Director Qualifications
Candidates should be distinguished individuals who are prominent in their fields or otherwise possess exemplary qualities that shall enable them to effectively function as directors of the Company. The Nominating and Corporate Governance Committee shall focus on the following qualities in identifying and evaluating candidates for Board membership: background, experience and skills; character, reputation and personal integrity; judgment; independence; diversity; viewpoint; commitment to the Company and service on the Board. The Nominating and Governance Committee may also consider any other factors that it may determine to be relevant and appropriate.
Independence
At least a substantial majority of the Board shall be comprised of directors meeting the independence requirements of the NYSE. The Board shall make an affirmative determination at least annually as to the independence of each director. The Board may from time to time establish categorical standards to assist it in making independence determinations. The categorical standards currently established by the Board are attached hereto as Annex A.
Director Nominations
The Nominating and Corporate Governance Committee shall recommend individuals for membership on the Company’s Board of Directors. In making its recommendations, the Nominating and Corporate Governance Committee shall:
- review candidates’ qualifications for membership on the Board (including making a specific recommendation as to the independence of the candidate) based on the criteria approved by the Board (and taking into account any independence, financial literacy and financial expertise standards that may be required under applicable law, rules or regulations, of the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (the “SEC”) promulgated from time to time); and
- periodically review the composition of the Board and its committees, including the chairs of each committee, in light of all of the factors the Nominating and Corporate Governance Committee deems relevant.
The Board proposes a slate of nominees for consideration each year. Between annual meetings, the Board may select one or more directors to serve until the next annual meeting. The Nominating and Corporate Governance Committee identifies, investigates and recommends prospective directors to the Board. Stockholders may recommend a nominee by writing to the Corporate Secretary in accordance with the Company’s By-Laws. All recommendations are brought to the attention of the Nominating and Corporate Governance Committee.
Board Size
The By-Laws of the Company allow for between 3 and 18 members of the Board. Although the Board considers its present size to be appropriate, it may consider expanding its size to accommodate its needs or reducing its size if the Board determines that a smaller Board would be more appropriate. The Nominating and Corporate Governance Committee shall periodically review the size of the Board and recommend any proposed changes to the Board.
Annual Election of Directors
All directors are elected annually by the stockholders. The Company does not have staggered terms and does not elect directors for longer periods. Any vacancies on the Board may be filled or new directors appointed by the Board between annual meetings of stockholders, but any such appointment shall only remain in effect until the next annual meeting of stockholders, when any such appointee shall be presented to the stockholders for election.
Majority Voting for Directors
In an uncontested election, each director shall be elected by the vote of the majority of the votes cast with respect to that director’s election at a meeting of stockholders for the election of directors at which a quorum is present. A majority of votes cast means that the number of votes “for” a director’s election must exceed fifty percent (50%) of the votes cast with respect to that director’s election.
In a contested election, the nominees receiving a plurality of the votes cast by holders of shares entitled to vote in the election at a meeting at which a quorum is present shall be elected. An election shall be considered contested if the number of nominees for election of directors exceeds the number of directors to be elected.
In order for any incumbent director to become a nominee of the Board for further service on the Board of Directors, such person must submit an irrevocable resignation, which resignation shall become effective upon (a) that person not receiving a majority of the votes cast in an election that is not a contested election, and (b) acceptance by the Board of that resignation in accordance with the policies and procedures adopted by the Board for such purpose.
In the event that an incumbent director does not receive a majority of the votes cast in an election, the Board, acting on the recommendation of the Nominating and Corporate Governance Committee, shall no later than at its first regularly scheduled meeting following certification of the stockholder vote, determine whether to accept the resignation of the unsuccessful incumbent. Absent a determination by the Board that a compelling reason exists for concluding that it is in the best interests of the corporation for an unsuccessful incumbent to remain as a director, no such person shall be elected by the Board to serve as a director, and the Board shall accept that person’s resignation.
As set forth in the By-Laws, if the Board determines to accept the resignation of an unsuccessful incumbent, the Nominating and Corporate Governance Committee shall recommend a candidate to the Board to fill the office formerly held by the unsuccessful incumbent, unless the Board decides to decrease the size of the Board.
Term Limits
Although the Board does not believe it should establish term limits, the Board shall periodically review the appropriateness of director term limits in connection with its procedures for the selection and nomination of directors. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contributions 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.
The Board believes the annual assessment of the Board’s and each director’s performance provides the Board the information necessary to confirm the desirability of each director continuing as a member of the Board.
Retirement Age
The current mandatory retirement age for directors is 74. No director who is, or would be over, the age of 74 at the expiration of his or her current term may be nominated to a new term, unless the Board waives the mandatory retirement age for a specific director in exceptional circumstances. Such waiver must be renewed annually.
Simultaneous Service on Other Public Company Boards or Audit Committees
It is the policy of the Board that every director must notify the Board prior to accepting any invitation to serve on another public company corporate board and/or another public company corporate board’s audit committee. The Nominating and Corporate Governance Committee shall evaluate the continued appropriateness of Board and/or committee membership under the new circumstances and make a recommendation to the Board as to any action to be taken with respect to continued Board and/or committee membership.
If a member of the Board wishes to serve on the board of directors of more than a total of five public companies, including the Company’s Board, the director must seek Board approval prior to accepting the additional service.
If a member of the Audit Committee wishes to serve on the audit committees of more than a total of three public companies, including the Company’s Audit Committee, the director must seek Board approval prior to accepting the additional service.
Changes in Primary Employment
It is the policy of the Board that every director must notify the Board of his or her retirement from present employment, any change in employer and any other significant change in professional roles and responsibilities. Such a director should also offer not to stand for reelection as a director. The offer not to stand for reelection should be initially communicated to the Board.
It is not the sense of the Board that such directors should necessarily leave the Board. There should, however, be an opportunity for the Nominating and Corporate Governance Committee to evaluate the continued appropriateness of Board membership under the new circumstances and make a recommendation to the Board as to any action to be taken with respect to continued Board membership.
Conflicts of Interest
If an actual or potential conflict of interest develops because of a change in the business of the Company, or in a director’s circumstances (for example, significant and ongoing competition between the Company and a business with which the director is affiliated), the director should report the matter immediately to the General Counsel or the Chief Compliance Officer who shall, where appropriate, report the matter to the Board or Nominating and Corporate Governance Committee for evaluation and appropriate resolution. The Company’s Code of Conduct contains a complete description of the Company’s policies regarding conflicts of interest.
If a director has a personal interest in a matter before the Board, the director shall disclose the interest to the full Board, shall recuse himself or herself from participation in the discussion and shall not vote on the matter.