backgrounder - icsi

BACKGROUNDER

A Guide toBoard Evaluation

JUNE 2017

PRICE Rs 200- (Excluding Postage)

copy THE INSTITUTE OF COMPANY SECRETARIES OF INDIAAll rights reserved No part of this publication may be translated or copied in anyform or by any means without the prior written permission of The Institute ofCompany Secretaries of India

ISBN 9789382207-92-4

Published by

THE INSTITUTE OF COMPANY SECRETARIES OF INDIAICSI House 22 Institutional Area Lodi Road New Delhi - 110 003Phones 41504444 45341000 Fax 24626727Website wwwicsiedu E-mail infoicsiedu

Printed at

Chandu Press200June 2017

(ii)

PREFACE TO REVISED EDITION

The performance evaluation is best tool in enhancing the boardrsquoseffectiveness is recognised globally An effective performanceevaluation exercise helps the board committees and individualdirectors perform to their optimum capabilities It improvesleadershipperformance culture clarifies differing directorsrsquo rolesimproves board communication and facilitates board teamworkimproves decision making processes and efficiency of boardoperations etc

In India the Companies Act 2013 laid down greater emphasis ongood governance through the boards board processes and enhancingboardrsquos effectiveness and performance evaluation is one of themThe performance evaluation is a qualitative factor certainly facilitatestransition from good to great boards which if implemented in trueletter and spirit would definitely take good governance in India togreater heights

In April 2015 the Institute released A Guide to Board Evaluationbased on the provisions of the Companies Act 2013 and relatedbest corporate practices The SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 which came into existence laterin 2015 also contains detailed provisions on board evaluation Thisyear the SEBI has released a Guidance Note on Board Evaluationconsidering all these developments this publication is being revised

To facilitate the board performance evaluation the Institute hasbrought out this revised publication This publication discusses theneed and importance of board evaluation international trends legalframework in India methodologies steps involved post-evaluationactivities and barriers to board evaluation It also contains theParameters and Sample models for evaluation of ChairpersonManaging Director Executive Director Non-executive directorIndependent Director Board as whole and the Committees and alsoprovides guidance on how to conduct evaluation of Board It alsocontains Current Trends and Practices in India with respect to boardevaluation and analysis of Annual Reports of top 100 companieslisted on Bombay Stock Exchange

I am confident that the publication will prove to be immensely(iii)

beneficial in the Board evaluation process I urge upon the corporatesand my professional colleagues to follow the principles proceduresamp practices as enunciated in this publication for performanceevaluation so as to promulgate good Corporate Governance

I commend the dedicated efforts put in by CS Nishita SinghalAssistant Director in preparing the revised edition and CS SudhirKumar Saklani Research Associate in analysing the Annual Reportof top 100 companies and finalising the publication under theguidance of CS Banu Dandona Joint Director and under thestewardship of CS Dinesh C Arora Secretary

Improvement is a continuous process therefore I would appreciatethe users readers for offering their constructive suggestionscomments for the improvement of this publication

Place New Delhi CS (Dr) Shyam AgrawalDate 14th June 2017 President

Institute of Company Secretaries of India

(iv)

PREFACE TO FIRST EDITION

ldquoEverything that can be counted does not necessarily counteverything that counts cannot necessarily be countedrdquo

Albert Einstein

The duties of the Board defined under the Companies Act 2013clearly codifies that the director of a company shall act in good faithin order to promote the objects of the company for the benefit of itsmembers as a whole and in the best interests of the company itsemployees the shareholders the community and for the protectionof environment This enhanced role of directors requires Boards tobe more engaged more knowledgeable and more effective

Board Evaluation is the most effective way to ensure Board membersunderstand their duties and to adopt effective good governancepractices To be effective boardroom appraisals need to havespecific clearly defined steps and practices and a specialcommitment from the Board

Board Evaluation as a good governance practice has found its placein the Companies Act 2013This Handbook comprehensively capturesall the provisions relating to Board Evaluation in the Companies Act2013 Steps involved in Board Evaluation Parameters and Samplemodels for evaluation of Chairperson Managing Director ExecutiveDirector Non- executive director Independent Director Board aswhole and the Committees and also provides guidance on how toconduct evaluation of Board

I am confident that the publication will prove to be of immense benefitto companies and professionals

I place on record my sincere thanks to CS S K Agrawala CentralCouncil member CS Ahalada Rao Central Council member Mr NHariharan Vice President (Secretarial) amp Company Secretary Larsenamp Toubro Ltd for their valuable inputs in finalizing the hand book

I commend the dedicated efforts put in by team ICSI led by CS AlkaKapoor Joint Secretary and comprising CS Banu Dandona DeputyDirector Mr Chittaranjan Pal CS Disha Kant Assistant Education

(v)

Officers under the overall guidance of CS Sutanu Sinha ChiefExecutive amp Officiating Secretary and leadership of CS Mamta BinaniVice President and CS Vineet Chaudhary Central Council Memberand Chairman Corporate Laws and Governance Committee

In any publication there is always scope for further improvement Iwould personally be grateful to users and readers for offering theirsuggestionscomments for further refinement

(CS Atul H Mehta)Place New Delhi PresidentDate 15-04-15 Institute of Company Secretaries of India

(vi)

INDEX

Introduction 1

bull Need for Board Evaluation 3

bull Potential Benefits of Board Evaluation 4

International Trends and Practices 6

bull Good Practices in Board Evaluation by IFC 7

bull G20OECD Principles of Corporate Governance 10

bull ICGN Global Governance Principles 11

bull UK Corporate Governance Code 2016 12

bull ASX Corporate Governance Council -Australia 13

bull King IV Code of Governance for South Africa 14

bull Code of Corporate Governance Singapore 16

bull Comparative table of Board Evaluation

in various countries 19

Legal Framework in India 24

bull Requirements under the Companies Act 2013 25

bull Provisions under the SEBI (Listing Obligations

and Disclosure Requirements) Regulations 2015 28

bull Frequency of Board Evaluation 30

bull Snapshot of Indian Legislative Framework 31

Board Evaluation Methodologies 35

bull Internal Evaluation 36

bull Board Evaluation by External Agencies 39(vii)

Broad Evaluation Framework and Parameters 42

bull Evaluation of the Board as a whole 42

bull Evaluation of the Committees 43

bull Evaluation of Individual Directors 44

bull Managing Director Whole time Director

Executive Director 44

bull Independent Directors 45

bull Non- executive Directors 45

bull Evaluation of the Chairperson 46

Post-Evaluation Activities 47

Succession Planning and Board Evaluation 48

Board Evaluation - Disclosure 49

Barriers to Board Evaluation 51

Board Evaluation - Current Trends and Practices in India 56

Sample Board Evaluation Policy 66

Annexures 69

SEBIrsquos Guidance Note on Board Evaluation 133

Bibiliography 151

(viii)

ldquoBoard evaluation if it is conducted in a rigorous manner whenit flows on to and is linked with individual director developmentplans and with board succession planning and when the resultsare disclosed is a valuable toolrdquo

Anne Molyneux ICGN Board

Introduction

At the core of the corporate governance practices is the Boardof Directors which oversees how the management serves andprotects the long term interests of all the stakeholders of thecompany The institution of Board or directors was based on thepremise that a group of trustworthy and respectable people shouldlook after the interests of the large number of shareholders who arenot directly involved in the management of the company Theshareholders and investors repose confidence on the Board ofDirectors as their representatives for conducting and monitoring theaffairs of the company The position of Board of Directors is that oftrust as the Board is entrusted with the responsibility to act in thebest interests of the company The Board is accountable to theshareholders for creating protecting and enhancing wealth ensuringoptimum utilisation of resources of the company and reporting tothem on the performance in a timely and transparent manner TheBoard is ultimately responsible for ensuring compliance of variousapplicable laws in the best interests of stakeholders

The Board generally performs three major roles in a company ndash

bull provide direction (ie set the strategic direction of thecompany)

bull control (ie monitor the management)

bull provide support and advice (advisory role)

Introduction

1

A Guide to Board Evaluation2

The aftermath of the global financial crisis and the controversiessurrounding the corporate landscape has brought the focus andattention on the performance of the board as never before The roleof the board of directors has undergone rapid transformation overthe past decade Board evaluation has emerged as one of thecorporate governance priority in recent times globally Corporategovernance practitioners have been applying Peter Druckerrsquos ideathat ldquowhat gets measured gets managed and among senior leaderswhat gets acknowledged and valued gets done even betterrdquo

Board evaluation typically examines these roles of the Boardand the entailing responsibilities and assesses how effectively theseare fulfilled by the Board

The ldquoReview of the Role and Effective Functioning of Non-Executive Directorsrdquo carried out under the chairmanship of Sir DerekHiggs in 2003 (the Higgs Review) in UK for the first time noted theimportance of Board performance evaluation It stated that it is lsquobestpractice that the performance of the Board as a whole of itscommittees and of its members is evaluated at least once a yearrsquoand that companies should disclose in their annual report whethersuch performance evaluation is taking place

Board evaluation is a key means by which boards can recognizeand correct corporate governance problems and add real value totheir organizations A properly conducted board evaluation cancontribute significantly to performance improvements onorganisational board and individual member level According toHeidrick amp Struggles Asia Pacific Corporate Governance Report 2014ldquoFoundations and Building Blocks for High performing Boardsrdquoregular Board evaluation is the core driver necessary to promotechange and deliver best practice

The stakeholders and investors are interested to know whetherthe members of Board are effectively functioning individually andcollectively The Board at many times requires new skills for promptlyresponding to the dynamic changing business environmentPerformance measurement against the set benchmarks in the formof Board evaluation has the potential to significantly enhance Boardeffectiveness maximize strengths tackle weaknesses and improvecorporate relationships Annual assessment is a powerful tool toconvert good boards into great boards

A Guide to Board Evaluation 3

Need for Board Evaluation

Evaluation provides the board and its committees with theopportunity to consider how group culture cohesivenesscomposition leadership meetings information processes andgovernance policies influence performance Board Evaluation helpsto identify areas for potential adjustment and provides an opportunityto remind directors of the importance of group dynamics andeffective board and committee processes in fulfilling board andcommittee responsibilities

Emphasis on evaluating board and committee performance isappropriate given the collective nature of board and committeedecision-making authority However evaluation of individual directorsis also important as the foundation for effective collective decision-making is the engagement and efforts of all individual directorsTherefore individual director assessment is also a valuablecomplement to the board and committee evaluation process Individualevaluation encourages self-reflection and can help directors identifyand address individual behaviors that may improve group dynamicsand performance In addition formal evaluation of individual directorscan help support the re-nomination decision process

Thus Board evaluation contributes significantly to improvedperformance at three levels - organizational Board and individualBoard member level It also improves the leadership teamworkaccountability decision-making communication and efficiency of theboard A commitment to annual evaluation is powerful change agent

The Board evaluation sets the standards of performance andimproves the culture of collective action by Board Evaluation alsoimproves teamwork by creating better understating of Boarddynamics board-management relations and thinking as a groupwithin the board It helps to maximize board director contributionby encouraging participation in meetings and highlighting the skillgaps on the Board and those of individual members Directorsdemonstrate commitment to improvement based on the feedbackprovided on individual and collective skill gaps

The purposes of the Board evaluation may be enumerated asunder

bull Improving the performance of Board towards corporate goalsand objectives


bull Assessing the balance of skills knowledge and experienceon the Board

bull Identifying the areas of concern and areas to be focussedfor improvement

bull Identifying and creating awareness about the role of Directorsindividually and collectively as Board

bull Building Team work among Board membersbull Effective Coordination between Board and Managementbull Overall growth of the organisation

Potential Benefits of Board Evaluation

Benefits To organisation To board To individual director

Leadership bull Sets the performance bull An effective bull Demonstratestone and culture of the chairperson commitment toorganisation utilising a improvement at

bull Role model for CEO board evaluation individual leveland senior manage- demonstratesment team leadership to the

rest of the boardbull Demonstrates

long-term focus ofthe board

bull Leadershipbehaviours agreedand encouraged

Role clarity bull Enables clear distinc- bull Clarifies director bull Clarifies duties oftion between the roles and committee individual directorsof the CEO manage- rolesment and the board bull Sets a board norm bull Clarifies expectations

bull Enables appropriate for rolesdelegation principles

Teamwork bull Builds boardCEO bull Builds trust bull Encourages individualmanagement between board director involvementrelationships members bull Develops commitment

bull Encourages active and sense of ownershipparticipation bull Develops commitment

bull Develops commit- bull Clarifies expectationsment and sense ofownership

Accounta- bull Improved stakeholder bull Focuses board bull Ensures directorsbil ity relationships (eg attention on understand their legal

investors financial duties to stake- duties andmarkets) holders responsibili ties

bull Improved corporate bull Ensures board is bull Sets performancegovernance standards appropriately expectations for

bull Clarifies delegations monitoring organi- individual boardsation members


Decision- bull Clarifying strategic bull Clarifying strategic bull Identifies areas wheremaking focus and corporate focus directorrsquos skills need

goals bull Aids in the identifi- developmentbull Improves organisa- cation of skills gap bull Identifies areas where

tional decision-making on the board the directorrsquos skills canbull Improves the be better utilised

boardrsquos decision-making ability

Communi- bull Improves stakeholder bull Improves boardbull Builds personalcation relationships management relationships between

bull Improves board- relationships individual directorsmanagement bull Builds trustrelationships between board

bull Improved board-CEO membersrelationships

Board bull Ensures an bull More efficient bull Saves directorsrsquo timeoperations appropriate top-level meetings bull Increases effective-

policy framework bull Better time ness of individualexists to guide the management contributorsorganisation


Over time a board may become complacent or may need newskills and perspectives to respond nimbly to changes in thebusiness environment or strategy Regular and rigorous self-evaluations help a board to assess its performance and identifyand address potential gaps in the boardroom (CII 2014)

A global trend is to require board evaluation with the objectiveof leading to better practices and board succession planningRegulators around the world have provided for board evaluationSeveral national codes or regulations require or expect boardevaluations andor related disclosures and in most countries it is arecommended practice Some countries have mandated an externalindependent board evaluation once every three years However thereis no one-size-fits-all approach there are many different ways forcountries and companies to approach evaluations

Heidrick amp Struggles published a report (Heidrick amp Struggles2014) that reviewed corporate governance data including boardevaluation practices and reporting from over 400 companies across15 diverse European jurisdictions reported that

bull 70 of boards surveyed undergo a performance evaluationannually

bull 78 percent of boards were evaluated in the last two yearsup from 75 percent in 2009

bull The board chairperson andor the board members themselvesare responsible for the evaluation

bull 21 of entities use external consultants to facilitate the boardevaluation

A study conducted by the Rock Center for Corporate Governance

International Trends and Practices

6


at Stanford University and the Miles Group titled lsquoBoard of DirectorsEvaluation and Effectivenessrsquo in 2016 reveals that while boardevaluations are a common practice they are not universal Eightypercent of companies conduct a formal evaluation twenty percentdo not

The study also reveals that board evaluations appear to be muchless effective at the individual level Only half (55 percent) ofcompanies that conduct board evaluations evaluate individualdirectors and only one-third (36 percent) believe that their companydoes a very good job of accurately assessing the performance ofindividual directors Boards appear not to be effective in using theresults of evaluations to improve individual performance Only half(52 percent) believe their board is very effective in dealing withdirectors who are underperforming or exhibit poor behavior while aquarter (26 percent) do not

To improve board functioning it recommends the following

1 Conduct a diagnostic where each directorrsquos input is solicitedaround a variety of critical topics board effectivenesscommittee effectiveness current board composition theforward-looking needs of the board to meet the strategicneeds of the enterprise board structures and processesagendas and materials board interface with managementboard succession process and board leadership

2 Provide a detailed report of the findings Includerecommended actions based upon short medium and long-term timeframes Develop a skills-and-experience matrix toassist with board refreshment efforts individual directorcoaching plans and feedback sessions to provide directorswith more detailed feedback around their effectiveness

3 Create a process that is as independent as possible Identifya point person on the board accountable for managing theprocess and following through on its recommendationsDevelop a process for removing underperforming directors

(1) Good Practices in Board Evaluation ndash International FinanceCorporation (IFC)

Some of the Good Practices in Board Evaluations as specifies inIFC Report titled ldquoFrom Companies to Markets mdash Global


Developments in Corporate Governancerdquo 2015 are given below-

bull Evaluations will vary from company to company and within acompany at different times in the companyrsquos developmentEvaluations should consider the specific context of thecompany Nevertheless below are some recognized goodpractices that are emerging

bull Trust in the credibility and confidentiality of the evaluationis a key factor for its success regardless of who managesthe process (IFC 2011) Also confidentiality and transparencyare critical to the process

bull It is important to have board membersrsquo full understanding ofand commitment to quality corporate governance and theevaluation

bull The goal of an evaluation is to improve the performance ofthe board and the company itself

bull Leadership of the evaluation process is keymdashusually led bythe chairperson

bull Evaluations should be a regular feature of board practicesMost companies undertaking board evaluations do soannually some companies where they are not mandatedotherwise may undertake an evaluation once every threeyears

bull Evaluations may be best completed in time for discussion atthe board strategy session thus any actions may beincorporated into the strategy

bull Prior to an evaluation all board members should know howthey will be assessed (that is the topics for evaluation) theprocess and the way they will be measured

bull Performance metrics should be developed over time

bull Questionnaires open discussion and one-to-one discussionsare the most widely used approaches

bull Questionnaires should be carefully drafted probably incollaboration with the chairperson and reviewed by all thosebeing evaluated prior to finalization

bull Evaluations should cover key topics board composition and


structure dynamics and functioning (including leadership andteamwork) role clarity governance of strategy and risk boardaccountability and oversight role board decision makingboard advice role individual characteristics of directors(vision contributions behaviors time availability preparationparticular skills) chairpersonrsquos role board functioning(notices meeting processes proactivity) andcommunication

bull An evaluation of board committees should cover issuespertinent to that particular committee

bull Evaluation results should remain confidential and beanalyzed distributed to board members and discussed inan open and non-confrontational manner

bull Any evaluation should focus on the improvement of boardperformance and thus should lead to the development of anaction plan to address issues arising

bull The process itself should be reviewed for improvements

bull Disclosure of the evaluation goals and process should becommunicated to shareholders in the annual report includedin the company code of corporate governance and placedon the company website

bull Board evaluations can be a sensitive issue to some peopleIt is important to be aware of this possibility and to deal withsensitivities

bull Evaluations may expose board weaknesses that if notattended to may provide information for a later litigationprocess

bull Safeguards should be built into the system to protect boththe company and individual directors

bull It is essential for any independent evaluator to be experiencedin board evaluations be seen to be independent and fairand be respected for his or her approach

bull The evaluation may destroy board collegiality if it is nothandled well and if directorsrsquo comments on peers are tooharsh or ill-considered


bull Careful consideration should take place before managementis included in the evaluation process The presence ofmanagement may constrain directorsrsquo comments

(2) G20OECD Principles of Corporate Governance

The revisedupdated G20 Principles maintain many of therecommendations from earlier versions as continuing essentialcomponents of an effective corporate governance frameworkThe chapter on the responsibilities of the board provides for anew principle recommending board training and evaluation anda recommendation on considering the establishment ofspecialized board committees in areas such as remunerationaudit and risk management

In the 2004 version of the OECD Principles there was littlereference to board evaluations and only as a voluntaryrecommended practice In the intervening 11 years to 2015pressure built for board evaluations to become the norm Therevised Principles make it clear that board evaluation is a way toensure continual board development with the goal of achievingan independent board capable of objective judgment Boardevaluation is now a corporate governance priority

