We recently posted highlights of and an introduction to . A recent PwC report, , compares the responses from these two surveys of directors and investors, to identify areas of overlap and divergence in directors and investors viewpoints and expectations.
The report is well-organized and, similar to the directors survey, includes sections on (a) board composition, structure and performance, (b) stakeholder communications, (c) executive compensation, (d) strategy and risk management, and (e) regulatory and digital concerns. The report also includesillustrations with helpful graphs and side-bars with Additional insights. An Executive Summary presents 14 highlights from the report.
While the report discusses many additional findings from comparing the two surveys, we found the following findings especially interesting:
*Most desirable attributes for board candidates Directors and investors agree that the most important attributes for board candidates include risk management, financial, operational and industry expertise. Investors rank gender diversity relatively higher than directors, and directors rank digital expertise relatively higher than investors.
*Reflections on board performance Directors reflect more favorably than investors on improvements in board performance regarding oversight and risk oversight. 28% of directors believe boards have provided more effective oversight generally over the past 12 months, compared to 19% of investors. 33% of directors believe boards have provided more effective risk oversight over the past 12 months, compared to 27% of investors.
*Communications with shareholders A majority of directors and investors agree that board governance and executive compensation are at least somewhat appropriate/ important topics for discussion between directors and shareholders. However, the majority of directors dont think they should discuss company strategy or use of corporate cash and resources with shareholders while a majority of investors indicate that these topics would drive them to talk with a company.
*Perceptions of credibility of proxy advisors Investors find proxy advisors to be more credible than directors do. 62% of investors rate the thoroughness of proxy advisor work very highly or good, compared to only 23% of directors. 49% of investors rate proxy advisor voting recommendations as at least good, compared to only 19% of directors. The divergence is even greater between investors with more than $10 billion in assets under management and directors serving on boards of the largest companies, with 73% of such investors rating thoroughness as very highly or good, compared to 9% of such directors, and 59% of such investors rating voting recommendations as at least good, compared to 8% of such directors.
*Perceptions of influence of compensation Investors and directors agree that compensation consultants and institutional shareholders are very influential on board decisions about compensation but investors are 38% more likely than directors to believe that CEO pressure is very influential on board decisions about compensation.
PwCs Center for Board Governance provides director-targeted insights on corporate governance issues and trends. Additional information from PwCs Center for Board Governance is available at http://www.pwc.com/us/en/corporate-governance/index.jhtml.
PwCs Investor Resource Institute provides investor-targeted insights regarding markets, industries and corporate governance. Additional information from PwCs Investor Resource Institute is available at www.pwc.com/us/InvestorResourceInstitute.