PricewaterhouseCoopers US’s Center for Board Governance announced three key themes it considers vital for directors to consider in 2011: prioritizing growth strategies, enhancing communications and understanding shifting business paradigms. The themes are included in PwC’s 2011 Current developments for directors, an annual in-depth analysis of emerging trends and suggested actions for corporate directors.
“Even though the shape of the global economic recovery is still uncertain, forward-looking companies are refocusing on growth,” said Catherine Bromilow, a partner in PwC’s Center for Board Governance. “The shifting regulatory environment can mean profound changes for some companies, and it will be crucial for directors to know what to expect as they help their companies chart the right course.”
PwC’s themes for directors to focus on for 2011 include:
Help management play offense
After a period of retrenching operations and reacting to economic stresses, companies need to — and indeed, will find it refreshing to focus on growth again. Directors should insist that time is made for meaningful strategy discussions. Those discussions work best when directors bring their combined perspectives and experience to collaborate with management in exploring opportunities, push management to stretch in expanding products and geographic reaches, and help management navigate the pitfalls ever present in forging new paths.
Communicate and connect
Whether it’s with your major shareholders or a broader group of your stakeholders, people want to understand what is going on in your company. In particular, with the say on pay votes starting in 2011 and proxy access possible in subsequent years, it’s vital to engage with major shareholders and understand their concerns. That may mean certain directors — possibly the lead director or the compensation committee chair — will play a role in those meetings. Recognize also that communications are changing, given the influence of social media. Because companies no longer control the message, directors will want to understand how management is responding to this phenomenon.
Understand the shifting business environment
Numerous changes are coming in the next few years — from regulation driven by the financial crisis, to major changes in financial reporting, which may have operational and strategic implications. Recognize that various regulators and enforcement agencies are increasingly active, whether it’s the Department of Justice and the SEC focusing on the Foreign Corrupt Practices Act, or the IRS monitoring tax compliance. These changes are placing a real burden on management, increasing the difficulty of operating the business. Directors can play a vital role in helping management understand the implications of this changing world, and they can help ensure the company is adapting to the new paradigms.
The 2011 Current developments for directors report includes in-depth analysis of key developments directors are focused on, including executive compensation, proxy access, financial reporting, regulatory enforcement trends, tax changes, and the impact of the Dodd-Frank Act.
The full report is available online at: http://www.pwc.com/us/en/corporate-governance/publications/current-developments-for-directors-2011.jhtml.