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, and 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 principals (referred to hereafter collectively as “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:
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 Board is comprised entirely of active partners. 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, 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 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 Senior Partner 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 designate others to assist in the management of the firm.
In addition to the Senior Partner, the U.S. Leadership Team (USLT) consists of approximately 15 partners, who were appointed by the Senior Partner. 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. Corporate responsibility (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; 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, including 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, using 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.