PwC issued its annual survey of nearly 700 U.S. directors. The survey covers a lot of ground and identifies several areas of opportunity for boards, including those relating to crisis management and board refreshment. Despite identifying problem areas, the survey’s introduction says the pandemic offers an opportunity for boards to leverage the crisis to create change in terms of board practices, diversity and inclusion efforts and company strategies and priorities. Here are the key findings:
– Even though directors gave management high marks on Covid-19 response, including supply chain interruptions, only 37% of directors say their board fully understands the company’s crisis management plan – PwC suggests boards leverage their companies’ experiences to date in 2020 to look back and evaluate what worked, what didn’t and what needs to improve so they’re prepared for the next chapter
– 84% of directors agree that companies should be doing more to promote gender and racial diversity in the workplace but only 39% support including D&I goals in company pay plans
– 67% of directors say issues like climate change should be considered when developing company strategy – up from 54% last year – but only 38% say ESG issues have a financial impact on the company
In terms of board refreshment, directors support it but also say boards aren’t doing a good job with it:
– 49% of directors say at least one board member should be replaced
– Only 49% say a board succession plan is shared with the full board
– 10% say their board doesn’t have a succession plan at all
– Directors cited board leadership’s unwillingness to have difficult conversations with underperforming directors and an ineffective process for director assessments most frequently as potential barriers to board refreshment
As more investors signal increased focus on board composition this coming proxy season, check out our “Board & Director Evaluations” Practice Area for checklists and current sample disclosures. Board succession is a frequent blog topic. Here’s an entry outlining steps for better board succession and Liz recently blogged on “The Mentor Blog” about emerging trends for board evaluations.
-Lynn Jokela, TheCorporateCounsel.net October 6, 2020
