TheCorporateCounsel.net

Korn Ferry & Gibson Dunn recently published this survey of board evaluation practices in the S&P 500, based on public disclosures. Anthony Goodman, who leads Korn Ferry’s Board Effectiveness Practice, shared these highlights from the 440 companies that provided details in their proxy statements:

– 60% are evaluating individual directors, not just the board or its committees

– 53% are using interviews as part of the process, rather than relying purely on surveys

– 32% use a third party evaluator either annually or periodically

While individual director evaluations appear to be getting more common, Anthony notes that it’s rare for them to yield constructive feedback for directors. Using independent evaluators to conduct interviews can help overcome that challenge – and make it more likely that the board & individuals receive candid, nuanced & actionable feedback.

Right now, the survey concludes that the lack of feedback could be hampering the usefulness of board evaluations: only 23% of companies disclosed that they made changes as a result of the evaluation.

That seems low, but it’s important to keep in mind that there are a variety of reasons why companies might not spell out changes that resulted from the evaluation process – so a lack of disclosure doesn’t necessarily prove that changes aren’t happening. Yet, there are ways to make the board’s efforts at “continuous improvement” more transparent. Anthony suggests describing:

– An overview of the process

– Key takeaways

– Updates on the key takeaways from prior year evaluations

– Liz Dunshee