Two years into renewed efforts to improve corporate governance, a McKinsey survey of directors and institutional investors finds them dissatisfied with the pace and extent of reform. Both groups cite resistance from management and directors themselves as reasons for the slowness of change, and they agree about which reforms are most needed: splitting the roles of chairman and CEO, increasing the accountability of directors, and reducing executive compensation.
The take-away
Corporate boards and management teams should heed the investors’ concerns and stop delaying governance reform. Companies with the best governance records probably will not only earn a premium from investors but also be better positioned to attract talented independent directors, who will be in short supply.
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