OECD Principle VIE4 as Revised in 2015 provides

Boards should regularly carry out evaluations to appraise theirperformance and assess whether they possess the right mix ofbackground and competences

In order to improve board practices and the performance of itsmembers an increasing number of jurisdictions now encouragecompanies to engage in board training and voluntary boardevaluation that meet the needs of the individual companyParticularly in large companies board evaluation can besupported by external facilitators to increase objectivity Unlesscertain qualifications are required such as for financialinstitutions this might include that board members acquireappropriate skills upon appointment Thereafter board membersmay remain abreast of relevant new laws regulations andchanging commercial and other risks through in-house trainingand external courses In order to avoid groupthink and bring adiversity of thought to board discussion boards should also


consider if they collectively possess the right mix of backgroundand competences

Countries may wish to consider measures such as voluntarytargets disclosure requirements boardroom quotas and privateinitiatives that enhance gender diversity on boards and in seniormanagement

(3) ICGN Global Governance Principles

The ICGN Global Governance Principles describe theresponsibilities of boards and shareholders respectively and aimto enhance dialogue between the two parties The Principlesapply predominantly to publicly listed companies and set outexpectations around corporate governance issues that are mostlikely to influence investment decision-making They are alsorelevant to non-listed companies which aspire to adopt highstandards of corporate governance practice The Principles arerelevant to all types of board structure including one-tier andtwo-tier arrangements

mdash The ICGN Global Governance principles provides for thefollowing responsibilities of the board

bull The Board should ensure a formal fair and transparentprocess for nomination election and evaluation ofdirectors

bull The Board should conduct an objective board evaluationon a regular basis consistently seeking to enhance boardeffectiveness

mdash It also provides that the nomination committee shouldevaluate the process for a rigorous review of the performanceof the board the company secretary (where such a positionexists) the boardrsquos committees and individual directors priorto being proposed for re-election

mdash The board should also periodically (preferably every threeyears) engage an independent outside consultant toundertake the evaluation

mdash The non-executive directors led by the lead independentdirector should be responsible for performance evaluation ofthe chair taking into account the views of executive officers


mdash The board should disclose the process for evaluation and asfar as reasonably possible any material issues of relevancearising from the conclusions and any action taken as aconsequence

mdash The Nomination committee should be responsible for theappointment of independent consultants for recruitment orevaluation including their selection and terms of engagementand publically disclosing their identity and consulting fees

(4) UK Corporate Governance Code 2016

The first version of the UK Corporate Governance Code (the Code)was framed in 1992 by the Cadbury Committee Therecommendations in the Cadbury Report have been added to atregular intervals since 1992 In 2003 the Code was updated toincorporate recommendations from reports on the role of non-executive directors and the role of the audit committee

In 2016 a revised version of the UK Corporate Governance Codewas published containing guidance on risk management andinternal controls remuneration policies and engagement withshareholders etc

The revised Code provides that for board effectiveness it isrequired that the board should undertake a formal and rigorousannual evaluation of its own performance and that of itscommittees and individual directors

Supporting PrinciplesEvaluation of the board should consider the balance of skillsexperience independence and knowledge of the company onthe board its diversity including gender how the board workstogether as a unit and other factors relevant to its effectiveness

The chairman should act on the results of the performanceevaluation by recognising the strengths and addressing theweaknesses of the board and where appropriate proposing newmembers be appointed to the board or seeking the resignationof directorsIndividual evaluation should aim to show whether each directorcontinues to contribute effectively and to demonstratecommitment to the role (including commitment of time for boardand committee meetings and any other duties)


Code Provisions

B61 The board should state in the annual report howperformance evaluation of the board its committees and itsindividual directors has been conducted

B62 Evaluation of the board of FTSE 350 companies should beexternally facilitated at least every three years The externalfacilitator should be identified in the annual report and astatement made as to whether they have any other connectionwith the company

B63 The non-executive directors led by the senior independentdirector should be responsible for performance evaluation ofthe chairman taking into account the views of executive directors

(5) ASX Corporate Governance Council - Australia

The ASX Corporate Governance Council Principles andRecommendations were initially introduced in 2003 andsubsequent revisions were made in 2007 and 2010 As a resultof the events that occurred both before and during the GlobalFinancial Crisis a number of jurisdictions adopted new legislationto tighten corporate governance codes Australia alsocomprehensively reviewed and released the third edition of thePrinciples and Recommendations in 2014

Principle 1 Lay solid foundations for management andoversight

A listed entity should establish and disclose the respective rolesand responsibilities of its board and management and how theirperformance is monitored and evaluated

Recommendation 16 A listed entity should (a) have anddisclose a process for periodically evaluating the performanceof the board its committees and individual directors and (b)disclose in relation to each reporting period whether aperformance evaluation was undertaken in the reporting periodin accordance with that process Commentary The board performsa pivotal role in the governance framework of a listed entity It isessential that the board has in place a formal and rigorousprocess for regularly reviewing the performance of the boardits committees and individual directors and addressing any issues


that may emerge from that review The board should considerperiodically using external facilitators to conduct its performancereviews A suitable non-executive director (such as the deputychair or the senior independent director if the entity has one)should be responsible for the performance evaluation of the chairafter having canvassed the views of the other directors Whendisclosing whether a performance evaluation has beenundertaken the entity should where appropriate also discloseany insights it has gained from the evaluation and any governancechanges it has made as a result

Recommendation 17 A listed entity should (a) have anddisclose a process for periodically evaluating the performanceof its senior executives and (b) disclose in relation to eachreporting period whether a performance evaluation wasundertaken in the reporting period in accordance with thatprocess Commentary The performance of a listed entityrsquos seniormanagement team will usually drive the performance of the entityIt is essential that a listed entity has in place a formal andrigorous process for regularly reviewing the performance of itssenior executives and addressing any issues that may emergefrom that review

Principle 2 Structure the board to add value

A listed entity should have a board of an appropriate sizecomposition skills and commitment to enable it to discharge itsduties effectively

The role of the nomination committee is usually to review andmake recommendations to the board in relation to the process forrecruiting a new director including evaluating the balance of skillsknowledge experience independence and diversity on the boardand in the light of this evaluation preparing a description of therole and capabilities required for a particular appointment

(6) King IV Code of Governance South Africa

The King Committee published the King IV Report on CorporateGovernance for South Africa 2016 (King IV) on 1 November 2016King IV is effective in respect of financial years commencing onor after 1 April 2017 King IV replaces King III in its entiretyWhile King III called on companies to apply or explain King IV


assumes application of all principles and requires entities toexplain how the principles are applied ndash thus apply and explainKing IV is principle- and outcomes-based rather than rules-basedThe focus is on transparency and targeted well-considereddisclosures King IV recognises information in isolation oftechnology as a corporate asset that is part of the companyrsquosstock of intellectual capital and confirms the need for governancestructures to protect and enhance this asset There is a newemphasis on the roles and responsibilities of stakeholder

King III recommended that an evaluation of the governing bodyits committees and its individual members be conducted everyyear To provide for sufficient time to appropriately respond tothe results of such performance evaluations the King IV Coderecommends for a formal evaluation process to be conducted atleast every two years Every alternate year the governing bodyshould schedule an opportunity for consideration reflection anddiscussion of its performance

Evaluations of the performance of the governing body

Governing bodyrsquos primary governance role and responsibilitiesPrinciple 9 The governing body should ensure that theevaluation of its own performance and that of its committeesits chair and its individual members support continuedimprovement in its performance and effectiveness

Recommended Practices

bull The governing body should assume responsibility for theevaluation of its own performance and that of its committeesits chair and its individual members by determining how itshould be approached and conducted

bull The governing body should appoint an independent non-executive member to lead the evaluation of the chairrsquosperformance if a lead independent is not in place

bull A formal process either externally facilitated or not inaccordance with methodology approved by the governingbody should be followed for evaluating the performance ofthe governing body its committees its chair and its individualmembers at least every two years


bull Every alternate year the governing body should schedule inits yearly work plan an opportunity for considerationreflection and discussion of its performance and that of itscommittees its chair and its members as a whole

bull The following should be disclosed in relation to the evaluationof the performance of the governing body

mdash A description of the performance evaluations undertakenduring the reporting period including their scope whetherthey were formal or informal and whether they wereexternally facilitated or not

mdash An overview of the evaluation results and remedialactions taken

mdash Whether the governing body is satisfied that theevaluation process is improving its performance andeffectiveness

(7) Code of Corporate Governance Singapore

The Code of Corporate Governance Singapore was first issuedby the Corporate Governance Committee in 2001 The Code isnot mandatory but listed companies are required under theSingapore Exchange Listing Rules to disclose their corporategovernance practices and give explanations for deviations fromthe Code in their annual reports

The Council on Corporate Disclosure and Governance initiated areview of the Code in May 2004 A revised Code was issued onJuly 2005

The Code of Corporate Governance came under the purview ofMonetary Authority of Singapore (MAS) and Singapore Exchange(SGX) with effect from 1st September 2007 to clarify andstreamline responsibilities for corporate governance matters forlisted companies bringing it under the sectoral regulator

The Corporate Governance Council conducted a comprehensivereview of the Code and submitted its recommendations to MASin 2011

MAS issued a revised Code of Corporate Governance on May2012 The 2012 Code of Corporate Governance superseded and


replaced the Code that was issued in July 2005 The Code waseffective in respect of Annual Reports relating to financial yearscommencing from 1 November 2012

The Singapore Corporate Governance Code of May 2012 includedfor the first time a requirement that boards conduct a formalassessment of their effectiveness

Principle 5 on Board Performance There should be a formalannual assessment of the effectiveness of the Board as a wholeand its board committees and the contribution by each directorto the effectiveness of the Board

Guidelines

51 Every Board should implement a process to be carried out bythe Nomination Committee for assessing the effectivenessof the Board as a whole and its board committees and forassessing the contribution by the Chairman and eachindividual director to the effectiveness of the Board TheBoard should state in the companys Annual Report how theassessment of the Board its board committees and eachdirector has been conducted If an external facilitator hasbeen used the Board should disclose in the companys AnnualReport whether the external facilitator has any otherconnection with the company or any of its directors Thisassessment process should be disclosed in the companysAnnual Report

52 The Nomination Committee should decide how the Boardsperformance may be evaluated and propose objectiveperformance criteria Such performance criteria which allowfor comparison with industry peers should be approved bythe Board and address how the Board has enhanced long-term shareholder value These performance criteria shouldnot be changed from year to year and where circumstancesdeem it necessary for any of the criteria to be changed theonus should be on the Board to justify this decision

53 Individual evaluation should aim to assess whether eachdirector continues to contribute effectively and demonstratecommitment to the role (including commitment of time formeetings of the Board and board committees and any other


duties) The Chairman should act on the results of theperformance evaluation and in consultation with theNomination Committee propose where appropriate newmembers to be appointed to the Board or seek the resignationof directors

A G

uide to Board Evaluation1

9

COMPARATIVE TABLE OF BOARD EVALUATION IN VARIOUS COUNTRIES

MODE

EVALUATION OFINDIVIDUALDIRECTOR

UK

Internal andExternal facilitatedevaluation

The board shouldundertake a formaland rigorous annualevaluation of itsindividual directors

USA(NYSE Corporate

GovernanceGuidelines)

Annual self-evaluation

An annual self-evaluation of theperformance of theboard of directorsand its committees

SOUTH AFRICA

Internal andExternal evaluation(chairman or ani n d e p e n d e n tprovider)

The evaluation ofthe individualdirectors should beperformed everyyear

The nomination forthe re-appointment of adirector should onlyoccur after theevaluation of the

AUSTRALIA

External facilitatorsis recommended

The board has in placea formal and rigorousprocess for regularlyreviewing theperformance of theboard its committeesand individualdirectors andaddressing any issuesthat may emerge fromthat review

SINGAPORE

Internal andExternalevaluation

There should bea formal annualassessment ofthe effective-ness of thecontribution byeach director tothe effective-ness of theBoard

A G


0Individual evalua-tion should aim toshow whether eachdirector continuesto contri-buteeffectively and tod e m o n s t r a t ecommitment to therole

The board shouldundertake a formaland rigorous annualevaluation of its

-do-

performance andattendance of thedirector

The evaluation ofthe board shouldbe performed everyyear

-do-

Individual eva-luation shouldaim to assesswhether eachd i r e c t o rcontinues toc o n t r i b u t eeffectively andd e m o ns t r a t ecommitment tothe role( i n c l u d i n gcommitment oftime formeetings of theBoard andb o a r dc o m m i t t e e s and any otherduties)

There should bea formal annualassessment of theef fect iveness

EVALUATION OFBOARD

A G


1

own perfor-mance

Evaluation of theboard of FTSE 350companies shouldbe externallyfacilitated at leastevery three years

The board shouldundertake a formaland rigorous annualevaluation of itscommittees

The results ofperformance eva-luations shouldidentify trainingneeds for directors

The evaluation ofthe boardcommittees shouldbe performed everyyear

-do--do-EVALUATION OFBOARD

COMMITTEES

of the Board asa whole

If an externalfacilitator hasbeen used theBoard shoulddisclose in thec o m p a n y rsquo sAnnual Reportwhether theexternal facili-tator has anyother connec-tion with thecompany or anyof its directors

There should bea formal annualassessment ofthe effective-ness of the boardcommittees

A G


2

The non-executivedirectors led by thesenior independentdirector should beresponsible forp e r f o r m a n c eevaluation of thechairman takinginto account theviews of executivedirectors

The board shouldstate in the annualreport howperformance eva-luation of the boardhas been conducted

EVALUATION OFCHAIRMAN

DISCLOSURES

Nothing Specific

The results of theself evaluation arenot disclosedpublicly

Chairmanrsquos ability toadd value and hisp e r f o r m a n c eagainst what isexpected of his roleand functionshould be assessedevery year

An overview of theappraisal processresults and actionplans should bedisclosed in theintegrated report

A suitable non-executive director(such as the deputychair or the seniori n d e p e n d e n tdirector if theentity has one)should beresponsible for thep e r f o r m a n c eevaluation of thechair after havingcanvassed theviews of the otherdirectors

A listed entityshould(a) have and

disclose aprocess forp e r i o d i c a l l yevaluating the

Nothingspecific

T h eN o m i n a t i o nC o m m i t t e eshould decidehow the Boardrsquosp e rf o r m an c emay be

A G


3

the perfor-mance of theboard itscommittees andindividual direc-tors and

(b) disclose inrelation to eachr e p o r t i n gperiod whethera performanceevaluation wasundertaken inthe reportingperiod in accor-dance with thatprocess

evaluated andpropose objec-tive perfor-mance criteriaThe Boardshould state inthe companyrsquosAnnual Reporthow its assess-ment has beenconductedThere should be aformal annualassessment of theeffectiveness ofthe contri-butionby each director tothe Board TheBoard should statein the companyrsquosAnnual Reporthow its assess-ment has beenconducted

In India the Companies Act 2013 has introduced a slew ofregulations focussed towards enhancing overall governancestandards Effective stewardship by the board has been amplifiedas one of the important cornerstones in the various requirementsspecified under the new Act

The Companies Act 2013 for the first time codifies the duties ofdirectors and specifies that the director of a company shall act inaccordance with the articles of the company and also providesfollowing mandate to the directors -

bull A director of a company shall act in good faith in order topromote the objects of the company for the benefit of itsmembers as a whole and in the best interests of thecompany its employees the shareholders community andfor the protection of environment

bull A director of a company shall exercise his duties with dueand reasonable care skill and diligence and shall exerciseindependent judgment

bull A director of a company shall not involve in a situation inwhich he may have a direct or indirect interest that conflictsor possibly may conflict with the interest of the company

bull A director of a company shall not achieve or attempt toachieve any undue gain or advantage either to himself or tohis relatives partners or associates and if such director isfound guilty of making any undue gain he shall be liable topay an amount equal to that gain to the company

bull A director of a company shall not assign his office and anyassignment so made shall be void

Several other measures for increasing board effectiveness like

Legal Framework in India

24


performance evaluation of board of directors training of independentdirectors guidelines for remuneration of directors has been specified

Board evaluation until recently was recognised as a goodcorporate governance practice and largely undertaken voluntarilyThe erstwhile Clause 49 of the Listing Agreement as a non-mandatoryrequirement provided for performance evaluation of non-executivedirectors by a peer group Further the Corporate GovernanceVoluntary Guidelines 2009 recommended that the Board shouldundertake a formal and rigorous evaluation of its own performanceand that of its committee and individual directors A few progressivecompanies however had been pursuing Board evaluation (and insome instances even peer evaluation of directors) voluntarily as theybelieved in its usefulness In all these voluntary cases the evaluationwas led by the Chairperson and the assistance of independentexternal experts was seldom sought However the Companies Act2013 has introduced mandatory provisions for board evaluation inIndia The Clause 49 of listing agreement which was revised in 2014mandates performance evaluation of Independent Directors

Currently legal provisions for board evaluation are provided underthe Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 for all listed entities

Requirements under the Companies Act 2013

1 Disclosure requirement in the Boardrsquos Report on PerformanceEvaluation

Section 134 (3) (p) read with Sub-rule (4) of Rule 8 of theCompanies (Accounts) Rules 2014 Every listed company andevery other public company having paid-up share capital of twentyfive crores or more calculated at the end of the preceding financialyear should include in the report by its Board of Directors astatement indicating the manner in which formal annualevaluation has been made by the Board of its own performanceand that of its committees and individual directors

However the Ministry of Corporate Affairs vide Notification NoGSR 463(E) dated 5-6-2015 provided certain exemption toGovernment Companies Accordingly the provisions of Section134(3)(p) does not apply in case the directors are evaluated bythe Ministry or Department of the Central Government which is


administratively in charge of the company or as the case maybe the State Government as per its own evaluation methodology

However keeping the importance of performance evaluation theDepartment of Public Enterprises (DPE) has designed a formatand laid down a procedure for filling up and evaluation of theDirectorrsquos performance

Thus the Board of every listed company and every otherpublic company having paid- up share capital of twentyfive crores or more calculated at the end of the precedingfinancial year except Government Companies has to doformal annual evaluation of the-

bull board

bull its committees and

bull all individual directors

The Boardrsquos report of such companies must include astatement indicating the manner amp criteria of formal BoardEvaluation

2 The Role of the Nominations and Remuneration Committeein Performance Evaluation of Directors

Section 178 (1) read with Rule 6 of the Companies (Meetings ofBoard and its Powers) Rules 2014 The Board of Directors ofevery listed company and all public companies with a paid upcapital of ten crore rupees or more or having turnover of onehundred crore rupees or more or having in aggregateoutstanding loans or borrowings or debentures or depositsexceeding fifty crore rupees or more shall constitute theNomination and Remuneration Committee consisting of three ormore non-executive directors out of which not less than one-half shall be independent directors

Provided that the chairperson of the company (whether executiveor non-executive) may be appointed as a member of theNomination and Remuneration Committee but shall not chairsuch Committee

Further the Companies (Amendment) Bill 2016 has proposed toapply the section to public listed companies


Section 178 (2) The Nomination and Remuneration Committeeshall identify persons who are qualified to become directors andwho may be appointed in senior management in accordance withthe criteria laid down recommend to the Board their appointmentand removal and shall carry out evaluation of every directorrsquosperformance

Further the Companies Amendment Bill 2016 has proposed thatthe Committee shall specify the manner for effective evaluationof performance of Board its committees and individual directorsto be carried out either by the Board by the Nomination andRemuneration Committee or by an independent external agencyand review its implementation and compliance

Section 178 is not applicable to a company to which a licenceis granted under the provisions of Section 8 of the CompaniesAct 2013 (Notification No GSR 466(E) dated 05-06-2015)Section 178(2) is not applicable to Government Companiesexcept with regard to appointment of senior management ampother employees (Notification No GSR 463(E) dated 05-06-2015)

