Home > Board Performance > Report by PWC on the Spanish public companies` Boards performance (II)

Report by PWC on the Spanish public companies` Boards performance (II)

Report on Boards` performance in Spanish public companies, 2011 (II)

On june 2012, PWC has released a report on the subject, the main items being:

  1. Performance of Board, Chairman, Secretary and Committees.
  2. Independent Directors` Compensation
  3. Trends and Conclusions.

The report is based on a survey made among directors covering 77% of all Spanish public firms, (90% of the bigger are covered).

In a previous post we dealt with the second topic, so in this one we will update on the first one.

The Board performance evaluation is considered through the following perspectives:

  1. Board meetings: the evaluation is positive as per the meetings development, quality of debates, directors’s engagement in debate, etc. Perhaps because of the economic crisis, a majority of respondents say to have dedicated more time to its functions than in previous years.
  2. Proposals by the Chief Executive rejected: 66% of companies recognized to have rejected at least two proposals made by management, which is higher than in 2010.
  3. Board annual evaluation: although directors judge the evaluation better than in previous years, directors recognize a strong improvement is needed; and even if 82% of companies declare to have done it in 2011, 94% of companies have developed the assessments through interviews, and without the use of external support. This is clearly
  4. Most of Directors declares Strategy Planning as a theme that will require more time from Board in the future, followed by Risk Control.
  5. As for the Board composition, only 8.5% of directors are satisfied; additional functional knowledge, international profiles, industry knowledge are said to be needed.
  6. And finally, according to the survey, Boards should engage more on Risk Management, Business model sustainability, Corporate Social Responsibility and Reputation, Nomination and Compensation, and Interest Conflicts.

The Chairman and Secretary are also considered:

  1. Both Chairman and first Executive`s Evaluation require further effort and do not receive a good grade.
  2. Chairmen`s functions are well quoted, as the agenda management, the debate enhancement, and the information and reporting flow to directors.
  3. Secretary is seen to have a much relevant role than the strict legal responsibility it has; compliance, support to Chairman with agenda and information flow to Directors, have become part of its normal duties. The only deficiency involves the lack of role Secretaries are recognized for Corporate Governance matters.

Committees:

  1. The Audit Committees are very well valued: they are composed by very experienced and professional people, doing a good task, and giving financial comfort to the rest of members.
  2. Nomination and Compensation Committee: its evaluation went down since 2010. The kind of subjects it deals with, and the increase in exigency by Board members is responsible for that poor evaluation. The most conflictive topics are Chairman evaluation and Succession to both CEO and Chairman.
  3. Corporate Governance Committee: it is basically Nomination and Compensation or  Audit Committees that are in charge of CG, and also the Secretary in 15% of cases. In general respondents think it should be the Nomination and Compensation Committee the one in charge for it, in case a specific committee does not exist.
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