago. Further, the proportion of boards that are more active varies little from region to region, even though reforms in corporate governance regulation have differed significantly around the world. Larger companies and publicly held ones are somewhat more likely to have more active boards (Exhibit 1).

Notably, CEOs, CFOs, and other "C-level" executives, who have...