Corporate Governance Guidelines
(As amended by the Board of Directors on February 25, 2010)
A. THE ROLE OF THE BOARD OF DIRECTORS
1. Direct the Affairs of the Company for the Benefit of Shareholders
The Board believes that the primary responsibility of directors is to oversee the
affairs of the Company for the benefit of shareholders. The Board agrees that day-to-day
management of the Company is the responsibility of management and that the role
of the Board is to oversee management’s performance of that function. The 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.
2. Ethical Business Environment
The Board believes that the long-term success of the Company is dependent upon the
maintenance of an ethical business environment that focuses on adherence to both
the letter and the spirit of regulatory and legal mandates. The Board expects management
will conduct operations in the manner supportive of the Board’s view.
3. CEO Performance Evaluation
The Board believes that CEO performance should be evaluated annually related to
his or her progress toward long term goals and strategies as well as current year
results as a regular part of any decision with respect to the CEO’s compensation.
The Board, after approval of the CEO’s annual goals, has delegated responsibility
to the Executive Compensation and Management Development Committee to evaluate the
CEO’s performance in light of such goals and to approve the CEO’s salary, bonus
and long-term incentives such as stock and option awards.
The Board believes that evaluation of the CEO should be an objective process, based
on both qualitative and quantitative factors, including performance of the business,
accomplishment of long-term objectives, positioning of the Company for the future,
development of management and leadership in the industry.
4. Succession Planning
The Board and the Executive Compensation and Management Development Committee share
the responsibility for succession planning. The Board has delegated responsibility
to the Executive Compensation and Management Development Committee to review and
advise on management succession issues, including the recommendations to the full
Board for selection of a new CEO.
5. Compensation of Other Executive Officers
The Board has delegated oversight of compensation and benefit plans to the Executive
Compensation and Management Development Committee. The Executive Compensation and
Management Development Committee establishes the compensation and benefits programs
for key executive officers, subject in some cases to shareholder approval.
6. Risk Management Oversight
The Board provides oversight of the Company’s risk management processes. In accordance
with New York Stock Exchange requirements, the Audit Committee is primarily responsible
for reviewing policies with respect to risk and fraud assessment and risk and fraud
management and meeting periodically with management to review the results of risk
and fraud assessments conducted by management. In addition, the other committees
of the Board consider the risks within their areas of responsibility.
B. MEETINGS OF THE BOARD OF DIRECTORS
1. Selection of Chairman and Vice Chairman of the Board
The Chairman of the Board shall be an independent director, under the rules of the
Company’s Director Independence Standards and the New York Stock Exchange, elected
by and from the members of the Board. The Chairman presides at all meetings of shareholders
of the Company, all meetings of the Board and all meetings of independent directors
(including executive sessions) and sees that all orders, resolutions and policies
adopted or established by the Board are carried into effect. The Chairman also provides
leadership to ensure that the Board functions in an independent, cohesive fashion.
The Board may also select a non-management director to serve as the Vice Chairman
of the Board, as it deems appropriate. The Chairman and Vice Chairman will fulfill
the other duties set forth in these Corporate Governance Guidelines, the Company’s
Articles of Incorporation and Bylaws, or as otherwise assigned from time-to-time
by the Board.
2. Frequency of Meetings
The Board believes that the number of scheduled Board meetings should vary with
circumstances. While the Board recognizes that directors discharge their duties
in a variety of ways, including personal meetings and telephone contact with management
and others regarding the business and affairs of the Company, the Board feels it
is the responsibility of individual directors to make themselves available to attend
both scheduled and special Board and committee meetings on a consistent basis. There
will be a minimum of four Board meetings annually.
3. Executive Sessions of Non-Management Directors
The Board believes that non-management directors should have the opportunity to
meet in executive session during Board meetings. The Agenda for each Board meeting
shall provide for an executive session. It is the policy of the Board for non-management
directors to meet in executive session at least four times annually. The Chairman
of the Board will preside during executive sessions and, in the absence of the Chairman,
the Vice Chairman (if applicable) is empowered to preside.
4. Access to Management
Board members shall have reasonable access to management. It is assumed however,
that Board members will use judgment to ensure that contact is not distracting to
the business operations of the Company and that such contact, if in writing, be
copied to the CEO and the Chairman. In the ordinary course, the Chairman will facilitate
communication and information flow between the Board and management. The Board and
each committee shall have the power to hire independent legal, financial or other
advisors as they may deem necessary, at the expense of the Company and without consulting
or obtaining the approval of any officer of the Company in advance.
The Chairman shall have access to management and financial and other information
of the Company, as he or she shall deem appropriate under the circumstances to assist
him or her and the Board in the proper discharge of their responsibilities.
5. Attendance of Non-Directors at Meetings
The Board believes that the Chairman or CEO should have discretion to invite such
members of management as the Chairman or CEO deems appropriate to attend the Board
meetings, subject to the Board’s right to request that such attendance be limited
or discontinued.
The Board believes it is important for directors to have exposure to the Company’s
key senior officers and believes their limited attendance at and participation in
Board meetings may be helpful.
