"What Directors Think"—from Corporate Board Member, Diligent Institute, and BDO—reveals the results of a survey of 250 US public company directors about upcoming challenges and opportunities in the context of ongoing domestic, geopolitical, and macroeconomic volatility.
Among the key takeaways:
Board oversight—Perhaps not surprisingly, directors identified AI developments and cybersecurity / data privacy as the most challenging issues to oversee (36% and 35%, respectively). AI also topped the list of closely monitored emerging risks, followed by regulatory risks and economic risks (in that order).
Board composition—Directors ranked industry expertise, C-suite experience, and business strategy expertise as the three most critical attributes for their board’s next new directors, with industry expertise and C-suite experience fairly consistently ranking among the top three attributes over the past 20 years.
Relatedly, nearly half of directors identified the board’s access to third party-subject matter experts as among the biggest strengths supporting their performance. Interviews with respondent directors support the theory espoused in the report that boards value business-specific knowledge and expertise in their fellow directors more so than subject matter expertise, which they can more easily attain from external sources.
External challenges—More than half of directors cited the following as negatively impacting their companies’ performance in the past year: interest rates, inflation, costs and availability associated with the labor market, the regulatory environment, access to / the cost of capital, geopolitical events, and supply chains.
Board agenda—Directors most commonly identified capital allocation, CEO / senior executive succession planning, and M&A as the most pressing topics they would include on the board meeting agenda (43%, 37%, and 31%, respectively). Comparatively, just 8% of directors cited climate / environmental considerations and only 3% cited diversity and inclusion.
Shareholder engagement—A majority of directors noted increasing shareholder inquiries relating to AI/generative AI developments, long-term strategic planning, short-term growth and financial performance, board composition, and M&A, and reduced inquires pertaining to director compensation and diversity and inclusion.
Respondents represented companies of all sizes and industries, committee representations, and board tenure (p13). Survey results are broken out by industry in the Appendix.