What are some basic guidelines for CEO evaluation?
Note: The following answers are adapted from the timeless guidance of an NACD Blue Ribbon Commission on this topic. For a Directors Monthly article summarizing this report, see Evaluating CEO performance by Boris Yavitz. Successful CEO performance evaluations hinge on clear and shared understandings of expectations. Every board should consider developing a position description for its CEO position. Position descriptions for the chief operating officer (COO) and board chairman (even if combined with the role of the CEO) should be prepared by the incumbents. The board should be comfortable with the fit among these various descriptions. The steps in such a process might include the following: Recognize what the CEO really does. Is there a COO? Does the CEO manage the company’s external relations, leaving almost all operating duties to the COO? Does the CEO chair the board or is there a separate chair? What does the board think the CEO should be doing? Have the CEO state what he or she bel