This excerpt taken from the DW DEF 14A filed Apr 19, 2006.
Corporate Governance and Related Matters
Statement Regarding Corporate Governance
The Company regularly monitors developments in the area of corporate governance, including the Sarbanes-Oxley Act of 2002 and rules promulgated by the SEC and the New York Stock Exchange. The Company complies with all laws and rules applicable to corporate governance, and has continually implemented best practices as the Company deems appropriate to protect and enhance stockholders interests.
The Company received notification in November 2005 from Institutional Stockholders Services, Inc. (ISS), a Rockville, Maryland-based independent research firm that advises institutional investors, that the Companys corporate governance policies outranked 98.4 percent of all companies listed in the Russell 3000 index. The Company has no business relationship with ISS.Board of Directors
The Board is elected annually by the Companys stockholders, and each director is nominated for election every year. The Company does not have cumulative voting. The Board currently consists of three directors who are employed by the Company, and five non-employee directors. The non-employee directors are Edward W. Rose, III, James F. Gero, Frederick B. Hegi, Jr., David A. Reed and John B. Lowe, Jr. Neither Messrs. Rose, Gero, Hegi, Reed or Lowe, nor any members of their immediate families, have any transactions or relationships with the Company or its subsidiaries. Accordingly, the Board has determined that each of these directors meets the independence standards of New York Stock Exchange.
In making that determination, the Board applied the following standards, in addition to other relevant facts and circumstances:
The independent directors have complete access to, and are encouraged to communicate with, the Companys Chief Executive Officer and any other executives of the Company. During the year ended December 31, 2005, the Board of Directors held twelve meetings. All directors attended at least 75 percent of the regularly scheduled and special meetings of the Board and the Board committees on which they served.
Board members are expected to attend the Companys annual meetings. At the Companys 2005 annual meeting, all members of the Board, each of whom were nominees for re-election, were present. It is anticipated that all Board members who are standing for re-election will be present at the 2006 annual meeting.Executive Sessions
The independent directors, those directors who are not officers or employees of the Company, meet regularly in executive sessions without management. An executive session is held in conjunction with each regularly scheduled Board meeting and is led by a Presiding Director. Additional executive sessions may be called by the Presiding Director in his discretion or at the request of the Board. Mr. Rose, Chairman of the Board, has been designated as the Presiding Director.Contacting the Board of Directors.
Any stockholder who wishes to communicate with the Board of Directors, or the Presiding Director or any member of the Board may do so electronically by sending an e-mail to email@example.com or by writing to any director at the address provided under the directors name in Voting SecuritiesSecurity Ownership of Management.
The Company has three standing committees of the Board of Directors: the Audit Committee, the Corporate Governance and Nominating Committee, and the Compensation Committee. All members of each Committee are non-employee directors who meet the independence and experience standards of the New York Stock Exchange. The Board annually selects the directors who serve on the Committees. Each Committee functions pursuant to a written Charter and written Key Practices adopted by the Board of Directors.
The Companys Governance Principles, as well as the Charters and Key Practices of the Audit Committee, the Corporate Governance and Nominating Committee, and the Compensation Committee, in addition to the Companys Guidelines for Business Conduct and Code of Ethics for Senior Financial Officers, can be accessed on the Companys website at www.drewindustries.com. A copy of any corporate governance document will be furnished, without charge, upon written request to Secretary, Drew Industries Incorporated, 200 Mamaroneck Avenue, White Plains, New York 10601. Information on our website is not incorporated by referenced into this Proxy Statement.
Audit Committee. The purpose of the Audit Committee of the Board of Directors is to assist the Board in its oversight of (i) the integrity of the financial statements of the Company, (ii) the Companys compliance with legal and regulatory requirements, (iii) the independence and qualifications of the independent auditor, and (iv) the performance of the Companys internal audit function, and the independent auditor. The Committee also prepares an annual report for inclusion in the Companys Proxy Statement. The Committee recommends to the Board of Directors, subject to stockholder ratification, the selection of the Companys independent auditor.
The Audit Committee of the Board of Directors currently consists of David A. Reed, James F. Gero, Frederick B. Hegi, Jr. and John B. Lowe, Jr. Mr. Reed serves as Chairman of the Committee and has been determined by the Board of Directors to be an audit committee financial expert as defined by the Securities and Exchange Commission. This Committee held seven meetings during the year ended December 31, 2005.
Corporate Governance and Nominating Committee. The purpose of the Corporate Governance and Nominating Committee of the Board of Directors is to assist the Board in (i) identifying qualified individuals to become Board members, (ii) determining the composition of the Board of Directors and its Committees, (iii) monitoring a process to assess Board effectiveness, (iv) developing and implementing the Companys corporate governance principles, (v) evaluating potential candidates for executive positions, and (vi) overseeing the development of executive succession plans.
