Corporate board directors want to see each other replaced

Nearly half the directors on corporate boards would like to see one of the other directors replaced, but few changes are happening, according to a new survey.

The survey, released Wednesday by PricewaterhouseCoopers, polled over 600 public company directors and found that 45% of them think someone on their board should be replaced, but 39% say their boards have not made any changes as a result of their last board assessment. "Directors are critical of peers yet are not using the board assessment process to drive change," said the report. 

Boards may be overconfident about their ability to deal with a crisis, despite such inaction. The survey found 96% of directors are confident their board can guide the company through a crisis, although 48 of them admit their board has not created a formal crisis management escalation policy. 

Fewer of the board directors feel that executives are overpaid, compared to six years ago, according to PwC's annual corporate directors survey, with 50% in 2023, compared to 70% in 2017. That means sentiment toward levels of executive compensation is improving.

Most directors also have a positive view of the core practices on the board. More than eight out of 10 directors say their boards have enough time to prepare for board meetings, meaningful discussions in private sessions, the right committee structure, and sufficient time allocated to committee work.

The survey also asked about hot-button issues like environmental, social and governance disclosure, as well as diversity, equity and inclusion initiatives. Splits emerged in those areas among the directors polled. Over half (51%) of the directors feel prepared to oversee mandatory ESG disclosures in 2023, up from 24% in 2022. That could be a sign that companies are preparing for the Securities and Exchange Commission's expected finalization of the climate-related disclosure rule it proposed last year. However, a declining proportion of board directors believe ESG issues are linked to the company's strategy, 54% in 2023, down from 64% in 2021 and 57% in 2022.

DEI also saw a split in opinions. While 82% of the board directors polled believe diversity enhances board performance, 55% said board diversity efforts are driven by political correctness. "Directors see the value in board diversity, but feel the issue has become politicized," said the report.

Board directors seem to be gaining more confidence about their company's cybersecurity efforts, with 49% seeing cybersecurity as a significant oversight challenge this year, compared to 59% in 2022.

Boards are continuing to engage with shareholders, with 54% of the directors polled saying someone on their board other than the CEO engaged with shareholders in the past year, and 87% saying the discussion was productive.