This excerpt taken from the PG DEF 14A filed Aug 28, 2007.
Independence of Its Members
It is expected that Board members (in that role) will exercise diligently and in good faith their independent judgment in the best interests of the Company and its shareholders as a whole, notwithstanding their other activities or affiliations.
The Board has determined a majority of its members should be independent, meaning they are free of any material relationship with the Company or Company management. In furtherance of this goal, the Board has adopted the following guidelines for determining whether a member is independent.*
1. Subject to Section 2, a Board member will NOT be independent if, within the past three (3) years:
(a) the Board member is employed by the Company or a member of his/her immediate family is an executive officer of the Company;
(b) the Board member receives or a member of his/her immediate family receives more than $100,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service which are not contingent in any way on continued service;
(c) the Board member is affiliated with or employed by, or a member of his/her immediate family is affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company;
(d) the Board member is employed, or a member of his/her immediate family is employed as an executive officer of another company where any of the Companys present executives serve on that companys compensation committee;
(e) the Board member is an executive officer or employee or any member of his/her immediate family is an executive officer, of a company that makes payments to, or receives payments from, the Company for property or services in an amount which in any single fiscal year, exceeds the greater of $1,000,000 or 2% of such companys consolidated annual gross revenues;
(f) the Board member is an executive officer or employee, or any member of his/her immediate family is an executive officer, of a company which is indebted to the Company or to which the Company is indebted, and the total amount of the indebtedness exceeds the greater of $1,000,000 or 2% of the consolidated annual gross revenues of either company;
(g) the Board member or any member of his/her immediate family serves as an officer of a charitable or educational organization, and donations by the Company (excluding Company matches of charitable contributions made by employees or directors under the Companys Matching Gifts Program) exceed the greater of $1,000,000 or 2% of the organizations consolidated annual gross revenues.
2. The Board will examine the independence of each of its members once per year, and more frequently when there are changed circumstances that may affect a Board members independence. The Board will weigh all relevant facts and circumstances in determining independence. If a Board member has a relationship that exceeds the thresholds described in Section 1 or another significant relationship with the Company or Company management, then the independent Board members will determine whether that Board members relationship affects his/her independence. Regardless of other circumstances, a Board member will not be independent if s/he does not meet the independence standards adopted by the New York Stock Exchange, from time to time, or any applicable legal requirement.
3. Independence determinations will be disclosed in the Companys proxy statement.
For purposes of these guidelines, members of his/her immediate family and similar phrases will mean a persons spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than an employee) who shares the persons home. The Company means The Procter & Gamble Company and all of its subsidiaries.