Advanced Boardroom Excellence (“AB Excellence”), leading advisers in developing individual and collective director effectiveness, has today launched a Code of Practice for Independent External Board Evaluations (the “Code”). The Code sets out guidelines for achieving a high-quality board evaluation with reference to the Financial Reporting Council’s Guidance on Board Effectiveness.
Board evaluations, as set out in the UK Corporate Governance Code, are one of the principal methods for building board effectiveness. The Code has been proposed to address the perceived variability in the scope and service quality of evaluations, and concerns about standards. If adopted, the Code would install a more coherent framework to allow companies and advisers to work more effectively together.
Helen Pitcher, Chairman of AB Excellence, said:
“The economic crisis had led to a step change in attitude to the challenge of board effectiveness, and has helped to identify that a structured approach to optimising performance makes business sense. It is therefore ideal timing for publishing a proposed Code which will generate a marked improvement in standards in the delivery of board evaluations.”
Key features of the Code, which will lead to a significant increase in standards, include proposals for:
- Not pursuing more than two consecutive assignments in order to remain independent
- Avoiding, or resolving, conflicts of interest
- Being suitably qualified and experienced to conduct an evaluation credibly
- Agreeing with the client how sensitive issues are handled effectively
- Ensuring the outcome of a board evaluation is disclosed in an appropriate manner
Sir David Walker, Chairman of Barclays, commented:
“The performance of boards is critical to the performance of the entities that they direct and the regular appraisal process will only be value-additive if done to a high standard. This proposal for a Code of Conduct for professional evaluators is a very welcome and timely initiative. Attestation that an evaluation process has been conducted to the standards of the Code should become a valuable ingredient in assuring shareholders and other stakeholders that the process has been insightful and substantive.”
In creating the Code, AB Excellence has consulted – and received strong levels of support from – interested parties, including chairmen, regulators, advisors, practitioners, relevant institutes and investor representatives.
Sacha Sadan, Director of Corporate Governance at Legal & General Investment Management, said:
“Board evaluations are an important mechanism for reassuring investors that a company board is engaged in a continuous, and structured, programme of self-improvement. At present these evaluations vary significantly and the proposed Code is a significant development in addressing this issue.”
Following publication, the Code will be subject to a process of public consultation, organised by the Institute of Chartered Secretaries and Administrators (ICSA), to which all market participants will be invited to contribute. One proposal is for the creation of an independent oversight body for the Code, and an industry-funded register, accompanied by an appropriate governance and standards process.
Peter Swabey, Policy & Research Director at the ICSA added:
“Company secretaries, working closely with the chairman, are responsible for guaranteeing the integrity of the board evaluation process. The Institute will conduct a comprehensive consultation process to ensure that the final version of the Code commands widespread acceptance and adherence”.
The Code can be downloaded at: www.abexcellence.com
For enquiries please contact:
Jackie White, AB Excellence
M: 07958 720107
Nadja Vetter/Lauren Foster, Cardew Group
T: 020 7930 0777
Notes to Editors
Advanced Boardroom Excellence (AB Excellence) is a board effectiveness consultancy dedicated to individual and collective director effectiveness. The organisation is passionate about the development and improvement of boardroom standards, behaviour and ethics.
AB Excellence’s experience as a leading board effectiveness consultancy is focussed on supporting chairmen, CEO’s and directors.
Advanced Boardroom Excellence is led by Helen Pitcher, supported by an experienced team who have worked together for more than 20 years.