6. Agendas and Presentations
The Board believes the Chairman, the Vice Chairman (if applicable) and CEO should
establish the agenda for each Board meeting, taking into account suggestions of
Board members.
7. Information Flow
The Board should receive information important to understanding presentations, discussions
and issues at each meeting, in writing and sufficiently in advance of the meeting
when possible to permit appropriate review.
The Corporate Secretary is responsible for coordinating the information flow to
the directors as directed by the Chairman and to periodically discuss director satisfaction
with Board materials with individual directors and encourage directors to offer
suggestions on materials.
C. BOARD STRUCTURE
1. Non-Management Directors
Non-management director means a director who is not a member of management and has
not been a member of management for the past five years, has no close family or
similar relationship with a member of key management and is not affiliated with
a company or firm which has any material financial relationship with the Company.
There should be as few management directors as possible.
2. Size of the Board
The Board believes that the Board should not be too large, but understands that
the size of the Board will fluctuate from time to time depending on circumstances.
The Board presently has nine members. The Company’s Bylaws permit the Board to vary
in size from three to fifteen. The Board and the Nominating and Corporate Governance
Committee periodically review the appropriate size of the Board, which may vary
to accommodate the availability of outstanding director candidates or the Board’s
changing needs and circumstances.
3. Director Retirement Age and Term Limits
The Board has established a retirement policy for directors which it feels is appropriate
for current circumstances. Under that policy, a director may not stand for election
or re-election after his or her 72nd birthday. The Nominating and Corporate Governance
Committee will periodically review the retirement policy to ensure that it remains
appropriate in light of the Company’s needs.
The Board believes that consistent quality in the directorship can be achieved effectively
without term limits. The Nominating and Corporate Governance Committee will review
incumbent directors and the strengths and weaknesses of the Board as a whole at
least annually.
4. Director Appointments
The Board believes that directors should be nominated for Board approval by the
Nominating and Corporate Governance Committee of the Board, which consists entirely
of independent directors. The Board expects the Nominating and Corporate Governance
Committee to consider the views of the Chairman, Vice Chairman (if applicable) and
the CEO in making appointments, but it is the Nominating and Corporate Governance
Committee’s responsibility to make director recommendations to the full Board for
appointments to fill vacancies of any unexpired term on the Board and to recommend
nominees for submission to shareholders for approval at the time of the Annual Meeting.
It is the joint responsibility of the Nominating and Corporate Governance Committee
and the Chairman to extend the offer to a new director candidate to serve on the
Board.
The Company does not set specific criteria for directors but believes that candidates
should show evidence of leadership in their particular field, have broad experience
and the ability to exercise sound business judgment, possess the highest personal
and professional ethics, integrity and values, and be committed to representing
the long-term interests of the shareholders. The Board believes that its membership
should reflect a diversity of experience, gender, ethnicity and age. Directors must
be willing to devote sufficient time to carrying out their duties and responsibilities
effectively, and should be committed to serve on the Board for an extended period
of time. No member of the Board may sit on more than a total of six public company
boards (including the Board of the Company).
5. Director Independence
A majority of the directors will be independent directors under the New York Stock
Exchange (NYSE) rules as in effect from time to time.
The Board has adopted categorical Director Independence Standards to assist it in
making a determination of independence. A copy of the Director Independence Standards
is attached as Exhibit A. The Board will periodically review the Director
Independence Standards.
In addition to the requirement that a majority of the board satisfy the independence
standards discussed above, members of the Audit Committee and the Executive Compensation
and Management Development Committee must also satisfy additional requirements discussed
in their charters.
6. Director Orientation and Continuing Education
In order to promote director effectiveness, management is responsible for an orientation
process for new directors to include a Board manual and comprehensive written materials
concerning the Company, its operation and the policies and procedures of the Board,
meetings with key members of management, and visits to Company offices and facilities
as appropriate.
The Company shall also consider providing an ongoing education program to ensure
awareness of areas relevant to the Company’s business, including corporate governance,
executive compensation and industry developments.
7. Director, Board and Committee Evaluations
The Board believes that the Nominating and Corporate Governance Committee should
review the performance of incumbent directors prior to their re-election. The Board
expects the Nominating and Corporate Governance Committee to recommend appropriate
action to effect changes in incumbent directors if, in the opinion of the Nominating
and Corporate Governance Committee after discussion with the Chairman, Vice Chairman
(if applicable) and CEO, it would be in the best interest of the Company and its
shareholders to effect such change.
The Board also believes that the Nominating and Corporate Governance Committee should
periodically review the Board’s performance and effectiveness as a body, including
its corporate governance policies and practices, and that a similar review should
be undertaken with respect to each of the Board’s committees. The assessment of
the Board and each committee should address the body’s contribution as a whole and
specifically review areas in which the Board or management believes a better contribution
could be made. This assessment should also include issues of diversity, age and
skills, all in the context of an assessment of the perceived needs of the Board
or the relevant committee at that point in time. The Nominating and Corporate Governance
Committee will coordinate these assessments, which may consist of surveys and self-evaluations,
and report to the Board the results of its analysis and any recommendations following
each such review. The Nominating and Corporate Governance Committee shall coordinate
such reviews at least annually.
