Blogs

EY's review of Fortune 100 company 2018 proxy statements revealed these board evaluation disclosure practices:

• Disclosure: 93% of companies provided some disclosure about their board evaluation process.
• Process: Nearly 70% disclosed that their Nom/Gov Committee conducted the process either alone or with the independent lead director or chair. 22% disclosed using an independent facilitator at least periodically - typically every two or three years.
• Scope: Nearly 25% disclosed that they included individual director self-evaluations along with board & committee evaluations; 10% disclosed conducting peer evaluations.
• Coverage: 40% disclosed the general topics covered by the evaluation - typically focused on core board duties & responsibilities and oversight functions.
• Method: 15% disclosed use of questionnnaires-only; 15% disclosed use of interviews-only; and 25% disclosed use of both questionnaires and interviews.
• Action Plan: About 20% provided high-level disclosure of actions taken as a result of their board evaluation, e.g., enhanced director orientation programs, changes to board structure and composition, expanded director search & recruitment practices, improvements to the format & timing relating to board materials.
• Graphics: Companies with more detailed disclosures often used graphics to explain their evaluation process.

In addition to helpful benchmarking data, the instructive report identifies upsides and downsides of particular evaluation approaches; offers suggestions accompanied by relevant examples to improve the process; and includes a list of questions for the board to consider to assist its evaluation of its current practices.