PwC Reports: Why BoD Members Don’t Sleep at Night

Lucas Gilmore, “Big 4″ observer
November 19, 2010 /

PwC, in its 9th Annual Corporate Directors Survey, asked tens of thousands of directors what keeps them up at night, of the issues foremost in their minds, and of the prevailing trends in corporate governance. Catherine Bromilow, partner in PwC’s Center for Board Governance, disclosed a deep analysis made on 1,100 submissions.

Fifty eight percent of the directors interviewed believed control over CEO remuneration is the major problem of most US boards while 83 percent said otherwise. Bromilow said the structure of CEO compensation lies in the complex process of the companies.

Asked what better ways to control CEO remuneration, 83 percent of the directors believed being realistic must be the qualification the companies must seek when forming peer groups. Benchmarking CEO pay must require appropriate targets and levels, said 82 percent of the respondents. Sixty five percent said CEOs must apply minimum stock ownership and holding period guidelines when aligning their interest with the shareholders.

According to the 82 percent of directors, shareholders must not have a role at all in setting CEO compensation.

With regards to the new rulings of the SEC proxy disclosure, 63 percent of the directors said board involvement in risk monitoring is valuable to the investors, 64 percent believed in the value of the experience of the board members, while 91 percent expressed no surprise at all on how people in their company are being paid.

In light of the SEC rules, 76 percent do not think there should be reconsideration in the current mix of the directors while 86 percent are contented with their either combined or separate CEO/Chair set-up.

Responding to how important it is to create a risk committee in preparation of a major crisis, 73 percent answered negatively, saying it is a strategic issue that requires the action of the board of directors as a whole.

Asked by PwC of their compliance with the Foreign Corrupt Practices Act, 59 percent professed their companies educate their employees regarding the Act and 57 percent of the interviewed directors believe complying with the Act will give protection to the company in case of a violation.


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