Corporate directorship pressures continue to mount

Board turnover is becoming commonplace at many enterprises

While the annual director time for corporate board members has increased, there is higher board turnover, increased demand for IT risk knowledge, and focus on stronger talent development programs at the majority of public companies in the U.S. according to one survey.

In fact, the average annual director time commitment has increased to 235.9 hours per board, up from 218.6 hours last year, says the National Association of Corporate Directors' (NACD) 2013-2014 NACD Public Company Governance Survey, which polled 1,000 directors of public companies who shared their perspectives on the state of their boards.

The study also revealed that executive talent management and leadership development ranked fifth in priority of leading issues, a huge jump from 13th place just five years ago.

Board turnover is becoming commonplace at many enterprises, as nearly 60 percent of boards replaced or added at least one director in the last 12 months, compared to 41 percent in 2012. 

“Whether it’s additional regulatory activity or legislation, demands from shareholders, or scrutiny from the media and public, the pressures of corporate directorship continue to increase,” Ken Daly, NACD president and CEO said in a statement. “NACD’s annual public company governance survey captures a snapshot of today’s boardroom environment to enable us to better anticipate trends, develop leading practices, and inform future decisions.”

Other key findings of the survey include the following:

  • Directors are most likely to use nomination by board committees (72.3 percent) than personal networks (69.9 percent) when searching for candidates to fill open board seats.
  • More than 60 percent of respondents believe directors could use improvement when it comes to understanding IT risk, noting that directors have some technical knowledge.
  • There is no “one-size-fits-all” approach for allocating risk oversight, though most respondents continue to assign the majority of risk oversight tasks to the audit committee.
  • Directors are more content with allocating risk to the full board—nearly all (92.7 percent) directors who currently assign risk oversight to the full board believe this is the correct location.

The NACD survey is one of a recent slate of studies that have shown that regulatory requirements have increased and only become more burdensome for companies of all sizes.

 

For more on boardroom trends, check out InsideCounsel’s coverage below: 

Surveys show regulation, compliance overwhelming

Facts & Figures: Corporate Directors need more IT knowledge

Boardroom dynamics: an insider’s view

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Erin E. Harrison

Erin E. Harrison is the Editor in Chief of InsideCounsel magazine. Harrison’s professional background includes extensive expertise in both print and online media, highlighted by...

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