Business leaders are predicting and preparing for the possibility of a recession. The economic outlook looks likely to add an additional dimension to the already heavy workload of the committee as they review remuneration policies, balance this economic uncertainty with the need to retain the key talent required to navigate the business through these challenging times, particularly when the ability to retain and recruit senior talent remains a challenge. Business recovery, growth, inadequate access to key resources and the long-term effects of the pandemic are likely to continue to test the skills and experience of board members. The board needs to review and potentially reshape the board composition to support new strategic imperatives, review succession planning, and create an environment for fairness, equality and opportunity allowing talented people to succeed.

We highlight five issues for governance, nomination and remuneration committees to keep in mind as they consider and carry out their 2023 agendas.

Based on our recent engagement with board members and members of remuneration committees across different industries, we have highlighted a number of areas to keep in mind as governance, nomination & remuneration committees consider and carry out their 2023 agendas.

Board and Management Composition & Diversity

Aligning boardroom talent with the company’s strategy is a key driver of many boards’ increasing focus on board composition and succession planning today. Indeed, talent in the boardroom is also front and centre for investors, regulators, and the media. The question being asked is: does the board have the skills and expertise as well as the diversity and variety of perspectives that are essential to being effective in their oversight role - and to contribute to the long-term success of the company?

Given the demands of today’s business and risk environment - not to mention increasing scrutiny by investors, regulators, and the media—a critical priority for almost every board is to align boardroom talent with company strategy, both for the short-term and the longterm as the strategy evolves. The related reasons for this intense focus on board composition, include the need for greater diversity, and the need for directors with an understanding of the competitive environment, the pace of technology change, and the potential disruptors of the company’s business model.

In KPMG Nigeria Board Governance Centres (BGC’s) Boardroom Diversity Survey report of 2022 titled ‘Poised for Change?’ 47 percent of directors polled say they are moderately concerned that the lack of diverse views in their boardroom hampers insightful discussions or identification of blind spots or important issues, 24 percent say they are extremely concerned and 29 percent are not concerned.

The ability to challenge long-held assumptions; understand megatrends; and effectively calibrate strategy, risk, and talent in the context of heightened stakeholder expectations puts a premium on thinking differently.

Board composition, diversity, and renewal should remain a key area of board focus in 2023 to fundamentally position the board strategically for the future even as boards are now realising that diverse perspectives create long-term value for the organisation.

Gender diversity on boards in Nigeria continues to be a key area of focus given the statistics. A survey conducted by KPMG Nigeria BGC and Women Corporate Directors Foundation Nigeria (WCD) in 2022 shows that of the 342 board seats on the NGX 30 index companies, only 89 are females. Of the 30 board chairs, only 4 are females while only 2 out of the 30 CEOs are females.

Beyond gender and ethnic diversity, diversity in skills, thought, experience, age and background are critical.

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