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Best practices for D&O and board evaluations: Complex data collection, simplified

Streamlining D&O and board evaluations

Director and Officer (D&O) questionnaires are a key tool used for board evaluations, and a requirement for publicly listed companies. These forms are critical for ensuring compliance with regulatory bodies and maintaining transparency for shareholders, particularly when it comes to demonstrating the qualifications and independence of directors.

However, completing these forms can be a laborious task — not only for the directors themselves, but also board administrators and legal counsel.

Common challenges associated with D&O questionnaires and board evaluations include:

• Engagement: Chasing down responses from board members

• Security: Ensuring disclosed information stays protected

• Inefficiencies: Navigating manual or paper-based processes that waste valuable time

• Benchmarking: Staying abreast of how leading organizations are evolving their practices, particularly with board evaluations

In this guide, we outline best practices and key considerations that will help you simplify the D&O process while minimizing the risk of errors and enhancing efficiency.

Board evaluations

Board evaluations (also called board assessments) are typically conducted on an annual basis. Often a requirement for listed companies, the board evaluation process can run the risk of becoming a check-the-box exercise if board leadership fails to set the right tone. Governance professionals must ensure their boards don’t miss the opportunity for valuable feedback, learning and growth.

  • Ensure your next evaluation accounts for today’s challenges: The past few years have been anything but ordinary. As organizations navigate a new work environment and uncertain economic future, many aspects of board composition, board processes and committee structure have been put to the test. How is your board taking this opportunity to reflect and improve? What questions need to be added to account for the unique challenges of today? High-performing boards use the assessment process as an opportunity for growth.
  • Collect feedback on new virtual governance processes: As boards have transitioned meeting formats and processes to a virtual setting, many have discovered new conveniences and efficiencies. Which of these processes have made the board more productive? Which ones should be integrated even after health/safety restrictions are lifted? Governance professionals should work with board leadership to ensure they collect feedback on new virtual meeting formats and processes — particularly those that save time and have the power to impact board performance.
  • Secure board evaluation data: Effective boards take the annual evaluation process seriously — which means they often enclose very candid and sensitive information as part of their evaluation. Governance professionals must make sure this information stays protected in a virtual evaluation process. If companies are using digital tools to complete director evaluations, they should ensure each adheres to top security requirements.
“Boards will benefit from taking a deeper look at their composition, structures and practices in a post-pandemic environment. For example, when we can go back to in-person board meetings, how can we preserve some of the efficiencies we have gained from virtual meetings? If we continue to hold some board meetings virtually, how will we ensure the board has sufficient exposure to management and leadership succession candidates?”
— George Anderson, Partner and Leader of Board Effectiveness Services at Spencer Stuart

Security requirements for virtual governance software

• Client data should be encrypted at rest, in transit and on users’ devices, with at least 256-bit encryption.

• Software providers should be able to show clean annual SOC-2/SSAE 18 audits and ISO 27001 certifications for security.

D&O questionnaires

Prior to an initial public offering or annual proxy filing, the D&O questionnaire collects information from board directors and executive officers that is required for company disclosure. The pain points of D&O questionnaires are often procedural or administrative, which means that governance professionals should aim to automate the process wherever possible.

  • Review and update questionnaires for 2024: While there are typically few changes to D&O questionnaires from year to year, the need to incorporate new information must still be assessed. For example, as conversations around diversity have come into sharper focus, a company may plan to collect and disclose voluntary information about directors’ diversity characteristics. The D&O questionnaire would be one such way to gain directors’ consent.
  • Streamline manual parts of the process: Consider your current process for D&O questionnaires. What are your top frustrations or inefficiencies? Chances are they can be solved by technology. Governance technology providers like Diligent offer tools specifically designed to streamline the D&O process, from building questionnaires to collecting responses and exporting results. Top governance teams are automating manual tasks like D&O questionnaires, so more time can be spent on strategic responsibilities.
  • Consider the director and executive experience: Amid a director or officer’s busy schedule, completing D&O questionnaires can feel like a distraction. Thus, making the process as efficient and painless as possible is the best way for governance professionals to get quick and accurate results. An effective D&O process leverages technology that allows for contingent questions and even pre-fills each director’s or officer’s answers from the year before.

Technology considerations for D&O questionnaires

• Select a software provider that allows directors and executives to access their D&O questionnaire from any device.

• Ensure the software can pre-fill each user’s answers from the year before.

“When it comes to our year-end director and officer questionnaire timing, the process is simple. I‘m able to roll things forward from the previous year. [Diligent] makes it easier for our directors and senior officers to submit that information in a timely manner, not waste their time.”
— Matt Muller, Legal Operations Manager and Corporate Secretary, Farm Credit Mid-America
“Having the tool to be able to do it on an iPad is a really big step forward. And then the way that Diligent analyzes it and produces a report for the board to then discuss, is really useful and saves me a lot of time.”
— Rebecca Sheppard, Global Head of the Company Secretariat, First State Investments

Diligent’s premium questionnaires solution

Organizations routinely need a way to facilitate feedback and data collection from their directors and leadership teams. Diligent enables easy collection and analysis of survey and questionnaire data, like D&O filings and board evaluations — all within the security and ease of Diligent Boards.

  • Create questionnaires for a variety of procedural purposes that can align with your existing questionnaire or new formats
  • Provide an intuitive workflow for board members by having all board related materials in Diligent Boards
  • Easily export the data into excel or word formats for analysis and reporting
  • Eliminate manual or paper process to ensure business continuity and efficiency
  • Save time for respondents with flexible answer formats, including pre-fill from previous surveys

Learn more about how Diligent Board & Leadership Collaboration can help you simplify your D&O and board evaluation process while saving time and resources.


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