What’s important to directors and investors? Depends on whose shoes you’re in.
A comprehensive new PwC report examines the views of corporate directors and institutional investors on current corporate governance issues. The report, What matters in the boardroom? Depends on whose shoes you’re in, compares results from PwC’s 2013 Annual Corporate Directors Survey and 2013 Investor Survey. It also includes certain CEO perspectives from PwC’s 16th Annual Global CEO Survey.
“We prepared this report to compare the responses of these groups and identify areas where viewpoints are shared or differences exist,” said Mary Ann Cloyd, Leader of PwC’s Center for Board Governance. “We hope this information helps directors, investors and management teams better understand where their views are similar and where they differ.”
There is considerable alignment between directors’ and investors’ views on the important issues directors should be focusing on in the coming year, according to the report. Both groups include strategic planning, risk management, and succession planning as top priorities. Ninety-five percent of investors say strategic planning is the “most or a very important” area for director focus while nearly eight of 10 directors say they want to spend more time in that area going forward.
In the area of IT, more than three-quarters of investors believe directors should be at least “moderately” focused on new business models enabled by IT, but only 45% of directors say they are very or moderately engaged in doing so.
For director Mike Monahan, deciding on how to provide oversight of new IT-enabled business models versus major IT project implementations is not black and white.
“They are both important, and the relative importance depends a great deal on the core mission and market characteristics of the company,” said Monahan, audit committee chair for CMS Energy.
He points to a development at a large public gas and electric utility where he sits on the board. “We are in the process of installing a so-called smart energy system whereby the company will provide meters with the capability of providing significant value to customers by enabling them to better manage their energy consumption,” he said. “The communication regime with the customer is important, but the IT-based development and installation project is more important. Without an effective application there would be no smart energy system.”
Other key findings from the PwC comparison of the director and investor surveys include:
Regulatory and enforcement
Board composition, structure and performance
The report also compares CEO viewpoints alongside directors and investors regarding company strategy and risk management. It showed that all three parties believe customers and clients have the most significant influence on company strategy. As for the greatest impediment to growth, directors and investors said it is “uncertain or volatile economic growth” (91%) while CEOs said it is government response to “fiscal deficit and debt burden” (93%).