Therefore the Nomination and Remuneration Committeeof every listed company and all public companies with apaid up capital of ten crore rupees or more or havingturnover of one hundred crore rupees or more or havingin aggregate outstanding loans or borrowings ordebentures or deposits exceeding fifty crore rupees ormore except Section 8 Companies and GovernmentCompanies shall formulate criteria for evaluation ofperformance of independent directors and the board ofdirectors

Note The paid up share capital or turnover or outstandingloans or borrowings or debentures or deposits as thecase may be as existing on the date of last auditedFinancial Statements shall be taken into account

3 Independent Directorsrsquo Role in Performance Evaluation ofBoards Non-independent Directors and Chairperson

Section 149(8) of the Act provides that the company and


independent directorsrsquo shall abide by the provisions specified inSchedule IV

Schedule IV (Part II (2)) Independent directors are required tobring an objective view in the evaluation of the performance ofboard and management

Schedule IV (Part VII) The independent directors are required tohold at least one meeting in a year without the attendance ofnon-independent directors and members of the management andin that meeting they are required to review the performance of

bull the non-independent directors and the Board as whole

bull also review the performance of the Chairperson of thecompany taking into account the views of the executive andnon-executive directors and

bull assess the quality quantity and timeliness of flow ofinformation between the company management and theBoard that is necessary for the Board to effectively andreasonably perform their duties

4 Performance Evaluation of Independent Directors

Schedule IV Part V Re appointment - The reappointment of theindependent directors would be based on their report ofperformance evaluation

Schedule IV Part VIII Evaluation mechanism

The performance of the independent directors would have to bedone by the entire Board excluding the director to be evaluated

On the basis of the report of performance evaluation thecontinuance or extension of the term of appointment of theindependent director would be determined

Requirements under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015

SEBI with a view to consolidate and streamline the provisions ofexisting listing agreements for different segments of the capitalmarket and to align the provision relating to listed entities with theCompanies Act 2013 notified the SEBI (LODR) Regulations 2015The regulations are applicable to all listed entities It also requires


Boards to conduct an annual performance evaluation and itsdisclosure in the annual report through the following provisions

1 Regulation (4) (2) (f) (ii) (9)

The Key functions of the board of directors includes -

bull Monitoring and reviewing board of directorrsquos evaluationframework

2 Regulation 17(10) mandates that entire board of directorsshall do the performance evaluation of independent directorsprovided that in the evaluation process the directors whoare subject to evaluation shall not participate

3 Regulation 19(4) provides that the Nomination ampRemuneration Committee shall lay down the evaluationcriteria for performance evaluation of Independent Directors

4 Regulation 25(3) provides that the independent directors ofthe listed entity shall hold at least one meeting in a yearwithout the presence of non-independent directors andmembers of the management and all the independentdirectors shall strive to be present at such meeting

5 Regulation 25(4) provides that the independent directors inthe meeting referred in sub-regulation (3) shall inter alia-

(a) review the performance of non-independent directors andthe board of directors as a whole

(b) review the performance of the chairperson of the listedentity taking into account the views of executivedirectors and non-executive directors

6 Part D(A) - Role of Nomination and RemunerationCommittee

It provides that the role of committee shall inter alia includethe following

bull formulation of criteria for evaluation of performance ofindependent directors and the board of directors

bull whether to extend or continue the term of appointmentof the independent director on the basis of the report ofperformance evaluation of independent directors


7 Schedule V C (d) - Corporate Governance Report

The following disclosures shall be made in the section onthe corporate governance of the annual report under the head-Nomination and Remuneration Committee -

bull Performance evaluation criteria for independentdirectors

The SEBI has released a Guidance Note on Board Evaluationsame is given at the end of this publication

Frequency of Board Evaluation

Section 134(3)(p) provides that there has to be a formal annualevaluation of Board of its own performance and that of its committeesand individual directors The Company may undertake annualevaluation either in accordance with calendar year or financial yearas there is no clarity on this Ideally the same should be as perfinancial year

A G


1

Snap Shot of Indian Legislative Framework

Board of Directors and Evaluation

Source Particulars Boardrsquos Role in evaluation Remarks

Companies Act-Section 134(3)(p) Evaluation to be done by the Has to do formal annual Board overall evaluationamp Listing Regulations entire Board evaluation of its own performance

Has to do formal annual Evaluation of Committeesevaluation of its CommitteesHas to do formal annual evaluation Evaluation of individual directorsof all the individual directorsHas to do performance evaluation The said evaluation will be the basisof Independent Directorrsquos (excluding for continuation of the extensionthe director being evaluated) the term of the Independent

Director

Companies Act- Section 134(3)(p) Disclosure Boardrsquos Report All the listed companies and publicread with Rule 8 of companies companies with paid-up share(Accounts) Rules 2014 capital of Rs Twenty Five crore or

more shall have to include such astatement in Board Reportindicating the manner amp criteria offormal Board evaluation

A G


2Nomination Committee and Evaluation

Source Particulars Committeersquos Role in evaluation Remarks

Listing Regulations Nomination amp Remuneration Shall lay down the evaluation criteria The evaluation criteria for Indepen-Committee (NRC) for performance evaluation of Inde- dent Directors shall be prepared by

pendent Directors NRC(This criteria is also required to bedisclosed in the Annual Report ofthe Company)

Companies Act- Evaluate every directorrsquos Evaluation of directors includesection 178(2) performance a Independent directors

b Non executive directorsc Executive directors and whole

time directorsd Managing Directorse Chairperson

A G


3

Role and functions of Independent Directors in relation to evaluation

Source Particulars Independent Directorsrsquo RemarksRole in evaluation

Companies Act - Schedule IV- In the separate meeting of Inde- Review the performance Review ofCode for ID (Part VII) amp pendent Directors of Non-Independent DirectorsListing Regulations a Non executive directors

b Managing Director whole timedirectors and Executivedirectors

Review the performance of the Review the performance of theBoard as a whole Board as a whole

Review the performance of the Review the performance of theChairperson of the Company Chairpersontaking into account the viewsof Executive Directorrsquos andNon executive directorrsquosAssess thea qualityb quantity andc timeliness

of flow of informationbetween Quality of information includesthe Company management and its relevance completeness

A G


4the Board that is necessary authenticity how comprehensivefor the Board to effectively and concise and clear such infor-reasonably perform their duties mation is As regards quantity the

independent director need to assessthat the information is neither tooless nor too much resulting in aninformation overload Typically theinformation to the board membersshould carry an executive summarywhich is supplemented by detailednotes and where necessary back-uppapers as annexure Timeliness ofinformation flow can be gaugedfrom facts such as how soon areimportant events communicatedbetween board meetings timelinessof the agenda papers etc

The Companies Act 2013 or SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are silent on how theBoard evaluation is to be undertaken The Companies AmendmentBill 2016 has proposed that the Nomination and RemunerationCommittee shall specify the manner for effective evaluation ofperformance of Board its committees and individual directors to becarried out either by the Board by the Nomination and RemunerationCommittee or by an independent external agency and review itsimplementation and compliance

Companies should ensure that the process for evaluation of theboard committees and directors should be developmental ratherthan just a compliance exercise Doing just bare minimum ofcompliance would mean squandering the opportunity of genuinelyimproving the work of the Board

Typically the Board evaluation process should comprise of bothassessment and review This would include analysis of how the Boardand its committees are functioning the time spent by the Board consideringmatters and whether the terms of reference of the Board committeeshave been met besides compliance of the provisions of the Act

Generally Board appraisals include following components1 Evaluation of the Board as a whole

a Internally

b Externally

2 Evaluation of Individual Directors (Independent ExecutiveNon- executive Whole Time Director)

a Self evaluation

b Peer to Peer evaluation

c External

Board Evaluation Methodologies

35


3 Evaluation of the Committees

a Internal (by the Board)

b External

4 Evaluation of the Chairperson

a All Directors

b External

Board Evaluation can either be done internally or through externalagencies These are elaborated below-

Board Evaluationcan be done

Internally Through External Agencies

Internal Evaluation

In case of internal evaluation the Board of the company isresponsible for managing both the process as well as the contentWhile evaluation processes should be tailored to the specific needsand objectives of a company some of the common elements foreffective evaluation includes following

(a) Delegation of authority The company should delegate theNomination and Remuneration Committee andor the leaddirector or independent chairman the task of developing andimplementing an evaluation process for the entire boardcommittees and individual directors

(b) Defining the objectives The objective of the evaluationshould be defined with some specificity Boards should askthe following key questions to define the objectives ofevaluation -

bull Is the evaluation being undertaken simply to comply withlaws and best practice

bull Are there specific areas that require close attention

bull Have there been significant changes on the Board that


increase interest in working on board culture andalignment with management

bull Are there any underlying concerns about how the boardis functioning

bull What would be considered a successful outcome

bull Are there sensitivities about exploring certain areas andif so why

(c) Determining the scope The defined objective will help todetermine the scope of the board evaluation both as to whowill be the subject of the evaluation and the topics thatshould be addressed for each like ndash Board Committees andindividual directors

(d) Identifying the participants The participants for the BoardEvaluation process would generally include - directors forboard evaluation committee members for committeeevaluation and all individual directors and independentdirectors also Individual directors may be asked to self-assess or they may be asked to assess their peers In additionkey members of management may be invited to participate

(e) Selecting the tools The evaluation process typically involvesobtaining viewpoints from the Board members on thefunctioning of Board Committee or director performancethrough the use of Questionnaires or Interviews or FacilitatedDiscussions While selecting the tools the Company shouldalso keep in mind the culture of the organisation and assurethat the process helps to build trust among participants

bull Questionnaires Questionnaires are the most commonmethod for facilitating board evaluation in India Theseprovide an efficient means of obtaining viewpoints whileallowing for confidentiality However they may not elicita full explanation of a particular point of view Typicalthe questionnaires include questions that can beanswered with standardized responses as well as open-ended questions and areas for comment

bull Interviews Interviews may also be conducted to exploreviewpoints of the participants in detail It is more time


consuming but provides the opportunity for in-depthdiscussions Questions are typically open-ended and theinterviewer can explore issues raised in detail

bull Facilitated discussion This provides the opportunity fordirectors and committee members to share viewpointsand discuss potential modifications to governancepractices in response to concerns and reach consensusFacilitated discussion helps to streamline the entireprocess

These methods can also be combined For example a surveyor an interview may be used to obtain information in amanner that protects confidences followed by a facilitateddiscussion or a survey may be sent out followed by briefinterviews and culminating in a facilitated discussion Thedefined objective will help determine the topics that arecovered in the evaluation To keep the evaluation fresh boththe process for obtaining input and the specific questionsshould be changed from time to time

A comparative analysis of the three Approaches to BoardEvaluation is presented as under ndash

Quantitative Qualitative Qualitative FacilitatedQuestionnaires Interviews discussion Group self-

assessment

Description Board members One-on-one Trained facilitator leadscomplete a written interviews are a group discussion of thesurvey rating board conducted with full board sessionperformance on a each board summarized in a reportnumeric scale member results for future useresults are discussed are discussed byby the full board in the full board ina feedback session a feedback

s e s s i o n

Strengths bull Partic ipants are bull Participants bull Partic ipants find thefamiliar with this become engaged process energizing andstraightforward in the interview enga gingstandard practice process most bull Critical thinking is

bull Can be completed find it interesting heightened becauseat a partic ipantrsquos and even enjoy- views are shared withconvenience a b l e everyone and partici-

bull Can track a boardrsquos bull Information tends pants can questionprogress over time to be more each other

bull Feedback sessions complete than bull Generates consensus


often focus on what a survey on priorities andgenerating addi- gathers which support for plans totional information is helpful in fully address themand insights to understanding bull Requires no prepara-supplement the the issues tion by partic ipantssurvey data setting priorities bull Serves as a team

bull Anonymity can be and developing building exerciseensured plans to address bull Most effective when

them there is a high degreebull Feedba ck of trust and openness

sessions tend to among board membersbe highly engaging

bull Anonymity canbe ensured

(f) Analyze and discuss the results The information obtainedfrom questionnaires and interviews should be collected andanalyzed in a written or oral report that is designed tostimulate a full board or committee discussion of the resultsWhatever format is used the evaluation should culminate indeliberation and discussion about how the board and itscommittees can improve their function This is a key toproductive evaluation

(g) Commit to action The results of the evaluation should beused to resolve issues make changes and achieve goals Ifthe Board discussion leads to consensus about areas in whichchanges might be beneficial appropriate follow-up actionshould be taken The discussion on results of entire boardevaluation process should be recorded in minutes appropriatelyto reflect the evaluation done and measures taken

Drawbacks of Internal Evaluation

bull Directors are reluctant to share issues within the company

bull This process does not bring confidence among allstakeholders especially shareholders as they may questionthe rigour of the process

Board Evaluation by External Agencies

The Boards of the company may identify independent externalagency to facilitate the entire process of Board committee and


assessment


directors evaluation to bring in the transparency in the system andgarner the confidence of stakeholders

A good external facilitator can add much external perspectivewhich a board would otherwise not be able to access An externalview can be both challenging as well as reassuring Evaluation byexternal agencies provides independent and impartial adviceobjectivity and rigour Board Evaluation by external agency also helpsto gain a view on how a board is doing compared to other boards

While conducting board evaluation through external agenciesboth the parties - the consultants and the company should be clearabout the levels of expectation associated with the assignment Boththe parties should communicate openly and transparently to avoidthe risk of misunderstandings and maximise the benefits of theengagement Agreements in the following areas should be set outformally and in writing It is also important to note that these externalconsulting firms have no ties to the Board of Directors or seniormanagement and have full autonomy in tabulating the results andexamining the appraised parameters

(a) Clarity of engagement and scope There should beagreement on the scope of the assignment in advance ofcommencing work There should be agreement on theprocess which will be followed to deliver the assignment inadvance of commencing work

(b) Agreement on timing deliverables and fees There shouldbe agreement on the nature of the services to be providedThe agreement should clearly identify the timescale forcompleting the assignment the deliverables and the basisof remuneration in advance of commencing work

(c) Assignment of personnel There should be agreement onwho will carry out the assignment The consultants shouldnot substitute or sub-contract or assign work without theprior agreement of the client The consultants should makeclear whether any person working on the assignment isemployed by the firm or is working under contract

(d) Communication and feedback The consultants will ensurethat the company is kept fully informed about the progressof the assignment The consultants will take note of anyfeedback provided by the client on the performance of the


consultantsrsquo services and will seek formal feedback fromthe company after the process not just on the outcomes buton the overall approach pursued by the consultants and howthey could be more effective

(e) Public reporting of outcomes There should be clarity in theagreement between the company and the consultants on thedegree and extent to which the consultantsrsquo assent to publicreporting by the company will be required

(f) Post-evaluation review of the assignment The company andthe consultants should agree on whether there will be areview of the evaluation exercise and how the lessonslearned can be shared to the participantsrsquo mutual benefit

(g) Post-evaluation review of the assignment outcomes Thecompany and the consultants should agree on whether andhow there should be a review of what actions have beentaken in response to the evaluation and the effectiveness ofthe outcomes


Boards should understand the framework under which board andcommittee evaluations are conducted and take steps to ensureevaluations are carried out effectively As per the Companies Act2013 as well as SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Board evaluation would generallyinclude following

1 Evaluation of the Board as a whole


3 Evaluation of Individual Directors

bull Managing Director Whole time Director ExecutiveDirector

bull Independent Directors

bull Non-executive Directors


1 Evaluation of the Board as a Whole

The performance of the Board as a whole may be evaluated eitherfrom the reviews feedback of the directors themselves or bysome external source The Independent Directors at theirseparate meeting shall also assess the quality quantity andtimeliness of flow of information between the companymanagement and the Board that is necessary for the Board toeffectively and reasonably perform their duties The evaluationof the performance of the Boards is essentially an assessmentof how the Board has performed on following parameters whichdetermines the effectiveness of boardsa Structure of the Board its composition constitution and

diversity and that of its Committees competencies and

Broad Evaluation Frameworkand Parameters

42


experience of the members transparent appointmentprocess Board and Committee charters frequency ofmeetings procedures

b Dynamics and Functioning of the Board annual Boardcalendar information availability interactions andcommunication with CEO and senior executives Boardagenda cohesiveness and the quality of participation in Boardmeetings

c Business Strategy Governance Boardrsquos role in companystrategy

d Financial Reporting Process Internal Audit and InternalControls The integrity and the robustness of the financialand other controls regarding abusive related partytransactions vigil mechanism and risk management

e Monitoring Role Monitoring of policies strategyimplementation and systems

f Supporting and Advisory Role andg The Chairpersonrsquos Role

The evaluation form placed later as Part I in SampleEvaluation Tools may be referred


The Board is responsible for the evaluation of the performanceits Committees The performance of the committees may beevaluated by the Directors on the basis of the terms of referenceof the committee being evaluated The evaluation may also beexternally facilitated The broad parameters of reviewing theperformance of the Committees inter alia are

a Discharge of its functions and duties as per its terms ofreference

b Process and procedures followed for discharging itsfunctions

c Effectiveness of suggestions and recommendations received

d Size structure and expertise of the committee and

e Conduct of its meetings and procedures followed in thisregard


The evaluation form placed later as Part V in SampleEvaluation Tools may be referred

3 Evaluation of Individual Director(s)

(a) Evaluation of Managing Director Whole time Director Executive Director

The performance evaluation of Managing Director ExecutiveDirector of the Company may be done by all the directorsThe external facilitation may also serve as the efficient toolfor evaluation The Code for Independent Directors providesthat Independent Directors should review the performanceof non-independent Directors which include ManagingDirector Whole time DirectorExecutive Director The broadparameters for reviewing the performance of ManagingDirectorExecutive Director are

a Achievement of financialbusiness targets prescribed bythe Board

b Developing and managing executing business plansoperational plans risk management and financial affairsof the organization

c Display of leadership qualities ie correctly anticipatingbusiness trends opportunities and priorities affectingthe companyrsquos prosperity and operations

d Development of policies and strategic plans aligned withthe vision and mission of the company and whichharmoniously balance the needs of shareholders clientsemployees and other stakeholders

e Establishment of an effective organization structure toensure that there is management focus on key functionsnecessary for the organization to align with its mission

f Managing relationships with the Board managementteam regulators bankers industry representatives andother stakeholders and

g Demonstrate high ethical standards and integrityattendance at meeting commitment to organization

The evaluation form placed later as Part II in SampleEvaluation Tools may be referred


(b) Evaluation of Independent Directors

The performance evaluation of independent directors shouldbe done by the entire Board of Directors excluding thedirector being evaluated On the basis of the report ofperformance evaluation it shall be determined whether toextend or continue the term of appointment of theindependent director

In addition to the parameters laid down for directors whichshall be common for evaluation to both Independent and non-executive directors an independent director shall also beevaluated on the following parameters

a Maintenance of independence and no conflict of interest

b Exercise of objective independent judgment in the bestinterest of the company

c Ability to contribute to and monitor corporate governancepractice and

d Adherence to the code of conduct for independentdirectors

The evaluation form placed later as Part IV in SampleEvaluation Tools may be referred for peer review

The evaluation form placed later as Part III in SampleEvaluation Tools may be referred for self assessment

(c) Evaluation of Non-Executive Directors

In terms of the Code for Independent Directors theIndependent director(s) on the Board of the company shouldevaluate the performance of non-independent director(s)which include non-executive director(s) Peer Review methodor external evaluation may also facilitate the purpose ofevaluating non-executive directors The broad parametersfor reviewing the performance of non-executive directors are

a Participation at the Board Committee meetings

b Commitment (including guidance provided to seniormanagement outside of Board Committee meetings)

c Effective deployment of knowledge and expertise


d Effective management of relationship with stakeholderse Integrity and maintaining of confidentialityf Independence of behaviour and judgment andg Impact and influence

