Against the backdrop of a new administration in Washington and growing social divisiveness, U.S. public company directors are faced with great expectations from investors and the public. Perhaps now more than ever, public companies are being asked to take the lead in addressing some of society’s most difficult problems. From seeking action on climate change to advancing diversity, stakeholder expectations are increasing and many companies are responding.
In part, this responsiveness is driven by changes in who owns public companies today. Institutional investors now own 70% of U.S. public company stock, much of which is held in index funds. Many of these passive investors believe that seeking improvements in corporate governance is one of the only levers they have to improve company performance. And these shareholders are exerting their influence with management teams and the board through their governance policies, direct engagement and proxy voting. But boards and shareholders don’t always agree, and the corporate governance environment itself is not immune to divisiveness. In fact, our research shows that directors are clearly out of step with investor priorities in some critical areas.
PwC’s 2017 Annual Corporate Directors Survey examines the areas where directors and investors are aligned and moving forward together, as well as the ways in which they are out of sync. While boards have made real improvements in some areas, there is clearly more work to be done.
PwC's Governance Insights Center supports directors and investors with governance knowledge to answer tough questions and tackle complex challenges. For more information, please visit: www.pwc.com/us/Governan