What Society Thinks? set out to determine the views of select groups on a range of corporate governance issues currently being debated in the public arena— accountability and transparency, social responsibility and compensation-related performance. In addition, the What Society Thinks? survey analyzed how well the various elements of society understand the board’s role in governance, risk management, social responsibility and business development. What is the perception of the board’s role compared to the CEO? And how does this compare to how directors and CEOs see themselves?
Given that economic conditions have improved from a year ago, this year’s questions focused more on the board’s role in risk management. In all, the number of questions was reduced from 39 to 29 and included:
- How much time do you think directors should spend on board duties each month?
- Are you familiar with the responsibilities of a public company board director?
- Do board directors have an impact on their company’s performance?
- Do you believe the roles of board chair and CEO should be separated?
- How would you rate the credibility of CEOs today?
- What are the main motivators of CEO performance?
- How do you believe directors are portrayed in the media?
- Which groups had the greatest impact on the economic recovery?
- Are board directors adequately involved in risk management?
- Is the current regulatory environment for U.S. companies appropriate?
- Who do you think exerts the most control over a company?
For most directors, being a focus of the public debate is the furthest thing from their minds when they accept a board position. But it has become a fact of life that board directors and CEOs are the subject of intense public scrutiny and generally negative media coverage.
Ever since the start of the global financial crisis, boards and CEOs have been the focal point for public and political anger. They are an easy target for those looking to assign blame. Many people— experts and laymen alike—felt justified in pointing the finger at corporate directors, accusing them of misunderstanding the risks and steering the economy off course. Even during the recovery phase, there remains a generally negative feeling among many elements of society toward corporate leaders. The overriding angst has clouded much of the good work directors and managers have done to improve governance, boost performance and lay the groundwork for the recovery.
Negative sentiment in itself has not, traditionally, been a particular concern for directors. However, with the implementation of new legislation handing shareholders unprecedented power to influence director elections and impact the board decision-making process, public opinion, especially that of investors, is becoming of vital importance.
The overall opinion of both directors and CEOs has improved slightly since the inaugural What Society Thinks? survey. “I am not surprised that the needle moved a bit, because the economy improved and the ship has steadied,” says Olson. “There continues to be a significant opportunity to educate the public on the reality of these jobs and the real value directors bring.”
Ray Lewis, partner, Deloitte & Touche LLP and managing partner of Deloitte’s Center for Corporate Governance, agrees with that sentiment: “Boards appear to have taken stock of the crisis and the opportunity to increase their performance, whether because of regulatory mandate or to better themselves. The lessons from the crisis are not forgotten and there is still a strong focus on fiduciary oversight responsibility, especially coming from the Securities and Exchange Commission and the Dodd-Frank Act.
“The problem,” Lewis continues, “is that few people see the efforts taking place in the boardroom and may not be aware of the changes.”