Board Evaluation

While acknowledging the corporate governance concept of “no one size fits all”, Corporate Governance codes continue to highlight board composition as an important factor. Even corporate law in different jurisdictions recognises the composition of the board of directors and highlights board structure. Despite the increasing interest in Corporate Governance by Nigerian directors and members of governing bodies, a “check-box” or regulatory compliance mindset remains, that can be addressed only through a proper understanding of and commitment to Corporate Governance principles and recommended practices, and their intrinsic purpose and value.

This article highlights the impact of cultural nuances on board composition and the cultural challenges surrounding keyboard functions such as Chair, and Executive Director and how these affect corporate governance practice in Nigeria and Africa and makes a case for a deliberate approach to addressing them if proper Corporate Governance is to be attained and its benefits enjoyed by Nigerian and African companies and their stakeholders.

Purpose – This paper examines how board evaluations have emerged as an important tool in public policy and corporate practice for enhancing board effectiveness.
Design/methodology/approach – We review the extensive literature on effectiveness and the emerging literature on board evaluation to identify ways to assess the current policy direction for external evaluation of corporate boards.
Findings – The paper develops an integrated framework of effectiveness that can be used as a tool for board evaluation, in particular for externally facilitated exercises.
Research limitations/implications – Through its integration of prior conceptual work this paper advances our theoretical understanding of this emerging part of policy and practice, with to-date lack much empirical basis.
Practical implications – The framework we develop shows ways to focus how the practice is conducted by boards and external evaluators alike.
Social implications – It can also help policy formation by pointing out the limitations as well as benefits of various policy options.
Originality/value – In pointing to ways to develop study of the field through empirical research it provides direction for future academic research. It also identifies a need for and direction toward the professionalization of practice.

Executive pay became a much discussed issue during the recent global financial crisis. Substantial research has been done in the United States and United Kingdom, while research in Australia is still limited, especially in terms of using the data for the financial crisis. This paper will investigate the relationship between Australian executives’ remuneration and their companies’ performance during the global financial crisis. Two approaches were used to examine the relationship: firstly, an investigation of the pay-for-performance relationship that existed during the global financial crisis; and secondly, checking the robustness test by using one year before-and-after data. The sample is taken from the Top 200 companies from the Australian Stock Exchange (ASX) list for 2007 and 2008. In order to achieve a better understanding of this relationship, a conceptual model has been developed. Results show that Australia’s business reward system is quite effective because executives’ remuneration were reduced by their respective companies when they underperformed during this particular crisis.

Overall, this study concludes that there is a positive and significant relationship between executives’ remuneration and company performance during the global financial crisis, with higher sensitivity to market-based performance measures than accounting-based performance measures.

Executive remuneration has been the subject of close scrutiny, huge public outcries and criticisms in the recent past in South Africa. This has invariably attracted unprecedented research interest across different sectors of the economy. Various studies on executive remuneration versus corporate performance have been conducted across South African companies with no finite consensus. This study joins the debate with the hope of reaching common understanding on the relationship between the two variables. The study seeks to investigate the relationship between CEO remuneration and company performance on the Johannesburg Stock Exchange Listed (JSE) Companies from 2010 to 2015. In particular, the focus of the study was to determine if these two constructs were correlated and aligned with the corporate governance principles. The study, employed a deductive methodological approach, based on a longitudinal, descriptive quantitative design. Purposive sampling technique was used to select the...

Evaluations of director and board effectiveness should be formal, rigorous and objective and address reality. They should also be alert to common failings and danger signals, cover governance arrangements and embrace stakeholder views. Assessment criteria used and areas focused upon can be particularly revealing. Areas to consider to improve the value of evaluations include their scoping, frequency and support; incorporating independent views; directorial experience, qualities, knowledge and skills; how evaluations are conducted, including of board meetings and informal activities between them; evaluation challenges and how to ensure balanced assessment; evidence and measures of performance; the consideration of evaluation findings and how they are used; and the periodic review of the evaluation process. Evaluations are sometimes undertaken quickly to satisfy a governance requirement, but effective evaluations can provide opportunities to reflect, review, re-think, re-calibrate and refresh, identify areas for improvement and trigger exploration, renewal and development.

Purpose This paper aims to examine how board evaluations have emerged as an important tool in public policy and corporate practice for enhancing board effectiveness. Design/methodology/approach The authors review the extensive literature on effectiveness and the emerging literature on board evaluation to identify ways to assess the current policy direction for external evaluation of corporate boards. Findings The paper develops an integrated framework of effectiveness that can be used as a tool for board evaluation, in particular for externally facilitated exercises. Research limitations/implications Through its integration of prior conceptual work this paper advances our theoretical understanding of this emerging part of policy and practice, with to-date lack much empirical basis. Practical implications The framework that is developed shows ways to focus how the practice is conducted by boards and external evaluators alike. Social implications It can also help policy formation by p...