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XXX Plc

Board Evaluation Exercise

Project Proposal

CMK
Consulting

Background and Understanding of Your Needs


XXX Plc1

XXX Plc (APR) is a leading share registration service provider in Nigeria with over 30 years of share registration experience in the Nigerian
Capital Market. APR participates in various offers, including IPO, Right Issue, Debenture, State and Federal Government Bonds, etc.

XXX Plc is a fully owned subsidiary of United Bank for Africa Plc. APR is a standard-delivery service provider for corporate organizations in
the primary and secondary sectors of the capital market.

APR requires the services of a consultant to assist in a Board Evaluation/ Assessment exercise

Board Evaluation
Board evaluation is a best practice around the World 2

1992: Cadbury Report (UK) first recommended conducting an annual assessment of the boards performance as a best practice in
governance. Conducting an annual board assessment is one of the guidelines in the modern UK Combined Code

OECD Corporate Governance Guidelines noted that regular evaluation of the boards performance was one of the boards key
responsibilities

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XXX Website
Board Evaluation Practices, Experiences from Latin American Companies Circle (OECD, IFC, Global Governance
2 Forum)

Background and Understanding of Your Needs

2003: New York Stock Exchange (NYSE) requires that all listed companies conduct an annual assessment of the performance of the
board

Listed below are the recommended practices regarding board evaluation from a number of governance codes 1
Institution/Source
Frequency
Recommendations
Central Bank of Nigeria Code of
Corporate Governance for Banks and
other Financial Institutions in Nigeria

The U.K Corporate Governance Code

IBGC Code of Best Practices (Brazilian


Institute of Corporate Governance)

Not explicitly stated

There should be a formal assessment of the effectiveness of the Board as a whole and
the contribution by each individual director (including the Chairman) to the
effectiveness of the Board

On a yearly basis

The Board should undertake a formal and rigorous annual evaluation of its own
performance and that of its committees and individual directors.

Evaluation of the Board of FTSE 350 companies should be externally facilitated at least
every three years (on a comply-or-explain basis).

A formal evaluation process of the performance of the Board, of individual directors and
of the CEO.

The process shall be conducted by the Chair.

The participation of an outside expert may contribute to the effectiveness of the


process.

Evaluation system shall be adapted to each organization.

Disclosure of the process and of the evaluation results to the shareholders.

On a yearly basis

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Board Evaluation Practices, Experiences from Latin American Companies Circle (OECD, IFC, Global Governance Forum)
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Potential Benefits of Board Evaluation1


Benefits
Leadership

Role Clarity

Team Work

To Organisation

To Board

To Individual Directors

Demonstrates
commitment
improvement at individual level

Sets the performance tone


culture of the organisation.

and

Role model for CEO and senior


management team

An effective chairperson utilising a


board
evaluation
demonstrates
leadership to the rest of the board

Demonstrates long term focus of the


board

Leadership behaviours agreed and


encouraged

Clarifies director and committee roles

Clarifies duties of individual directors

Sets a board norm for roles

Clarifies expectations

Builds trust between board members

Encourages

Encourages active participation

Develops commitment and sense of

Enables clear distinction between the


roles of management, CEO and the
board

Enables
principles

appropriate

Builds Board/
relationships

CEO/

to

delegation

Management

individual

director

involvement

Develops commitment and sense of


ownership

ownership

Clarifies expectations

1. Seven Steps to Effective Board & Director Evaluations: Kiel & Beck

Work Approach
The high-level work approach to be adopted for this engagement is as illustrated below. It draws heavily from the work of two leading Australian
experts: Geoffrey Kiel and James Beck1

1.0 Determine
Objectives of Evaluation

Establish what the


board hopes to
achieve with the
assessment exercise

2.0 . Determine Who Will


of Evaluation

Establish who will be


evaluated:
The board as a whole
Board committees
Individual directors
All of the above

3.0 Determine What Will


be Evaluated

Establish the specific themes


for evaluation

4.0 Select Techniques


for Evaluation

Select techniques for


evaluation
Qualitative techniques
Quantitative techniques
Combination of both

5.0 Conduct Evaluation


& Analyze Results

Conduct evaluation, analyse


evaluation results and discuss
with relevant stakeholders

6.0 Project Management & Quality Control

1. Seven Steps to Effective Board & Director Evaluations: Kiel & Beck
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1.0: Determine Objectives of Evaluation


Narrative

Output

Establish what The Board hopes to accomplish with the evaluation exercise:

Determine overriding motivation for the evaluation exercise

Distil objectives clearly defined objectives enable The Board to set specific goals for the

A shared understanding of
objectives of the evaluation.

evaluation and make decisions about the scope of the review:

Issues such as complexity of the performance problem, size of the board, stage of the
organizational life-cycle and significant developments in African Prudential Registrars
competitive environment will determine issues to be raised.