8. Director Compensation
The Board believes that the level of director compensation generally should be competitive
with that paid to directors of other corporations of similar size and complexity.
The Board also believes that director compensation should be tied, in part, to corporate
performance.
9. Service of Former Company CEO on the Board
When the CEO resigns, retires, is terminated or otherwise ceases to serve as the
CEO of the Company, he or she will also resign from the Board, effective as of the
date he or she ceases to serve as CEO.
D. COMMITTEES OF THE BOARD
1. Number and Types of Committees
The Board believes that committees should be created and disbanded depending on
the particular interests of the Board, issues facing the Company and legal requirements.
The current standing committees of the Board (that is, committees expected to operate
over an extended period) are the Audit Committee, the Executive Compensation and
Management Development Committee, the Nominating and Corporate Governance Committee
and the Strategic Planning and Investment Committee. The Nominating and Corporate
Governance Committee is primarily responsible for making recommendations to the
full Board on the committee structure, but directors are free to make suggestions
regarding committees at any time and are encouraged to do so. The Board also expects
that the committee structure would be one of the matters considered by the Nominating
and Corporate Governance Committee from time to time as part of its review of overall
Board effectiveness.
2. Assignment and Rotation of Committee Members
The Chairman will annually review Committee chairs and membership and recommend
any changes to the Nominating and Corporate Governance Committee. Based on these
recommendations, the Nominating and Corporate Governance Committee will, in turn,
conduct its own review of Committee chairs and membership and recommend any changes
to the full Board. The Board expects that assignments would be made within the following
guidelines: assignments may be rotated periodically, though not necessarily within
any specified time frame; the Audit Committee, the Executive Compensation and Management
Development Committee and the Nominating and Corporate Governance Committee should
be comprised solely of independent directors; and committee assignments must comply
with any NYSE qualifications.
3. Committee Reports
Reports of committee meetings are submitted to the full Board following each committee
meeting. Committee chairs are offered the opportunity to comment on committee activities
at each Board meeting.
E. OTHER CORPORATE GOVERNANCE ISSUES
1. Communications with the Public
The CEO is responsible for establishing effective communications with the Company’s
stakeholder groups, i.e., shareholders, residents, associates, communities, suppliers,
creditors, governments and corporate partners. It is the policy of the Company that
management speaks for the Company, and the Chairman speaks for the Board. However,
from time-to-time, it may be desirable for individual Board members, at the request
of management, to meet or otherwise communicate with various constituencies that
are involved with the Company. If comments from the Board are appropriate, they
should, in most circumstances, come from the Chairman. All corporate communications
should be in accordance with the Company’s Disclosure Policy.
2. Periodic Review
These principles shall be reviewed by the Nominating and Corporate Governance Committee
from time to time (not less than annually).
Exhibit A
Amended Director Independence Standards
(As adopted February 25, 2010)
The Company’s goal is that at least a majority of the Board of Directors will be
independent. Each year, the Board will affirmatively determine whether a director
is "independent" and will disclose these determinations in its annual proxy statement.
A director will not be considered independent if:
a) the director is, or has been within the last three years, an employee of the
Company, or an immediate family member is, or has been within the last three years,
an executive officer, of the Company or any of its affiliates;
b) the director has received, or has an immediate family member who has received,
during any twelve-month period within the last three years, more than $120,000 in
direct compensation from the Company or any of its affiliates, other than excluded
compensation;
c) (1) the director or an immediate family member is a current partner of a firm
that is the company’s internal or external auditor; (2) the director is a current
employee of such a firm; (3) the director has an immediate family member who is
a current employee of such a firm and personally works on the Company’s audit; or
(4) the director or an immediate family member was within the last three years (but
is no longer) a partner or employee of such a firm and personally worked on the
Company’s or any of its affiliates’ audit within that time;
d) the director or an immediate family member is, or has been within the last three
years, employed as an executive officer of another company where any of the Company’s
or any of its affiliates’ present executive officers at the same time serves or
served on that company's compensation committee;
e) the director is a current employee, or an immediate family member is a current
executive officer, of any organization that has made payments to, or received payments
from, the Company for property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million, or 2% of such other company's
consolidated gross revenues (such payments and consolidated gross revenues to be
measured based on reported figures for the last completed fiscal year); and
For purposes of these guidelines, the terms:
"affiliate" means any entity that controls, is controlled by or is under common
control with the Company, as evidenced by the power to elect a majority of the board
of directors or comparable governing body of that entity;
"excluded compensation" means director and committee fees (including fees paid to
the Chairman of the Board of Directors and the chairman of any committee of the
Board of Directors) and pension or other forms of deferred compensation for prior
service, provided such compensation is not contingent in any way on continued service;
and
"immediate family" has the meaning set forth in Rule 303A.02 of the New York Stock
Exchange, as amended from time to time.