Our annual in-depth analysis of the quality and reporting standards of how C25 companies conduct board evaluations reveals that while some progress was made up to 2023, 2024 saw a regression with more C25 companies failing to comply.
Our annual research aims to analyze the extent to which C25 companies comply with the Committee on Corporate Governance’s (CCG) recommendations 3.5.1 and 3.5.2 concerning board evaluations and the quality of these evaluations.
Robust board evaluations are essential for assessing board performance. As the highest and most influential group of leaders in any company, boards must be held to high standards. The consequences and ripple effects of a poor-performing board could devastate any company, plummet shareholder prices, and significantly impact thousands of employees and their families.
We can and should do better to ensure value-creating boards. One of the most impactful tools is high-quality board evaluations.
Key Findings
Our findings reveal significant differences among the C25 companies regarding the practice and compliance of board evaluations. An increasing number of companies are not meeting the standards for reporting on their board evaluations. Moreover, the quality of board evaluations varies widely. Although some companies are conducting higher-quality evaluations, many still fall short of the mark.
Moreover, adhering to the reporting recommendations does not guarantee the evaluations' high quality. The current Corporate Governance Code appears to allow too much room for interpretation. Our findings indicate that ambitious boards that already perform well tend to conduct thorough evaluations to learn and improve. In contrast, others merely aim to "tick the box."
This situation indicates a need for a mindset change and potentially more precise corporate governance guidelines. Companies often report only on their evaluation successes and strengths, omitting areas for improvement. In several instances, the reporting does not clearly state whether the evaluation is done by the board or by an objective third party.
Further Insights: You can contact us here for further insights, such as additional benchmarks and examples of best practices from Danish and international companies.
