Korn Ferry’s review and analysis of S&P 500 listed company 2022 proxy disclosures (conducted in partnership with Gibson Dunn) revealed a number of noteworthy insights and trends.
Disclosure prevalence—Of the 500 companies, 91% disclosed at least some information about their board evaluation process and 440 (88%) disclosed more detailed information regarding the nature of the assessment.
Evaluation scope—The majority of evaluations (58%) encompass the board, board committees, and individual directors; nearly 40% address only the board and its committees.
Evaluation format—Of the companies that disclosed more detailed information, a majority (53%) utilize interviews as part of the evaluation and nearly one-third utilize third party facilitators either periodically or annually (53% and 40%, respectively).
Process owner/lead—A committee chair owns or is involved in leading the process for a plurality of companies (46%); 35% identified involvement by the lead independent director and 30% identified the board chair.
Evaluation coverage—Of those companies disclosing the topics covered in their board evaluation (71% of companies), the top three topics identified were: (i) board and/or committee skills and composition, (ii) board and/or committee structure and responsibilities, and (iii) board culture, dynamics, functioning, and/or operations.
Evaluation outcome/action plan—Nearly one-quarter of companies disclosed changes made following the evaluation—most commonly: (i) updates to board and/or committee structures, responsibilities, agendas, and materials, and (ii) 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.
See the accompanying article; our recent report: Society Members Speak! Board Education & Evaluation Practices, and additional resources on our Board/Director Education page.
This post first appeared in the weekly Society Alert!