![]() ![]() Eliciting valuable and candid feedback from each board member, without attribution if appropriate, about board dynamics, operations, structure, performance and composition.Focusing director introspection on actual board, committee and director performance compared to agreed-upon board, committee and director performance goals, objectives and requirements.Instead, the evaluation process should be designed to rigorously test whether the board’s composition, dynamics, operations and structure are effective for the company and its business environment, both in the short- and long-term, by: The evaluation process should not be used simply as a way to assess whether the board, its committees and its members have satisfactorily performed their required duties and responsibilities. Prior to designing and implementing an evaluation process, boards should determine the substantive and specific goals and objectives they want to achieve through evaluation. Planning and designing an effective evaluation process This publication outlines elements that can be considered in designing an effective evaluation process and notes related observations from our proxy statement review. Our first observation is that 93% of proxy filers in the Fortune 100 provided at least some disclosures about their board evaluation process. In view of these developments, we reviewed the most recent proxy statements filed by companies in the 2018 Fortune 100 to identify notable board evaluation practices, trends and disclosures. Increased focus on board composition by institutional investors.Board evaluation requirements outside the US, in particular the UK.Pressure from stakeholders for companies to better explain and achieve current and long-term corporate performance.Increased complexity, uncertainty, opportunity and risk in business environments globally.Recent high-profile examples of board oversight failures.The focus on board effectiveness and evaluation reflects factors that have shaped public company governance in recent years, including: Boards are also seeking to enhance their own effectiveness and to more clearly address stakeholder interest by enhancing their board evaluation processes and disclosures. Investors, regulators and other stakeholders are seeking greater board effectiveness and accountability and are increasingly interested in board evaluation processes and results. ![]()
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