The evaluation form placed later as Part IV in SampleEvaluation Tools may be referred

4 Evaluation of Chairperson of the Board

The performance of the Chairperson is linked to both thefunctioning of the Board as a whole as well as the performanceof each director The Code for Independent Directors providesthat the Independent Director should review the performance ofthe Chairperson of the company taking into account the views ofthe executive directors and non-executive directors

Therefore all the directors of the Board of the company thereofcontribute in evaluating the performance of the Chairperson ofthe Board External agencies may also be involved in evaluatingthe Chairperson

The broad parameters for reviewing the performance ofChairperson of the Board are

a Managing relationship with the members of the Board andmanagement

b Demonstration of leadership qualities and able steering ofmeetings

c Relationship and communication within the Boardd Providing ease of raising of issues and concerns by the Board

memberse Promoting constructive debate and effective decision making

at the boardf Relationship and effectiveness of communication with the

shareholders and other stakeholdersg Promoting shareholder confidence in the Board andh Personal attributes ie Integrity Honesty Knowledge etc

The evaluation form placed later as Part VI in Sample EvaluationTools may be referred


Different criteria may be assigned different weights dependingon the organisationrsquos requirements circumstances outcome ofprevious assessments stage of Boardrsquos maturity etc Instead of thequestionnaire in a simple yesno format it is advised that it providesscope for grading additional comments suggestions etc

Post-evaluation Activities

Evaluations provide critical insights into how the board canbecome stronger and support the organizationrsquos strategic objectivesHowever such assessments are merely superficial if they are notacted upon if the strengths revealed are not leveraged or if theweaknesses identified are not remediated Boards look forward toevaluations for useful feedback which can be used to developspecific action plans The results must be communicated to theconcerned people in an appropriate manner leading to generatingan improvement action plan

The actions a board should follow to ensure it does not just ldquocheckthe boxrdquo in an evaluation but instead uses the resulting data forimprovement

Generally a post evaluation activity should include ndash

1 Prepare a summary report and analysis of the findingshighlighting the degree of board effectiveness in each areaexamined noting areas of effectiveness as well as areas ofconcern

2 Discuss with the nomination and Remuneration Committeewhat was learned in the board evaluation process and shareany additional insights

3 Submit the report to each director and place the boardsdiscussion of the findings as a high-priority agenda withsufficient time allocated

4 Discuss the findings candidly and openly with each directorso that heshe can freely contribute hisher views

5 Agree on and approve an action plan to address areas ofimprovement

6 Assign responsibilities and monitor any improvementachieved


7 Incorporate achievement objectives into the next boardevaluation to make it a dynamic continuous improvementprocess that is more than just an annual form-filling exercise

A similar process may be followed for the evaluation of the boardcommittees

Where the results of the evaluation concern individual directorperformance the generally accepted approach is for the boardchairman andor the nomination and remuneration committeechairman with or without an external facilitator to discuss thefindings individually with each director

Some companies even follow the practice discuss the results ofperformance of directors around the board table a process that canlead to much greater mutual understanding

The success of such an approach depends very much on theintrospection confidence and honesty of the individuals participating inthe process and the degree of trust and collegiality in their board culture

If the objective of the board evaluation is to assess the qualityof board-management relationships results of the evaluation shouldbe shared with the executive management team

Succession Planning and Board Evaluation

It is most important that board is prepared for resignation andorretirement of its members Succession planning for the board and forboard committees should follow the board evaluation process As partof board evaluation an evaluation of the skills and competences withinthe current board should be measured against future expectedrequirements of the skills and competences within the board Thisprovides a readily available profile of a new board member if one berequired on short notice The board should continually ensure that ithas the right set of skills talents and attributes

A well-prepared board will develop a succession plan thatprovides guidance on identifying and sourcing potential boardmembers who can fulfill key requirements This succession plan helpsthe organization appoint new directors quickly in a structured mannerallowing the board to continue its business without disruptionmeeting any business challenges that are encountered


Investors need to know whether a board is effective and goodcorporate communication can do much to convey the boardrsquosmessage to investors and other stakeholders on outcomes that arisefrom evaluation The Council of Institutional Investors in the UnitedStates has stated in its report ldquoBest Disclosure ndashBoard Evaluationrdquothat when making voting decisions about directors shareholdersvalue detailed disclosure of the board evaluation processmdashhow theboard goes about evaluating itself identifying areas forimprovement and addressing themmdashas a window into theboardroom While shareholders generally do not expect the boardto discuss the details of individual director assessments they wantto understand the process by which the board goes about regularlyimproving itself This is particularly important because over time aboard may become complacent or may need new skills andperspectives to respond nimbly to changes in the businessenvironment or strategy Disclosures about how the board evaluatesitself identifies areas for improvement and provide a window intohow robust the boardrsquos process is for introducing change

The Council of Institutional Investors has developed followingguidelines explaining its expectations of board evaluationdisclosures

ldquoInvestors value specific details that explain who does theevaluating of whom how often each evaluation is conducted whoreviews the results and how the board decides to address the resultsThis type of disclosure does not discuss the findings of specificevaluations either in an individual or a holistic way nor does itexplain the takeaways the board has drawn from its recent self-evaluations Instead it details the ldquonuts and boltsrdquo of the selfassessment process to show investors how the board identifies andaddresses gaps in its skills and viewpoints generallyrdquo

Board Evaluation ndash Disclosure

49


CII recommends that self-evaluation disclosures should gobeyond a detailed discussion of the boardrsquos evaluation methodologyto also include a discussion of ldquobig-picture board-wide findings andany steps for tackling areas identified for improvementrdquo Thisapproach focuses on the most recent evaluation and recaps keytakeaways from the boardrsquos review of its own performance Thisevaluation includes a discussion of areas where the board feels itfunctions effectively areas where it thinks it can improve and aplan of action to address these matters

Disclosure by General Electric

According to CIIrsquos report General Electric is one of the few UScompanies that provide a thorough disclosure of its board evaluationprocess Its disclosure focuses exclusively on the mechanics of howthe evaluation is conducted without venturing into the results orfindings from previous evaluations The detailed explanation of theevaluation process is included in the companyrsquos ldquoGovernance andPublic Affairs Committee Key Practicesrdquo document which is separatefrom the proxy statement General Electricrsquos proxy statement includesa brief high-level overview of how the process is conducted andprovides a link to the document where a more detailed explanationcan be found

Disclosure made in Annual report 2016

The Board and its committees annually conduct aperformance self-evaluation and recommendimprovements Our lead director chaired four meetings ofour independent directors this year helping us sharpen ourfull Board meetings to better cover significant topicsCompensation policies for our executives are aligned withthe long-term interests of GE investors


ldquoOne of the great mistakes is to judge policies and programsby their intentions rather than their resultsrdquo - Milton Friedman

Corporate boards today are expected to be more engaged moreknowledgeable and more effective than in the past In order to attainit board evaluation is emerging as the tool to examine boardeffectiveness Annual assessments have become the norm for boardsin many countries

Despite the growing adoption board assessments are fallingshort of their promise of enhancing board effectiveness They arefacing certain challenges which are acting as barriers and makingevaluation ineffective

Barriers to board evaluation can be classified under threecategories

Barriers to Board Evaluation Effectiveness

Personal Concerns

bull Mindsets or Attitudes

Attitudes are the first and greatest challenge particularly whenlsquomindsetsrsquo include indifference or inflexibility ndash unwillingness tochange The duty to exercise independent judgment also poses

Barriers to Board Evaluation

51


distinct challenges Many directors prefer to go along with themajority (ldquogroup thinkrdquo) to get along Directors who have servedwith the same Board members over an extended period of timemay be uncomfortable judging or being judged by colleaguesThey are accustomed to evaluating the CEO and other seniorexecutives but when asked to engage in Board evaluation theyraise a wide range of objections

bull Incompetency to come out of comfort zone

Directors who have served with the same Board members overan extended period of time seems to develop a comfort zoneand therefore shows reluctance to infusion of new people intothe organization Deliberate thought should be given to form awell-functioning team having balance of new and old experiencedmembers

bull Failure to remove unproductive members

People who are not carrying out their commitments as boardmembers become major blocks to overall board effectivenessThere needs to be a process for evaluating board memberperformance and making recommendations regarding their futureservice with the board

Structural Concerns

bull Non-availability of pre-defined objectives and scope forevaluation

Board tends to spend their precious and limited time ondiscussion of trivial subjects while neglecting major agenda itemswhich requires their absolute attention This happens due to lackof pre-identified objectives and scope for the evaluationTemptation to micro-management can be minimised by having astrategic plan

Areas including board process behaviours communicationissues the effectiveness of executive sessions the role of thelead independent director the boardrsquos relationship tomanagement and development of the boardrsquos agenda etc canbe identified so that the evaluation can be more focussed

bull Non-identification of assessment approachBoardrsquos approach assessments can be done in variety of waysranging from a director questionnaire to a robust process in


which directors are interviewed individually typically by a thirdparty to draw out candid views about the boardrsquos effectiveness

bull Small size of BoardSometimes a board is ineffective because it is simply too smallin number When we consider the awesome responsibilities ofboard leadership its easy to see why we need enough peopleto do the work We need enough members to lead and form thecore of the committees and in general share in other work ofthe board We also need sufficient numbers to reflect the desireddiversity in the board as well as assure the range of viewpointsthat spurs innovation and creativity in board planning anddecision-making

bull Ineffective Nomination and Remuneration Committee and lackof functioning committee structureNomination and remuneration committee has lasting impact onorganization as this committee determines who shall constituteas Board leaders in future A well organized nomination andremuneration committee with clear sense of recruiting prioritiesas well as expectations for individual board members especiallyin the area of fund-raising makes the committee more effectiveThese elements are frequently missing in many organizations Ifthe nomination and remuneration committee or board recruitingcommittee is poorly organized board members in turn are notlikely to have a good understanding of the organization and theirrole as board members

Also Board fails to perform below at an acceptable level is dueto lack of a functioning committee structure While it is true thatmajor decisions are made in board meetings it is also true isthat most of the work that supports and implements this decision-making occurs at the committee level If the board has acommittee structure that functions inadequately this can leadto poor performance in general

bull Non-availability of post evaluation action plan

Some boards for compliance reasons begin an assessmentprocess but then spend little or no time on discussing thefindings In addition to leaving issues unresolved lack of follow-up can generate cynicism about the process and the boardleadershiprsquos commitment to improving effectiveness in the future


Absence of action plan to review the results of the assessmentand addressing the results of evaluation further adds to theineffectiveness to the board evaluation process

bull Diversity in culture and governance process

Board structures governance issues and cultural norms differby company and country and these differences also can affectthe style and scope of the board assessment To be mosteffective a board assessment must be tailored to the companyrsquoscurrent business context

Business Concerns

bull No strategic plan

Absence of a strategic plan in this period of rapid change wouldmake the process ineffective A strategic plan provides cleardirection and helps in revealing questionable transactions likeinappropriate loans related party transactions or fairness ofremuneration packages (annual per meeting fees etc) Similarlylack of a long-range service delivery and financial developmentplan that will advance the strategic plan also be a major businessconcern

bull Absence of a Board Leader

Essential to a successful evaluation is having an independentboard leader to champion the assessment process TheIndependent Board Leader is in a position to drive the processby involving the right people asking for directorsrsquo timescheduling time on the agenda to discuss the results and ensurethat the board follows up on the issues that emergeBoards Leadership Culture strongly influences the issuesinvestigated by it The Chairperson plays crucial role in ensuringlegitimacy with sense of fairness and authority in evaluationprocess

bull Having narrower Perspectives

Narrower perspective on Board evaluation is a major hurdle inprocess Incorporating new perspectives on the boardrsquoseffectiveness by seeking inputs from senior management teammembers executives who participate in most of the boardmeetings such as the Chief Financial Officer and Head of HumanResources can help in broadening our perspectives Non-


availability of a platform for obtaining valuable feedback fromExecutives about what Board does well and what does not

Board assessments also can be more valuable when boardsbenchmark themselves against other high-performing boards inthe same industry segment or against best practices in a specificarea

bull Compliance based Assessment

The Assessment process is limited to compliances only Ratherthe process should go beyond compliance issues consideringthe boardrsquos role in strategic decision-making gaps in knowledgeand competencies on the board executive and director successionplanning etc

bull No process for JustndashinndashTime Board Orientation

Learning curve of directors lagged because timely training andorientation is not provided An effective just-in-time boardorientation program should be prescribed focussing on thestrategic plan of the organization If the prospective boardmembers are familiar with the mission vision major goals andstrategies of the organization and additional information andtraining is provided to the greatest extent possible new boardmembers will participate in their first meeting with confidence


Prior to Companies Act 2013 most companies conducted boardevaluation to raise the companyrsquos Corporate Governance standardsand to ensure that the Boards and their members are functioningproperly Now Board evaluation is a mandatory requirement forcertain prescribed classes of companies Only the governmentcompanies where directors are evaluated by the Ministry orDepartment of the Central or State Government are exempted

India Board Report 2015-16 surveyed over 500 companiesSelection of the companies was based on their market capitalization(750 crore INR and more) on the Bombay Stock Exchange (BSE) andtheir ownership According to survey sixty-two per cent of thecompanies surveyed do not currently have a board evaluation processand will have to introduce it Eighty-nine per cent of companies thathave a board evaluation process would prefer to do it internallyAmong the companies that need to implement a board evaluationprocess 66 would prefer to do a self-assessment and a very smallpercentage (16) of companies indicated that they will avail theservices of an externalthird-party assessor However most of thetop 100 companies listed on BSE have implemented board evaluationprocess except Govt companies which are exempted

Disclosures

Section 134 (3) (p) provides that the report by Board of Directorsof every company except Government Companies should include astatement indicating the manner in which formal annual evaluationhas been made by the Board of its own performance and that of itscommittees and individual directors

Though most of the companies have disclosed a para on Boardevaluation stating that they have conducted evaluation of boardthis approach does not focus on the mechanics of how the boardevaluation process is conducted and analyzed Investors value

Board Evaluation - Current Trends andPractices in India

56


specific details that explain who does the evaluating of whom howoften each evaluation is conducted who reviews the results andhow the board decides to address the results This type of disclosuredoes not discuss the findings of specific evaluations either in anindividual or a holistic way nor does it explain the takeaways theboard has drawn from its recent self-evaluations Instead it detailsthe ldquonuts and boltsrdquo of the self-assessment process to show investorshow the board identifies and addresses gaps in its skills andviewpoints generally This kind of disclosure can be an ldquoevergreenrdquoapproach that remains the same in proxy materials from year toyear assuming the boardrsquos evaluation process does not change

Process of Evaluation

The Act does not prescribe any specific method for evaluatingthe board Generally Board evaluation is an elaborate process Pre-evaluation process involves deciding the objective criteria andmethod for evaluating the board The board decides all those withinputs from the CEO The most common evaluation method is tocollect data by analysing governance documents (eg agenda andminutes) surveying directors through a questionnaire andinterviewing directors A robust board evaluation strategy employsall of these tools both in combination and rotation over time

The data so collected is analysed and a report is presented fordiscussion before the full board Performance of individual directorsis assessed through self-assessment and interview Feedback isprovided to each director on a one-to-one basis Usually thechairperson of the Nomination and Remuneration Committee or thelead independent director supervises the whole process interviewsindividual directors provides feedback to each director and presentsthe report before the full board Confidentiality is the hallmark ofthe evaluation process Therefore names of individuals are removedfrom all documents while collating and analysing the data

On analysing the annual reports for the year 2015-16 of top 100companies listed in Bombay Stock Exchange Bosch Limited DaburDr Reddy Godrej Consumer Hero MotoCorp HDFC HDFC bankInfosys JSW Steel Kotak Mahindra Bank LampT Mahindra andMahindra Limited Titan Vedanta Wipro and ICICI Bank (2016-17)have evaluated their directors and committees throughquestionnaires


HDFC Bank in its annual report has mentioned that theNomination and Remuneration Committee has approved aframework policy for evaluation of the Board Committees of theBoard and the individual members of the Board The said frameworkpolicy was duly reviewed during the year The process of boardevaluation adopted by HDFC Bank disclosed in its annual report 2015-16 is given in following paras -

ldquoA questionnaire for the evaluation of the Board and itsCommittees designed in accordance with the said framework andcovering various aspects of the performance of the Board and itsCommittees including composition and quality roles andresponsibilities processes and functioning adherence to Code ofConduct and Ethics and best practices in Corporate Governance wassent out to the directors The responses received to the questionnaireson evaluation of the Board and its Committees were placed beforethe meeting of the Independent Directors for consideration Theassessment of the Independent Directors on the performance of theBoard and its Committees was subsequently discussed by the Boardat its meeting

Bank has in place a process wherein declarations are obtainedfrom the directors regarding fulfilment of the ldquofit and properrdquo criteriain accordance with the guidelines of the Reserve Bank of India Thedeclarations from the Directors other than members of the NRC areplaced before the NRC and the declarations of the members of theNRC are placed before the Board Assessment on whether theDirectors fulfil the said criteria is made by the NRC and the Board onan annual basis In addition the framework policy approved by theNRC provides for a performance evaluation of the Non-IndependentDirectors by the Independent Directors on key personal andprofessional attributes and a similar performance evaluation of theIndependent Directors by the Board excluding the Director beingevaluated Such performance evaluation has been duly completedas aboverdquo

Criteria for evaluation

The Section 178 (2) of Companies Act 2013 and SEBI (LODR)Regulations provides that Nomination and remuneration Committeeshall formulate criteria for evaluation of performance of independentdirectors and the board of directors In Annual Reports of 2016 some


companies like Asian Paints Bajaj Auto Berger Paints Bharti InfratelBritannia Cadila healthcare Dabur Dr Reddy Emami Eicher MotorsGodrej Consumer Havells HCL Technologies Hero MotoCorpIndiabulls IndusInd Bank JSW Steel Kotak Mahindra Bank L amp TFinance Holdings LampT LIC Housing Finance Lupin Maruti SuzukiMotherson Sumi Systems Petronet LNG Reliance IndustriesSiemens Sun Pharma Tata Motors Tata Steel Tech Mahindra TVSMotors Titan Vedanta and in 2017 - ICICI Bank TCS and Yes Bankhave mentioned certain criteria for evaluation of board directorsand committees in their annual report

Hero Motocorp Ltd has stated in its annual report variouscriteria on which evaluation of directors has taken place The companyhas made disclosure in its annual report of 2015-16 as ndash

ldquoPerformance of the Board was evaluated on various parameterssuch as composition strategy tone at the top risk controls anddiversity Similarly questionnaires for Committees were also framedon the parameters such as adherence to the terms of reference andadequate reporting to the Board Parameters for the Directorsincluded intellectual independence of the Director participation informulation of business plans constructive engagement withcolleagues and understanding of risk profile of your Company TheChairman of the Company was evaluated on parameters such asleadership style and motivation of the Directorsrdquo

Berger Paints India Ltd has stated in its annual report that lsquotheCompensation and Nomination and Remuneration Committee havelaid down the following criteria for evaluating the performance ofthe Board of Directors

1 Board members support and debate the organisationrsquos strategyand values enabling them to set the tone from the top

2 Board members have a clear understanding of theorganisationrsquos core business its strategic direction and thefinancial and human resources necessary to meet itsobjectives