Scope of the review (i.e. the number of people involved, resource allocation etc.) will be
determined by the severity of problems facing The Board and the availability of sufficient
resources to carry out an evaluation.

Salient questions to ask at this stage include 1..

Is Our Board Composition Right


for the Challenge?..

Are we Addressing the Risks that


Could Send Our Company Over
The Cliff?..

Are We Prepared to Do Our Job


Well When a Crisis Erupts?)..

Are we well Prepared to Name


Our Next CEO?..

Does our Board Really Own the


Company's Strategy?..

Is Our Governance Committee


Best Of Breed? ..

How Can Our Board SelfEvaluation Improve Our


Functioning And Our Output?..

Does the board have the right


committees, and are they
functioning well?
..

Does the board have the right


kind of expertise? Is anything
missing?..

1. Owning Up: The 14 Questions Every Board Member Should Ask by Ram Charan

2.0: Determine Who Will be Evaluated


Narrative

Output

A wide range of individuals/ groups could be considered for evaluation. At this stage, The Board (with
assistance from the consultant) will determine what groups are most important or relevant. Some

Identified

groups

and

individuals for evaluation

relevant groups include:

The Board as a whole (including committees)

Individual directors (including the roles of chairpersons) and;

Key governance personnel.

Effective evaluation will require selection of the most appropriate individuals or groups to review.
Options include:

The Board could be evaluated as a whole.

Progress to the evaluation of Board committees, individual directors and the chairperson

A high level competency assessment of The Board can be


included as part of this process..
Required
Competencies

Current
Competencies

Competency Gap
Bridging
Interventions

What is needed to do
the job properly?

How strong is The Board


at doing these things?

Addressing weaknesses
and building on strengths

Some of the competencies for assessment could include:

Functional Competencies

Organisational Competencies

Attributes

Strategic Perspective

Leadership

Teamwork and Collaboration

Business and Financial Acumen

Organisational Awareness

Innovation & Creativity

Alliance Management

Customer Orientation

Integrity

Conflict Resolution

Industry Knowledge

3.0: Determine What will be Evaluated


Narrative

Output

Having established the objectives of the evaluation and the people/groups to be evaluated to achieve
these objectives, these objectives will then be elaborated into a number of specific themes to ensure

Specific

themes

for

evaluation

that the:

The evaluation clarifies any potential problems.

Identifies the root cause(s) of these problems, and

Tests the practicality of specific governance solutions, wherever possible

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4.0: Select Techniques for Evaluation


Narrative

Output

Based on the specific needs of African Prudential, a range of qualitative and quantitative techniques will
be selected

Specific

techniques

for

evaluation

Qualitative techniques: The three main methods used for collecting qualitative data in governance
evaluations are interviews, board observation and document analysis:

Interviews: An excellent method of assessing directors perceptions, meaning and constructions of


reality by asking for information in a way that allows them to express themselves in their own
terms1

Observation of board meetings.

Relevant documents could also be a rich source of information in the governance


evaluation process. It will help confirm/elucidate on data collected using other
methods.

Surveys are by far the most common form of quantitative technique & will likely be used.

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Business Arrangements
Our professional fees for the arrangement described in this proposal are based on the level of staff and time required to complete the
assignment.
We estimate this assignment will take 1 month.
Based on our understanding of the required scope of the project, We estimate that our services will cost a discounted fee of N 2.16 million,
representing 10% discount on our fees in line with our commitment to partner with you on this strategic initiative.
Our fees exclude VAT and out-of-pocket expenses which are incidental to the assignment. Out-of-pocket expenses will be billed separately at
actual costs incurred, if not provided directly by you. Furthermore, we will bill 60% of the contract sum as mobilisation billing prior to
commencement of the engagement.

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About the Consultant C.M.K Chukudebelu

Specifically, he has acquired experience in Enterprise Resource Planning application implementation, Business Process Analysis and
Re-engineering, Human Resources, Telecommunications Engineering, Oil & Gas Industry and Project Management.

Has worked KPMG & Accenture. He worked on a wide range of projects, involving subject areas as diverse as Organisational
Restructuring, Cost-Benefit Analysis, Business Process Analysis and Human Resources. Examples of projects include:

Project manager for an integration advisory assessment of the Dangote Group.

Project manager for HR organizational restructuring project at Federal Inland Revenue Service

Project manager for Design of an Invoicing and Payment Model for British American Tobacco/ Great Brands Nigeria Limited

He was the Group Projects Coordinator at Nigerias largest indigenous software company, responsible for the delivery of projects, CRM
and support activities and a budget of millions of dollars.

Has also anchored projects like a ground breaking study of agricultural value chain (the project was jointly sponsored by a leading
commercial bank & a subsidiary of the World Bank Group)

Has a Bachelors Degree in Electronic Engineering and a Masters Degree in Telecommunications and Information Systems.

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