NEW YORK, Oct. 14, 2008 (GLOBE NEWSWIRE) -- According to the 7th Annual "What Directors Think" survey released today by PricewaterhouseCoopers and Corporate Board Member magazine, enterprise risk management is increasingly becoming a point of focus on the board agenda. The survey, which polled over 1,000 directors of publicly traded companies, clearly shows that boards are recognizing the need to understand the real risks facing their companies in order to protect shareholder interest.
When asked if they felt their board members could adequately meet the responsibility of monitoring the company's multitude of risks, 81 percent of directors felt their board was capable; yet only 50 percent said their board was effective or very effective at monitoring a risk management plan to mitigate corporate exposures.
"In light of the economic uncertainty we face today, boards should ensure they are aware of the risks their companies encounter on a daily basis and make certain that appropriate risk management practices are in place," said Catherine Bromilow, a partner with the Corporate Governance Practice at PricewaterhouseCoopers.
Another overarching, company-wide concern that is closely tied to risk management is strategic planning. Sixty-six percent of directors polled say they want to spend more time on strategic planning compared to 58 percent in 2007. However, only 4 percent of respondents reported that they needed more time to fulfill their overall director duties.
Forty-seven percent of respondents said their board isn't as effective as it could be at management succession planning, and 41 percent of respondents said the board should devote more time to discuss succession planning.
Just over half of directors (53 percent) said there is a shortage of qualified directors for today's companies. When looking for new directors, 56 percent indicated they had no difficulty finding directors with financial expertise, compared to 37 percent who indicated some difficulty. Fifty-one percent of boards reported they find it very difficult (11 percent) or somewhat difficult (40 percent) to recruit directors with international expertise. That said, 34 percent of boards were not looking for directors with international expertise.
In addition, 56 percent said they find it very difficult (11 percent) or somewhat difficult (45 percent) to find directors with technology expertise. Respondents reportedly found it not at all difficult to find new board members with marketing (43 percent) and legal (51 percent) expertise.
According to the survey, 37 percent of directors polled said their boards have reservations about bringing in a new director with no previous board experience. "Given this degree of concern, one wonders how boards will be able to expand their diversity and add new, needed skill sets, and how do otherwise qualified people get a chance to be a director if this barrier exists," added Bromilow.
Additional key findings include:
* Good Governance - While directors appear to believe that good corporate governance affects the company's ability to recruit new directors (81 percent) and improve the company's reputation (67 percent), only 27 percent believe good corporate governance will affect the company's stock price. Also, only 19 percent believe it will affect their directors' compensation and 29 percent believe it will affect their CEO's compensation. * Shareholder Communication - Thirty-seven percent of directors believe shareholders should have the ability to communicate directly with board members at any time, 52 percent believe all shareholders should be able to ask board members questions at the annual shareholder's meeting, 22 percent said certain major shareholders should have the ability to communicate with board members during special meetings designed for that purpose, and 15 percent said shareholders should not have access to communicate with board members. * Board Education - Most respondents (71 percent) agree that all directors should be required to attend board education sessions, although only 37 percent of boards represented in the study have a formal budget for board education. More outside directors (73 percent) than inside directors (63 percent) see the value of all directors receiving training.
According to Corporate Board Member president and CEO, TK Kerstetter, "We completed this year's research just before the financial crisis rescue plan was being proposed. While that may affect how a director might use his or her time, it's safe to say after the rescue plan addresses the financial crisis, all these identified governance and strategic issues will still be a challenge for the board."
This marks the 7th year for the annual What Directors Think survey, which measures the opinions of over 1,000 directors serving on the boards of the top 2,000 publicly traded companies listed on the New York Stock Exchange, NASDAQ Stock Market, and the American Stock Exchange. The 2008 survey findings are highlighted in the Corporate Board Member November/December issue and can be found on the Corporate Board Member website at www.boardmember.com. Additional findings and analysis will be published in a supplement mailing in the coming months.
About Corporate Board Member
Corporate Board Member is a leading information resource for senior officers and directors of publicly traded corporations, large private companies, and Global 1000 firms. The bimonthly publication provides readers with decision-making tools to deal with the corporate governance challenges confronting their boards. Corporate Board Member further extends its governance leadership through an online resource center, conferences, roundtables, and timely research. The magazine maintains the most comprehensive, up-to-date database of directors and officers serving on boards of publicly traded companies listed with the New York Stock Exchange, NASDAQ Stock Market, and American Stock Exchange. Headquartered in Nashville, Tenn., with editorial offices in New York, Corporate Board Member is published by Board Member Inc. and is the sister publication of Bank Director magazine, a leading information resource for officers and directors of financial institutions. For more information, visit www.boardmember.com.
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 154,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.