3 The Board sets the Companyrsquos targets and measures itsperformance against them

4 Board meetings encourage a high quality of debate withrobust and probing discussions


5 Board members make decisions objectively andcollaboratively in the best interests of the organisation andfeel collectively responsible for achieving organisationalsuccess

5 The Board communicates effectively with shareholders

6 Board members recognise the role which they and each oftheir colleagues is expected to play and have the appropriateskills and experience for that role

7 Board members actively contribute at meetings

8 The Board has open channels of communication withexecutive management and others and is properly briefed

9 The Board is aware of steps taken to assess and mitigaterisks through Business Process and Risk ManagementCommittee

10 The Board is the right size and has the good mix of skills toensure its optimum effectiveness

11 The Boardrsquos committees are properly constituted performtheir delegated roles and report back clearly and fully to theBoard

12 The Board meets sufficiently often and with information ofappropriate quality and detail such that agenda items canbe properly covered in the time allocated

13 Information is received in sufficient time to allow for properconsideration with scope for additional briefing if necessaryrsquo

Ashok Leylands Limited has mentioned several detailedparameters for Board evaluation in its Annual Report of 2015-2016

lsquoThe criteria for performance evaluation are as follows

(i) Role and Accountability

- Understanding the nature and role of IndependentDirectorsrsquo position

- Understanding of risks associated with the business

- Application of knowledge for rendering advice tomanagement for resolution of business issues


- Offer constructive challenge to management strategiesand proposals

- Active engagement with the management andattentiveness to progress of decisions taken

(ii) Objectivity

- Non-partisan appraisal of issues

- Own recommendations given professionally withouttending to majority or popular views

(iii) Leadership and Initiative

- Heading Board Sub-committees

- Driving any function or identified initiative based ondomain knowledge and experience

(iv) Personal Attributes

- Commitment to role and fiduciary responsibilities as aBoard member

- Attendance and active participation

- Proactive strategic and lateral thinkingrsquo

Idea Cellular

lsquoA formal evaluation mechanism is in place for evaluating theperformance of the Board the Committees thereof individualDirectors and the Chairman of the Board The evaluation was donebased on the criteria which includes among others providingstrategic perspective Chairmanship of Board and Committeesattendance and preparedness for the meetings contribution atmeetings effective decision making ability role of the CommitteesThe Directors expressed their satisfaction with the evaluation processrsquo

ICICI Bank (2016-17)

lsquoThe evaluations for the Directors the Board and the Chairpersonof the Board were undertaken through circulation of threequestionnaires one for the Directors one for the Board and one forthe Chairperson of the Board The performance of the Board wasassessed on select parameters related to roles responsibilities andobligations of the Board and functioning of the Committees including


assessing the quality quantity and timeliness of flow of informationbetween the company management and the Board that is necessaryfor the Board to effectively and reasonably perform their duties Theevaluation criteria for the Directors was based on their participationcontribution and offering guidance to and understanding of the areaswhich were relevant to them in their capacity as members of theBoard The evaluation criteria for the Chairperson of the Board besidesthe general criteria adopted for assessment of all Directors focusedincrementally on leadership abilities effective management ofmeetings and preservation of interest of stakeholders The evaluationprocess for whole-time Directors is further detailed under the sectiontitled ldquoCompensation Policy and Practicesrsquo

Marico Ltd has disclosed the criteria as well as process ofEvaluation ndash

lsquoMaricorsquos Board is committed to assessing its own performanceas also performance of individual director in order to identify itsstrengths and areas in which it may improve its functioning Towardsthis end the Corporate Governance Committee of the Board (lsquoCGCrsquo)(which functions as the Nomination and Remuneration Committeeof the Company for the purpose of the Companies Act 2013)established the criteria and processes for evaluation of performanceof individual Directors Chairman of the Board the Board as a wholeand its individual statutory Committees The appointmentreappointment continuation of Directors is subject to positiveoutcome of the annual evaluation process The manner in which theevaluation has been carried out has been explained in the CorporateGovernance Report In terms of the Act the Independent Directorson Maricorsquos Board also meet separately once in a year to discuss thematters as prescribed under Schedule IV to the Act and to assess theperformance of the Non ndash Independent Directors of your Board

The board evaluation exercise during the year under review hasresulted in the Board identifying three focus areas for it to workupon in the coming years

1 Intensifying its efforts in guiding the organization to get futureready especially in identifying new growth drivers

2 Renewed focus and time commitment for mentoring thesenior management setting them up for success in the everchanging macro environment and


3 Revisiting the Board composition with an eye on future trendsespecially in the digital era

The Board is also committed to review progress on these prioritiesduring the annual Board Retreats held once a yearrsquo

Evaluation by External Agency

On analysing the annual reports of top 100 companies listed inBombay Stock Exchange in India it is observed that some companiesAshok Leyland Axis Bank Bharti Airtel Bharti Infratel Infosys Nestleand Shree Cement have disclosed that they have appointed externalagency for board evaluation Some companies are governmentcompanies and are not required to get board evaluation done Othercompanies have not appointed any external consultants for thisprocess

Post-Evaluation Activities

Most companies out of top 100 companies which have beenanalysed have not mentioned anything about post evaluationactivities done by them in the annual report Some companies likeHindustan Unilever Limited Bosch Limited and Dr Reddy havereported that they have taken post evaluation activity also Theextracts from their annual reports are given below-

Hindustan Unilever Limited ndash lsquoThe results of the Evaluation wereshared with the Board Chairman of respective Committees andindividual Directors Based on the outcome of the Evaluation theBoard and Committees have agreed on an action to further improvethe effectiveness and functioning of the Board and Committeesrsquo

Bosch Limited ndash ldquoThe feedback from the Directors wassummarized and ideas for further improving effectiveness of theBoard processes etc were discussedrdquo

Dr Reddyrsquos Laboratories - lsquoA 360 degree feedback cum-assessment of individual Directors the Board as a whole and itsCommittees was discussed and collective action points forimprovement were put in placersquo

Bharti Airtel - lsquoThe Board members noted the suggestions inputsof Independent Directors HR and Nomination Committee andrespective committee Chairman and also discussed variousinitiatives to further strengthen Board effectivenessrsquo


Vedanta ndash lsquoBased on the feedback of the Board Evaluationprocess appropriate measures were taken to further improvethe process and other aspectsrsquo

Review of board by independent directors

The Act requires independent directors to hold at least onemeeting in a year without the attendance of non-independentdirectors and members of the management and in that meeting theyare required to review the performance of the non-independentdirectors and the Board as whole and also review the performanceof the Chairperson of the company taking into account the views ofthe executive and non-executive directors

Independent directors should formally evaluate the board andnon-independent directors They may finalise the draft report in theseparate meeting Although the law is silent on how the result ofevaluation will be used the draft report should be discussed withthe full board to decide the actions for improving board effectivenessIndependent directors should involve the CEO and the full board indeciding the objective criteria and method of evaluation

One of the leading Pharmaceutical Indian Company ndash SunPharmaceutical Industries Limited has stated in its annual reportthat separate meeting of independent directors was conducted ndashldquoIn a separate meeting of Independent Directors performance ofNon Independent Directors performance of the Board as a wholeand performance of the Chairman was evaluated taking into accountthe views of the Executive Directors and Non-executive DirectorsThe same was discussed in the Board Meeting that followed themeeting of Independent Directors at which the performance of theBoard its Committee and individual Directors was also discussedrdquo

Evaluation of independent directors

The laws and regulations also provided for the review ofperformance of the independent directors by the entire Boardexcluding the director and the continuance or extension of theindependent director would be determined by the performanceevaluation report

However discussion of report cards of individual directors withthe full board is likely to be resented by directors and might driveaway good directors The best practice may be to use self-assessment


and interview method to assess individual performance and to providefeedback to each director (independent or non-independent) on aone-to-one basis The reports of independent directors should besubmitted to the chairperson of the Nomination and RemunerationCommittee It should consider the same while deciding thecontinuation of the independent director as a board member Boardsshould adopt the global best practices

Mostly companies in India which have been assessed haveevaluated the entire board including independent directors

Bharti Infratel disclosed the criteria of evaluation of independentdirectors as under

lsquoSome of the performance indicators based on which theIndependent Directors were evaluated include

mdash Devotion of sufficient time and attention towards professionalobligations for independent decision and acting in the bestinterest of the Company

mdash Provides strategic guidance to the Company and determineimportant policies with a view to ensure long term viabilityand strength

mdash Bringing external expertise and independent judgement thatcontributes to the objectivity of the Boardrsquos deliberationparticularly on issues of strategy performance and conflictmanagementrsquo

Infosys in its Annual Report 2016-17 disclosed lsquothe performanceindicators on which the independent directors are evaluated

mdash The ability to contribute and monitor our corporategovernance practices

mdash The ability to contribute by introducing international bestpractices to address business challenges and risks

mdash Active participation in long-term strategic planning

mdash Commitment to the fulfilment of a directorrsquos obligations andfiduciary responsibilities these includes participation in Boardand Committee meetingsrsquo


EFFECTIVE DATE

1 INTRODUCTION

As one of the most important functions of the Board of Directorsis to oversee the functioning of companyrsquos top management thispolicy aims at establishing a procedure for conducting periodicalevaluation of directorsrsquo performance and formulating the criteria fordetermining qualification positive attribute and independence ofeach and every director of the company in order to effectivelydetermine issues relating to remuneration of every director keymanagerial personnel and other employees of the company Thispolicy further aims at ensuring that the committees to which theBoard of Directors has delegated specific responsibilities areperforming efficiently in conformity with the prescribed functionsand duties In addition the Nomination and Remuneration Committeeshall carry out the evaluation of performance of every director keymanagerial personnel in accordance with the criteria laid down

2 OBJECTIVE

The object of this policy is to formulate the procedures and alsoto prescribe and lay down the criteria to evaluate the performanceof the entire Board of the Company

3 RESPONSIBILITY

mdash Responsibility of the Board

It shall be the duty of the chairperson of the board who shallbe supported by a Company Secretary to organise theevaluation process and accordingly conclude the stepsrequired to be taken The evaluation process will be usedconstructively as a system to improve the directorsrsquo and

Sample Policy for Evaluation of thePerformance of the Board of Directors

66


committeesrsquo effectiveness to maximise their strength andto tackle their shortcomings

The Board of Directors shall undertake the following activitieson an annual basis

mdash The board as a whole shall discuss and analyze its ownperformance during the year together with suggestionsfor improvement thereon pursuant to the performanceobjectives

mdash Review performance evaluation reports of variouscommittees along with their suggestions on improvingthe effectiveness of the committee Also the requirementof establishing any new committees shall be reviewedby the Board on an annual basis

mdash Review the various strategies of the company andaccordingly set the performance objectives for directors

mdash Ensure that adequate disclosure is made with regard toperformance evaluation in the Boardrsquos Report

mdash Responsibility of the Nomination amp Remuneration Committee

It shall evaluate the performance of individual Directors ofthe Company as per the terms of the Nomination andRemuneration Policy of the Company framed in accordancewith the provisions of section 178 of the Companies Act2013

mdash Responsibility of Independent Directors

Independent Directors are duty bound to evaluate theperformance of non-independent directors and Board as awhole The independent directors of the Company shall holdat least one meeting in a year to review the performance ofnon-independent directors performance of the chairpersonof the Company and Board as a whole taking into accountthe views of executive directors and non-executive directorsThe independent directors at their separate meetings shall

(a) review the performance of non-independent directors andthe Board as a whole


(b) review the performance of the Chairperson of theCompany taking into account the views of executivedirectors and non-executive directors

(c) assess the quality quantity and timeliness of flow ofinformation between the company management and theBoard that is necessary for the Board to effectively andreasonably perform their duties

mdash Evaluation of Independent Director shall be carried on bythe entire Board of Directors of the Company except theDirector getting evaluated

4 POLICY REVIEW

Subject to the approval of Board of Directors the ldquoNominationand Remuneration Committeerdquo reserves its right to review and amendthis policy if required to ascertain its appropriateness as per theneeds of the Company The Policy may be amended by passing aresolution at a meeting of the Nomination and RemunerationCommittee

5 DISCLOSURE

In accordance with the requirement under the Act disclosureregarding the manner in which the performance evaluation has beendone by the Board of Directors of its own performance performanceof various committees of directors and individual directorsrsquoperformance will be made by the Board of Directors in the BoardrsquosReport Further the Boardrsquos Report containing such statement willbe made available for the review of shareholders at the generalmeeting of the Company

The Policy has been made available on Companyrsquos officialwebsite and the key features of this Policy have also been includedin the corporate governance statement contained in the annualreport of the Company

A Guide to Board Evaluation

69

SAMPLE EVALUATION TOOLSRating Scale

1 Outstanding2 Exceeds Expectation3 Meets Expectation4 Needs Improvement5 Poor

PART IBoard of Directors Evaluation

(By all the directors or externally facilitated)

Criteria 1 2 3 4 5 How can the boarddo it better ordifferently

Board Composition amp Quality1 The Board has appropriate qualifications expertise and experience to meet

the best interests of the company2 The board has appropriate combination of industry knowledge and diversity

(gender experience background competence)3 The process of appointment to the board of directors is clear and transparent4 The Role and responsibilities of the Board and its members are clearly

documented


705 All the independent directors are independent in true letter and spirit iewhether the independent Director has given declaration of independenceand they exercise their own judgement voice their concerns and act freelyfrom any conflicts of interests

6 Board members demonstrate highest level of integrity (includingmaintaining confidentiality and identifying disclosing and managingconflicts of interests)

7 The Board members spend sufficient time in understanding the visionmission of the company and strategic and business plans financial reportingrisks and related internal controls and provides critical oversight on the same

8 The Board understands the legal requirements and obligations under whichthey act as a Board ie by laws corporate governance manual etc anddischarge their functions accordingly

9 The Board has set its goals and measures its performance against them onannual basis

10 The Board has defined its stakeholders and has appropriate level ofcommunication with them

11 The Board understands the line between oversight and management

12 The board monitors compliances with corporate governance regulationsand guidelines


71

13 An effective succession plan of board in place

14 The Board has the proper number of committees as required by legislation andguidelines with well-defined terms of reference and reporting requirements

15 The Board regularly reviews the grievance redressal mechanism of investors

Board Meetings and Procedures

1 The Annual Calendar of Board meetings is communicated well in advanceand reviewed from time to time

2 The Board meeting agenda and related background papers are concise andprovide information of appropriate quality and detail

3 The information is received by board members sufficiently in advance forproper consideration

4 Adequacy of attendance and participation by the board members at theboard meetings

5 Frequency of Board Meetings is adequate

6 The facility for video conferencing for conducting meetings is robust

7 Adequate and timely inputs are taken from the members of the board priorto setting of the Agenda for the meetings


72

8 Location of Board Meeting (As a good governance practice the Boardmeeting should be held at different places)

9 The Board meetings encourage a high quality of discussions and decisionmaking

10 Openness to ideas and ability to challenge the practices and throwing upnew ideas

11 The amount of time spent on discussions on strategic and general issues issufficient

12 How effectively does the Board works collectively as a team in the bestinterest of the company

13 The minutes of Board meetings are clear accurate consistent completeand timely and records dissenting views

14 The actions arising from board meetings are properly followed up andreviewed in subsequent board meetings

15 The processes are in place for ensuring that the board is kept fully informedon all material matters between meetings (including appropriate externalinformation eg emerging risks and material regulatory changes)

16 Adequacy of the separate meetings of independent directors


73

17 Appropriateness of secretarial support made available to the Board

18 The Board members understand the terms and conditions of D amp Oinsurance

19 All proceedings and resolutions of the Board are recorded accuratelyadequately and on a timely basis

Board Development

1 Appropriateness of the induction programme given to the new boardmembers

2 Timeliness and appropriateness of ongoing development programmes toenhance skills of its members

3 Appropriate development opportunities are encouraged andcommunicated well in time

Board Strategy and Risk Management

1 The time spent on issues relating to the strategic direction and not day-to-day management responsibilities

2 Engaging with management in the strategic planning process includingcorporate goals objectives and overall operating and financial plans toachieve them


74

3 The Board has developed a strategic plan policies and the same wouldmeet the future requirement of the Company

4 The Board has sufficient understanding of the risk attached with the businessstructure and the Board uses appropriate risk management framework andwhether board reviewed and understood the risks provided in the internalaudit report and the management is taken sufficient steps to mitigate therisk

5 The Board evaluates the strategic plan policies periodically to assess theCompanyrsquos performance considers new opportunities and responds tounanticipated external developments

6 The Risk management framework is subject to review

7 Monitoring the implementation of the long term strategic goals

8 Monitoring the companyrsquos internal controls and compliance with applicablelaws and regulations

9 The adequacy of Board contingency plans for addressing and dealing withcrisis situations

10 Appropriateness of effective vigil mechanism

11 The Board focuses its attention on long-term policy issues rather than short-term administrative matters


75

12 The Board discusses thoroughly the annual budget of the Company and itsimplications before approving it

13 The Board periodically reviews the actual result of the Company vis-agrave-visthe plan policies devised earlier and suggests corrective measures ifrequired

Board and Management Relations

1 The Board sets the overall tone and direction of the Company

2 The Board has approved comprehensive policies and procedures for smoothconduct of all material activities by Company

3 The Board has a range of appropriate performance indicators that are usedto monitor the performance of management

4 The Board is well informed on all issues (short and long-term) being facedby the Company

5 The Board adequately reviews proposed departures from the long-andshort- term business plans of the Company before they take place

6 The Board sets a corporate culture and the values by which executives shallbehave

7 The Board and the management are able to actively access each other andexchange information

8 The level of independence of the management from the Board is adequate


76

Succession Planning

1 The Board has a succession plan for the Chairperson and the Chief ExecutiveOfficer Managing Director

2 The Board reviews the existing succession plan and if appropriate makenecessary changes by taking into account the current conditions

Stakeholder value and responsibility

1 The Board treats shareholders and stakeholders fairly where decisions ofthe board of directors may affect different shareholder stakeholder groupsdifferently

2 The Board regularly reviews the Business Responsibility Reporting relatedcorporate social responsibility initiatives of the entity and contribution tosociety environment etc


77

Outstanding Exceeds Expectation Meets Expectation Needs Improvement Poor

Overall rating ofBoard performance

Comment helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip


Please suggest three things that could improve Boardrsquos performance Name of Director

a) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

b) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Signature

c) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

Date

helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

If Externally facilitated

Comments of evaluator


78PART II

MANAGING DIRECTOR EXECUTIVE DIRECTOR ASSESSMENT FORM(By all the Board members)

RATINGS COMMENTS

EVALUATION FACTOR 1 2 3 4 5

Leadership

1 The MD ED has shown clear vision in correctlyanticipating business trends opportunities andpriorities affecting the Companyrsquos prosperity andoperations

2 The MD ED has clearly translated hisher vision andstrategy into feasible business or operational plans toachieve strategic success for the Company

3 The MD ED has accurately communicated hisherconcept vision mission strategies goals anddirections for the Company to stakeholders

4 The MD ED has motivated and encouraged highemployee morale and loyalty to the organization and


79

facilitated team-building and cohesiveness among theCompanyrsquos employees to achieve the Companyrsquos vision

5 The MD ED is open to constructive suggestions andexercised effective leadership for the organization

6 The MD ED has been an initiator setting high workingstandards and pursuing goals with a high level ofpersonal drive and energy

Strategy Formulation

7 The MD ED has developed clear mission statementspolicies and strategic plans that harmoniously balancethe needs of shareholders clients employees andother stakeholders

8 The MDED has accurately identified and analyzedproblems and issues confronting the Company

9 The MDED has accurately determined and assessed keysuccess factors for formulating the Companyrsquos strategy


80

10 The MDED has ensured that board members seniormanagement and other employees had participated inthe formulation of strategic plans so that they had theownership of the plans

