Board Membership 101: Evaluating CEO Performance

Once a board has hired a capable CEO, it’s important that they continue to offer their guidance and support. For some boards, evaluating CEO performance is a bit of an afterthought. Stephen P. Kaufman, CEO at Arrow Electronics, describes his own first evaluation process as merely perfunctory.
evaluating CEO performance

He explains, “The chair of the compensation committee would pop by my office for just 10 minutes after the year-end closed session of independent directors.

He’d inform me that the board was happy that the company had made its numbers, thank me for my leadership, tell me what compensation it had approved, and express his regret that he couldn’t stay to talk.”

In other words, as long as things appeared to be going well, the board merely patted him on the back and went about its own business. This model, however, does very little to thoroughly evaluate the CEO’s performance.

While it focused on his ability to meet financial goals, it overlooked his influence on company culture, strategic planning, and other aspects of leadership that indicate the development of a well-rounded company.

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