Among the noteworthy key findings revealed in PwC's newly-released report on its 2018 Annual Corporate Directors Survey of 714 public company directors (19% women/81% men) are those relating to how - and the extent to which - the current investor and public policy focus on board diversity, board refreshment, and E&S issues are playing out in the boardroom.
Board Diversity Perspective Gaps
- 67% of female directors vs. 41% of male directors said that gender diversity on their board is "very important"; 50% of female directors vs. 31% of male directors said that racial/ethnic diversity on their board is "very important"; and 30% of female directors vs. 19% of male directors said that age diversity on their board is "very important."
- In response to the question "To what extent do you agree with the following about board diversity?": 27% of female directors vs. 58% of male directors "somewhat" or "strongly" agreed it is driven by political correctness; 20% of female directors vs. 54% of male directors (and 52% of respondents over age 60 vs. 38% of respondents 60 and under) "somewhat" or "strongly" agreed shareholders are too preoccupied with board diversity; 15% of female directors vs. 34% of male directors "somewhat" or "strongly" agreed it results in nominating additional unneeded candidates; and 9% of female directors vs. 30% of male directors "somewhat" or "strongly" agreed it results in nominating unqualified candidates.
- In response to the question "To what extent do you agree with the following about board diversity?": 83% of female directors vs. 51% of male directors "strongly agreed" that diversity brings unique perspectives; 73% of female directors vs. 40% of male directors "strongly agreed" that it enhances board performance; 57% of female directors vs. 21% of male directors "strongly agreed" that it improves strategy/risk oversight; and 53% of female directors vs. 20% of male directors "strongly agreed" that it enhances company performance.
On a positive note, directors overwhelmingly (91%) said their board has taken some action to increase board diversity:
- 63% prioritized diversity as a critical criterion for search firms
- 45% nominated a director with no prior public company board experience
- 42% recruited from outside the C-suite
- 16% identified and mentored potential director candidates
- 7% sought director recommendations from shareholders
- 6% took some other action
Just 9% said they had taken no action to increase their board's diversity.
Peer Performance (Generation Gap)
- Although 45% of respondents overall said that, in their opinion, at least one of their fellow directors should be replaced, that view varies by director age - with 52% of directors aged 60 or younger thinking this is the case, compared to 43% of directors aged 61 or older.
Respondents' bases for criticism of fellow directors are extremely noteworthy:
Q: Do you believe the following about any of your fellow board members? (select all that apply)
- Oversteps the boundaries of his/her oversight role - 18%
- Reluctant to challenge management - 16%
- Interaction style negatively impacts board dynamics (e.g., style/culture fit) - 14%
- Lacks appropriate skills/expertise - 12%
- Advanced age has led to diminished performance - 10%
- Consistently unprepared for meetings - 8%
- Board service largely driven by director fees - 8%
- Serves on too many boards - 7%
- None of the above apply - 53% [emphasis added]
ESG (Gender Gaps)
Among many other noteworthy results:
- Social Issues & Corporate Strategy: 31%, 28%, and 16% of director respondents overall say the company should "very much" take resource scarcity, human rights, and climate change, respectively, into account when forming company strategy. When broken out by gender, female directors are much more likely to believe social issues should "very much" inform company strategy: 38% of female directors vs. 28% of male directors as to resource scarcity; 38% of female directors vs. 25% of male directors as to human rights; and 27% of female directors vs. 13% of male directors as to climate change.
- Social Issues & Investor Focus: Male directors are much more likely than female directors to believe that institutional investors devote too much attention to social issues like board diversity, the environment, CSR, and pay inequality. Percentage of respondents saying institutional investors devote too much attention to board racial/ethnic diversity: 9% of female directors vs. 39% of male directors; board gender diversity: 11% of female directors vs. 40% of male directors; environment: 14% of female directors vs. 33% of male directors; CSR: 16% of female directors vs. 33% of male directors; pay inequality: 18% of female directors vs. 30% of male directors.