Companies are gradually getting better at reporting their board evaluations, but quality could use a boost

During April/May 2023, we repeated our systematic annual desk research, reading the C25 companies’ management commentary from latest annual reports and researching their websites, then commenting on each of the companies’ written descriptions. Our assessment was based purely on what the companies have described in writing available to the public.

Our analysis included the extent to which the C25 companies comply with the recommendation on reporting, as well as the estimated quality with which these evaluations have been carried out.

As the practice and compliance of board evaluations are still improving, there are significant differences among the C25 companies, but our report includes an evaluation for each of the C25, for comparison and inspiration.

Here are this year’s topline results:

Regarding reporting compliance, there was continued improvement in the number of companies who report the board evaluation procedure and conclusions in both their Annual Report and on the company website, to 10 companies this year, from 9 last year and 8 in 2021.

However, as for quality of the evaluations (using our definition: to what extent a robust procedure was used, including both questionnaires and individual interviews, a third-party evaluator, and stating both strengths and development areas for the board in the conclusions), the numbers have declined. This year, only 8 companies are deemed to have performed a high or moderate quality evaluation, while last year the number was 12, and a full 7 companies were rated as having a low quality evaluation, up from only 5 prior year (we cannot compare with 2021 as we did not measure quality the same way that year).

For inspiration, this year our report includes examples from companies who have successfully described the conclusions of their evaluation, covering both the board’s strengths as well as development areas. Here is one example, and our full report includes others also from the UK:

It is our hope and intention that our research can not only shed light on the challenges but also inspire boards that would like to comply with the recommendations, to better integrate good corporate governance and to do high quality board evaluations, all with the purpose of increasing board effectiveness for the benefit of the company, the stakeholders, and the community.

To receive the full analysis (available for clients only), please contact reception@leadershipadvisorgroup.com.