Recently, PWC published the results of its Annual Corporate Directors Survey. This survey represents the responses of 1,110 board members, representing 819 separate boards, and covers a range of topics from risk management to executive compensation and Foreign Corrupt Practices Act compliance. The results of the survey provide interesting insights into corporate directors' attitudes and concerns with regard to these issues. Among the most revealing survey results were:
General Board Concerns
- Over half of the directors indicated that more time and focus should be spent on risk management.
- Over 70% of the directors stated that they do not believe their board should have a separate risk committee, while 67% concluded that the board is very effective at monitoring risk management to mitigate corporate exposures.
- Over half of the directors stated that the board does not receive general and/or specific customer satisfaction research.
- Most directors stated that during the last 12 months the board had discussed an action plan that would outline steps the company would take if faced with a major crisis.
- Almost 80% of directors indicated that sustainability/climate change is already a major focus and no additional time on the question is required.
- Almost 90% of directors surveyed stated that no additional time is required on social responsibility issues because it is already a major focus.
Compliance and Regulatory Concerns
- Almost 75% of the directors stated that compliance and regulatory issues are already a major focus and do not require more time.
- The top five items identified as "red flags" in signaling a director to step up his/her board involvement are: (1) a restatement of the financial statements; (2) charges or investigations; (3) management missing strategic performance goals; (4) an adverse 404 opinion; and (5) multiple whistle-blower incidents.
- Almost 25% of the companies involved in the survey do not have an FCPA compliance program.
- Significantly less than half of companies in the survey have an FCPA program which covers employees and agents, while almost 20% have a program limited to employees.
- Only about 30% of directors concluded that the company had an effective board evaluation process.
- Over 81% of directors stated that the most important technique in ensuring that directors continue to be effective on the board is an effective evaluation process.
Though the survey's population and focus was mainly on the concerns of public company directors, investment company directors may take some interesting insights from the way their corporate brethren answered these questions.
The full text of the PWC survey is available at: http://www.pwc.com/us/en/corporate-governance/assets/annual-corporate-directors-survey-2010.pdf