11 The MDED has assured that companyrsquos resources andbudgets are aligned to the implementation of theorganizationrsquos strategic plan

12 The MDED has established processes that did themonitoring and controlling works thus ensuring thatthe effectiveness of organizational performanceincluding risk management was achieved

Strategy execution

13 The MDED has established an effective organizationstructure ensuring that there is management focus onkey functions necessary for the organization to alignwith its mission

14 The MDED has organized and delegated workaccurately and has performed his or her functionswithin hisher scope of responsibility


81

15 The MDED has consistently made sound decisions andmade timely adjustments in strategies if required

16 The MDED has timely and effectively executedstrategies on priorities and with measures set by theBoard

17 The MDED has accurately supervised performancemonitoring and performance control to ensureaccountability at all levels of the organization

18 The MDED has ensured that the companyrsquos operationscomplied with requirements from all pertinent laws andregulations

Financial planning performance

19 The MDED has possessed a good understanding of thecompanyrsquos financial measures relevant to its businessand financial situation

20 The MDED has exercised good judgment in managingthe financial affairs and budgets of the organization

21 The MDED has effectively monitored and evaluatedfinancial planning budget and administrativeoperations


82

Relationships with the Board

22 The MDED has built strong working relationships withBoard members and has worked closely andcooperatively with the board in developing the missionand short medium and long-term strategic plans

23 The MDED has demonstrated a sound knowledge ofBoard governance procedures and has consistentlyfollowed them

24 The MDED has presented information to the board onitems requiring Board opinions and decisions in aprofessional manner with recommendations based onthorough study and sound principles

25 The MDED has been available to individual Boardmembers whenever necessary as well as supported theboard in its governance duties by providing necessaryresources and other facilities

External Relations

26 The MDED has served as an effective Companyrsquosrepresentative in communicating with all stakeholders


83

27 The MDED has encouraged corporate socialresponsibility and community involvement inpromoting a positive image of Company

28 The MDED has assured that the Company maintainspositive relationships in the community and cultivatesgood working relationships with community groups andorganizations

Human Resources ManagementRelations

29 The MDED has created and maintained anorganizational culture and climate which attracts keepsand motivates staff to carry out the Companyrsquos missionstrategic directions and organizational goals

30 The MDED effectively monitors procedures andpractices pertaining to human resources includingappraisal process and rewarding systems formanagement and employees

31 The MDED has ensured that the company has goodinternal communication and treated all personnel fairlywithout favoritism or discrimination


84

Succession

32 The MDED has effectively reviewed the Companyrsquossuccession plan and if appropriate made necessarychanges by taking into account conditions that areexternal or internal to the Company

33 The MDED has put in place the processes and programsrequired to create a pipeline of future leadership

ProductService Knowledge

34 The MDED has demonstrated a thorough knowledgeand understanding about key aspects of the Companyrsquosproducts and services

35 The MDED has demonstrated a thorough knowledge andunderstanding of Company management and operations

36 The MDED has a good understanding of the companyrsquosbusiness model and allocation of its resources as wellas business and industry environment

37 The MDED has regularly demonstrated creativity andinitiative in creating new products and services


85

Personal Qualities

38 The MDED has attained an image that reflectspositively on the company as well as demonstrated apersonality outlook and attitude that wins trust andsupport from all stakeholders

39 The MDED has exercised good judgment in dealing withsensitive issues between people and between groups

40 The MDED has shown skills at analyzing and addressingproblems challenges and conflicts and has beencomfortable with ambiguity and complexity

41 The MDED has maintained a high standard of ethicsand integrity as well as a healthy balance of timemanagement and priorities in both work-related andpersonal matters


Overall rating ofOverall rating ofManaging Director Executive Directorrsquosperformance


86








Date



87

PART III

DIRECTOR SELF ASSESSMENT PEER REVIEW

Criteria 1 2 3 4 5

KNOWLEDGEABLE

1 Understands duties responsibilities qualifications disqualifications and liabilitiesas a director

2 Brings relevant experience to the board and uses it effectively

3 Understands the vision and mission of the company strategic plan and key issues

4 Staying abreast of issues trends and risks (including opportunities and competitivefactors) affecting the company and using this information to assess and guide thecompanyrsquos performance

5 Takes advantage of opportunity to upgrade skills by regularly attending professionaldevelopment programmes

6 The management communications are sufficient to enhance company specificupdates


88

DILIGENCE amp PARTICIPATION

1 Regularly and constructively attend board committee and general meetings

2 Prepares in advance for board and committee meetings

3 Communicates opinions and concerns in a persuasive yet clear and concisemanner

4 Uses Independent judgement in relation to decision making

5 Facilitates and encourages change when it would improve board processes

6 Encourages other members to contribute their opinions

7 Raises appropriate issues at meetings and asking the appropriate questions forclarity

8 Contributions add value to the decision making

9 Gets dissent recorded in minutes

10 Maintains confidentiality


89

11 Abides by the legal obligations and code of conduct

12 Reports concerns about unethical behaviour actual and suspected fraud

LEADERSHIP TEAM

1 Listens attentively to the contributions of others

2 Initiates discussions on issues in companyrsquos interest

3 Shares good interpersonal relationship with other directors

4 Supportive and cooperative

5 Respected by board members

6 Insists on receiving information necessary for decision making to all the directors

7 Manages conflicts of interest in best interest of the company

8 Safeguard the interest of all stakeholders in the decision making

9 Personal values are in congruence with that of the company


90PART IV

NON-EXECUTIVE DIRECTOR AND INDEPENDENT DIRECTOR EVALUATION FORM

(PEER REVIEW- by Directors other than director being evaluated)Name of the Director ______________________________Category Independent Non-executive

PART A

RATINGS COMMENTS


Participation at Board Committee Meetings

1 Director comes well prepared and informed for theBoard committee meeting(s)

2 Director demonstrates a willingness to devote time andeffort to understand the Company and its business anda readiness to participate in events outside the meetingroom such as site visits

3 Director has ability to remain focused at a governancelevel in Board Committee meetings


91

4 Directorrsquos contributions at Board Committee meetingsare of high quality and innovative

5 Directorrsquos proactively contributes in to development ofstrategy and to risk management of the Company

Managing Relationship

6 Directorrsquos performance and behaviour promotes mutualtrust and respect within the Board Committee

7 Director is effective and successful in managingrelationships with fellow Board members and seniormanagement

Knowledge and Skill

8 Director understands governance regulatory financialfiduciary and ethical requirements of the Board Committee

9 Director actively and successfully refreshes his herknowledge and skills and up to date with the latestdevelopments in areas such as corporate governanceframework financial reporting and the industry andmarket conditions


92

10 Director is able to present his her views convincinglyyet diplomatically

11 Director listens and takes on Board the views of othermembers of Board

Personal Attributes

12 Director has maintained high standard of ethics andintegrity


Overall rating ofCommittee performance

Comment helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

Please suggest three things that could improve Boardrsquos performance Name of Directora) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipb) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Signaturec) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

Date helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip


93

Part - B

If concerned director is ldquoIndependent Directorrdquo then in addition to Part-A of this sample toolthis may also be used

Name of the Director ______________________________

Category Independent

RATINGS COMMENTS


1 Director upholds ethical standards of integrity and probity

2 Director exercises objective independent judgment in the bestinterest of Company

3 Director has effectively assisted the Company is implementingbest corporate governance practice and then monitors thesame

4 Director helps in bringing independent judgment during boarddeliberations on strategy performance risk management etc

5 Director keeps himself herself well informed about theCompany and external environment in which it operates


94

6 Director acts within his authority and assists in protecting thelegitimate interest of the Company Shareholder andemployees

7 Director maintains high level of confidentiality

8 Director adheres to the applicable code of conduct forindependent directors


Overall rating ofDirector performance

Comment helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip




95

PART V

EVALUATION OF BOARD COMMITTEES(By Board of Directors)


Function and Duties

1 The Committee of the Board are appropriately constituted

2 The terms of reference for the committee are appropriate with clear definedroles and responsibilities

3 Observing Committees terms of reference

4 The composition of the committee is in compliance with the legalrequirement

5 The amount of responsibility delegated by the Board to each of thecommittees is appropriate

6 The reporting by each of the Committees to the Board is sufficient


96

7 The performance of each of the Committees is assessed annually againstthe set goals of the committee

8 Whether the terms of reference are adequate to serve committeersquospurpose

9 The committee regularly reviews its mandate and performance

10 Committee takes effective and proactive measures to perform its functions

Management Relations

11 Adequate independence of the Committee is ensured from the Board

12 Committee gives effective suggestion and recommendation

13 Committee meetings are conducted in a manner that encourages opencommunication and meaningful participation of its members

Committee Meetings and Procedures

14 Committee meetings have been organized properly and appropriateprocedures were followed in this regard

15 The frequency of the Committee meetings is adequate

16 Committee makes periodically reporting to the Board along with itssuggestions and recommendations


97










Date


The participation and effective functioning of the committee meetings the questions may remain the same asfor Board meetings


98PART VI

CHAIRPERSON ASSESSMENT(By each Board member)

RATINGS COMMENTS


Managing Relationships

1 The Chairperson actively manages shareholder boardmanagement and employee relationships and interests

2 The Chairperson meets with potential providers ofequity and debt capital if required

3 The Chairperson manages meetings effectively andpromotes a sense of participation in all the Boardmeetings

Leadership

4 The Chairperson is an effective leader

5 The Chairperson promotes effective participation of allBoard members in the decision making process


99

6 The Chairperson promotes the positive image of theCompany

7 The Chairperson promotes continuing training anddevelopment of directors


Overall rating ofChairpersonrsquos performance








Date


A G

uide to Board Evaluation100SAMPLE BOARD ASSESMENT MODELS

Deloitte

Sample Board Performance Form

Select the appropriate rating for each statement

0 Insufficient knowledge Not applicable

1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5

Composition and Quality

1 Qualified board members are identified by sources independent of management (egindependent board members assisted by an independent firm in the search for candidates)

2 Board members have the appropriate qualifications to meet the objectives of the boardrsquoscharter including appropriate financial literacy

The document is a copyright of Deloitte LLP an Ontario Limited Liability Partnership the Canadian member firm of Deloitte Touche TohmatsuLimited It is available at httpwwwcorpgovdeloittecaen-caPagesRolesAndResponsibilitiesPerformanceaspxThe right to produce the document is received from the organisation


101

3 The board demonstrates integrity credibility trustworthiness active participation an abilityto handle conflict constructively strong interpersonal skills and the willingness to addressissues proactively

4 The board demonstrates appropriate industry knowledge and includes a diversity ofexperiences and backgrounds

5 Members of the board meet all applicable independence requirements

6 The board participates in a continuing education program to enhance its membersrsquounderstanding of relevant risk reporting regulatory and industry issues

7 The board monitors compliance with corporate governance regulations and guidelines

8 The board reviews its charter annually to determine whether its responsibilities are describedadequately

9 New board members participate in an orientation program to educate them on the organizationtheir responsibilities and the organizationrsquos activities

10 The board chairman is an effective leader

11 The board in conjunction with the nominating committee (or its equivalent) creates asuccession and rotation plan for board members including the board chairman

A G

uide to Board Evaluation102Select the appropriate rating for each statement 0 1 2 3 4 5

Understanding the Business including Risks

1 The board takes into account significant risks that may directly or indirectly affecttheorganization Examples includebull Regulatory and legal requirementsbull Concentrations (eg suppliers and customers)bull Market and competitive trendsbull Financing and liquidity needsbull Financial exposuresbull Business continuitybull Organization reputationbull Strategy executionbull Managementrsquos capabilitiesbull Management overridebull Fraud controlbull Organization pressures including ldquotone at the toprdquo

2 The board considers understands and approves the process implemented bymanagement to effectively identify assess and respond to the organizationrsquos key risks


103

3 The board understands and approves managementrsquos fraud risk assessment and has anunderstanding of identified fraud risks

4 The board considers the organizationrsquos performance versus that of its peers in a mannerthat enhances comprehensive risk oversight by using reports provided directly bymanagement to the board or at the full board meeting These may include benchmarkinginformation comparing the organizationrsquos performance and ratios with industry andpeers industry trends and budget analysis with explanations for areas where significantdifferences are apparent

Select the appropriate rating for each statement 0 1 2 3 4 5

Process and Procedures

1 The board develops a calendar that dedicates the appropriate time and resourcesneeded to execute its responsibilities

2 Board meetings are conducted effectively with sufficient time spent on significant oremerging

3 The level of communication between the board and relevant parties is appropriatethe board chairman encourages input on meeting agendas from committee and boardmembers management the internal auditors and the independent auditor

A G

uide to Board Evaluation1044 The agenda and related information are circulated in advance of meetings to allow

board members sufficient time to study and understand the information

5 Written materials provided to board members are relevant and concise

6 Meetings are held with enough frequency to fulfill the boardrsquos duties and at leastquarterly which should include periodic visits to organization locations with keymembers of management

7 The board maintains adequate minutes of each meeting

8 The board and the compensation committee regularly review management incentiveplans to consider whether the incentive process is appropriate

9 The board meets periodically with the committee responsible for reviewing theorganizationrsquos disclosure procedures

10 The board respects the line between oversight and management

11 Board members come to meetings well prepared


105


Oversight of the Financial Reporting Process including Internal Controls

1 The board considers the quality and appropriateness of financial accounting andreporting including the transparency of disclosures

2 The board reviews the organizationrsquos significant accounting policies

3 The board makes inquiries of the independent auditor internal auditors andmanagement on the depth of experience and sufficiency of the organizationrsquos accountingand finance staff

4 The board reviews the management recommendation letters written by theindependent and internal auditors and monitors the process to determine that allsignificant matters are addressed

5 The board ensures that management takes action to achieve resolution when there arerepeat comments from auditors particularly those related to internal controls

6 Adjustments to the financial statements that resulted from the audit are reviewed bythe audit committee regardless of whether they were recorded by management

7 The board is consulted when management is seeking a second opinion on an accountingor auditing matter

A G

uide to Board Evaluation106Oversight of Audit Functions

8 The board understands the coordination of work between the independent and internalauditors and clearly articulates its expectations of each

9 The board appropriately considers internal audit reports managementrsquos responsesand steps toward improvement

10 The board oversees the role of the independent auditor from selection to terminationand has an effective process to evaluate the independent auditorrsquos qualifications andperformance

11 The board considers the independent audit plan and provides recommendations

12 The board reviews the audit fees paid to the independent auditor

13 The board comprehensively reviews managementrsquos representation letters to theindependent auditor including making inquiries about any difficulties in obtaining therepresentations


107


Ethics and Compliance

1 Board members oversee the process and are notified of communications receivedfrom governmental or regulatory agencies related to alleged violations or areas ofnon-compliance

2 The board oversees managementrsquos procedures for enforcing the organizationrsquos code ofconduct

3 The board determines that there is a senior-level person designated to understandrelevant legal and regulatory requirements

4 The board oversees the organizationrsquos hotline or whistleblower process reviews thelog of incoming calls that relate to possible fraudulent activity and understands theprocedures to prohibit retaliation against whistleblowers

Monitoring Activities

5 An annual performance evaluation of the board is conducted and any matters thatrequire follow-up are resolved and presented to the full board

Overall evaluation

Use the space below to conclude on the overall results taking into account thequantitative results of this self-assessment and qualitative factors not consideredabove

A G

uide to Board Evaluation108SAMPLE II

GENOME CANADA

Introduction

The purpose of this evaluation tool is to assist the Board of Directors to

bull understand and recognize what is working wellbull identify areas for improvementbull discuss and agree on priorities for change which can be addressed in the short-and-long-termbull agree on an action plan

It is intended that this evaluation tool will be completed annually by each director of Genome Canadarsquos Board ofDirectors The Corporate Governance Committee will have responsibility to oversee the implementation of this evaluationtool including discussing a summary of the results and preparation of a final report with recommendations to the Boardof Directors

In order to encourage open and frank evaluations as well as offer anonymity to respondents the evaluation processshall be directed by the Corporate Secretary who will mail the questionnaire to each director as well as collate theresults into a report which will be submitted to the Corporate Governance Committee

The questionnaire is structured in two parts

PART 1 ndash Director Self Assessment

PART 2 ndash Board of Directors Evaluation


109

Both parts of the questionnaire are to be completed and sealed in the attached envelope and returned to the CorporateSecretary

PART 1 - DIRECTOR SELF ASSESSMENT

Background

Genome Canada does not undertake a formal evaluation process for each director Rather it promotes a selfassessment by directors of their own performance

Assessment Criteria for Individual Directors

The following criteria are useful in determining how effective a Directorrsquos performance results in

bull contributing to corporate leadership and stewardship

bull contributing to achievement of corporate objectives

bull understanding Genome Canadarsquos mandate strategic plan and key issues

bull constructive contribution to resolution of issues at meetings

bull communicating expectations amp concerns clearly

bull obtaining adequate relevant amp timely information

bull promotion of corporationrsquos interests externally

bull interpersonal relationships with other directors and management

bull attendance confidentiality and preparation for meetings

A G

uide to Board Evaluation110PART 1 - DIRECTOR SELF-ASSESSMENT

Rating Scale

On a scale from 1 to 5 with 1 being ldquo Strongly Disagreersquorsquo and 5 being lsquorsquo Very Strongly Agreerdquo please rate your performanceas a director based on the following

Assessment Criteria Strongly Disagree Agree Strongly VeryDisagree Agree Strongly

Agree

1 2 3 4 5

1 I have a good understanding of Genome Canadarsquosmandate strategic plan and key issues

2 I understand the difference between governing andmanaging a corporate enterprise and avoid intrudingon managementrsquos responsibilities

3 My special skills expertise provide a uniquecontribution to the boardrsquos overall effectiveness

4 I have good interpersonal relationships with the otherdirectors

5 I think speak and act independently in relation todecisions the board must make


111

6 I facilitate and encourage change when it wouldimprove board processes

7 I make a measured and appropriate contribution toboard discussions and deliberations

8 I am sensitive to the complex relationships whichnaturally exist among the board chair the independentdirectors and the president and CEO

9 I come to meetings well prepared- having done thenecessary prior reading and having consulted otherdirectors andor management if required

10 I have a good knowledge of the responsibilities ofGenome Canadarsquos management team and am able toconsult with members of the management team asrequired

11 I promote Genome Canadarsquos corporate interestsexternally

12 I respect the confidentiality of business information andour boardrsquos deliberations

A G

uide to Board Evaluation11213 I understand the legal and fiduciary obligations of

individual directors and of the board as a whole

14 I have a sufficient knowledge of Genome Canadarsquos as alegal entity and not-for-profit corporation as well asan understanding of its relationship with industryCanada and other federal departments

15 When it is appropriate I communicate privately andconstructively with the chair andor President and CEObetween meetings

16 I expect high levels of performance from myself myfellow directors and management

17 I ask probing questions focused on policy and strategyrather than tactics and details

18 I insist that I and the other directors receive informationnecessary for decision making

19 I make a meaningful contribution when I serve on aboard committee

20 My attendance rate at meetings is satisfactory


113

21 I serve as a resource to the board and to management

22 I introduce new thinking and a fresh perspective toproblem solving

23 My attitude is positive supportive and enthusiastic

24 My personal value and ethical system is congruent withthat of the board and the corporation

Additional Comments

PART 2 - BOARD OF DIRECTORS EVALUATION

Background

The Board of Directors should undergo on an annual basis a review of its performance against established criteriafor purposes of assessing its effectiveness

Assessment Criteria

The following criteria assist in determining how effective the Boardrsquos performance is in

bull leadershipbull stewardshipbull contributing to achievement of corporate objectives

