NEW YORK, Dec. 18, 2014 /PRNewswire/ -- Nearly
three-quarters of institutional investors responding to a PwC US
survey believe that it is important for corporate directors to be
discussing their company's crisis response plan in the event of a
major security breach, yet only half of directors have had those
discussions.
A new report released today by PwC compares findings of two
surveys conducted in the summer of 2014. The first, PwC's 2014
Annual Corporate Directors Survey, revealed the insights from more
than 860 public company directors, 70 percent of whom serve on the
boards of companies with more than $1
billion in annual revenue. At the same time, institutional
investors with more than $11 trillion
in aggregate assets under management responded to PwC's 2014
Investor Survey.
Corporate directors and institutional investors both identify
strategic planning, risk management and succession planning as top
areas for board focus in the coming year. However, the two groups
have notable differences in opinion when it comes to areas such as
obstacles to increasing board diversity and the need for director
communications about their board's composition.
"We structured both surveys to focus on certain trends that are
shaping corporate governance and which we believe will impact the
board of the future," said Mary Ann
Cloyd, leader of PwC's Center for Board Governance. "This
report compares director and investor responses in order to
identify where they share views or have different perspectives. We
hope that this information will be used by directors, investors and
management to help close the expectations gap."
Significant findings include:
- Investors are much more skeptical than directors about
impediments to replacing underperforming directors. Ninety-four
percent of investors say there are obstacles to replacing
underperforming directors, compared to only 53 percent of
directors. Investors perceive a close relationship between the CEO
and the underperforming director as the greatest challenge.
Directors who say that impediments exist most frequently cite their
board leadership's discomfort addressing the issue.
- Investors are more skeptical about overcoming board
diversity challenges. Eighty-five percent of investors believe
there are impediments to increasing gender diversity compared to
just 14 percent of directors. Investors and directors also disagree
about what the greatest challenges are; investors say the top
impediment is directors not wanting to change their current board
composition to create a position for a diverse candidate, while
directors say it is a lack of awareness of qualified
candidates.
- Board composition and performance are receiving increased
scrutiny. Both investors and directors sense this trend and
express even more concern about lower levels of voting support for
director nominees than last year. Not surprisingly, investors
think directors should be even more concerned than they currently
are about shareholder support. Forty-eight percent of investors say
the board should become concerned if a nominee receives a negative
vote of 20 percent or higher; only 31 percent of directors take
that view (versus 36 percent and 28 percent last year,
respectively).
- Investors are 64 percentage points more likely than
directors to believe that CEO pressure has a "very influential"
effect on the board's decisions about executive
compensation.
- Ninety-five percent of directors say they understand their
company's risk appetite at least moderately well, compared to only
61 percent of investors who believe they do. More than
nine-in-ten directors say their board understands the company's
ability to prioritize the most important risks at least moderately
well, compared to 58 percent of investors who believe this is the
case.
Other notable comparisons:
- Both investors and directors acknowledge the trend toward
increased communications between the two groups.
- Investors are more than three times as likely to believe board
composition is an "important/very appropriate" topic for
director-investor communications.
- Investors want directors to focus more on certain aspects of
information technology than they currently are – including
preparing for possible communications about security breaches.
For more information or to download the complete report—"What
Matters in the Boardroom 2014: Director and Investor Views on
Trends Shaping Governance and the Board of the Future"—please
visit:
http://www.pwc.com/en_US/us/corporate-governance/publications/comparing-director-investor-boardroom-governance-trends.jhtml.
In addition, data and analysis from PwC's 2014 Annual Corporate
Directors Survey can be viewed in full and downloaded here:
http://www.pwc.com/us/directorssurvey, and PwC's 2014 Investor
Survey data results can be viewed in full and downloaded here:
http://www.pwc.com/us/en/pwc-investor-resource-institute/publications/investor-influence-corporate-boards.jhtml.
About PwC's Center for Board Governance
PwC's Center for Board Governance is a group within PwC whose
mission is to help directors effectively meet the challenges of
their critical roles. This is done by sharing governance leading
practices, publishing thought leadership and offering forums on
current issues.
For more information, please visit
http://www.pwc.com/US/CenterForBoardGovernance.
About PwC's Investor Resource Institute
PwC's Investor Resource Institute seeks to add value to
investors' decision-making processes by sharing PwC's insights and
educational materials regarding markets, industries, and corporate
governance. To learn more, please visit:
http://www.pwc.com/us/InvestorResourceInstitute.
About PwC US
PwC US helps organizations and individuals create the value
they're looking for. We're a member of the PwC network of firms,
which has firms in 157 countries with more than 195,000 people.
We're committed to delivering quality in assurance, tax and
advisory services. Find out more and tell us what matters to you by
visiting us at www.pwc.com/US.
PwC refers to the US member firm, and may sometimes refer to the
PwC network. Each member firm is a separate legal entity. Please
see www.pwc.com/structure for further details.
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SOURCE PwC US