Attendance at Meetings. Directors are expected to attend all Board and committee meetings, as well as the annual shareholders' meeting, absent exigent circumstances.
Meeting Agendas and Materials. Agendas for upcoming Board and committee meetings are regularly reviewed and updated for planning purposes. The agenda and topics for Board and committee meetings are developed through discussions between management and Board members. Information and data that are important to the issues to be considered are distributed to Board and committee members in advance of each meeting.
Overseeing Business Strategy and Performance. Each year, the Board formally reviews and discusses our annual and long-term strategic business plans. The Board holds an annual extended off-site meeting focused on long-term strategic planning, which includes reviewing and discussing external business dynamics, emerging trends and risks and potential strategic alternatives. The Board also reviews our annual and longer-term business plans, financial targets and plans to achieve those targets. Focused discussions of key business issues, segment and business unit operations and strategic developments are held at each Board meeting.
CEO Succession Planning. The Board annually reviews and discusses management development and succession plans for the Chief Executive Officer and the Chief Executive Officer’s direct reports. The review includes an assessment of senior executives and their potential as successor to the Chief Executive Officer. The Board has also adopted procedures to elect a Chief Executive Officer in the event of the Chief Executive Officer's sudden departure.
The Board’s Role in Risk Management. The full Board is actively engaged in overseeing the Company’s enterprise risk management (ERM) program, which is designed to identify risks that may have a significant impact on our business. The oversight process includes reviewing mitigation actions for these risks and receiving appropriate assurances that the risks are being effectively managed by the organization. Effective risk management is an integral part of Board and committee deliberations throughout the year. To ensure that the Board fulfills its risk oversight role in a comprehensive and coordinated manner, the responsibility for overseeing specific aspects and areas of our risk management program are purposefully assigned to the full Board and committees.
The Audit Committee has primary responsibility for reviewing and monitoring the Company’s ERM program. The Audit Committee annually reviews the Company’s
ERM process and the comprehensive assessment of key strategic, financial, operational and regulatory risks identified by management, as well as mitigating practices. The Audit Committee then discusses the ERM process and results with the full Board. Each committee is responsible for overseeing risks consistent with the duties set forth in their charters, some of which are highlighted under Committee Performance and Operations. In addition, the Board discusses risks related to the Company’s annual financial plan at the beginning of each fiscal year, and risks related to business strategy at the annual strategic planning meeting. It continues to address these risks in follow-up discussions as the year progresses.
Through these processes, the Board oversees a system to identify, assess and address on a timely basis material risks to the Company. The Board also encourages management to promote a corporate culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations in a way that is consistent with the Company’s targeted risk profile.
Access to Independent Advisors and Management. The Board and its committees may engage independent outside financial, legal and other advisors as they deem necessary to provide advice and counsel on various topics or issues. Directors also have full access to officers and employees.
Board Leadership. The Chairman of the Board is appointed by the Board upon the recommendation of the Corporate Governance Committee. The Chairman leads the Board and oversees Board meetings and the delivery of information necessary for the Board's informed decision-making. The Chairman also serves as the principal liaison between the Board and our management. The Board determines whether the role of the Chairman and the Chief Executive Officer should be separated or combined based on their judgment as to the structure that best serves the interests of the Company. Currently, the Board believes that the positions of Chairman and Chief Executive Officer should be held by the same person as this combination has served and is serving the Company well by providing unified leadership and direction.
At any time when the Board determines that the same individual should hold the positions of Chairman and Chief Executive Officer, or at any time when the Chairman is not independent, the independent directors elect an Independent Lead Director. The Board recognizes the importance of appointing an Independent Lead Director to maintain a strong independent board leadership structure that functions collaboratively with management, while maintaining independent oversight. Therefore, the position of Independent Lead Director comes with a clear mandate and significant authority and responsibilities. The primary responsibilities of the Independent Lead Director are set forth below:
- Reviews and approves Board agendas with the Chairman;
- Presides at all Board meetings at which the Chairman is not present, including executive sessions of the independent directors (held at each Board meeting), and informs the Chairman of issues considered and decisions reached during those sessions;
- Facilitates effective and candid Board discussions and communications to optimize Board performance;
- Meets regularly with the Chairman, serves as a liaison between the Chairman and the independent directors, and helps facilitate communications between the Board and senior management;
- Leads the Board in setting forth and enforcing its expectations of ethical standards at the Board and senior leadership levels;
- Oversees Board evaluations, and leads the Board’s process for selecting his or her successor;
- Advises the Chairman of the Board’s informational needs and reviews and approves the types of information sent to the Board;
- Calls meetings of the independent directors, as needed, and sets agendas for executive sessions;
- Monitors and coordinates with the Chairman and Chair of the Corporate Governance Committee on governance issues; and
- Serves as a Board representative for consultation and direct communication with major shareholders.
Our Independent Lead Director is elected to serve for a three-year term, with the appointment ratified annually.
Executive Sessions. Non-employee directors meet in executive session without management directors present at each Board meeting.
CEO Performance Evaluation. At least annually, the Chair of the Compensation Committee leads an executive session of the Board where non-employee directors meet formally without management directors present to evaluate the Chief Executive Officer's performance. This executive session includes a review of the Chief Executive Officer's annual accomplishments, compensation and performance objectives for the next fiscal year. In advance of the meeting, a formal Chief Executive Officer evaluation is conducted that includes input from all non-employee directors. Following the executive session, the Chair of the Compensation Committee communicates the results of the evaluation to the Chief Executive Officer.
Corporate Governance Procedures. The Corporate Governance Committee has responsibility for corporate governance and Board organization and procedures. The Corporate Governance Committee actively monitors and discusses evolving corporate governance trends. It reviews our corporate governance practices in light of those trends and implements those practices that it determines are in the best interests of the Company and consistent with our long-standing commitment to good corporate governance practices.
Board Evaluations. The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance. Our annual evaluation processes, including written Board and committee evaluations and individual director interviews, are designed to assess Board and committee effectiveness as well as individual director performance and contributions. The Corporate Governance Committee considers the results of our annual Board evaluations in connection with its review of director nominees to ensure the Board continues to operate effectively. Each committee also reviews its annual evaluation, and the committee chairs present the results to the Board for its consideration and discussion.
Director Orientation and Education. New directors participate in an orientation program that includes discussions with senior management, background materials on our strategic plan, organization and financial statements and visits to our facilities. Management and outside experts regularly make presentations to the Board on issues relevant to our industry and business, corporate governance trends and other topics of interest to the directors. We encourage each director to participate in continuing educational programs that are important to maintaining a director's level of expertise to perform his or her responsibilities as a Board member, and we reimburse directors for the cost of attending these programs.
Director Code of Conduct. The Board expects all directors, officers and employees to act with the highest standards of integrity and adhere to our policies and applicable code of conduct. Directors also are required to follow our Director Code of Conduct. The Corporate Governance Committee of the Board annually reviews and oversees compliance with the Director Code of Conduct.