This excerpt taken from the SGR DEF 14A filed Dec 17, 2009.
Recent Developments in Governance
In October 2009, our Nominating and Corporate Governance Committee and Board of Directors reviewed our Principles on Corporate Governance, as well as our other corporate governance guidelines and procedures to determine whether they should be revised to address changes in regulatory requirements and evolving governance practices. Based upon this review, in December 2009, our Board of Directors adopted, revised and restated our Principles on Corporate Governance (Corporate Governance Principles) and compiled, drafted and adopted Executive Compensation Guidelines described below. During fiscal year 2009, we also made significant improvements to our accounting and financial reporting practices, as described below.
No Future Death Benefits for Executive Officers. In fiscal year 2009, the Compensation Committee approved and adopted, and our Board ratified, a policy subsequently incorporated into the Executive Compensation Guidelines whereby the Company will provide shareholders an advisory vote for approval of new employment or other agreements between the Company and executive officers of the Company to the extent that such agreements provide for unearned payments or awards (including acceleration of vesting of previously granted awards) upon the death of the executive officer. This guideline does not apply to existing employment or other agreements or ministerial amendments thereto or renewals or extensions thereof. In addition, this guideline does not require a shareholder advisory vote regarding payment of the following amounts: (i) accrued and/or deferred wages and benefits; (ii) provision (or payments in lieu) of COBRA medical and dental benefits for the executive officers surviving spouse and dependents; or (iii) life insurance benefits that are provided as part of the Companys general employee benefits.
No Future Guaranteed Recurring Management Incentive Program Payments for Executive Officers. The Executive Compensation Guidelines prohibit the Company from entering into any future executive employment agreements that guarantee recurring Management Incentive Program (MIP) payments.
Personal Use of Corporate Aircraft by Executive Officers. The Executive Compensation Guidelines provide that any future personal use of corporate aircraft by executive officers must be paid for by the executive officer, except for existing contractual commitments and the safety of the Chief Executive Officer.
No Tax Gross-Ups for Executive Officers. The Executive Compensation Guidelines provide that executive officers will not receive additional compensation to cover the cost of taxes assessed, if any, on perquisites. Exceptions to this general guideline include taxes associated with relocation and with change in control provisions included in certain employment agreements.
Stock Ownership Guidelines for Directors. The Corporate Governance Principles provide that from January 1, 2010, forward, non-employee directors, until departing from the service to the Board, should hold at least 25% of the shares of stock-based awards granted, with flexibility for tax considerations.
Stock Ownership Guidelines for Executive Officers. The Executive Compensation Guidelines provide that from January 1, 2010, forward, our Chief Executive Officer should hold at least five times his base salary in Company stock-based awards and certain other executive officers should hold at least two and a half times the executive officers base salary in Company stock-based awards. The Chief Executive Officer and current executives have five years from January 1, 2010, to reach the holding requirement and new executives have five years from an executive officers appointment to such position to meet the requirement. The value of stock for this purpose will be measured at the time of award on the same basis it was awarded and shall include all stock-based awards, whether vested or unvested. Executive officers are not required to purchase additional shares if the market price declines from that on the grant date.
Director Evaluation of Shareholder Rights Plan. The Corporate Governance Principles provide that, starting in 2010 and every three years thereafter, the Board shall review the terms and conditions of the Companys shareholder rights plan, including whether termination or modification of the shareholder rights plan is in the best interest of the Company and its shareholders. Our current shareholder rights plan will automatically expire on July 9, 2011.
Director Status Change. The Corporate Governance Principles provide that a non-employee director who either retires from or changes the professional position held when initially elected to the Board shall notify the Board of the change and offer to resign. The Board shall then, through the Nominating and Corporate Governance Committee, review the appropriateness of the directors continued service to the Company. The director will maintain the position until the full Board members act on the Nominating and Corporate Governance Committees recommendation.
Director Participation in ISS Accredited Director Education. The Corporate Governance Principles provide that all of our directors receive at least eight hours of ISS-accredited (or similar training program) director education training every twenty-four months. In connection with this guideline, the Board will strive to offer four hours of in-Board ISS accredited director education programs each year.
Changes in Accounting and Financial Reporting and Governance. Under the supervision and guidance of our Audit Committee, we believe our accounting and financial reporting practices have improved in many respects during the past fiscal year. Based upon the remediation actions taken during fiscal year 2009 and the testing of the control improvements implemented during the year, we reported that the material weaknesses in our internal controls over financial reporting, as identified at August 31, 2008, no longer existed at August 31, 2009, and that our internal disclosure controls and procedures over financial reporting were effective at August 31, 2009. Our remediation activities included: (1) development and issuance of additional and revised policies and procedures regarding the development, reporting and review of estimates at completion (EAC); and (2) design and implementation of related internal controls associated with the new additional and revised policies and procedures, focusing on the following areas: (a) minimum project reporting documentation requirements that allow for an effective analysis and review of the completeness, accuracy and reasonableness of EACs by knowledgeable management; (b) guidance to ensure adequate identification and disclosures by project management of changes in assumptions that could be material to development of EACs; (c) guidance on independent reviews as determined by management; and (d) written periodic project EAC certification requirements. We have significantly strengthened our financial organization with the current team of accounting, financial, tax and SEC reporting professionals, including our Executive Vice President and Chief Financial Officer, our Senior Vice President and Chief Accounting Officer, our Vice President of Taxation, our Executive Vice President, General Counsel and Corporate Secretary and our Vice President of Internal Audit, and have added approximately 100 additional financial professionals and staff.