In this recent Equilar C-Suite (pdf here) article: "Assess, Analyze, Address" (page 26), Donnelley Financial Solutions Director of Corporate Governance Services Ron Schneider discusses - with reference to specific examples (see T-Mobile: "Annual Board & Committee Evaluations" and Invesco: "Board evaluation process" & "Director recruitment") - how companies can enhance their proxy statement disclosure to promote investors' confidence in the quality and integrity of their board evaluation processes.
Importantly, enhancing disclosure in a way that is responsive to growing investor interest in this area doesn't mean disclosing board evaluation results; rather, the focus is on effective use of text and graphics to evidence a robust process that facilitates constructive feedback so that the board's composition and conduct remain optimal in view of its likely-expanding oversight responsibilities and the company's long-term strategy.
Ron's sound advice to companies:
What Should You Do?
- Review your current board evaluation and recruitment process.
- Review your most recent proxy and other disclosures about these critical processes.
- Review your peer companies' proxies and their descriptions of their processes.
- Ask yourself: If our processes are strong, are our disclosures of these processes equally strong? Are we building confidence on the part of investors and others who don't have a direct window into the board, and how board performance evaluations are conducted?