Accompanying the changes are notes from the ASX Governance Council on the background to each change. Given this, we think it peculiar that nothing was mentioned in regard to several additional new recommendations. These include recommendations that companies evaluate the performance of directors and senior executives.
New Recommendation 1.2 requires that companies should disclose the process for evaluating the performance of senior executives. Somewhat confusingly, the guidance accompanying this recommendation discusses the need for companies to have induction and ongoing training for senior executives. Apart from being somewhat prescriptive, what this has to do with evaluating performance we are at a loss to explain.
Another new recommendation (Recommendation 2.5) requires that companies should disclose the process for evaluating the performance of the board, its committees and individual directors. But there is a similar discussion of an induction and training process that has little to do with the recommendation as it is worded.
Perhaps the Council could consider deleting this excess and unrelated verbiage.
For related articles in this ASX Governance Council’s principles amendments series, see:
Major Changes To ASX Good Governance Principles
ASX Governance Council Removes Remuneration Disclosure Recommendation
ASX Governance Council Recommendation Requires That Many Companies Change Their Remuneration Committee
ASX Governance Council Changes Catch Hedging Of Executive Options
ASX Governance Council Removes Guideline For Disclosure Of Non-Executive Director Retirement Benefits
ASX Council Unsure On Senior Executive Equity Pay
ASX Governance Council And ASX Not Sure Where To Go On Director Equity