EY's annual review of Fortune 100 company proxy statements revealed (online here) these board evaluation process and disclosure practices in 2021, and changes since its inaugural review in 2018:
- Disclosure: 94% of companies provided some disclosure about their board evaluation process.
- Process: Up from 22% in 2018, 32% this year disclosed using a third-party facilitator at least periodically to facilitate the evaluation.
- Scope: More than half (53%) (up from 24% in 2018) disclosed that they conducted individual director self-evaluations along with board and committee evaluations; 31% clearly disclosed that their individual director evaluation includes peer evaluations, compared to 10% in 2018.
- Coverage: Nearly 60% disclosed the general topics covered by their board evaluation compared to 40% in 2018.
- Method: Up from 26% in 2018, 33% disclosed the use of both questionnaires and interviews.
- Action Plan: One-third (up from 21% in 2018) provided typically high-level disclosure of actions taken as a result of their board evaluation, including updating meeting structures, frequency, focus, and quantity and quality of board pre-read materials; changing committee structures and responsibilities; expanding the responsibilities of the independent board leader; and changing board and committee agendas to facilitate specific objectives (e.g., enhance focus on strategic priorities).
In addition to helpful benchmarking data and associated commentary, the report includes a list of questions for boards to facilitate their evaluation of their current practices.
See this IR Magazine article and additional information & resources on our Board/Director Evaluations page.
This post first appeared in the weekly Society Alert!