…but need to do more on succession planning. The Association of British Insurers has today published a “Report on Board Effectiveness”. The press release is here and the report is here.
From the press release:
“UK boardrooms are making clear progress on diversity and the use of external evaluation but need to do more on disclosing their approach to succession planning according to the ABI’s report on Board Effectiveness published today.
The ABI’s 2012 report on Board Effectiveness sets out progress and highlights best practice in diversity, succession planning and the use of external evaluation, one year on from its first report on board effectiveness. It also includes a review of the role of the chairman.
Based on ABI analysis of FTSE 350 annual reports, key findings show that:
• Board diversity is improving: 26% of FTSE 100 and 31% of FTSE 250 board appointments were women, in the year to 30th November 2012, compared to 19% and 12% respectively in the last report. On succession planning, 80% of FTSE 100 and 50% of FTSE 250 chief executive officers appointed in the year to September 2012 were internal appointments.
• Based on a survey of FTSE 350 company secretaries, the use of external evaluation of board effectiveness is increasing: 44% of FTSE 100 and 30% of FTSE 250 companies conducted external evaluation. This is up from 31% and 17% respectively in the previous year.
The main recommendations in the report to improve shareholder engagement on these important issues are:
- Companies should disclose steps they are taking to promote boardroom diversity.
- Companies need to show more meaningful disclosures on their approach to succession planning
- External board evaluations should be carried out by an independent party with no conflict of interest
The report also explores the role of the chairman. Based on interviews with a selection of FTSE 350 chairman, there was consensus on the key components of the Chairman’s role in:
- Creating the right board dynamic and composition, setting the agenda, managing the board’s relationship with the executives and acting as an ambassador for the company.
It was also agreed that Chairmen should outline in the annual report their role in creating an effective board and how it has been set up to respond to any challenges the company faces.”
