Corporate Governance Policies and Guidelines
1. Responsibilities of Board and Assessment of Board Size and Composition. The Board of Directors, which is elected by the stockholders, is the ultimate decision-making body of the Company, except with respect to those matters reserved to the stockholders by law or pursuant to the Company’s articles of incorporation and/or bylaws. The Board will have the following responsibilities:
It is the policy of the Company that independent directors will compose a majority of the Board of Directors. In order for a director to be deemed “independent,” the Board must affirmatively determine that the director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and otherwise meets the independence requirements imposed by the New York Stock Exchange from time to time.
The Board will undertake an annual review of the “independence” of all directors. For purposes of these guidelines, the Company realizes that it is not possible to anticipate, or to explicitly provide for, all circumstances that might bear on the materiality of a director’s relationship with the Company. Accordingly, it is the policy of the Company that, when making “independence” determinations, the Board will broadly consider all facts and circumstances.
In addition, the Board recognizes that it is important that each director have the requisite time to devote to the oversight of the Company’s business. Therefore, in choosing new directors, the Board will seek candidates who do not serve on so many other boards as to interfere with their ability to dedicate the requisite time to serve on this Board. The Board believes that directors who are full-time employees of other companies should not serve on more than three other public company boards at one time, and that directors who are retired from active employment should not serve on more than six such boards. The Board also believes that Audit Committee members should not serve on the audit committee of more than two other public companies. The Board may, however, make exceptions to this standard as it deems appropriate and in the interest of the Company’s stockholders.
The Chief Executive Officer and other executive officers of the Company shall seek the approval of the Nominating and Corporate Governance Committee before accepting membership on the board of directors, or similar governing body, of any for profit enterprise. Directors and executive officers of the Company must immediately notify the chair of the Nominating and Corporate Governance Committee and the Chief Legal Officer of the Company upon invitation to join the board of directors, or similar governing body, of any unaffiliated entity to allow for conflicts checks.
The Nominating and Corporate Governance Committee shall at least annually review the size and composition of the Board to assess whether the personal experience and expertise of the individual directors, and the overall mix of experience, expertise, independence and diversity of backgrounds among all the directors, will enable the Board to most effectively monitor the Company’s performance and participate in providing direction to the Company and otherwise are in accordance with these Corporate Governance Policies and Guidelines. Such annual review shall also include director succession planning, in light of expected future needs of the Board and Company and application of policies pertaining to tenure on the Board, so as to ensure that Board effectiveness is not diminished during periods of transition. The Nominating and Corporate Governance Committee shall recommend to the full Board any changes deemed necessary or desirable. In assessing Board size, the Nominating and Corporate Governance Committee shall seek to ensure that there are sufficient independent directors to perform the functions assigned to the various Board committees, while at the same time ensuring that the Board as a whole can function effectively in terms of discussion and decision-making. It is the sense of the Board that eight to 10 directors is the optimum size for the Company currently.
2. Number and Responsibilities of Board Committees. The current committees of the Board are the Audit Committee, the Compensation and Human Resources Committee (“Compensation Committee”), the Nominating and Corporate Governance Committee, the Executive Committee, and the Technology Strategy Committee. The independent directors have elected a Lead Independent Director who acts as a committee of one. Such additional or replacement committees may be established as the Board, upon recommendation of the Nominating and Corporate Governance Committee, determines is necessary or desirable in light of the Company’s circumstances at any particular time and the Board’s desire to most effectively utilize directors’ time, experience and expertise.
The responsibilities of Board committees shall be as set forth in their charters, which shall be approved by the full Board. Such charters shall address the purpose, goals, duties, and responsibilities of the Committee, as well as qualifications for Committee membership, procedures for Committee member appointment and removal, structure and operations and Committee reporting to the Board. The charters will also provide for annual performance evaluations of such Committees. These charters shall be posted on the Company’s web site, and the Company’s annual report shall indicate that they are posted on the Web site and that a written copy of the charters will be made available to any stockholder who requests it.
Each Committee will have the full power and authority to retain and terminate the services of such advisers and experts, including counsel, as it deems necessary or appropriate with respect to specific matters within its purview.
