Society public company members across sizes and industries* responding to the most recent Society / Deloitte Board Practices Quarterly survey: “Back to basics: Board Committees” provided insights on whether and how board committee composition and practices have changed to keep pace with ever-evolving board oversight expectations.
Among the takeaways:
Committee composition—Aside from organic changes in board committee composition, which a majority of respondents experienced, 34% of mega- and large-caps and 26% of mid-caps have sought in the past year, or are currently seeking, one or more new directors with specific expertise or skill sets related to a committee’s scope of responsibility.
New Standing Committees—Just 11% of respondents indicated that their board had added at least one standing committee in the past year – most commonly, a technology committee. Another 2% said their board is considering adding at least one standing committee.
Committee responsibilities—More than half of boards have expanded the remit/oversight responsibilities of at least one standing committee in the past year, most commonly by incorporating ESG-related responsibilities across existing standing committees or allocating primary responsibility for ESG-related matters to the Nom/Gov Committee.
Committee responsibilities—The survey asked members to identify which of the Audit Committee, Compensation Committee, Nom/Gov Committee, Risk Committee, or other standing committee, or whether the full board, has primary oversight responsibility across a number of areas, including climate change, political spending, human capital, DE&I, and cybersecurity, and whether (and if so, how) oversight had changed over the past year.
Although relatively few companies made or considered changes over the past year, or are considering changes, notably, 6% changed primary oversight for their workforce DE&I from the full board to the committee level, and 6% are considering or have considered making a change in primary oversight responsibility for climate change, water, and other environmental issues.
Committee meeting participation and cadence—Non-committee members commonly have access to committee materials and are permitted to attend and participate in committee meeting discussions, but not vote. Committees typically don’t meet concurrently.
New member onboarding—A plurality of respondents (45%) indicated that their company has an onboarding program for all new committee members; 16% reported having a program for certain new committee members and/or chairs.
Committee chair & member rotation—Consistent with prior benchmarking, mandatory rotation policies for committee chairs and members are uncommon; however, one-third of respondents have a policy/practice to consider rotating committee chairs and 30% have a policy/practice to consider rotating committee members.
*Public company respondent market capitalization as of December 2021: 46% large-cap (which includes mega- and large-cap) (> $10 billion); 52% mid-cap ($2 billion to $10 billion); and 2% small-cap (includes small-, micro-, and nano-cap) (< $2 billion) (excluded from report due to limited response rate). Respondent industry breakdown: 34% energy, resources, and industrials; 28% financial services; 17% consumer; 13% technology, media, and telecommunications; and 7% life sciences and health care.
Responses tended to vary by company size. Access the survey results online and by company size and type here.
See Deloitte’s Select Findings and additional resources on our Board Committees and Board Practices pages.
This post first appeared in the weekly Society Alert!