A NEW ROLE FOR THE ANNUAL BOARD EVALUATION.
Informing directors, giving them a voice and opening a window into the boardroom.
We are pleased to host an article by John C . Wilcox , Chairman, Morrow Sodali.
Thirty years of corporate governance reforms have concentrated attention on the critical role played by the directors of public companies. Shareholders recognize the board’s importance but complain that they are asked to elect directors without being given sufficient information to make an informed decision. Today’s board evaluations, mostly limited to compliance checks, peer comparisons and examination of internal processes, are private affairs, with results that may be meaningful but are rarely visible to constituents outside the boardroom.
Annual board evaluations have the potential to do much more. A robust evaluation process can inform directors, give them a voice and reassure a wide array of stakeholders that the board is representing their interests effectively. By providing early warning of constituents’ concerns, the board evaluation process can also help the directors and management understand and deal with problems before they reach the stage of open confrontation.