The board of directors is an important part of any company or hospital.
Here are eight points of interest with statistics from the PwC 2016 Annual Corporate Directors Survey, which includes responses from 884 public company directors.
1. Around 35 percent of the respondents reported they believed someone on their board should be replaced. The most common reasons for replacing that person are:
• Arriving unprepared at meetings: 25 percent
• Lacking expertise: 17 percent
• Aging: 12 percent
2. Only about half of the survey respondents reported boards had made changes as a result of their last self-evaluation. The self-evaluation process often examines how the board is functioning and helps identify the directors who are underperforming.
3. Almost all — 96 percent — of the respondents felt diversity on the board of directors was important, but the actual diversity has only grown incrementally over the past five years. Additionally, males and females see diversity's impact on the company differently; 89 percent of females felt diversity leads to better company performance, compared to 24 percent of males.
4. More than half — 53 percent — of the respondents are looking for outside help on legal issues. Another 37 percent are looking for third party advice on IT and 31 percent seek a third party for help with corporate strategy.
5. The most common changes directors reported making after board self-evaluations include:
• Changing board committee composition: 26 percent
• Adding expertise to the board: 25 percent
• Providing counsel to one or more members: 12 percent
6. The biggest challenge for boards of directors effectively managing CEO succession plans is that the CEO currently performs as expected; however succession planning is still important due to emergency situations. The second biggest challenge was discomfort in having that conversation with the CEO.
7. The respondents recognized some positive outcomes of "say on pay" where shareholders are allowed to vote on CEO compensation; 77 percent report "say on pay" encouraged them to look at compensation disclosures in a different way and 73 percent reported they increased the influence of proxy advisory firms. However, 72 percent felt it didn't affect a "right sizing" of CEO compensation.
8. A majority of respondents — 62 percent — reported their board has looked at emerging technology trends over the past 12 months. More than half of the respondents — 55 percent — report looking at long-term economic, geopolitical and environmental trends and 53 percent report examining their competitor's initiatives that could introduce disruption.