Corporate Governance Guidelines
As approved by the Board of Directors on August 14, 2012
The board of directors of Haverty Furniture Companies, Inc. ("Havertys") has adopted the following guidelines as a framework for corporate governance. The Nominating and Corporate Governance Committee ("Governance Committee") of the board reviews these guidelines annually and recommends changes as appropriate.
- Role of the Board
Havertys' business is conducted by its employees, managers and officers, under the direction of the chief executive officer ("CEO") and the oversight of the board.The responsibility of the Havertys' board of directors is to review and regularly monitor the effectiveness of Havertys' fundamental operating, financial, business plans, policies and decisions, including the execution of its strategies and objectives.The board seeks to enhance shareholder value over the long term.
- Board Responsibilities, Composition and Procedures
- Board Responsibility. The basic responsibility of the directors is to exercise their reasonable business judgment on behalf of Havertys and its stockholders.In discharging this obligation, directors rely on, among other things, Havertys' corporate officers, outside advisors and auditors.The board provides advice and counsel to the CEO and other senior officers of Havertys. The board ensures that Havertys' assets are properly safeguarded, that appropriate financial and other controls are maintained and that business is conducted wisely and in compliance with applicable laws and regulations.
- Number of Directors. The board currently consists of 11 members.This size is satisfactory under current circumstances, but will be adjusted upward or downward to reflect Havertys' changing needs.
- Selection of Board Members and Director Qualifications. Directors may be nominated by the board or by stockholders in accordance with Havertys' bylaws.The Governance Committee will review all nominees for the board in accordance with its Charter.The review will include an assessment of the nominee's judgment, experience, independence, understanding of Havertys' or other related industries, and such other factors as the Governance Committee concludes are pertinent in light of the current needs of the board.The board believes that its membership should reflect a diversity of experience, skills, gender, race, ethnicity and age.The Governance Committee will select qualified nominees and review its recommendations with the board. Based on the resulting decision, the chairman of the board will extend to the nominee an invitation to join the board.
- Director Independence. A majority of the directors must be non-employee directors who meet the "independence" requirements of the New York Stock Exchange listing requirements.
- Board Meetings. The board of directors meets on a regular basis, no less than four times each year. The chairman of the board in conjunction with the CEO and corporate secretary is responsible for determining the agenda items and materials to be distributed in connection with each meeting.All members of the board are encouraged to suggest items for inclusion on meeting agendas and may raise subjects not on the agenda at any board meeting.
- Board Attendance. Directors are expected to attend all meetings of the board and of the committees on which they serve, to review materials in advance of meetings, to actively participate in all board deliberations and to maintain in strict confidence proprietary information and the nature and content of board discussions and other business.
- Chairman of the Board. The board will elect the chairman of the board who may or may not be an employee of Havertys. The chairman will chair all regular sessions of the board and serve as chairman of the Executive Committee of the board. The performance and compensation reviews of a non-executive chairman will be coordinated by the Governance Committee and determined by the independent directors.
- Lead Director. When the chairman of the board is not an independent director, the independent directors shall, by majority vote, annually select one independent director as the board's Lead Director. The Lead Director will preside at all meetings of the non-management directors and independent directors. He or she will provide the Chair with input as to the preparation of agendas for board and committee meetings and will take on such responsibilities as may be assigned to him or her by the non-management directors or the independent directors.
- Executive Sessions. Independent members of the board will meet in executive session as needed. Normally, such meetings will occur during regularly scheduled board meetings.
- Terms of Service. Each director will stand for election annually. Havertys does not impose term limits so as to not unnecessarily interfere with the continuity, diversity, development, experience, knowledge, and the long term outlook of the board. The Governance Committee reviews the prior service of directors eligible to be re‑nominated for board membership on a yearly basis.
- Retirement/Resignation. Independent directors are subject to a mandatory retirement age and cannot stand for re-election in the calendar year following their 72nd birthday.The board may ask a director to continue to serve under certain circumstances upon review and recommendation of the Governance Committee.A director is also required to submit his or her resignation from the board to the Governance Committee in the event that the director retires from or otherwise leaves his or her principal occupation or employment.The Governance Committee can choose to accept or reject the resignation.When the CEO resigns from that position, he or she will be required to simultaneously submit his or her resignation from the board.At the discretion of the board such former officer may be asked to continue as a director until normal retirement age.
