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Corporate boards are at their most willing in five years to see one of their own members replaced, according to an Oct. 17 survey from consultant PwC.
Almost half of the U.S. public company directors surveyed said at least one of their peers should step aside in favor of someone new. That’s the highest response PwC has gotten since it started asking the question in 2012.
Usually about a third of directors say a fellow director should go for reasons ranging from “advanced age” to a lack of preparedness or expertise.
PwC said this year’s jump may reflect a changing conversation about board refreshment. The renewal rate nearly doubled from 2008 to 2016 as companies in the S&P 1500 index have added new directors, a January analysis by Institutional Shareholder Services Inc. found. By 2016, nearly one out of every 10 directors serving on those boards was new.
“The board role is getting a lot of attention,” Paula Loop, who leads PwC’s governance insights center, told Bloomberg Law.
Some of that attention is coming from State Street Global Advisors, BlackRock Inc., and other institutional investors that are focusing on director diversity and skills. In 2016, women held just over 20 percent of board seats in the S&P 500 and minorities held only 14 percent of them, the ISS study found.
But when asked about diversity, more than half of directors told PwC that their board is diverse enough. Directors who are newer to a board are less likely to be satisfied with their boardroom’s diversity than those who have sat on a board for 10 years or more.
Boards are also getting more serious about measuring their own job performance with regular evaluations, ISS data show. “So I think we’re continuing to see the bar raised,” Loop said.
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