Board directors shared with PwC what they think is working and what needs to be improved in corporate governance in a new report.
PwC conducted interviews with 32 board directors across America's top companies, representing over 85 boards. All of the directors interviewed sat on at least one Fortune 500 board. They gave the consulting firm a range of insight into how they think board governance can be improved.
Four things to know:
- CEOs are embracing board involvement in management and strategy, with 77 percent of C-suite executives saying their board should be more willing to challenge it. By taking an outsider's perspective, using metrics to track progress and addressing strategy in depth at every board meeting, directors can be poised to push for directional changes in strategy if needed.
- Board turnover remains stubbornly low, despite a need for change in composition. Most boards undergo individual annual member assessments, but only 11 percent of these lead to a decision not to renominate a member. Board members should begin to accept shorter tenures in their positions, continue to conduct reviews and honestly assess purpose and value added.
- CEOs can make or break companies, so it is critical that the right person is in place. However, 75 percent of CEO turnover in 2020 was attributed to the CEO's decision to step down, suggesting boards' hesitancy to act decisively. Directors should be honest and tough with CEOs and embrace change if it is needed for the good of the company.
- Only 25 percent of directors say that their board understands environmental, social and governance risks very well despite it dominating boardrooms. Directors also said that shareholders named ESGs as the No. 1 topic they wanted to discuss. Thus, it's important for boards to devise and incorporate ESG strategies into the business plan.