There is a provision under Non-mandatory requirements of Clause 49 of the listing agreement which provides for 'mechanism for evaluating non-executive Board Members'. This clause states the performance evaluation of non-executive directors could be done by a peer group comprising the entire Board of Directors, excluding the director being evaluated; and Peer group evaluation could be the mechanism to determine whether to extend / continue the terms of appointment of non-executive directors.
Now is such a evaluation practically possible? Will not the 'you scratch my back and I scratch yours' principle creep in so that all survive together and the institution loses.
How to ensure an impartial evaluation of independent directors is the moot question.
M.S.VAIDYANATHAN
Saturday, January 5, 2008
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