Deloitte: Boards Seek Industry Experience in New Directors

By Rob Starr, Content Manager, Big4.com

A new report issued by the Deloitte Center for Corporate Governance and the Society of Corporate Secretaries and Governance Professionals indicates the top attribute sought in new directors is industry experience, as board subject matter knowledge comes to the fore. In addition, more corporate board members are engaging directly with shareholders. Other shifts in board practices include an increased length and frequency of board meetings and more actively reviewed CEO succession policies

The board and company executives at organizations of all sizes reported interaction with shareholders, according to survey respondents. Approximately one-third of small- and mid-cap companies (38 percent and 33 percent respectively) reported meeting with up to 5 percent of their shareholders, while 44 percent of large-cap companies reported meeting with more than 20 percent of their shareholders. Board members have also engaged in direct contact with shareholders. At 55 percent of large-cap companies, at least one director met with a shareholder. At small-cap companies, even more, 58 percent, had at least one director meeting with a shareholder; only 27 percent of mid-cap companies had at least one director-shareholder meeting.

“The report shows that board members are really working on enhancing their interactions with each other and with shareholders, which goes along with wider trends related to facility of communication,” said Maureen Errity, director, Deloitte Center for Corporate Governance, Deloitte LLP. “There’s no longer the sense that boards operate behind closed doors.”