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All large ASX listed companies conduct some form of Board, Committee and director performance review. This makes good governance and business sense. It is also consistent with the spirit of the ‘Corporate Governance Principles and Recommendations’ 4th Edition, which state that entities should have and disclose a performance evaluation process and disclose whether such an evaluation occurred in or in respect of the period.

What do performance reviews involve?

Most companies cycle between internal reviews (e.g. facilitated by the Company Secretary) and external reviews (i.e. facilitated by a third party provider). Market practice is mixed, but many ASX 200 companies use an external facilitator every three years. Some companies run external reviews every two years, but this is a high watermark.

Internal and external review

External review only

Both the internal and external review should, ideally, involve:

  • completion of confidential questionnaires by directors and key executives; and
  • one-on-one feedback sessions with the Chair (and in the case of the Chair’s own review, a Committee Chair or a Lead Independent Director – if any).

The external review generally involves additional steps. At a minimum, it should involve the facilitator conducting one-on-one briefings with each director and key executives. Depending on the Chair’s preference, the facilitator may also observe Board and Committee meetings. Ideally, your facilitator will provide observations and any recommendations (which should actionable) and will report to the Chair and/or Board.

How can we unlock more value?

Both the internal and external reviews are an investment in time. The external reviews also come at a cost. Given the investment involved, companies should consider whether they are unlocking value and getting bang for buck. Consider the following:

Are we conducting the review at the right time? In our experience, there are various points throughout the year that are optimal for Board reviews. Equally, there are times to avoid. One trap to avoid – conducting the review shortly after the company’s AGM.

Are we getting clear, practical and actionable recommendations out of our external Board performance review?

How does the Board performance review feed into our Board Skills Matrix? These are separate streams but there is scope to enhance the Board Skills Matrix using intelligence gleaned from the performance review process.

Is the Board performance review informing Director induction and ongoing education? Are we proactively looking for gaps and looking to plug them?

Could we use the Board performance review as an opportunity to establish a succession roadmap or inform director and executive succession planning?

Is the Board performance review being used efficiently to inform the Board’s recommendations for director elections and re-elections at the AGM?

Do we need to work through some challenging Board dynamics? Could an external Board performance review provide a way of navigating this challenge?

Key contacts

Bianca Marcocci photo

Bianca Marcocci

Senior Associate, Sydney

Bianca Marcocci
Quentin Digby photo

Quentin Digby

Senior Adviser, Sydney

Quentin Digby

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