Corporate Directors Push for Change in 2024

While 2023 saw plenty of changes, 2024 could see even more on a corporate level.

A new study of corporate executives and directors finds 45% want someone on the board replaced. And that change imperative is top of mind for most board members.

A survey of corporate board members by PwC finds that while nearly half of board members want someone gone, those criticisms of the performance of their peers hasn’t resulted in much action. Of the 45% lobbying for change, the vast majority say boards have not made any changes as a result of their assessments.

Just 11% of directors say their board’s assessment processes resulted in the decision to not renominate a director.

Change isn’t just necessary in the boardroom, the study found. The strain on power grids amidst extreme weather conditions this year is increasing pressure for companies to accelerate net-zero timelines. Social conditions are finding their way into business conversations. And the threat of AI’s impact on the business world is making leaders and boards reexamine their business plans, often much earlier than they’d planned to. 

“All of this points to the fact that the business community must embrace the need to change,” the report reads. “And that change imperative is top of mind in every boardroom.”

The question, though, is whether corporate boards are up for that challenge. The survey, which spoke with board members on over 600 public companies, suggested that while most agreed change was needed, the pace of that change actually occurring was questionable.

“Resistance to evolution continues to plague many boards, particularly when it requires self-reflection about their own composition,” PwC writes. “While it’s more important than ever that organizations have the right people in the boardroom to oversee their strategy for today and tomorrow, many directors remain reluctant to take action on board refreshment.”

One other note on that…directors on boards with non-executive independent chairs were more likely to say their board made changes as a result of their assessment processes, compared with boards that have combined CEO/chairs.

The survey further found that boards are likely overconfident in their ability to react to a crisis. While 96% of the directors PwC spoke with said they were confident the board could guide the company through a significant issue, only 52% said they had created a formal crisis management escalation policy. And only 70% have participated in tabletop exercises around a possible crisis.

Smaller companies, PwC found, could be less prepared for a crisis, as 60% of the board members they spoke to at companies with revenue under $1 billion have created a written escalation policy. Compare that to just 33% at companies with revenues of $10 billion or more.

Given the health and geopolitical crises that have emerged in the past three years, notes PwC, management teams are more prepared for a potentially calamitous event than they used to be. That said, boards should not get comfortable. Crisis preparation is not a one-time event. 

"Progress is not a journey with a finish line — and boards still have work to do in responding to the imperative to change," the report reads.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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