EY's annual review of Fortune 100 company proxy statements revealed (online here) these board evaluation process and disclosure practices in 2020 and changes year-over-year:
- Disclosure: 95% of companies provided some disclosure about their board evaluation process.
- Process: Up from 22% in 2018 and 27% last year, 31% this year disclosed using a third-party facilitator at least periodically to facilitate the evaluation.
- Scope: Nearly half (48%) (up from 39% last year) disclosed that they included individual director self-evaluations along with board and committee evaluations; 29% (compared to 10% in 2018) disclosed conducting peer evaluations.
- Coverage: More than half (53%) disclosed the general topics covered by their board evaluation compared to 40% in 2018 and 49% last year.
- Method: Up from 29% last year, 31% disclosed use of both questionnaires and interviews.
- Action Plan: Nearly one-third (32%) (up from 25% last year and 21% in 2018) provided typically high-level disclosure of actions taken as a result of their board evaluation, including changing committee structures and responsibilities; expanding the responsibilities of the independent board leader; changing board and committee agendas to facilitate specific objectives (e.g., enhance focus on strategic priorities); and strengthening director education and orientation programs.
In addition to helpful benchmarking data and associated commentary, the report includes a list of questions for boards to consider to facilitate their evaluation of their current practices.
See this Corporate Secretary article and additional information & resources on our Board/Director Evaluations page. This post first appeared in the weekly Society Alert!