The board evaluation process is a critical opportunity to enhance multiple dimensions of board effectiveness and strengthen governance practices. Rigorous evaluation enables boards to identify the changes needed to effectively steward the company now and into the future.
Board evaluations can help boards reset expectations for directors and management and strengthen the board’s relationship with management. They can also identify opportunities to adapt and advance board leadership, structure, dynamics, decision-making processes, operations, information practices, and education opportunities.
Disclosures about the board’s evaluation process and high-level outcomes can enhance investor understanding and trust in the rigor of a board’s oversight by offering a valuable window into the rigor of the board’s self-assessment and its commitment to continuous improvement.
For the fourth consecutive year, the EY Center for Board Matters (CBM) has reviewed proxy statements filed by Fortune 100 companies to identify trends in board evaluation practices and disclosures. Nearly all (94%) of 2021 Fortune 100 proxy filers provide at least some disclosure about their evaluation process, in line with prior years, with the scope and details of the disclosures continuing to vary.
Over time we observe significant enhancements in how boards are assessing themselves and communicating those efforts to stakeholders.