The Board of Directors’ performance appraisal system is a component of corporate governance since the BOD is the only organizational unit that is self-evaluated given its position on the top of the organizational structure and sensitivity of its information and data. This concept applies to all business entities on optional basis.
For companies regulated by Capital Markets Authority in the State of Kuwait, they should comply with the requirements of the Executive Regulations of Law No. 7 of 2010 comprising sixteen modules where Module 15 – Corporate Governance – contains controls and criteria to be considered when developing the Board of Directors and executive management performance appraisal systems.
Given the importance of this pillar of corporate governance, the CMA Executive Regulations addressed it through stating three articles for the same in Chapter 11 of Module 15 – Corporate Governance:
|Article 11-4||sets forth the requirement to develop performance appraisal systems for the members of the Board of Directors and the executive management on periodic basis.|
|Article 11-5||sets forth the requirement to develop key performance indicators (KPIs) to evaluate the Board of Directors as a whole and the contribution made by each member of the board and its committees, and evaluate the performance of executive managers on periodic basis (annually).|
|Article 11-6||sets forth some examples of key performance indicators (KPIs) including the qualitative and quantitative KPIs.|
Added value to business entities from BOD and Executive Management Performance Appraisal Systems Services
- Clearly define the key performance indicators for the directors and help achieve the company’s strategic objectives.
- Enhance the efficiency of directors’ performance and motivate them to reach their full potentials.
- Identify strengths and weaknesses in the performance of board and committee members.
- Enhance the performance of executive management, provide supervision and monitoring, and identify strengths and weaknesses.
Services provided by Baker Tilly
Development of Board of Directors and Executive Management Performance Appraisal Systems.