Article by Bruce M. Taten and Robert Barker
These eight safeguards can make the self-assessment process useful and relevant and reduce the potential liability for the board and individual directors.
Effective in 2004, companies subject to the listing requirements of the New York Stock Exchange will face the prospect of conducting up to four separate "performance evaluations" for their boards and board committees. Other companies may follow suit as a "best practice" or to meet obligations to third parties. Although such performance evaluations — sometimes called self-assessments — have been considered a "best practice" for good corporate governance, they pose new risks that may not be immediately apparent. Perhaps because of lack of experience, perceived risk, or simply the "newness" of the process, there are no widely accepted procedures for conducting board and committee performance evaluations, or for minimizing the risks associated with them.
