Are your top execs and board aligned on company risks and how to handle them? For many companies, this is an area ripe for continuous improvement. Part of the board’s role is to oversee this process, ensuring that major risks are identified and mitigated. Companies in which top execs and their boards are aligned through a formal process are more likely to minimize risk.
Every year, Leadership Advisor Group does in-depth desk research to understand how companies are reporting the procedure and conclusions of their annual board evaluations.
Good reporting shows transparency and will help build stakeholder trust.
Guidelines differ across countries. For example, in Norway the guidelines suggest public reporting of whether or not the company has done a board evaluation, but reporting the actual results only to the Nomination Committee. Meantime, in the UK it is recommended to report even the results to the public. UK companies should report not only on how the board evaluation has been conducted, but also identify the external evaluator (if one was used), show a statement about the nature and extent of an external evaluator’s contact with the board and individual directors (to ensure the evaluator’s objectivity and that no consultant do board evaluation, non-executive / executive search or auditing etc. for the same client within the same year), show the outcomes and actions taken, and include how the evaluation has or will influence board composition.
To inspire companies who are striving to achieve “best-in-class” status on board evaluation reporting, below are the verbatim texts from two brilliant examples we found.
ISS: Annual Report 2021, page 42:
SSE Annual Report 2022, page 115:
Extract from pages 143 to 144:
Based on international best practice, Leadership Advisor Group recommends that all listed companies, as well as those who are striving to become “top class”, should, as a minimum, report the process for the assessment (i.e the elements included in the procedure), as well as the conclusions (strengths and development areas) in the annual report, on the company’s website, and at the company’s annual meeting.
If you’d like our guidance on how to improve the reporting of your board evaluation, please contact us at firstname.lastname@example.org
Interested in self-evaluation? Try Online Board Evaluations
Well-aligned with national corporate- and foundation/charity governance recommendations, our board clients usually conduct an external board evaluation every three years. However, most national governance recommendations recommend that boards perform a self-evaluation in the years between an external board evaluation. Therefore, we have developed OnlineBoardEvaluations.com which is a tool enabling boards to self-evaluate effectively and effortlessly every year.
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