Corporate Board Survey Results: 2021 Trends & Insights

Corporate Board Survey Results:2021 Trends & InsightsFebruary 2021Private and confidentialThis report has been prepared for the exclusive use of theclient named. Because it contains confidential information,its use should be controlled and limited to the executivesconcerned. This information is given in good faith and isbelieved to be correct but may require verification.312.988.4843 jwcpartners.com

2021: SummaryJWC Partners’ 2021 survey of board directors reveals new insightsabout board challenges with a largely virtual environment in 2020-21and increased focus on ESG; we are delighted to share these withyou. Key findings:Strategy, Leadership and Technology in the Boardroom Leadership succession and strategy continue to be top issues inthe boardroom. Directors see ESG and technology as top issues of the future.Board Refreshment IT and ESG experience are the most under-represented skills inthe boardroom. Millennial/Gen-Z perspective is new to the list andalso ranked high as a needed skill for the future. Most boards anticipate replacing one to two directors in 2020-21. Directors believe their boards can on-board new directorseffectively in a largely virtual environment, but recognizechallenges in their processes.Environmental/Social/Governance The vast majority of directors expect increases in ESG investmentover the coming years. Board discussion, reporting, boarddiversification, and oversight by the Nominating and Governancecommittees are key means of this investment. Governance outranks Environmental and Social in importance,with some variation by geographic regions of the world.Virtual Board Meetings Overall time spent on board meetings is up in 2020 and expectedto continue for 2021. Directors believe virtual board meetings are effective, particularlyin terms of increased attendance. They show a strong preferencefor a return to mainly in-person meetings. Directors note negative effects of virtual meetings on boardrelationships and nuanced communication.Source: Corporate Board Survey 2021Board RevenuesResponses 109 40%20%19%13%6%Less than 500M 500M 1B 1-5B 5-10BRespondents’ years of boardexperience13%1-323%4-7 10B 48%15%8-1010 Strategy and Technology Experience are Key Issues in theExecutive Suite Strategic perspective remains the dominant focus for theexecutive suite of the future. Technology expertise climbed again and now ranks second,while M&A experience fell out of the top 3. ESG was new tothe list this year and ranked strongly. Directors believe their company’s performance-basedexecutive compensation plans are effective and show apreference for tying this compensation to multiple metrics.Please contact JWC Partners for further information about thesurvey and results. We thank all of the directors for sharing theirperspectives.2

Directors have considered CEO succession and corporate strategythe most important boardroom topics for over a decade, withtechnology and board composition continuing to riseIMPORTANCE OF TOPICS IN BOARDROOMRating (1-7 scale)Corporate strategy6.3CEO and leadership succession6.3Technology/Cyber security5.8Board composition5.6CEO evaluation5.6Risk management5.5Financial management5.5Environmental/Social/Governance (ESG)5.0Executive compensation5.0Group dynamics within the boardroom4.7Regulatory, legislative, and legal matters4.5International perspective4.0Activist investors3.5TrendSource: Corporate Board Survey 2021Top 2since2010Board composition is on the rise3

Directors predict ESG, technology, and corporate strategy willcontinue to be the most important boardroom topics in the futureIN THE FUTURE, WHICH TWO TOPICS WILL BECOME MOST IMPORTANT, REQUIRING MORETIME IN THE BOARDROOM?Percent selected as top two most important topicsEnvironmental/Social/Governance (ESG)Technology/Cyber securityCorporate strategyCEO and leadership successionBoard compositionRisk managementRegulatory, legislative, and legal mattersInternational perspectiveActivist investorsOtherFinancial managementExecutive compensationGroup dynamics within the boardroomCEO evaluation40%39%36%24%17%12%9%6%6%3%3%3%2%1% Trends Source: Corporate Board Survey 2021ESG tops the list for the first time, a big jump fromthe middle of the rankings last yearCorporate strategy fell out of the top 2 for the firsttime since 2010CEO evaluation, risk management are declining4

Directors strongly believe their companies will increase investment inESG in the coming years. Governance outranks Environmental andSocial in importance, with some variation among geographic regionsRELATIVE IMPORTANCE OF EACH ESGTOPIC (Percentage ranked first)EXPECTED CHANGES IN ESG INVESTMENTOVER THE NEXT THREE YEARSDecrease0%Nochange18%THIS IMPORTANCE CAN VARY BY GEOGRAPHIC REGION(e.g., US, Europe, Asia)CommentsreceivedIncrease82% “Europe is way ahead on environment” “Social is more important at our US facilities vs. those in Mexico, Europe or Asia” “Social and environmental norms vary dramatically across the globe”Source: Corporate Board Survey 20215

Directors report discussion, oversight, and reporting of ESG as mainforms of ESG investmentHOW BOARDS ARE INVESTING IN ESGPercent of ResponsesESG is a regular discussion topic on the board agenda44%ESG oversight added to Nominating & Governance Committee42%Add board member(s) with racial/ethnic diversity37%Management reports ESG performance as compared to company goals35%ESG is a specific focus within the current strategic plan23%Not investing significantly16%Add board member(s) with specific ESG skills/expertise10%Other*ESG committee of the board*Other8%2% Just beginning to integrate ESG topics into board calendar, creating ESG reporting mechanisms internally and externally A board needs to have accountability, which is very clear in terms of financial performance and shareholders. ESG has no clear accountability nor consistent measurements for comparative purposes which limits its importanceSource: Corporate Board Survey 20216