3. Composition of Board Committees. All members of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee shall be independent directors. “Independent” shall be defined as set forth in paragraph 1 above, except in relation to members of the Audit Committee. For purposes of members of the Audit Committee, “independent” shall also mean, in addition to the requirements of paragraph 1 above, that the director cannot accept any consulting, advisory or other compensatory fee from the Company or be an affiliate of the Company or any subsidiary. In addition, any member of the Audit Committee who holds 20 percent or more of the Company’s stock (either directly or indirectly) cannot chair, or be a voting member of, the Audit Committee. The Board believes that a majority of the members of the Executive Committee and the Technology Strategy Committee should be non-employee directors, that the chairperson of the Board chair the Executive Committee, and that an independent director chair the Technology Strategy Committee. The Nominating and Corporate Governance Committee shall review Board committee structure and assignments at least annually, and recommend any changes to the full Board. The Board believes that it is generally desirable for members of a committee to serve on that committee for four years, for the chairperson of a committee to serve on that committee for five years, for terms of service on a committee to be staggered among the committee members so as to provide necessary continuity, and for the next chairperson of a committee to be designated at least one year in advance of any such change to facilitate the transition. Such designation shall be made by the Nominating and Corporate Governance Committee, with input from the current committee chair.
4. Board Leadership. The Board believes that the chairpersons of the respective Board committees should appropriately assume leadership roles within the Board pertaining to issues within the purview of the committees that they chair. The Board believes that by taking this approach, its decision-making processes will be enhanced.
5. Evaluation of Board and Individual Director Performance. The Nominating and Corporate Governance Committee shall conduct at least annually an evaluation of the performance of the Board with a view toward increasing the effectiveness of the Board and the individual directors. The structure of such evaluation process, including the use of outside consultants, shall be in the discretion of the Nominating and Corporate Governance Committee. Results of the evaluation process shall be discussed with the full Board.
6. New Director Candidates. The Board delegates to the Nominating and Corporate Governance Committee the responsibility to identify and recommend to the Board candidates for director in accordance with the policies and procedures established by the Nominating and Corporate Governance Committee from time to time. The Board will then determine the director candidates that are submitted for election by the stockholders at the annual stockholders’ meeting. At a minimum, candidates for director will be selected on the basis of: strength of character; ability to exercise independent thought, practical wisdom and mature judgment; ability to make independent analytical inquiries; willingness and ability to devote adequate time and resources to diligently perform Board duties; and reputation, both personal and professional, consistent with the image and reputation of the Company. The Board is committed to a diversified membership, in terms of both the individuals involved and their various skills, experiences and areas of expertise.
7. Board Meetings and Access to Management. The chairperson of the Board, in consultation with the Lead Independent Director, as applicable, and other members of the Board, will determine the timing and length of meetings of the Board. There will be at least four regularly scheduled meetings of the Board in each calendar year. In addition to regularly scheduled meetings, additional unscheduled Board meetings may be called upon appropriate notice at any time to address specific needs of the Company. Directors are expected to attend, in person or by telephone, Board meetings and meetings of committees on which they serve. In addition, directors are expected to attend the Company’s annual meeting of stockholders.
The chairperson of the Board, in consultation with the chief executive officer (if such offices are filled by different persons) and the Lead Independent Director, as applicable, will set the agenda for Board meetings, with the understanding that certain items pertinent to the advisory and monitoring functions of the Board will be brought to it periodically by the chairperson for review and/or decision. Agenda items that fall within the scope of responsibilities of a Board committee will be reviewed with the chairperson of that committee. Any member of the Board may request that an item be included on the agenda.
Presentation materials are important to the Board’s understanding of the business and essential to prepare Board members for productive meetings. Materials relating to specific agenda items will be provided to Board members sufficiently in advance of the Board meeting to allow the directors to prepare for discussion of such items at the meeting. It is recognized that, in the event of a pressing need for the Board to meet on short notice, materials may not be available in advance of the meeting. In that event, sufficient time for discussion will be allocated to allow the Board to become adequately informed on such issue
At the invitation of the Board, members of senior management recommended by the chairperson of the Board, in consultation with the Chief Executive Officer (if such offices are filled by different persons), will attend Board meetings for the purpose of participating in discussions. Generally, presentations of matters to be considered by the Board will be made by the manager responsible for that area of the Company’s operations.
In addition, Board members will have complete access to management and employees of the Company. The chief executive officer or secretary of the Company will, whenever requested, assist in arranging and facilitating such meetings or contacts. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company.
8. Presumptive Term Limit Retirement. Any non-employee director who has completed or will as of the next annual meeting of stockholders have completed 12 years of service as a director of the Company or will have turned 70 years of age by such time shall submit a letter to the Nominating and Corporate Governance Committee offering not to stand for reelection to the Board at any future meeting of stockholders. The Nominating and Corporate Governance Committee shall have complete discretion as to whether and when such offer shall be accepted. Any member of the Nominating and Corporate Governance Committee to whom this policy applies shall recuse himself or herself from such deliberations.
9. Directors Who Change Their Employment Status. Upon a change in the employment status of any non-employee director (whether by resignation, retirement, reassignment or termination), that director shall submit a letter to the Nominating and Corporate Governance Committee offering not to stand for reelection to the Board at the next annual meeting of the Company’s stockholders. The Nominating and Corporate Governance Committee shall have complete discretion as to whether such offer shall be accepted. Any member of the Nominating and Corporate Governance Committee to whom this policy applies shall recuse himself or herself from such deliberations.
