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C » Topics » Independent Board Chairman

This excerpt taken from the C DEF 14A filed Mar 13, 2008.

Independent Board Chairman

 

RESOLVED: Shareholders request that our Board establish a rule (specified in our charter or bylaws unless absolutely impossible) of separating the roles of our CEO and Chairman, so that an independent director who has not served as an executive officer of our Company, serve as our Chairman whenever possible.

 

This proposal gives our company an opportunity to follow SEC Staff Legal Bulletin 14C to cure a Chairman’s non-independence. This proposal shall not apply to the extent that compliance would necessarily breach any contractual obligations in effect at the time of our shareholder meeting.

 

The primary purpose of our Chairman and Board of Directors is to protect shareholders’ interests by providing independent oversight of management, including our CEO. Separating the roles of CEO and Chairman can promote greater management accountability to shareholders and lead to a more objective evaluation of our CEO. The Council of Institutional Investors www.cii.org recommends adoption of this proposal topic.

 

The advantage of adopting this proposal should also be considered in the context of our company’s overall corporate governance. For instance in 2007 the following governance status was reported (and certain concerns are noted):

 

•  

The Corporate Library http://www.thecorporatelibrary.com, an independent research firm rated our company:

“D” in Overall Board Effectiveness.

“High Governance Risk Assessment”

“High Concern” in executive pay.

 

• Two directors held 4 or 5 director seats each – Over-extension concern:

Mr. Deutch

Mr. Ryan

• Two directors had 20 or 37 years tenure each – Independence concern:

Mr. Derr

Mr. Thomas

 

Additionally:

•  

We had two “Problem Directors” according to TCL:

1) Mr. Thomas due to the loss of significant shareholder value that occurred at Lucent Technologies during his director tenure.

2) Mr. Parsons because he chaired the committee that set executive pay at Citigroup, a committee with a track record of overcompensation under his leadership.

•  

Our following directors were “Accelerated Vesting” directors. This was due to a director’s involvement with a board that accelerated the vesting of stock options in order to avoid recognizing the related expense:

Mr. Thomas

Mr. Belda

Mr. Armstrong

Ms. Mulcahy

Ms. Rodin

•  

We had no shareholder right to:

1) Cumulative voting.

2) To act by written consent.

3) To call a special meeting.

 

The above concerns shows there is room for improvement and reinforces the reason to take one step forward now and encourage our board to respond positively to this proposal:

 

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