Samil PwC Releases "Governance Focus"
Presents Roadmap for Strengthening Board Accountability
As the role of corporate directors becomes increasingly important worldwide, dissatisfaction among directors regarding their board experiences is also on the rise. More than half of directors at publicly listed companies in the United States feel that changes in board composition are necessary.
The Samil PwC Governance Center announced on the 15th that it had released the findings of a survey in the recently published "Governance Focus No. 32," and proposed a "Responsibility Implementation Roadmap" to strengthen board accountability. This roadmap includes specific actionable guidelines at the level of individual directors, board leadership, the entire board, and management.
The report analyzed the results of the "PwC Annual Corporate Director Survey," which targeted over 600 directors at U.S. listed companies. According to the survey, 55% of directors recognized the need for changes in board composition. The reasons cited included insufficient contributions to board discussions (41%) and a lack of expertise among directors (21%).
Jounghyun Cho, Professor at Korea University Business School (former head of the Korea Corporate Governance Service and current head of the Korea ESG Standards Institute), commented, "These results indicate that quite a few directors are more concerned with holding a board seat than actively participating in discussions and fulfilling the board’s primary supervisory and advisory functions." He added, "To enhance the board's dynamism, structural issues must be addressed from the director nomination process by strengthening the role of the nomination committee and ensuring the appointment of qualified directors."
There was also a clear sense of skepticism regarding board evaluations. 78% of respondents said that current evaluation methods do not adequately reflect board performance, and more than half (51%) responded that sufficient investment is not being made in the board evaluation process. This suggests that board evaluations are not being fully utilized as a tool for effective board functioning and operations, highlighting the need for greater attention to board assessments.
Jeheon Heo, Partner at Samil PwC Governance Center, emphasized, "Unlike most organizational structures, boards operate without hierarchy and are based on mutual oversight among directors. Therefore, establishing policies and procedures, fostering culture and relationships, and maintaining self-discipline are extremely important for board operations." He stressed, "It is essential to regularly and objectively evaluate board activities to review and improve board performance."
The report then presented a roadmap for fostering a board culture based on responsibility and ownership, from the perspectives of individual directors, board leadership, the entire board, and management.
Key steps for individual directors include informal communication with fellow directors, participating in peer mentoring, focusing on personal competency development, and supporting the introduction of individual director evaluations. At the board leadership level, recommendations include establishing a board leadership succession plan, initiating difficult conversations based on empathy, and building an inclusive culture. For the entire board, the roadmap suggests reimagining board evaluations, redesigning the director selection process, investing in onboarding and reboarding, and introducing prudent replacement practices. Finally, for management, the proposals include improving the clarity of information provided to the board, offering tailored education, and creating opportunities to build relationships.
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