Key Proxy Statement Disclosure Trends: Board Evaluation

The board evaluation process is evolving at many companies. Before, the entirety of the process was a written form where board members literally checked boxes rating the board and committees on a five-point Likert scale. This “old way” wasted  board member time and generated little or no insight.

Pressure to modernize has come from all corners. Directors and corporate executives want their boards to be as effective as they can be – and demand evaluation processes that are worth their time. Shareholders and other stakeholders recognize that without honest and thorough feedback on the full board, committees, and individual directors, evaluation processes will not improve board and company performance.

Many companies have answered the call, adopting “new way” processes that gather, synthesize, and share insightful, actionable feedback about board, committee, and director effectiveness. At Russell Reynolds Associates, we are proud to have helped clients conduct over 350 board effectiveness projects – processes that we have seen solidify strong existing practices and help boards and their members become even more successful.

Companies that invest the time to rigorously assess their own performance should get credit from shareholders and other important stakeholders for having done so. Effective proxy statement disclosure about evaluation practices need not be complex or controversial; as the range of leading and effective examples in this compendium demonstrate, there are many ways to tell shareholders that the Board is committed to its own excellence.

We hope that these examples inspire companies with effective practices to let the world know – and remind companies stuck in “old way” practices that there is a better way.