CORPORATE GOVERNANCE GUIDELINES
The Board will have a majority of directors who meet the criteria for independence
required by the New York Stock Exchange. The Nominating & Governance Committee is
responsible for reviewing with the Board, on an annual basis, the requisite skills
and characteristics of new Board members as well as the composition of the Board
as a whole. This assessment will include each member's qualification as independent,
as well as consideration of diversity, age, skills, and experience in the context
of the needs of the Board. Nominees for directorship will be selected by the Nominating
& Governance Committee in accordance with the policies and principles of its charter.
The invitation to join the Board should be extended by the Board itself, by the
Chairman of the Nominating & Governance Committee and the Chairman of the Board.
While it is the sense of the Board that individual directors who change the responsibility
they held when they were elected to the Board should volunteer to resign from the
Board. It is not the sense of the Board that in every instance the directors who
retire or change from the position they held when they came on the Board should
necessarily leave the Board. There should, however, be an opportunity for the Board
through the Nominating & Governance Committee to review the continued appropriateness
of Board membership under the circumstances.
The Board does not believe it should establish term limits. While term limits could
help ensure that there are fresh ideas and viewpoints available to the Board, they
hold the disadvantage of losing the contribution of directors who have been able
to develop, over a period of time, increasing insight into the Company and its operations
and, therefore, provide an increasing contribution to the Board as a whole. As an
alternative to term limits, the Nominating & Governance Committee will review each
director's continuation on the Board every three years. This will allow each director
the opportunity to conveniently confirm his or her desire to continue as a member
of the Board.
The basic responsibility of the directors is to exercise their business judgment
to act in what they reasonably believe to be in the best interests of the Company
and its shareholders. In discharging that obligation, directors should be entitled
to rely on the honesty and integrity of the Company's senior executives and its
outside advisors and auditors. The directors shall also be entitled to have the
Company purchase reasonable directors' and officers' liability insurance on their
behalf, to the benefits of indemnification to the fullest extent permitted by law
and the Company's charter, by-laws and any indemnification agreements, and to exculpation
as provided by state law and the Company's charter.
Directors are expected to attend Board meetings and meetings of committees on which
they serve, and to spend the time needed and meet as frequently as necessary to
properly discharge their responsibilities. Information and data that are important
to the Board's understanding of the business to be conducted at a Board or committee
meeting should generally be distributed in writing to the directors before the meeting,
and directors should review these materials in advance of the meeting.
The Board has no policy with respect to the separation of the offices of Chairman
and the Chief Executive Officer. The Board believes that this issue is part of the
succession planning process and that it is in the best interests of the Company
for the Board to make a determination when it elects a new chief executive officer.
The Chairman will establish the agenda for each Board meeting. At the beginning
of the year the Chairman will establish a schedule of agenda subjects to be discussed
during the year (to the degree this can be foreseen). Each Board member is free
to suggest the inclusion of items on the agenda. Each Board member is free to raise
at any Board meeting subjects that are not on the agenda for that meeting. The Board
will review the Company's long-term strategic plans and the principal issues that
the Company will face in the future during at least one Board meeting each year.
The non-management directors will meet in executive session at least quarterly.
The director who presides at these meetings will be chosen by the non-management
directors, and his/her name will be disclosed in the annual proxy statement.
The Board believes that the management speaks for the Company. Individual Board
members may, from time to time, meet or otherwise communicate with various constituencies
that are involved with the Company. But it is expected that Board members would
do this with the knowledge of the management and, absent unusual circumstances or
as contemplated by the committee charters, only at the request of management.
The Board will have at all times an Audit Committee, a Compensation Committee, an
Ethics Committee and a Nominating & Governance Committee. Generally, the members
of these committees will be independent directors under the criteria established
by the New York Stock Exchange. In addition, there shall be an Executive Committee.
Committee members will be appointed by the Board upon recommendation of the Executive
Committee with consideration of the desires of individual directors. It is the sense
of the Board that consideration should be given to rotating committee members periodically,
but the Board does not feel that rotation should be mandated as a policy.
Each committee will have its own charter. The charters will set forth the purposes,
goals and responsibilities of the committees as well as qualifications for committee
membership, procedures for committee member appointment and removal, committee structure
and operations and committee reporting to the Board. The charters will also provide
that each committee will annually evaluate its performance.
The Chairman of each committee, in consultation with the committee members, will
determine the frequency and length of the committee meetings consistent with any
requirements set forth in the committee's charter. The Chairman of each committee,
in consultation with the appropriate members of the committee and management, will
develop the committee's agenda. At the beginning of the year each committee will
establish a schedule of agenda subjects to be discussed during the year (to the
degree these can be foreseen). The schedule for each committee will be furnished
to all directors.
The Board and each committee have the power to hire independent legal, financial
or other advisors as they may deem necessary, without consulting or obtaining the
approval of any officer of the Company in advance. However, engagements in excess
of $25,000 shall not be made by a committee without the approval of the Board.
The Board may, from time-to-time, establish or maintain additional committees as
necessary or appropriate.
DIRECTOR ACCESS TO OFFICERS AND EMPLOYEES
Directors have full and free access to officers and employees of the Company. Any
meetings or contacts that a director wishes to initiate may be arranged through
the CEO or the Secretary or directly by the director. The directors will use their
judgment to ensure that any such contact is not disruptive to the business operations
of the Company and will, to the extent not inappropriate, copy the CEO on any written
communications between a director and an officer or employee of the Company.
The Board welcomes regular attendance at each Board meeting of senior officers of
the Company. If the CEO wishes to have additional Company personnel attendees on
a regular basis, these suggestions should be brought to the Board for approval.
The form and amount of director compensation will be determined by the Compensation
Committee in accordance with the policies and principles set forth in its charter,
and the Compensation Committee will conduct an annual review of director compensation.
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.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
All new directors must participate in the Company's Orientation Program, which should
be conducted within two months of the annual meeting at which new directors are
elected. 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. In
addition, the Orientation Program will include visits to Company headquarters and,
to the extent practical, certain of the Company's significant facilities. All other
directors are also invited to attend the Orientation Program.
CEO EVALUATION AND MANAGEMENT SUCCESSION
The Compensation Committee will conduct an annual review of the CEO's performance,
as set forth in its charter. The Board of Directors will review the Compensation
Committee's report in order to ensure that the CEO is providing the best leadership
for the Company in the long- and short-term.
The Executive Committee should make an annual report to the Board on succession
planning. The entire Board will work with the Executive Committee to nominate and
evaluate potential successors to the CEO. The CEO should at all times make available
his or her recommendations and evaluations of potential successors, along with a
review of any development plans recommended for such individuals.
ANNUAL PERFORMANCE EVALUATION
The Board of Directors will conduct an annual self-evaluation to determine whether
it and its committees are functioning effectively. The Nominating & Governance Committee
will receive comments from all directors and report annually to the Board with an
assessment of the Board's performance. This will be discussed with the full Board
following the end of each fiscal year. The assessment will focus on the Board's
contribution to the Company and specifically focus on areas in which the Board or
management believes that the Board could improve.
RELATED PARTY TRANSACTIONS
All related party transactions shall be reviewed and approved by the Ethics Committee
of the Board. The review is intended to identify potential conflicts of interest
and to establish safeguards when necessary. In addition, the review is designed
to prevent fraudulent or manipulative acts and practices, and, in general, protect
investors and the public interest. Related party transactions are deemed to be limited
to transactions which are reportable pursuant to rules and regulations of the Securities
and Exchange Commission. Transactions reviewed and approved by the Compensation
Committee of the Corporation shall not require further review.