A G

uide to Board Evaluation114bull timely resolution of issues at meetings

bull communications of expectations amp concerns clearly

bull obtain adequate relevant amp timely information

bull review amp approval of strategic and operational plans objectives budgets

bull regular monitoring of corporate results against projections

bull identify monitor amp mitigate significant corporate risks

bull assess policies structures amp procedures

bull direct monitor amp evaluate President and CEO

bull review managementrsquos succession plan

bull effective meetings

bull formal communications policy for corporation

bull corporationrsquos approach to governance

bull accountability

bull assuring appropriate board size composition independence structure

bull clearly defining roles amp monitoring activities of committees

bull review of corporationrsquos ethical conduct


115

PART 2 BOARD OF DIRECTORS EVALUATION

Rating Scale

On a scale from 1 to 5 with 1 being ldquoStrongly Disagreersquorsquo and 5 being lsquorsquoVery Strongly Agreersquorsquo please rate theBoardrsquos performance against the following criteria

Note Additional comments are welcome


Agree

1 2 3 4 5

Strategic Plan and Performance

1 The Board understands the vision mission andobjectives of Genome Canada

2 The Board is involved in the strategic planning processincluding corporate goals objectives and overalloperating and financial plans to achieve them

3 The Board focuses on strategic issues and regularlyassesses performance against its strategic plans andgoals

A G

uide to Board Evaluation1164 The Board monitors financial and other indicators

throughout the year and takes appropriate action asrequired

5 The Board regularly assesses strategic and operatingrisks and takes appropriate action as required

6 The Board understands the legal requirements andobligations under which they act as a Board ie bylawsfunding agreement corporate governance manual

7 The Board has adopted and maintains a seniormanagement succession planning process and issatisfied with succession planning for the CEO

8 The Board appropriately relates the compensation ofthe president and CEO to performance

9 The Board is diligent in verifying the integrity of itsfinancial and management controls and systems

10 The Board is made aware of Genome Canadarsquoscommunications with key stakeholders ie mediagovernment general public

Additional Comments


117

Management Interaction

11 The Board has sufficient formal and informal contactwith the President and CEO

12 The Board has sufficient formal and informal contactwith other management personnel

13 The Board is able function independently ofManagement and has the mechanisms in place tomaintain that distinction

14 The Board understands the difference between its roleand that of management

15 The Board receives appropriate advice and counsel frommanagement

Additional Comments

Board of Director Operations

16 The Board has an effective process for maintaining its sizeand compositions to provide appropriate expertise andexperience to meet the best interests of Genome Canada

A G

uide to Board Evaluation11817 The Board has an adequate process for orientating and

educating new Directors

18 The number and length of Board meetings isappropriate

19 The amount of time spent on discussions on strategicand general issues is sufficient

20 The chair conducts the meetings in a respectful mannerthat ensure open communication and meaningfulparticipation

21 The chair communicates with directors betweenmeetings as necessary and appropriate

22 The amount of information received in board packagesis appropriate for discussion and decision makingpurposes

23 The Board materials are received sufficiently in advanceto adequately prepare for meetings

Additional Comments


119

Committee Structure deg Executive deg Audit deg Investment deg Election deg Corporate Governance deg Compensation

24 The Committee structure is appropriate

25 The delegation of responsibilities by the Board to itscommittee is appropriate

26 The composition of the committee is appropriate

27 The number and length of committee meetings isappropriate

28 The meetings are conducted in a manner that ensuresopen communication and meaningful participation

29 The amount of information received is appropriate fordiscussion and decision making purposes

30 The materials are received sufficiently in advance toadequately prepare for meetings

31 The committee regularly reviews its mandate andperformance

Additional Comments

A G

uide to Board Evaluation120List the top three priorities requiring attention in order for the Board of Directors to function more effectively

1

2

3

The document is a copyright of Genome Canada The document is available at httpwwwgenomecanadacamediasPDFENGenomeCanadaBoardDirectorsAnnualQuestionnairepdf

The right to produce the document is received from the organisation


121

SAMPLE III

KPMG

AUDIT COMMITTEE INSTITUTE IRELANDMore Satisfied 1 2 3 (Tick any one)

Less satisfied 4 5 (Tick any one)

A Creating an effective board 1 2 3 4 5 What could the board dobetter or differently

1 Are you satisfied that the board has clearly documented its roleand responsibilities ( eg schedule of matters reserved for theboard split of the chairmanrsquos role and that of the CEO)

2 Are you satisfied that board members both individually andcollectively understand what is expected of them (eg determiningthe companyrsquos strategic aims)

3 Are you satisfied that all non executive directors are independentof the organisationrsquos management and exercise their ownjudgement voice their own opinions and act freely from anyconflicts of interest

4 Are you satisfied with the process by which board members areappointed

A G

uide to Board Evaluation1225 Are you satisfied with the appropriateness of the succession plans

in place

6 Are you satisfied that board members as a whole have sufficientskills experience time and resources to undertake their duties

7 Are you satisfied that there is sufficient diversity in the boardroom(eg diversity of experience balance between non executive andexecutive director is appropriate)

8 Are you satisfied that board members have a sufficientunderstanding of the organisation and the sector in which itoperates

9 Are you satisfied that all board member demonstrate the highestlevel of integrity (including maintaining utmost confidentiality andidentifying disclosing and managing conflicts of interest)

10 Are you satisfied with the level of lsquosecretarial supportrsquo placed atthe boardrsquos disposal

11 Are you satisfied with the process in place to make funds availableto the board to take independent legal accounting or other advicewhen it reasonably believes it necessary to do so


123

B Running an effective board 1 2 3 4 5 What could the board dobetter or differently

1 Are you satisfied that the board has in place a set of objectives thatseek to enhance its effectiveness

2 Are you satisfied with the chairmanrsquos leadership style (eg arethey decisive open minded and courteous do they set a goodexample allow members to contribute and hold members to highstandards do they relate well to other membersattendees dealeffectively with dissent and work constructively towardsconsensus)

3 Are you satisfied that the boardrsquos workload is dealt with effectively

4 Are you satisfied that board members work together constructivelyas a team

5 Are you satisfied that board meetings are conducted in a mannerwhich encourages open discussion healthy debate and allows eachboard member to clearly add value to discussion and decisions

6 Are board meetings conducted in an atmosphere of creativetension

A G

uide to Board Evaluation1247 Are you satisfied that the relationship between a) the board and b)

the CEO CFO and members of the senior management team strikesthe right balance between challenge and mutuality

8 Are you satisfied that the boardrsquos discussions enhance the qualityof managementrsquos decision making (eg does the board engagethose reporting to the board in dialogue that stimulates andenhance their thinking and performance)

9 Are you satisfied that the boardrsquos schedule of matters is up to dateand regularly reviewed

10 Are you satisfied that the boardrsquos meeting arrangements (egfrequency timing duration venue and format) enhance itseffectiveness

11 Are you satisfied that the boardrsquos meeting agenda has sufficientinput from all board members

12 Are you satisfied that board meetings allow sufficient time for thediscussion of substantive matters

13 Are you satisfied that board meeting agendas and relatedbackground information are circulated in a timely manner to enablefull and proper consideration to be given to the important issues


125

14 Are you satisfied with the quality of the board papers (eg notoverly lengthy and clearly explain the key issues and priorities)

15 Are you satisfied that the board has the appropriate committeeswith necessary chargers

16 Are you satisfied that the board is adequately informed of eachcommitteersquos activities

17 Are you satisfied that private meetings without the executivedirectors present are useful

18 Are you satisfied that the boardrsquos meeting minutes are clearaccurate consistent complete and timely

19 Are you satisfied that outstanding actions arising from boardmeetings are properly followed up

20 Are you satisfied that the processes in place for ensuring the boardis kept fully informed on all material matters between meetings(including appropriate external information eg emerging risks andmaterial regulatory changes) is working effectively

A G

uide to Board Evaluation126C Professional development 1 2 3 4 5 What could the board do

better or differently

1 Are you satisfied that new board members are given an appropriateinduction programme covering issues like the role of the directorits terms of references membersrsquo expected time commitment anoverview of the organisation and its strategic objectives

2 Are you satisfied with timeliness and appropriateness of ongoingprofessional development received by the board (eg regulatorymatters directorrsquos liability)

3 Are you satisfied that board members are afforded appropriateopportunities to attend formal courses and conferences internaltalks and seminars and briefings by external advisers such as theorganisationrsquos auditors and lawyers

4 Are you satisfied that any induction and professional developmentprogrammes adequately equip board members to understand thebusiness environment in which organisation operates


127

D Strategic foresight 1 2 3 4 5 What could the board dobetter or differently

1 Are you satisfied that the board devotes significant time todetermining (via management and other sources) the emergingissues that could affect the organisation in the future

2 Are you satisfied that the board has a good understanding of thecompanyrsquos key drivers of performance

3 Are you satisfied that the board appropriately uses scenarioplanning as a fundamental process in the evaluation of strategicrisks

4 Are you satisfied that the majority of the boardrsquos time is spent onissues relating to the strategic direction and not day-to-daymanagement responsibilities

5 Are you satisfied that the organisationrsquos purpose (mission) andvision been defined and clearly communicated to all levels withinthe organisation

A G

uide to Board Evaluation128E Stewardship 1 2 3 4 5 What could the board do


1 Are you satisfied that the board understands and fulfils itsstewardship role

2 Are you satisfied that the companyrsquos risk management processesprovide to the board a full understanding of the high risk issuesthat could impact the organisation

3 Are you satisfied that the board understands the details of thecontrol assurance framework including reporting scope andtimeliness

4 Are you satisfied that board members are fully informed in relationto the issues not covered by the existing Directors and OfficersInsurance

5 Are you satisfied that there is an adequate policy in place for dealingwith potential conflicts of interest and confidential information


129

F Performance evaluation 1 2 3 4 5 What could the board dobetter or differently

1 Are you satisfied that your existing range of financial and non-financial performance measures are board enough to monitormanagementrsquos performance

2 Are you satisfied that your existing performance measures arelinked to the organisationrsquos strategy

3 Are you satisfied that the organisationrsquos performance is adequatelybenchmarked against its peers

4 Are you satisfied that managementrsquos remuneration is appropriatelylinked to the organisationrsquos performance and an appropriate peergroup

5 Are you satisfied that the board has in place an appropriate processfor regular board committee and individual board memberevaluation

6 Are you satisfied that all actions arising from performanceevaluation are followed up

7 Are you satisfied that the board performance assessment processenhances board effectiveness

A G

uide to Board Evaluation130G Managing management 1 2 3 4 5 What could the board do


1 Are you satisfied that the board has an agreed process to adequatelysupport the CEO

2 Are you satisfied that the board has in place a rigorous process toevaluate the performance of the CEO with input from all nonexecutive board members

3 Are you satisfied that the board is appropriately engaged in CEOsenior management succession planning

4 Are you satisfied that there are appropriate delegation authoritiesin place for management and that they are regularly reviewed

5 Are you satisfied that the organisationrsquos culture encourages boardmembers to discuss agenda and other issues with seniormanagement

6 Are you satisfied that bad news is communicated to the board as itarises

7 Are you satisfied that the CEO and senior management receiveconstructive support from the board


131

H Value creation 1 2 3 4 5 What could the board dobetter or differently

1 Are you satisfied that the board has clearly identified theorganisationrsquos major stakeholders and the lsquovaluersquo each requires

2 Are you satisfied that there are systems in place to allow the boardto measure whether the organisation is creating or destroying majorstakeholder value

3 Are financial and non financial value drivers in place to focus on theenhancement of value

4 Is your existing decision making process (including the presentstructure of management proposals) adequate to properly assesswhether proposals create major stakeholder value

5 Is your organisation creating major stakeholder value

6 Does the board management have adequate mechanisms forcommunicating with major stakeholders

A G

uide to Board Evaluation132I Corporate culture 1 2 3 4 5 What could the board do


1 Are you satisfied that the boardrsquos comprehension of theorganisationrsquos purpose vision and strategic plan is reflected inactions taken in the boardroom

2 Are you satisfied that the board plays an appropriate pro- activerole in change

The document is the copyright of KPMG Audit Committee Institute Ireland The document is available at httpwwwauditcommitteeinstituteiedocuments101878_ Board_ Effectiveness_ Quest_ Flyer_ Feb12 20 28229pdf

The right to produce the document has been received from the organisation


A Background of Board Evaluation in India

India has moved recently from a voluntary Board evaluation underClause 49 of the Listing Agreement (SEBI) and Corporate GovernanceVoluntary Guidelines of MCA (2009) to a mandatory Board evaluationunder Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI LODR)

The Companies Act 2013 and SEBI LODR provide for severalmandatory provisions for Board Evaluation on who is to be evaluatedwho is to evaluate such persons disclosure requirements etc Themain provisions of Companies Act 2013 and SEBI LODR on BoardEvaluation as applicable to listed entities is attached at AnnexureA1 and summarized as under

1 Role of the Nomination and Remuneration Committee (NRC)

a NRC shall formulate of criteria for evaluation of performanceof independent directors and the board of directors

b NRC shall carry out evaluation of every directorrsquos performance

c NRC shall determine whether to extend or continue the termof appointment of the independent director on the basis ofthe report of performance evaluation of independentdirectors

2 Role of independent directors

a In the meeting of independent directors of the company(without the attendance of non-independent directors andmanagement) such directors shall

(i) review the performance of non-independent directors andthe Board as a whole

(ii) review the performance of the Chairperson of the

SEBIrsquos Guidance Note onBoard Evaluation

133


company taking into account the views of executivedirectors and non-executive directors

(iii) assess the quality quantity and timeliness of flow ofinformation between the company management and theBoard that is necessary for the Board to effectively andreasonably perform their duties

b The independent directors shall bring an objective view inthe evaluation of the performance of board and management

3 Evaluation of independent directors The performance evaluationof independent directors shall be done by the entire Board ofDirectors excluding the director being evaluated

4 Disclosure requirementsa A statement indicating the manner in which formal annual

evaluation has been made by the Board of its ownperformance and that of its committees and individualdirectors shall be included in the report by Board of Directorsplaced in the general meeting

b The performance evaluation criteria for independent directorsshall be disclosed in the section on the corporate governanceof the annual report

B Subject of EvaluationAs required under SEBI LODR and Companies Act the evaluation

of the Board involves multiple levels1 Board as a whole2 Committees of the Board3 Individual Directors and Chairperson (including Chairperson

CEO Independent Directors Non-independent directors etc)C Process of Evaluation

The process of evaluation is generally elaborate stretching acrosspre-evaluation evaluation and post- evaluation processes includinginter alia the following

1 Identifying the objectives of evaluation

Identifying the objectives of the evaluation is the first and acrucial step in the Board Evaluation process Clear identificationof objectives is key to streamlining the process of evaluationanalyzing the results and taking appropriate and corrective action


The objectives may be

(a) General objectives- Standard Objectives for all Boardevaluations of the entity

(b) Specific objectives- Objectives specific to the current Boardevaluation based on recent events new issues of concernetc

2 Criteria of evaluation

The criteria for evaluation under different categories depend onthe role the persongroup plays in the organization For instancethe evaluation of the Chairperson may evaluate the personrsquosleadership coordination and steering skills etc which may bedifferent from the role of other directors The criteria for everyevaluation may be decided at every level depending on thefunctions responsibilities competencies required nature ofbusiness etc As per SEBI LODR the primary responsibility offormulation of criteria lies on the NRC

Indicative criteria that may be used for different directorsgroupsare

A Board as a whole

a Structure of the Board

i Competency of directors (Different competenciesmay be identified as may be required for effectivefunctioning of the entity and the Board) -WhetherBoard as a whole has directors with a proper mix ofcompetencies to conduct its affairs effectively

ii Experience of directors Whether Board as a wholehas directors with enough experience to conduct itsaffairs effectively

iii Mix of qualifications Whether Board as a whole hasdirectors with a proper mix of qualifications to conductits affairs effectively

iv Diversity in Board under various parametersGenderbackground competenceexperience etc ndashWhether there is sufficient diversity in the Board onthe aforesaid parameters


v Appointment to the Board Whether the process ofappointment to the board of directors is clear andtransparent and includes provisions to considerdiversity of thought experience knowledgeperspective and gender in the board of directors

b Meetings of the Board

i Regularity of meetings Whether meetings are beingheld on a regular basis

ii Frequency

1 Whether the Board meets frequently

2 Whether the frequency of such meetings isenough for the Board to undertake its dutiesproperly

iii Logistics Whether the logistics for the meeting isbeing handled properly- venue format timing etc

iv Agenda

1 Whether the agenda is circulated well before themeeting

2 Whether the agenda has all relevant informationto take decision on the matter

3 Whether the agenda is up to date regularlyreviewed and involves major substantial decisions

4 Whether the quality of agenda and Board papersis up to the mark (explains issues properly notoverly lengthy etc)

5 Whether outstanding items of previous meetingsare followed-up and taken up in subsequentagendas

6 Whether the time allotted for the every item(especially substantive items) in the agenda ofthe meeting is sufficient for adequate discussionson the subject

7 Whether the Board is able to finish discussionand decision on all agenda items in the meetings


8 Whether adequate and timely inputs are takenfrom the Board members prior to setting of theAgenda for the meeting

9 Whether the agenda includes adequateinformation on Committeersquos activities

v Discussions and dissent

1 Whether the Board discusses every issuecomprehensively and depending on theimportance of the subject

2 Whether the environment of the meeting inducesfree-flowing free flowing discussions healthydebate and contribution by everyone without anyfear or fervour

3 Whether the discussions generally add value tothe decision making

4 Whether the Board tends towards groupthink andwhether critical and dissenting suggestions arewelcomed

5 Whether all members actively participate in thediscussions

6 Whether overall the Board functionsconstructively as a team

vi Recording of minutes

1 Whether the minutes are being recorded properly-clearly completely accurately and consistently

2 Whether the minutes are approved properly inaccordance with set procedures

3 Whether the minutes are timely circulated to allthe Board members

4 Whether dissenting views are recorded in theminutes

vii Dissemination of information

1 Whether all the information pertaining to themeeting are disseminated to the members timelyfrequently accurately regularly


2 Whether Board is adequately informed of materialmatters in between meetings

c Functions of the Board(Functions of the Board have been specified in detail inChapter II of SEBI LODR and Companies Act)(i) Role and responsibilities of the Board Whether the

same are clearly documented Eg Difference in rolesof Chairman and CEO Matters reserved for the Boardetc

(ii) Strategy and performance evaluation1 Whether significant time of the Board is being

devoted to management of current and potentialstrategic issues

2 Whether various scenario planning is used toevaluate strategic risks

3 Whether the Board overall reviews and guidescorporate strategy major plans of action riskpolicy annual budgets and business plans setsperformance objectives monitored implemen-tation and corporate performance and overseesmajor capital expenditures acquisitions anddivestments

(iii) Governance and compliance

1 Whether adequate time of the Board is beingdevoted to analyse and examine governance andcompliance issues

2 Whether the Board monitors the effectiveness ofits governance practices and makes changes asneeded

3 Whether the Board ensures the integrity of theentity rsquos accounting and financial reportingsystems including the independent audit and thatappropriate systems of control are in place inparticular systems for risk management financialand operational control and compliance with thelaw and relevant standards


4 Whether the Board oversees the process ofdisclosure and communications

5 Whether the Board evaluates and analyses thecompliance certificate from the auditors practicing company secretaries regardingcompliance of conditions of corporategovernance

(iv) Evaluation of Risks

1 Whether Board undertakes a review of the highrisk issues impacting the organization regularly

2 In assessment of risks whether it is ensured thatwhile rightly encouraging positive thinking thesedo not result in over-optimism that either leadsto significant risks not being recognised orexposes the entity to excessive risk