Directors identify IT, ESG expertise, and perspective on Millenial/GenZ employees among the most underrepresented skills in theboardroom todayUNDERREPRESENTED SKILLS AND EXPERIENCEPercent selected as top three most important topicsInformation Technology expertiseDigital company executiveESG expertisePerspective on Millennial/Gen-Z employeesDiversityActive CEO perspectiveInternational experienceMarketing (B2B or B2C) expertiseRevenue Growth experienceStrategistResearch & Development expertiseHuman Resources management knowledgeTurnaround capabilityOperations and Supply ChainM&A transaction/integration experienceSupply chain and logisticsLegal/regulatory knowledgeExecutive compensation experienceFinancial expertiseSource: Corporate Board Survey %33%38% IT expertise tops the list for the first time Millennial/Gen-Z perspective and ESGexperience, both new to the list this year,rank high Diversity, international reversed last year’sdrops Active CEO perspective, M&A experienceare declining7

88% of directors report an increase in time spent on board activities in2020 and expect this will continue into 2021HOW MANY DAYS PER BOARD DID YOUSPEND ON BOARD ACTIVITIES LAST YEAR?(attending meetings/events, reviewing reports,travel, informal meetings/conversations)COMPARING 2020 TO 2019, HOW MUCH MORETIME HAVE YOU SPENT ON BOARDACTIVITIES?80%60%43%39%35%22%9%Under 1515-2526-35Source: Corporate Board Survey 202114%12%36-4546 12%1-25%26-50%51-75%76-100% No Change8

While directors believe virtual meetings have been effective, there is astrong preference for a return to mainly in-person meetingsPOST-PANDEMIC PERCENTAGE OFBOARD MEETINGS EXPECTED TO BEVIRTUALARE VIRTUAL BOARD ce: Corporate Board Survey 202125% or less26-50%51-75%5%76-100%9

Directors see some benefits to virtual board meetings, particularlywith attendance, but recognize the negative effects virtual meetingshave on board relationships and in on-boarding new directorsEFFECTS OF VIRTUAL MEETINGS ON THE FOLLOWING(1 significantly less effective; 7 significantly more effective)Overall board attendance5.1Overall board efficiency4.7Length of board meetings4.6Length of board agendas4.4Overall board performance4.2Time spent preparing for meetings4.1Time spent on corporate strategy3.9Director participation during meetings3.8Trust among board directors3.7Relationship with subject experts3.1Relationship with executive team3.1Relationship among directors3.0New director on-boarding2.9Developing management team (especially CEO successors)2.9Nuanced communication and influence among directorsSource: Corporate Board Survey 2021Time andproductivitygainsCommunication andrelationship losses2.710

Directors’ comments reveal nuances about the positive and negativeeffects of virtual board meetingsReally hard to readthe roomZoom fatiguePROSForces a greater listening discipline on allattendees and therefore improves thequality of deliberationsImmensely productive for board memberswho grew up with technologyAbsence of ancillarydiscussionsNot as much creativityLargely ineffective atstrengthening theculture and chemistryof the boardHard to have broaderstrategicconversations thatinvolve a level ofbrainstorming andbuilding off each otherCONSCould be effective as a supplement in thefuture, such as having committee meetingsvirtual and full board in-person meetingsSource: Corporate Board Survey 202111

Boards continue to add directors during the pandemicNUMBER OF BOARD MEMBERS TO BE REPLACED IN 2020-2021Percent of Responses45%28%21%6%0Source: Corporate Board Survey 2021123 or more12

Most directors believe that their boards have effectively on-boardednew directors this year - but there are opportunities for improvementRATINGS OF RECENT ON-BOARDING PRACTICESScale of 1 to 7Comments33%28%18%8%6%6%2%1234Not effectiveSource: Corporate Board Survey 2021567 On boarding new directors is a realissue during Covid-19. Technologycannot replace in person meetings forrelationship development. No real process -- jump in and learn.But our Chairman was very willing totalk/teach. Baptism by fire. Needs to be improved significantly. Virtual is just not as effective as inperson. With no in person meetings, terrible! Management and sitting directors seemto all have different ideas and concernsabout what is most important. Will not be effective until things return tosomewhat more normal.Highly effective13

Boards are being creative in how they on-board new directors in alargely virtual environmentEFFECTIVE SUPPLEMENTS FOR ON-BOARDING NEW DIRECTORS (IN VIRTUALENVIRONMENTS): Schedule 1:1 discussions with all other directors and the CEO, CFO, GC to betterunderstand the company & culture.* Assign a board mentor to the new director. Schedule tours of HQ and important corporate facilities (e.g., plants)* Have all new directors join, or at least observe, the Audit Committee as a way to get toknow the company.*virtual if in-person not possibleSource: Corporate Board Survey 202114

In the executive suite, strategic perspective and technology expertisestand out as skills that will become increasingly importantINCREASINGLY IMPORTANT SKILLS IN THE EXECUTIVE SUITE IN THE NEXT 5-10 YEARSPercent of ResponsesStrategic perspectiveTechnology expertise, including data analytics/AI/IoTGlobal experienceM&A experienceEnvironmental/social/governance (ESG)Financial managementCustomer relationshipsRisk managementOperations/supply chain expertiseInvestor relationsCorporate governanceHuman resources managementMarketing expertiseLegal or regulatory knowledgeOther (please specify)9%9%25%24%22%20%16%15%TrendsOther: generalist, innovation, problem solving, decision makingSource: Corporate Board Survey 202140%39%37%32%32%48%70% Strategic perspective has topped thelist since 2012 Global and M&A experience remainimportant ESG is new the to the list this year andranks strongly15