February 16, 2003	Sunday	Zul Hijjah 14, 1423

NEW YORK, Feb 15: Corporate boards will soon be getting in touch with their “inner selves” as they start the process of evaluating key board committees as required under tighter standards proposed by the New York Stock Exchange.

Yet whatever insights result from these evaluations will remain private, so shareholders will not be able to glean any information from the annual reports they find in their mailboxes every spring.

And in any case, the evaluations are not binding.

It really is for the benefit of the board, so it can do the best job it can by looking at itself in a constructive and careful manner, said Myra Drucker, the chief investment officer of the General Motors Investment Management Corp. and member of the NYSE committee that recommended a wide range of new standards for public companies, including the committee evaluations.

If you are disclosing the results of the evaluation, you might as well not do it at all, said Peter Gleason, director of research at the National Association of Corporate Directors.

Public disclosure becomes a sticking point for everyone and you are not going to get honest feedback, he said.

It is an internal tool to increase board effectiveness. The whole idea is to identify areas for improvement.

The process, according to Gleason, seeks to answer key questions: does the board have the right people with the right skill sets, are people actively participating, does the board get enough information from management and can directors hold unrestrained, frank discussions about management and the company.

The NYSE’s Corporate Accountability and Listing Standards Committee labored during the first half of 2002, while stocks spiraled downward after successive corporate scandals drove investors out of equities.

The proposals are before the US Securities and Exchange Commission for review and eventual approval.

If approved, the compensation, audit and nominating and corporate governance committees will be subject to annual performance evaluations.

The NYSE, however, did not describe in any detail how this should be undertaken and there is no requirement for the assessment of individual directors.

Ray Pellecchia, spokesman for the NYSE, said the Big Board does not plan on issuing additional guidance for the committee reviews.

An SEC spokesman said he was unsure when the SEC will rule on the proposals.

Drucker said the NYSE recommendations leave it up to individual companies to figure out how to conduct the review.

There is not one standard. Each committee would develop a questionnaire that would generally speak to questions like: ‘Are they tackling the right issues? Are they focused on the right areas? Do they function well as group?’ she said in an interview with Reuters.

Richard Steinberg, PricewaterhouseCoopers senior partner and head of the firm’s corporate governance program, said the board likely will bring in an outside consultant to manage the process, which it intended to be constructive and enhance performance.

The boards see how it is performing against its responsibilities and charter, he said.

They often bring in facilitators who may have (a list) of the various attributes, skill sets and responsibilities that the board measures itself against. Sometimes they will interview a number of directors, Steinberg said.

And the NACD’s Gleason added there is no lack of interest on the subject of board evaluations.

His own group’s NACD Blue Ribbon Commission on Board Evaluations: Improving Director Effectiveness flew off the bookshelf.

That was our top-selling publication last year. We sold over 3,500 copies. A lot of people are at least coming to the arena, he added.—Reuters