Firm governance and management
The Board of Partners and Principals (the “Board”) is the highest governance body of our firm. The Board is responsible for the overall strategic direction of the firm and approves the firm’s philosophy, policies, and direction.
The Board’s authority generally extends to approving the firm’s long-range strategies and business plans, as well as major financial commitments, major transactions, or other matters that could significantly affect the scope or expansion of the firm’s practice and business and oversight of management. The Board also has authority over other matters including firm governance, matters related to the firm’s partners, and certain financial matters such as the firm’s capital and the manner in which partners participate in firm profits. The Board currently has nine standing committees:
- Accounting and Auditing Practice
- Admissions
- Clients
- Finance
- Governance
- Management Evaluation and Compensation
- Partner Affairs
- People
- Risk Management, Ethics, and Compliance
The Board and its standing committees receive regular presentations from management on all aspects of the firm’s operations, including its compliance with applicable laws, regulations, standards, and codes of conduct. The firm has a Code of Conduct and set of principles relevant to economic, environmental, and social performance.
The Board is comprised entirely of active partners and principals of the firm. Under the firm’s Code of Conduct and in order to avoid possible conflicts, partners and employees are generally restricted from accepting directorships, other similar executive appointments, or membership in a supervisory or advisory board in for-profit organizations. In addition, the firm has implemented a number of policies and risk management standards that address conflicts of interest, and ethics and compliance. Reflecting the private nature of the partnership, there are no independent (i.e., external) Board members. As all Board members are partners of the firm, they are intimately familiar with the operations and business of the firm. Potential Board candidates are subject to a comprehensive nominating process that has as its goal the selection of candidates who possess the best qualifications, experience and personal attributes to be excellent Board members. The nominees are then subject to election by the entire partner group, who are able to make their own assessment of the qualifications and expertise of the various nominees to serve as Board members.
The partners of PwC elect a senior partner. The senior partner manages the practice and business of the firm, and proposes strategic initiatives for the firm. The senior partner also appoints partners to assist in firm management. The roles of the Board Lead Director and chief executive officer are separate and filled by different people. The Lead Director functions as the lead director of the Board and the senior partner functions as the Chairman and chief executive officer of the firm. Neither the Lead Director nor any other member of the Board, other than the senior partner, may fill a senior management role within the firm, defined as a designated member of management.
The US Leadership Team (USLT) consists of approximately 13 partners, in addition to the senior partner, who are appointed by the senior partner of the US firm. The USLT has reviewed and approved this report. The Extended Leadership Team (ELT) is a broader set of market, sector, and business unit leaders who serve as an extension of the USLT in carrying out the day-to-day operations and strategy of the firm.
Overall, partner profit allocation is based on firm performance including the firm’s success in executing on its strategy, with particular focus placed on evaluating partner performance in four primary areas: people, quality, partnership and teamwork, and profitable growth. CR is not directly reflected as a separate component of an individual partner’s evaluation, but its priorities are embedded throughout the overall firm strategy.
The “shareholders” of the firm are the partners. There are multiple two-way communications between the Board and the partners including, for example, regular written communications to all partners on the Board’s ongoing activities and meeting proceedings, the Board Outreach program (i.e., meetings of individual Board members with smaller groups of partners), the Board Outreach sessions at partner meetings, and partner webcasts. Also, governance mechanisms such as Board elections and other partner voting events provide opportunities for partners to provide direction on firm matters.
While our firm leadership and Board are responsible for approving certain major decisions, our people have an impact on the firm’s strategy and direction. Throughout the year, our employees provide feedback to leadership, leveraging several different forums and vehicles to voice their questions, suggestions, comments, and concerns to various levels of management. We are committed to building a culture in which our people feel comfortable speaking up, and use their candid feedback to help guide our firm’s strategy.
CR management
Our firm has a dedicated CR team of nine professionals who are responsible for overseeing the penetration of our strategy into the fabric of the firm. Overall, the team focuses on engaging our people in our CR efforts, building strategic engagement programs as well as helping to manage the components of our carbon footprint. The team monitors key CR performance indicators and reports progress to both market and firmwide leadership teams. Globally, corporate responsibility at PwC is led by the Global Corporate Responsibility Board (GCRB). The GCRB is comprised of the CR leaders from our largest member firms (the US firm provides two participants), regional CR leaders, and sustainability subject matter professionals from our Assurance and Advisory practices. In keeping with standard industry practice, an external independent advisor also sits on the GCRB. The role of the GCRB is to provide governance, oversight, input, and direction to the global PwC CR strategy in alignment with PwC’s overall business strategy and to provide a forum for CR alignment across the network of member firms. The GCRB connects quarterly and conducts one in-person meeting a year.