8.2.5.3 Evaluation

The DCGC addresses the evaluation in best practice provision III.1.7. The supervisory board should evaluate its own functioning and the functioning of its board committees and individual members at least once a year. The management board should not take part in these evaluation sessions. Furthermore, the supervisory board should evaluate the functioning of the management board and its individual members. Best practice provision III.1.7 requires that the report of the supervisory board should include a statement about how the evaluation of the functioning of the supervisory board and its committees and individual members has been carried out.

The DCGC does not require external evaluations, but provides some guidance in ‘Explanation of and notes on terms used in the Code’. Although the way the review is carried out is considered to be a matter for the company, the DCGC suggests that it ‘can take place collectively, on an individual basis between the chairman and the members separately, or through the input of an external adviser’ (Corporate Governance Code Monitoring Committee 2008: 41). The explanation of this best practice provision stresses the benefits of an evaluation, because it is expected to enhance the quality of the performance and functioning of the supervisory board. The explanation remarks that confidentiality in the evaluation process is important, so that supervisory directors feel free to share their opinions.