Tag Archives: board engagement

Do board self-evaluations help produce a high-functioning board?

by Cydney Posner

In this paper from the Rock Center for Corporate Governance at Stanford University, Board Evaluations and Boardroom Dynamics, the authors suggest that board self-evaluations aren’t all they’re cracked up to be. While, based on a recent study, 89% of directors believe their boards have the skills and experience necessary to oversee their companies, at the same time, survey respondents expressed “significant negative sentiments. Board evaluations do not appear to be effective at the individual level.”  In fact, the authors report, the “typical director believes that at least one fellow director should be removed from their board because this individual is not effective. These are troubling statistics that suggest that many companies do not use board evaluations to optimize the contribution of their members.” By focusing only on the functioning of the board as a whole without adequate attention to individual performance, have board self-evaluations become simply pro forma exercises that do not really identify or address the problems that impede effective board operation? Continue reading

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BlackRock sets its priorities for board engagement

by Cydney Posner

Asset management firm BlackRock (reportedly the largest, with $5.1 trillion under management) has identified its “Investment Stewardship” priorities for 2017-2018, intended to help companies prepare for engaging with BlackRock. Among the hot topics are governance (including board composition and diversity), corporate strategy for long-term value creation in light of shifting assumptions, executive pay linked to long-term strategy, climate risk disclosure and human capital management.  According to BlackRock, its engagement process is designed to be constructive, and its goal is “to build mutual understanding and ask probing questions, not to tell companies what to do. Where we believe a company’s business or governance practices fall short, we explain our concerns and expectations, and then allow time for a considered response.” However, Blackrock’s approach is not limited to engagement; although, as a long-term investor, the firm will be “patient” as companies work to address concerns, in the absence of progress, BlackRock “will not hesitate to exercise our right to vote against management recommendations.” Continue reading

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Filed under Corporate Governance, Executive Compensation