- Other directorships. Independent directors are encouraged to limit the number of other boards on which they serve, taking into account potential board attendance and their participation and effectiveness on the boards.The board has limited Havertys' CEO to serving on no more than two other boards.Audit Committee members are also limited to simultaneously serving on the Audit Committee of two or more other public companies. The Governance Committee, under certain circumstances may waive this limitation.
- Conflicts of Interest. Each director is required to disclose to the board any financial interest or personal interest that he or she has in any contract or transaction that is being considered by the board for approval. After such disclosure, the interested director will abstain from voting on the matter, and in some cases, at the request of the chairman of the meeting will leave the meeting while the remaining directors discuss and vote on the matter.
- Director Compensation. The form and amount of director compensation, including the compensation for any non-executive chairman of the board, is determined by the Governance Committee and then recommended to the full board for approval. Non-employee directors receive a combination of cash and stock-based compensation.A non-employee director may elect to receive all board compensation in the form of common stock.
- Stock Ownership Requirement. The board has adopted a Stock Ownership Policy for independent and non-employee directors.
- Communication with the Board. Any stockholder or interested party, who wishes to communicate with the board, the Lead Director, the non-employee or independent directors or any specific director, may contact the Board of Directors, c/o Corporate Secretary, Haverty Furniture Companies, Inc., 780 Johnson Ferry Road, Suite 800, Atlanta, GA 30342.Please specify to whom your correspondence should be directed. Any reports of concerns regarding accounting, internal auditing controls or other audit matters shall be reported at the address given above (if confidentiality is requested, the communication shall be forwarded to the chairman of the Audit Committee).Depending on the subject matter, the correspondence will be handled as outlined under the Director Communications Policy available at www.havertys.com.
- Board Committees
- Committees. The board currently has four standing committees: (a) Executive Committee, (b) Audit Committee, (c) Executive Compensation and Employee Benefits Committee (the "Compensation Committee"), and (d) the Governance Committee.The board may establish additional committees as necessary.
- Committee Charters. Each committee reviews its charter annually to make certain it is consistent with current sound governance practices and legal requirements.
- Independence of Committees. All members of the Audit, Compensation and Governance Committees will be independent directors.
- Board and Committee Self-Assessments. The board and each committee is responsible for annually conducting a self-assessment.The Governance Committee is responsible for monitoring the processes and evaluation criteria. The results of the evaluations are reported to the full board.
- Management Development, Director Education and Succession Planning
- Annual Chief Executive Officer Performance Evaluation. To ensure that the CEO is providing the best leadership for Havertys, the Compensation Committee annually evaluates his or her performance.The Compensation Committee discusses with and seeks feedback from the independent directors during an executive session of the board. The evaluation is based upon objective criteria including the performance Havertys and the CEO's achievement of goals previously approved by the Compensation Committee.
- Director Orientation and Continuing Education. All new directors must participate in Havertys' Orientation Program, which is conducted within two months of the annual meeting at which new directors are elected.This orientation includes presentations by senior management to familiarize new directors with Havertys' business and strategic plans, its significant financial accounting and risk management issues, it compliance programs, its Code of Business Conduct, its principal officers, and its internal and independent auditor.Any sitting director may attend the orientation program. The board, through the Governance Committee, also encourages directors to take advantage of educational programs appropriate for the performance of their responsibilities.
- Succession Planning. The CEO makes an assessment of senior managers and their potential for success to the CEO position along with an assessment of persons considered potential successors to certain senior management positions.These assessments are reviewed annually with the Compensation Committee and presented to the board in executive session.
- Stock Ownership Guidelines for Named Executive Officers. The named executive officers are required to own various levels of stock depending upon their position.The Compensation Committee reviews ownership compliance levels annually.
- Other Matters
- Board Access to Management. Directors have complete access to management.Directors use their judgment to be sure that such contacts are not distracting to business operations of Havertys.
- Board Interaction with Outside Interested Parties. The board believes that management speaks for Havertys.From time to time, at the request of management, individual board members may meet or otherwise communicate with various constituencies that are involved with Havertys.Where comments from the board are appropriate, they will normally come from the chairman.
- Amendments of Guidelines. The Governance Committee reviews these guidelines at least annually and recommends needed changes to the board.