10. Executive Sessions of Non-Employee Directors. To promote open discussion among non-employee directors, the Board will devote a portion of each regularly scheduled Board meeting to executive sessions without management participation. The independent directors will designate, and publicly disclose the name of, the director who will preside at such executive sessions. If the group of non-employee directors includes directors who are not independent, as defined in the New York Stock Exchange’s listing standards, it is the Company’s policy that at least one such executive session convened per year shall include only independent directors. The Board will not take formal actions at such sessions, although the participating independent directors may make recommendations for consideration by the full Board.
11. Evaluation of the Chief Executive Officer. The Compensation Committee annually reviews and approves the Company’s corporate goals and objectives with respect to the compensation of the Company’s chief executive officer, and evaluates the chief executive officer’s performance in light of those goals and objectives. The non-employee directors will also meet annually to evaluate the performance of the chief executive officer, which evaluation will be based on the Compensation Committee’s evaluation and the evaluation and feedback forms previously completed by the non-employee directors. The Compensation Committee will then determine and approve, either as a Committee or together with the Company’s other independent directors (as directed by the Board of Directors), the appropriate level and structure of the chief executive officer’s compensation based on such evaluations. In reviewing the chief executive officer’s performance, factors to be considered shall include financial performance against revenue goals and EPS as well as nonfinancial goals such as diversity, effective strategic planning, communication skills, external relationships, relationships with the Board, overall vision, and leadership skills. The results of these evaluations shall be communicated to the chief executive officer by the chairperson of the Compensation Committee or his or her designee.
12. Succession Planning and Management Development. The Board delegates to the Compensation Committee the responsibility for monitoring the processes for managing executive succession, diversity, and development for positions other than the chief executive officer, and the results of those processes. Management shall report at least annually to the Compensation Committee regarding these processes and the results thereof, and shall report to the full Board as directed by the Compensation Committee. The full Board shall be responsible for succession planning with respect to the chief executive officer position, and shall discuss such succession planning annually with its chief executive officer.
13. Non-Employee Director Compensation. The Board delegates to the Compensation Committee, with input from Company management or outside consultants as to the practices of other similarly sized U.S. public companies with respect to compensation of non-employee directors, the responsibility to assess the form and amount of compensation provided by the Company to its non-employee directors, and to recommend any changes in such compensation. Independent directors will be compensated for their service to the Company on a basis that is commensurate with the commitment made by such directors to serve the Company, and taking into account the compensation paid to directors by other similarly situated public companies. The Board will periodically review the amount and nature of compensation paid to directors, and will adjust such compensation arrangements as appropriate. Directors who also are employees of the Company will not receive cash compensation for their service as directors.
The Compensation Committee will consider that directors’ independence may be jeopardized if director compensation and perquisites exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated. Any changes in the form or amount of compensation provided to non-employee directors must be approved by the full Board.
14. Board Interaction with Stockholders and Other Constituencies.The Board believes it appropriate that Company management ordinarily speak for the Company in dealings with stockholders, customers, analysts, the media and other constituencies. Management shall keep the Board regularly apprised of significant information gleaned from its contacts with all of these constituencies. The Company, however, will provide a means by which interested third parties may communicate directly with the Board and with the independent directors.
15. Confidential Stockholder Voting. The Board believes that all stockholder meeting proxies, ballots and voting tabulations that identify the vote of a particular stockholder should be kept confidential if the stockholder has requested confidential treatment on the proxy card or ballot. If the stockholder so requests, no such document shall be available for examination, nor will the identity and vote of any stockholder be disclosed prior to the final tabulation of the vote at the stockholders’ meeting except (i) as necessary to meet applicable legal requirements; (ii) to allow the independent election inspectors to count and certify the results of the vote; or (iii) in the event of a proxy solicitation in opposition to the Board based on an opposition proxy statement filed with the Securities and Exchange Commission. The independent election inspectors may inform the Company whether or not a particular stockholder has voted.
16. Director Orientation and Continuing Education. All new directors will participate in the Company’s orientation program. This orientation will include presentations by senior management to familiarize new directors with the Company’s strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Business Conduct and Ethics, its principal officers, and its internal and independent auditors.
It is the policy of the Company to encourage all directors to participate in continuing director education programs.
17. Publishing of Guidelines. These Policies and Guidelines shall be posted on the Company’s Web site, and the Company’s annual report shall indicate that they are posted on the Web site and that a written copy of these Policies and Guidelines will be made available to any stockholder who requests it.
Effective Date: May 13, 2008