Security - Check Permissions

MFDF - Mutual Fund Directors Forum - Corporate Directors Weigh in on Board Leadership, Underperformers, Term Limits

Member Login

Request an account

Sample Banner 2

Corporate Directors Weigh in on Board Leadership, Underperformers, Term Limits

According to PwC’s annual survey of public company directors, U.S. corporate directors are increasingly faced with great expectations from investors and the public. “From seeking action on climate change to advancing diversity, stakeholder expectations are increasing and many companies are responding,” the report noted. The survey also examined areas where boards see room for improvement, including board leadership. PwC found that 72% of directors surveyed think that their board leadership is very effective. However, challenges persist in dealing with underperforming directors. PwC reported that only 30% believe their board leadership is very effective at this task, while 24% of directors say their board leadership is not very or not at all effective. The report also found that director discontent with peers hit a high-water mark. Almost half of directors (46%) surveyed believe that one or more of their fellow board members should be replaced, according to the report. Additionally, one-fifth of directors say that two or more directors on their board should be replaced. Some of the problems reported by directors included: overstepping the oversight role, reluctance to challenge management, an interaction style that negatively impacts the dynamics in the boardroom, and advanced age that is affecting performance. The report also touched on effective strategies to refresh the board. According to directors surveyed, the most effective method for driving board refreshment is a strong focus from the board chair or lead director. PwC reported that a large number of directors believe term limits promote board refreshment, with 61% saying term limits are at least somewhat effective. However, only 4% of the S&P 500 currently have director term limits in place.