(v) Grievance redressal for Investors

Whether the Board regularly reviews the grievanceredressal mechanism of investors details ofgrievances received disposed of and those remainingunresolved

(vi) Conflict of interest

1 Whether the Board monitors and managespotential conflicts of interest of managementmembers of the board of directors andshareholders including misuse of corporate assetsand abuse in related party transactions

2 Whether a sufficient number of non-executivemembers of the board of directors capable ofexercising independent judgement are assignedto tasks where there is a potential for conflict ofinterest

(vii) Stakeholder value and responsibility

1 Whether the decision making process of theBoard is adequate to assess creation ofstakeholder value


2 Whether the Board has mechanisms in place tocommunicate and engage with variousstakeholders

3 Whether the Board acts on a fully informed basisin good faith with due diligence and care withhigh ethical standards and in the best interest ofthe entity and the stakeholders

4 Whether the Board treats shareholders andstakeholders fairly where decisions of the boardof directors may affect different shareholderstakeholder groups differently

5 Whether the Board regularly reviews the BusinessResponsibility Reporting related corporate socialresponsibility initiatives of the entity andcontribution to society environment etc

(viii) Corporate culture and values Whether the Boardsets a corporate culture and the values by whichexecutives throughout a group shall behave

(ix) Review of Board evaluation Whether the Boardmonitors and reviews the Board evaluationframework

(x) Facilitation of independent directors Whether theBoard facilitates the independent directors to performtheir role effectively as a member of the board ofdirectors and also a member of a committee of boardof directors and any criticism by such directors is takenconstructively

d Board and management

(i) Evaluation of performance of the management andfeedback

1 Whether the Board evaluates and monitorsmanagement especially the CEO regularly andfairly and provides constructive feedback andstrategic guidance

2 Whether the measures used are broad enough tomonitor performance of the management


3 Whether the managementrsquos performance isbenchmarked against industry peers

4 Whether remuneration of the management is inline with its performance and with industry peers

5 Whether remuneration of the Board and themanagement is aligned with the longer terminterests of the entity and its shareholders

6 Whether the Board selects compensatesmonitors and when necessary replaces keymanagerial personnel based on such evaluation

7 Whether the Board lsquosteps backrsquo to assistexecutive management by challenging theassumptions underlying strategy strategicinitiatives (such as acquisitions) risk appetiteexposures and the key areas of the entityrsquos focus

(ii) Independence of the management from the BoardWhether the level of independence of themanagement from the Board is adequate

(iii) Access of the management to the Board and Boardaccess to the management Whether the Board andthe management are able to actively access eachother and exchange information

(iv) Secretarial support Whether adequate secretarialand logistical support is available for conductingBoard meetings

(v) Fund availability Whether sufficient funds are madeavailable to the Board for conducting its meetingeffectively seeking expert advice Eg Legalaccounting etc

(vi) Succession plan Whether an appropriate andadequate succession plan is in place and is beingreviewed and overseen regularly by the Board

e Professional development

(i) Whether adequate induction and professionaldevelopment programmes are made available to newand old directors


(ii) Whether continuing directors training is provided toensure that the members of board of directors arekept up to date

B Committees of the Board

a Mandate and composition Whether the mandatecomposition and working procedures of committees ofthe board of directors is clearly defined and disclosed

b Effectiveness of the Committee Whether the Committeehas fulfilled its functions as assigned by the Board andlaws as may be applicable(For different Committees different functions may be laidout as sub-criteria for evaluation)

c Structure of the Committee and meetings(i) Whether the Committees have been structure

properly and regular meetings are being held(ii) In terms of discussions agenda etc of the meetings

similar criteria may be laid down as specified abovefor the entire Board

d Independence of the Committee from the BoardWhether adequate independence of the Committee isensured from the Board

e Contribution to decisions of the Board Whether theCommitteersquos recommendations contribute effectively todecisions of the Board

C Individual Directors and Chairperson (includingChairperson CEO Independent Directors Non-independent directors etc)General

a Qualifications Details of professional qualifications ofthe member

b Experience Details of prior experience of the memberespecially the experience relevant to the entity

c Knowledge and Competency

(i) How the person fares across different competenciesas identified for effective functioning of the entity


and the Board (The entity may list variouscompetencies and mark all directors against everysuch competency)

(ii) Whether the person has sufficient understanding andknowledge of the entity and the sector in which itoperates

d Fulfillment of functions Whether the person understandsand fulfills the functions to himher as assigned by theBoard and the law (Eg Law imposes certain obligationson independent directors)

e Ability to function as a team Whether the person is ableto function as an effective team- member

f Initiative Whether the person actively takes initiativewith respect to various areas

g Availability and attendance Whether the person isavailable for meetings of the Board and attends themeeting regularly and timely without delay

h Commitment Whether the person is adequatelycommitted to the Board and the entity

i Contribution Whether the person contributed effectivelyto the entity and in the Board meetings

j Integrity Whether the person demonstrates highest levelof integrity (including conflict of interest disclosuresmaintenance of confidentiality etc)

Additional criteria for Independent director

a Independence Whether person is independent from the entityand the other directors and there if no conflict of interest

b Independent views and judgement Whether the personexercises his her own judgement and voices opinion freely

Additional criteria for Chairperson

a Effectiveness of leadership and ability to steer the meetingsWhether the Chairperson displays efficient leadership isopen-minded decisive courteous displays professionalismable to coordinate the discussion etc and is overall able tosteer the meeting effectively


b Impartiality Whether the Chairperson is impartial inconducting discussions seeking views and dealing withdissent etc

c Commitment Whether the Chairperson is sufficientlycommitted to the Board and its meetings

d Ability to keep shareholdersrsquo interests in mind Whether theChairperson is able to keep shareholdersrsquo interest in mindduring discussions and decisions

Different criteria may be assigned different weights dependingon the organisationrsquos requirements circumstances outcome ofprevious assessments stage of Boardrsquos maturity etc Instead ofthe questionnaire in a simple yesno format it is desirable thatit provides scope for grading additional comments suggestionsetc

3 Method of evaluation

As a global best practice the method of evaluation is generallyin 2 ways

a Internal assessment

b Assessment by external experts

Internal assessmentInternal assessment of the Board is crucial Who should evaluatewhom is provided in the Companies Act and SEBI LODR asspecified aboveThe internal assessment may be done by following methodsa A detailed Questionnaire to be circulated to individual

directors Committees Board etcb Oral assessments provided by the person on interviewsIf deemed fit the questionnaire may enable written answers tobe submitted on a confidential basis If due to various reasonsmembers are not willing to provide written inputs theChairperson or any other person may take initiative and obtainviews of such members on a confidential basis

Assessment by external experts

Use of external experts imparts an independence to the


evaluation process and therefore is used by many entitiesglobally However care must be taken to ensure that the externalassessor is not a related party or conflicted due to closeness ofthe Board to ensure impartiality

Such external assessment may be done based on questionnairesinterviews or a combination of the two and done on a regularbasis Such external assessment complements the internalassessment and adds an objective aspect to the evaluationprocess

Effective use of Information Technology through use of boardevaluation software applications etc can also play a facilitatingrole

D Feedback

Providing feedback to the individual directors the Board and theCommittees is crucial for success of Board Evaluation Oncollation of all the responses the feedback may be provided inone or more of the following ways

a Orally given by Chairman external assessor or any othersuitable person to

i Each Member separately

ii To the entire Board

iii To the Committees

b A written assessment to every member Board and Committee

The active role of the Chairperson is desirable in providingfeedback to the members If members are not comfortable toopen individual assessments provision for confidentiality maybe made where possible For effectiveness of the evaluation itis essential that the feedback be given honestly and withoutbias

E Action Plan

Based on the analysis of the responses the Board may preparean action plan on

- Areas of improvement including training skill building etcas may be required for Board members


- List of actions required detailing

o Nature of actionso Timelineo Person responsible for implementationo Resources required etc

- Review of the actions within a specific time period

The action plan may be prepared by the Board in a comprehensivemanner Suggestions under the external assessment individualmember feedback etc may be taken into account while draftingthe action plan

F Disclosure requirements

SEBI LODR and Companies Act requires disclosure of manner offormal annual evaluation of the Board its committees andindividual directors and of performance evaluation criteria forindependent directors to the shareholders on an annual basis

In addition for more transparency many entities worldwidevoluntarily provide additional disclosures including the resultsof the Board evaluation action taken on the basis of theevaluation current status etc to various stakeholders

G Frequency of Board Evaluation

As per SEBI LODR and Companies Act the Board Evaluation isrequired to be done once a year The entity if it so desires mayalso conduct such evaluation more frequently Since Boardevaluation is a continuous process it is felt that feedbackprovided to the members during meetings and otherwise whetheroral or written is more effective for continuous improvementand ideally complements the annual evaluation process

Many entities globally also complement the internal assessmentwith external assessment at regular intervals to impart objectivityto the process

H Responsibility

The responsibility of Board evaluation lies on different personsdepending on the subject of evaluation as per Companies Actand SEBI LODR


However it is found that on a global basis generally the primaryrole of steering the whole process of Board evaluation and ofensuring its effectiveness in improving the Board efficiency lieson the Chairperson Therefore to achieve maximum benefit ofthe process the role and function of Chairperson in BoardEvaluation needs to be laid out clearly in advance

I Review

Board evaluation is not a static process and requires periodicalreview for improvement The responsibility of such review of theevaluation process lies with the Board of Directors in accordancewith SEBI LODR

Such review may involve the following

a Whether objectives and criteria for evaluation are adequateor needs to be changed updated

b Whether the processmethod of evaluation is appropriatefor individual members Committees and the Board

c Whether the actions based on the Board evaluation is beingfollowed up on a timely basis

d Whether the Board evaluation has enhanced effectivenessof the Board

e Whether the review of the process is being done on a regularbasis

f Whether feedback of the members to improve the process isbeing taken into account

Such review may be done based on feedback from managementBoard members Chairperson external assessors variousstakeholders etc


Annexure A1

Main provisions under Companies Act with respect to BoardEvaluation

Section 134(3) - There shall be attached to statements laidbefore a company in general meeting a report by its Board ofDirectors which shall includemdash

(p) in case of a listed company and every other public companyhaving such paid-up share capital as may be prescribed astatement indicating the manner in which formal annualevaluation has been made by the Board of its ownperformance and that of its committees and individualdirectors

Section 178(2)- The Nomination and Remuneration Committeeshall identify persons who are qualified to become directors andwho may be appointed in senior management in accordance withthe criteria laid down recommend to the Board their appointmentand removal and shall carry out evaluation of every directorrsquosperformance

SCHEDULE IV CODE FOR INDEPENDENT DIRECTORS

II Role and functions (2) The independent directors shall bringan objective view in the evaluation of the performance ofboard and management

V Re-appointment The re-appointment of independentdirector shall be on the basis of report of performanceevaluation

VII Separate meetings

(1) The independent directors of the company shall hold atleast one meeting in a year without the attendance ofnon-independent directors and members of management

(2) All the independent directors of the company shall striveto be present at such meeting

(3) The meeting shall

(a) review the performance of non-independent directorsand the Board as a whole


(b) review the performance of the Chairperson of thecompany taking into account the views of executivedirectors and non-executive directors

(c) assess the quality quantity and timeliness of flow ofinformation between the company management andthe Board that is necessary for the Board to effectivelyand reasonably perform their duties

VIII Evaluation mechanism

(1) The performance evaluation of independent directorsshall be done by the entire Board of Directors excludingthe director being evaluated

(2) On the basis of the report of performance evaluation itshall be determined whether to extend or continue theterm of appointment of the independent director

Rule 8 (4) of the Companies (Accounts) Rules 2014

Every listed company and every other public company having a paidup share capital of twenty five crore rupees or more calculated atthe end of the preceding financial year shall include in the report byits Board of directors a statement indicating the manner in whichformal annual evaluation has been made by the Board of its ownperformance and that of its committees and individual directors

Main provisions under SEBI LODR with respect to BoardEvaluation

CHAPTER II

4(2)(f)(ii) Key functions of the board of directors- (9) Monitoringand reviewing board of directorrsquos evaluation framework

Chapter IV

17(10) The performance evaluation of independent directors shallbe done by the entire board of directors

Provided that in the above evaluation the directors who are subjectto evaluation shall not participate

25 (3) The independent directors of the listed entity shall hold atleast one meeting in a year without the presence of non-independent


directors and members of the management and all the independentdirectors shall strive to be present at such meeting

(4) The independent directors in the meeting referred in sub-regulation (3) shall interalia-


(b) review the performance of the chairperson of the listed entitytaking into account the views of executive directors and non-executive directors

(c) assess the quality quantity and timeliness of flow ofinformation between the management of the listed entityand the board of directors that is necessary for the board ofdirectors to effectively and reasonably perform their duties

Schedule II (PART D) (A) ROLE OF NOMINATION ANDREMUNERATION COMMITTEE Role of committee shall inter-aliainclude the following

(2) formulation of criteria for evaluation of performance ofindependent directors and the board of directors

(4) identifying persons who are qualified to become directors andwho may be appointed in senior management in accordance withthe criteria laid down and recommend to the board of directors theirappointment and removal

(5) whether to extend or continue the term of appointment of theindependent director on the basis of the report of performanceevaluation of independent directors

Schedule V Corporate Governance Report The followingdisclosures shall be made in the section on the corporate governanceof the annual report

(4) Nomination and Remuneration Committee

(d) performance evaluation criteria for independent directors


1 Board Assessment Designing the Process by Beverly Behan(The Corporate BoardndashNovemberDecember 2004) httpswwwcorporateboardcomPdfs0411-Behanpdf)

2 Corporate Governance Beyond Letters ndash ICSI Publication

3 Evaluation Questionnaires provided by Balrampur Chini MillsLimited

4 Beyond the Basics Getting the Most From Board EvaluationsSpencer Stuart (httpswwwspencerstuartcom~mediaPDF20FilesResearch20and20Insight20PDFsCornerstone-of-the-Board_01Apr2004pdf)

5 Enhancing Board effectiveness A round Table DiscussionSpencer Stuart (httpswwwspencerstuartcom~mediaPDF20FilesResearch20and20Insight20PDFsE n h a n c in g - b o a rd - e f f e c t i v e n e s s - A - r o u n d t a b le -discussion_29Nov2007pdf)

6 Board Performance Evaluation Private (Private SectorOpinion) Issue 9 A Global Corporate Governance ForumPublication

8 Review of the Role and Effective Functioning of Non-ExecutiveDirectors Derek Higgs January 2003

9 ICGN Global Governance Principles 2014

10 Code of Corporate Governance May 2012

11 The UK Corporate Governance Code 2014

12 Global Principles of Accountable Corporate Governance 2014

13 ASX Corporate Governance Council-Corporate GovernancePrinciples and Recommendations 2014

Bibliography

151


14 NYSE Listed Company Manual

15 Board Performance Evaluation Tool- Health InformationManagement Association of Australia Limited (httpwwwhimaa2orgauq=node47)

16 Corporate Governance Handbook 2007 Legal Standards andBoard Practices- The Conference Board (httpwww corpgovdeloitte combinarycom epicentric content managementservletContentDeliveryServletUSEngDocumentsBoard20GovernanceBoard20 Evaluations 20Education20and20DevelopmentAppendix6_SelfAssessment Questionnaire_Corporate Governance Handbook2007_TheConfBrd_July2007pdf)

17 Good Practices in Board Evaluation ndash International FinanceCorporation (IFC)

18 King IV Report on Corporate Governance for South Africa 2016

19 India Board Report 2015-16

20 Annual Reports of top 100 BSE listed companies by marketcapitalisation

21 SEBI Guidance Note on Board Evaluation

22 Standford University Board of Directors Evaluation andEffectiveness A Study

cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11

JUNE 2017

PRICE Rs 200- (Excluding Postage)

copy THE INSTITUTE OF COMPANY SECRETARIES OF INDIAAll rights reserved No part of this publication may be translated or copied in anyform or by any means without the prior written permission of The Institute ofCompany Secretaries of India

ISBN 9789382207-92-4

Published by

THE INSTITUTE OF COMPANY SECRETARIES OF INDIAICSI House 22 Institutional Area Lodi Road New Delhi - 110 003Phones 41504444 45341000 Fax 24626727Website wwwicsiedu E-mail infoicsiedu

Printed at

Chandu Press200June 2017

(ii)












(iv)



Albert Einstein







(v)




(vi)

INDEX

Introduction 1





































Annexures 69


Bibiliography 151

(viii)



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11












(iv)



Albert Einstein







(v)




(vi)

INDEX

Introduction 1





































Annexures 69


Bibiliography 151

(viii)



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11



Albert Einstein







(v)




(vi)

INDEX

Introduction 1





































Annexures 69


Bibiliography 151

(viii)



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11




(vi)

INDEX

Introduction 1





































Annexures 69


Bibiliography 151

(viii)



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11

INDEX

Introduction 1





































Annexures 69


Bibiliography 151

(viii)



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11
















Annexures 69


Bibiliography 151

(viii)



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11



Introduction






Introduction

1
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11
























































6

































































Code Provisions










































Guidelines






A G


9


MODE


UK



USA(NYSE Corporate




SOUTH AFRICA




AUSTRALIA



SINGAPORE



A G




-do-



-do-



EVALUATION OFBOARD

A G


1

own perfor-mance






COMMITTEES




A G


2




DISCLOSURES

Nothing Specific







Nothingspecific


A G


3













24













bull board
































1 Regulation (4) (2) (f) (ii) (9)




















A G


1






Director



A G









A G


3








A G








a Internally

b Externally


a Self evaluation


c External


35




b External


a All Directors

b External




Internal Evaluation























assessment


s e s s i o n



















assessment



























42





















































































49













Personal Concerns




51







Structural Concerns
















Business Concerns

















Disclosures




56










































(ii) Objectivity










Idea Cellular













































EFFECTIVE DATE

1 INTRODUCTION


2 OBJECTIVE


3 RESPONSIBILITY




66

















4 POLICY REVIEW


5 DISCLOSURE




69









documented











71













72











73




Board Development








74











75













76

Succession Planning







77










Date





78PART II


RATINGS COMMENTS


Leadership






79









80




Strategy execution




81










82






External Relations



83








84

Succession









85

Personal Qualities








86








Date



87

PART III


Criteria 1 2 3 4 5

KNOWLEDGEABLE








88













89



LEADERSHIP TEAM











90PART IV



PART A

RATINGS COMMENTS







91






Knowledge and Skill




92



Personal Attributes








93

Part - B




RATINGS COMMENTS








94










95

PART V



Function and Duties








96














97










Date




98PART VI


RATINGS COMMENTS






Leadership




99












Date


A G


Deloitte




1 Strongly disagree

5 Strongly agree

0 1 2 3 4 5






101










A G






103








A G











105










A G









107









Overall evaluation


A G


GENOME CANADA

Introduction









109



Background













A G


Rating Scale



Agree

1 2 3 4 5







111








A G











113





Additional Comments


Background


Assessment Criteria



A G













bull accountability





115


Rating Scale




Agree

1 2 3 4 5





A G









Additional Comments


117







Additional Comments



A G









Additional Comments


119










Additional Comments

A G


1

2

3




121

SAMPLE III

KPMG








A G


in place








123








A G










125








A G








127







A G









129









A G











131








A G




















133






















A Board as a whole










ii Frequency




iv Agenda


























































































































D Feedback








E Action Plan














H Responsibility




I Review











Annexure A1






















CHAPTER II


Chapter IV






























Bibliography

151











cover

1

2

2A

3

3A

4

5

6

7

8

9

9A

9B

10

11