PwC’s 2022 Annual Corporate Directors Survey

Charting the course through a changing governance landscape

In 2022, as both the ongoing direct impacts and unexpected side effects of the COVID-19 pandemic continue to mount, the landscape of the business world is shifting yet again. An ongoing war in Ukraine, rising global inflation, fears of recession and the near-constant drumbeat of catastrophic environmental news and predictions are changing the geopolitical context. In the US, market turmoil, social upheaval, political polarization, looming midterm elections and uncertain regulatory developments make the landscape feel like uncharted territory. When the path is uncertain, boards are a source for constancy and guidance.

As shareholder and consumer expectations rise, our 2022 Annual Corporate Directors Survey shows that board oversight and board practices are shifting in response as directors navigate this new governance landscape. 

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Directors increasingly critical of peer performance

Almost half of directors (48%) think one or more directors on their board should be replaced. Nineteen percent (19%) would replace two or more of their fellow directors.

What’s more—directors are more likely to identify performance-related issues with their peers this year. Almost one in five (19%) say that fellow board members are reluctant to challenge management—up from 12% last year. Directors are also more likely to identify peers who overstep the bounds of their authority (17%, up from 11%). After a year when fewer voiced these types of complaints, directors seem more critical of their peers than in the past.

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Despite discontent, boards reject refreshment tools

A mandatory retirement age can be a strong tool to encourage refreshment. But only 14% of directors think their board would be willing to adopt a retirement age of 72 or younger. Sixty-two percent (62%) think they would not.

Mandatory term limits are even more unpopular. Seventy percent (70%) of directors say their board would not adopt term limits of 12 years or less. Just 7% have such a policy in place, and less than a quarter (23%) think their board would be willing to adopt it.

But implementing an individual assessment process may be one area that could make a difference in board refreshment. More than one-third of directors (37%) say their board uses the practice, and another 35% think their board would be willing to adopt it.

Diversity of thought comes in many forms

When we ask about what is important to create diversity of thought, gender diversity is still the most commonly cited (88%). But the percentage saying the same about racial/ethnic diversity is not far behind at 83%.

Almost all directors (96%) say their board has done something in the past two years regarding board diversity. Their most common action: increased disclosure. The percentage of directors saying their company disclosed information in the proxy statement about board diversity jumped 15 points from 54% in 2021 to 69% this year.

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ESG confidence is high, even as demands grow

Directors are confident of the board’s understanding in traditional areas of oversight that fall under the ESG umbrella. This includes talent and culture, which 92% of directors say the board understands. Ninety percent (90%) of directors also tell us that their board understands both the company’s diversity and inclusion efforts and its data privacy and cybersecurity policies and practices.

But directors are much less confident in emerging areas like climate risk and related regulations. Fewer than two-thirds of directors say their board understands the company’s climate risk/strategy or the internal processes and controls around data collection. And just more than half (56%) think they understand the company’s carbon emissions.

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Shareholder engagement reaches new heights

The once-unusual practice of having non-executive directors meet with investors is now the norm. While just 42% of directors reported this practice in 2017, in 2022, 60% of directors say that a member of their board (other than the CEO) had direct engagement with shareholders in the past 12 months. This represents almost a 50% increase in prevalence compared to five years ago.

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Searching for ways to impact stakeholder trust

Amid social and economic disruption, the public increasingly sees corporations as agents of stability. When it comes to board actions that could increase trust, directors look to increasing transparency and accountability. Seventy-one percent (71%) of directors say that engaging directly with shareholders would enhance stakeholder trust. Second to engagement, directors point to enhanced shareholder communications. Seventy percent (70%) of directors say that enhancing disclosure or reporting can have a positive impact on stakeholder trust. Making governance changes in a central focus area can also help. Almost two-thirds (64%) of directors say increasing board diversity can improve trust.

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About the survey

PwC’s Annual Corporate Directors Survey has gauged the views of public company directors from across the United States on a variety of corporate governance matters for more than a decade. In 2022, 704 directors participated in our survey. The respondents represent a cross-section of companies from over a dozen industries, 72% of which have annual revenues of more than $1 billion. Seventy-three percent (73%) of the respondents were men and 27% were women. Board tenure varied, but 64% of respondents have served on their board for more than five years.

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Maria Castañón Moats

Maria Castañón Moats

Leader, Governance Insights Center, PwC US

Paul DeNicola

Paul DeNicola

Principal, Governance Insights Center, PwC US

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