The Corporate Governance and Nominating Committee currently consists of Frederick B. Hegi, Jr., James F. Gero, David A. Reed and John B. Lowe, Jr. Mr. Hegi serves as Chairman of the Committee. This Committee held four meetings during the year ended December 31, 2005.
The Corporate Governance and Nominating Committee considers candidates for Board membership suggested by members of the Committee and other Board members, as well as management and stockholders. In this connection, the Committee considers the composition of the Board with respect to experience, balance of professional interests, required expertise and other factors. The Committee uses the same criteria for evaluating candidates nominated by stockholders as it does for those proposed by other Board members or management. To be considered for membership on the Board, a candidate must meet the following criteria, which are also set forth in the Companys Governance Principles: (a) should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders; (b) should have an inquisitive and objective perspective, practical wisdom and mature judgment; (c) must be willing to devote sufficient time to carrying out his or her duties and responsibilities effectively; (d) should be committed to serving on the Board for an extended period of time; (e) should be prepared to resign in the event of any significant change in his or her personal circumstance which may impair his or her ability to effectively serve on the Board; (f) directors who also serve as CEOs or in equivalent positions should not serve on more than two Boards of public companies in addition to the Companys Board; and (g) directors who are not CEOs or equivalent should not serve on more than four Boards of public companies in addition to the Companys Board.
The Corporate Governance and Nominating Committee met in November 2005 to recommend to the Board each of the nominees for election as directors as set forth herein. Stockholders may recommend a prospective nominee for consideration by the Corporate Governance and Nominating Committee by sending the candidates name and qualifications, in writing, to the Secretary at Drew Industries Incorporated, 200 Mamaroneck Avenue, White Plains, New York 10601. Recommendations must be received by February 16, 2007 in order for a candidate to be considered for election at the 2007 annual meeting.
Compensation Committee. The purpose of the Compensation Committee of the Board of Directors is: (i) to assist the Board in discharging its responsibilities in respect of compensation of the Companys executive officers; and (ii) to prepare an annual report on executive compensation for inclusion in the Companys Proxy Statement.
The Compensation Committee currently consists of James F. Gero, Edward W. Rose, III, Frederick B. Hegi, Jr., David A. Reed, and John B. Lowe, Jr. Mr. Gero serves as Chairman of the Committee.
The Compensation Committee is responsible for reviewing the performance and development of the Companys management in achieving corporate goals, and to ensure that the Companys senior executives are compensated consistent with the long-term objectives of the Company as well as competitive practices. This Committee provides oversight and guidance in the development of compensation and benefit programs for senior executives of the Company, reviews and sets the compensation of the Companys Chief Executive Officer, recommends to the Board compensation of other senior executives, based on the recommendations of the Companys Chief Executive Officer, including salary, bonus, incentive compensation and equity awards, administers the Companys 2002 Equity Award and Incentive Plan, approves equity awards, and coordinates with the Corporate Governance and Nominating Committee with respect to compensation of directors. This Committee held four meetings during the year ended December 31, 2005.Stock Options
It has been, and will continue to be, the Companys policy to obtain stockholder approval for any equity-based compensation plans for directors, officers and employees. Moreover, the Company does not re-price stock options. In 2002, the Company began expensing the compensation related to stock options granted after January 1, 2002. As a result of recent changes in generally accepted accounting principles, commencing January 1, 2006, the Company will begin to expense the compensation related to unvested stock options granted prior to January 1, 2002, which expense will be less than $125,000 in 2006.
Employees and Directors Guidelines for Business Conduct
The Company has Guidelines for Business Conduct which all management employees and directors are required to follow in conducting the Companys business, and a Code of Ethics for Senior Financial Officers governing the conduct of its Chief Executive Officer, the chief executive officers of its subsidiaries and the financial officers of the Company and its subsidiaries. The Company has established a method, included in its Guidelines for Business Conduct, by which employees can make anonymous and confidential reports about the Companys accounting practices, internal controls, auditing matters, or any other concerns they may have.Disclosure Committee
The Company has established a Disclosure Committee comprised of executive, financial, operating and legal management personnel. The function of the Disclosure Committee is to develop and implement disclosure controls and procedures intended to ensure that information required to be disclosed by the Company in public reports is made available to management and reported within the specified time periods. Each quarter, the Companys management personnel (exceeding 100 people) are required to certify in writing whether or not any matters arose that should be considered for disclosure.