Director FAQ: Considerations for Enhancing the Board Evaluation Process
In brief: Thorough, rigorous, and recurring evaluations are an important mechanism for boards looking to reliably assess performance and effectiveness. For more than a decade, companies listed on the New York Stock Exchange (NYSE) have been required to disclose how their boards evaluate key committees. In addition to committee evaluations, the NYSE also recommends that companies conduct a full-board assessment annually. NACD has long called on companies of all sizes and ownership structures to carry out individual director, committee, and full-board evaluations as part of a broader strategy for continuous improvement. This brief offers guidance on how boards can transform evaluations from a check-the-box exercise to a dynamic process that enhances board performance.
How directors can use this resource:
- Consider different approaches to board-evaluation processes.
- Inform and improve the board’s practices around full-board, committee, and individual-director evaluations.
- Evaluate whether the board’s composition is well-suited to the current and future needs of the company.
Most relevant audiences: Board members of public, private, and nonprofit organizations, especially board chairs, lead directors, and committee chairs