Many directors are unhappy with their approach to risk oversight and mitigation, frequently feeling out-of-the-loop when it comes to cyber-security threats and concerned about where responsibility lies within the board.
That insight is gleaned from the National Association of Corporate Directors’ latest Public Company Governance Survey. The annual report compiled perspectives on governance trends and best practices from more than 1,000 corporate directors.
The survey found that many directors want changes to how risk oversight responsibilities are allocated, with nearly a quarter of respondents saying that their boards have not assigned risk oversight tasks to the correct group. Forty-eight percent of boards assign these tasks to the audit committee, even though 30 percent of directors disagreed with that approach. Conversely, directors were most satisfied when oversight was owned by the full board or a risk committee, with the latter most popular in the financial sector where there are a regulatory requirements to place certain risk-related tasks with a risk committee.
Respondents also expressed a lack of satisfaction regarding the information they receive regarding IT threats and cyber-risk: one-third said they were not satisfied with the quality of information they received from management; more than half (52 percent) were displeased by the quantity of that information.
Other findings from the survey:
The two most frequent changes boards made in response to shareholder pressure and requests involved executive compensation. More than half (57 percent) expanded their executive compensation explanations in the proxy statement and 30 percent revised their executive compensation plans.
Factoring in informal meetings and conversations with management, the time commitment required of directors is rising. The number of hours devoted to their duties rose from an average of 236 hours last year, to 278 hours in the latest survey.
The use of formal CEO succession plans is increasing, rising from 39 percent of companies in 2011 to 57 percent in 2014.
The majority of companies use lead directors, with 51 percent of all respondents reporting that their boards do so, regardless of whether an independent chairman leads their board.