Corporate Governance

Shearman & Sterling ROLE OF THE LEAD INDEPENDENT DIRECTOR Disclosures made by companies as to the role played by the lead independent director in the self-evaluation process varied considerably. Several companies disclosed that the lead independent director "leads," "oversees," "guides" or is generally responsible for the process, while others made disclosures about the specific tasks performed by the lead independent director. The most common task disclosed as having been performed by the lead independent director was individual director interviews. OTHER TASKS PERFORMED BY THE LEAD INDEPENDENT DIRECTOR THAT WERE DISCLOSED INCLUDE: providing feedback to directors in situations where they were individually evaluated 1 summarizing the results of the evaluation for the board 3 presiding over executive sessions where the results of the self-evaluation were discussed with the board 2 FAST FACTS BOARD INVOLVEMENT IN THE DIRECTOR SELF- EVALUATION PROCESS Top 100 Companies disclosed that there was lead independent director / independent board chair involvement in the self-evaluation process (59% of companies that made detailed disclosure). Top 100 Companies disclosed that a separate committee process was utilized (48% of companies that made detailed disclosure). Top 100 Companies disclosed that there was a board review of the results of the self-evaluation process (79% of companies that made detailed disclosure). 33 28 46 Director Self-Evaluation Process | 17 THE BUSINESS ROUNDTABLE'S Principles of Corporate Governance (2016) states under the heading "Board Operations – Board and Committee Evaluations" that: The board should have an effective mechanism for evaluating its performance on a continuing basis. Meaningful board evaluation requires an assessment of the effectiveness of the full board, the operations of board committees and the contributions of individual directors on an annual basis. The results of these evaluations should be reported to the full board, and there should be follow-up on any issues and concerns that emerge from the evaluations. The board, under the leadership of the nominating / corporate governance committee, should periodically consider what method or combination of methods will result in a meaningful assessment of the board and its committees. Common methods include written questionnaires; group discussions led by a designated director, employee or outside facilitator (often with the aid of written questions); and individual interviews. " "

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