Korn Ferry’s review and analysis of S&P 500 listed company 2023 proxy disclosures (conducted in partnership with Gibson Dunn) revealed a number of noteworthy insights and trends.
Disclosure prevalence—Of the 500 companies, 97% disclosed at least some information about their board evaluation process (up 6% year-over-year) and 87% disclosed more detailed information regarding the nature of the assessment.
Evaluation scope—Down from 58% last year, 46% of evaluations encompass the board, board committees, and individual directors, while 41% address only the board and its committees (up from 39% last year).
Evaluation format—Of the companies that disclosed more detailed information, nearly half (49%) utilize interviews as part of the evaluation and nearly one-third (32%) utilize third party facilitators—most commonly a consulting firm—either periodically or annually (73% and 27%, respectively).
Process lead—38% of companies identified that their evaluation process was led by an independent lead director, board chair, or committee chair, whereas just 2% disclosed that the process was led by the GC, CLO, or Corporate Secretary.
Evaluation coverage—Of those companies disclosing the topics covered in their board evaluation (59% of companies, down 12% year-over-year), the top three topics identified were consistent year-over-year: (i) board and/or committee skills and composition (79%); (ii) board culture, dynamics, functioning, and/or operations (73%); and (iii) board and/or committee structure and responsibilities (69%).
Evaluation outcome/action plan—Nearly one-quarter (24%)of companies disclosed changes made following the evaluation, including updates to board and/or committee structures; board responsibilities, agendas, and materials; and board succession planning and refreshment.
The report includes instructive commentary and guidance from Gibson Dunn on the benefits of board evaluation disclosure and commentary and guidance from Korn Ferry on the data and key components of an effective evaluation process.