Pub. 11 2021-2022 Issue 3-1

November • December 2021 21 board and its committees. When conducted properly, board evaluations benefit stakeholders, directors, and the institutions by developing a stronger board that is a strategic asset to the institution and its management. Forty-seven percent of participants conduct a formal evaluation of the board, and of these institutions, the majority (66%) conduct the evaluation themselves instead of using a third party (1.3%) or an evaluation tool developed by a third party (18%). Eleven percent opt for both self- evaluation and that of a third party. As might be expected, board evaluations occur on an annual basis at most of the institutions conducting evaluations (68%), and evaluations of individual directors occur at only 22% of the participating institutions. Each board should have its own unique set of objectives and goals by which to be measured. Evaluations can be a full board activity or fall under the purview of the compensation committee as they increasingly cover leadership development, talent management and set board pay. An outside party can objectively assist the board in identifying its strengths and weaknesses and improving board performance. Pearl Meyer Managing Director Tim O’Rourke, who often conducts board evaluations, said, “We have seen a significant increase in compliance with governance policy since board evaluations have become more common.” Diversity in the Boardroom With the increased spotlight on diversity, equity, and inclusion (or DE&I), institutions and boards are becoming more aware of the need to focus on creating a more diverse representation in the boardroom. “This is one of the many areas where bank boards increasingly focus when conducting board evaluations,” according to O’Rourke. Our 2021 survey reports on board representation by gender and ethnic or racial minority. While there is much more to be accomplished, 97% of institutions that participated in our survey reported an average of two female board members, and 93% reported at least one board member of an ethnic or racial minority. Additionally, illustrating what a hot topic this is, there has been an increase in education surrounding DE&I (35%) and environmental, social, and governance (ESG) issues (23%). Pearl Meyer’s 2020 Equity, Diversity, and Inclusion – Management and Pay Practices Survey Report further highlights the board’s role in organizational diversity, as it reveals that many are taking ownership for improving diversity. Fifty-four percent of banking institutions responded that the full board has oversight of DE&I. Additional insights into not only organizational diversity and inclusion practices but also gender and minority representation approach to pay equity and closing the pay gap are available in this informative report. Summary All institutions are unique, and banking is an ever-evolving business. Successful banks require quality directors with a varied range of knowledge, skills, and abilities to navigate the most unpredictable circumstances. Developing a compensation program that fits your board’s needs and attracts knowledgeable directors is a challenge. The Pearl Meyer 2021 Banking Board of Directors Compensation and Governance Practices Survey is a valuable resource and provides the most comprehensive look at board data, trends, and practices. For information on purchasing the 2021 Banking Board of Directors Compensation and Governance Practices Survey, please email survey@pearlmeyer.com. About the Authors Jordan Gagnon is a Survey Account Manager in the Boston Office. He manages Pearl Meyer’s portfolio of Banking Compensation and Benefits Surveys in addition to assisting with other compensation surveys and client accounts. Rhonda Snyder i s a Survey Account Manager based out of the Boston Office. She joined Pearl Meyer in August of 2019, and she works as a liaison to the Southeast banking associations on banking salary surveys while also assisting many other state and national survey clients. The Pearl Meyer 2021 Banking Board of Directors Compensation and Governance Practices Survey is a valuable resource and provides the most comprehensive look at board data, trends, and practices.