NACD Survey Finds That 20 Percent of Boards Were Approached by an Activist Investor in the Past Year

Monday, October 12, 2015 - 16:45

The National Association of Corporate Directors(NACD), the advocate for the profession of directorship, announced on October 5 the release of its 2015–2016 NACD Public Company Governance Survey, which compiles benchmarking data on governance trends and practices from more than 1,000 public company corporate directors and governance professionals. The survey is available at

According to the 2015–2016 survey, more than 20 percent of respondents’ boards were approached by activist investors during the past year. Yet 46 percent of those surveyed have no plan in place for responding to activist investor challenges. The survey also found that preparedness and market capitalization are highly correlated: smaller-cap boards are less prepared than larger-cap boards, with only a minority of smaller-cap boards having a formal playbook to address such challenges.

This year’s survey includes the following key findings:

  • Almost half of boards are unprepared to respond to activist investors. Forty-six percent of surveyed boards have no plan in place to respond to a challenge from an activist investor.
  • M&A is now a leading board priority. Top board priorities cluster around the theme of driving corporate growth, with strategic planning and oversight most frequently rated as the top issue. Corporate restructuring, including M&A, is also rated as a key priority.
  • Executive compensation is changing in response to shareholder pressure. The most common board response to growing shareholder demands includes the expansion of compensation explanations in proxy statements (36 percent), the revision of executive compensation plans (28 percent), and the alteration or implementation of dividends or stock buybacks (18 percent).
  • Direct board engagement with institutional investors remains unchanged. Forty-four percent of survey respondents indicate that a member of their board met with institutional investors in the past 12 months, mirroring results from the previous year.
  • Director turnover has increased. Seventy-two percent of survey respondents indicate that their board added a new director in the past year, up from 64 percent of respondents in the prior year’s survey.
  • The rise in gender diversity is slow but steady. The percentage of respondents who indicate they have at least one woman on their boards rose slightly in 2015 to 79 percent, up from 77 percent in the prior year.
  • Directors’ comprehension of cyber-risk is low. Only 14 percent of survey respondents believe their boards have a high level of understanding of the risks associated with inadequate cybersecurity, and 31 percent of responding directors are either “dissatisfied” or “very dissatisfied” with the quality of information from management about cybersecurity.

“We expect pressure on boards from activist investors to continue to increase. However, almost half of our survey respondents report that their boards do not have formal plans in place to respond to these challenges,” said Ken Daly, NACD CEO. “Our flagship survey sheds light on the issues that are defining today’s boardroom, and it can help boards to identify areas of opportunity and set priorities for the coming year.”

In addition to the highlights noted above, this year’s report includes executive compensation averages categorized by industry.

To download a copy of the survey, visit