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Role of the Board
Havertys' business is conducted by its employees, managers and officers, under the direction of the Chairman and 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 will seek 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 the Company. In discharging this obligation, directors rely on, among other things, the Company's corporate officers, outside advisors and auditors. The Board provides advice and counsel to the Chairman of the Board and the Chief Executive Officer and other senior officers of the Company. The Board ensures that the assets of the Company are properly safeguarded, that appropriate financial and other controls are maintained and that the Company's business is conducted wisely and in compliance with applicable laws and regulations.
Number of Directors. Our Board currently consists of 11 members. This size is satisfactory under current circumstances, but will be adjusted upward or downward to reflect the changing needs of the Company.
Selection of Board Members and Director Qualifications. Directors may be nominated by the Board or by stockholders in accordance with the Company's By-laws. The Nominating and Corporate Governance Committee will review all nominees for the Board in accordance with its Charter. The assessment will include a review of the nominee's judgment, experience, independence, understanding of the Company's or other related industries, and such other factors as the Committee concludes are pertinent in light of the current need of the Board. The Board believes that its membership should reflect a diversity of experience, gender, race, ethnicity and age. The Committee will select qualified nominees and review its recommendations with the Board, which will decide whether to invite the nominee to join the Board. The Chairman of the Board will extend the Board's invitation to join the Board.
Director Independence. A majority of the directors must be non-management 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 is responsible for determining the agenda items and materials to be distributed in connection with each meeting, in conjunction with the CEO and Corporate Secretary. 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 Company proprietary information and the nature and content of Board discussions and other business.
Executive Sessions. Non-employee members of the Board will meet in executive session as needed. Normally, such meetings will occur during regularly scheduled Board meetings. Meetings of the non-employee Directors will be chaired by the “Lead Director”.
Lead Director. When the Chairman of the Board is a management director, the Board will also designate a non-employee director as “Lead Director.” The Lead Director will chair executive sessions of the non-management directors and have such other duties as the Board may determine. The Chairman of the Nominating and Corporate Governance Committee shall serve as the Lead Director.
Terms of Service. Each director will stand for election annually. The Company, however, does not impose term limits, because the Company believes they could unnecessarily interfere with the continuity, diversity, development, experience, knowledge, and the long term outlook of the Board. The Nominating and Corporate Governance Committee will review the prior service of the director who is eligible to be re nominated for Board membership on a yearly basis.
Retirement/Resignation. Our non-employee Directors are subject to a mandatory retirement age and cannot stand for re-election in the calendar year following their 72nd birthday. The Board of Directors may ask a director to continue to serve under certain circumstances upon review and recommendation of the Nominating and Corporate Governance Committee. When the Chairman of the Board or the Chief Executive Officer 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 Board member 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 the Company's Chief Executive Officer to serve on no more than two boards other than that of the Company. The Nominating and Corporate Governance Committee, under certain circumstances may waive this limitation.
Conflicts of Interest. Each Director is required to disclosure 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 will be determined by the Nominating and Corporate Governance Committee and then recommended to the full Board for approval.
Stock Ownership Requirement. There is no stock ownership requirement for Directors. A portion of the compensation for directors is paid with shares of the Company's stock. A director may elect to receive all Board Compensation in the form of the Company's Common Stock.
Board Committees
Committees. The Board currently has four standing committees: (a) Executive Committee, (b) Audit Committee, (c) Executive Compensation and Employee Benefits Committee, and (d) Nominating and Corporate Governance Committee. The Board may establish additional committees as necessary.
Committee Charters. Each Committee reviews its charter annually to make certain they are consistent with current sound governance practices and legal requirements.
Independence of Committees. All members of the Audit, Executive Compensation and Nominating and Corporate Governance Committee will be independent directors.
Board and Committee Self-Evaluations. The Board of Directors and each Committee shall be responsible for annually conducting a self-evaluation. The Nominating and Corporate Governance Committee shall be responsible for monitoring the processes and evaluation criteria. The results of the evaluations will be reported to the full Board.
Management Development, Director Education and Succession Planning
Annual Chairman and Chief Executive Officer Performance Evaluations. To ensure that the Chairman and the CEO are providing the best leadership for the Company, the Executive Compensation Committee will annually evaluate their performance. The Compensation Committee should discuss with and seek feedback from the non-management directors during an executive session of the Board. The evaluation is based upon objective criteria including the performance of the Company and the Chairman and CEO's achievement of goals previously approved by the Committee.
Director Orientation. All new Directors must participate in Havertys' Orientation Program, which should be conducted within two month of the annual meeting at which new Directors are elected. This orientation will include 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 auditors. Any sitting Director may attend the orientation Program.
Continuing Education. The Board, through the Nominating and Corporate Governance Committee will work with Management to develop and provide appropriate continuing education programs to assist directors in development and maintaining skills necessary or appropriate for the performance of their responsibilities.
Succession Planning. The Chairman and CEO will provide annually to the Executive Compensation Committee an assessment of senior managers and their potential for success to the Chairman or CEO position along with the assessment of persons considered potential successors to certain senior management positions. These assessments are reviewed annually with the Executive Compensation Committee and presented to the Board of Directors in Executive Session.
Other Matters
Board Access to Management. Directors have complete access to management. Directors will use their judgment to be sure that such contacts are not distracting to the business operations of the Company.
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 Nominating and Corporate Governance Committee will review these Guidelines at least annually to ensure that they remain suitable for the needs of the Company. The Nominating and Corporate Governance Committee will recommend needed changes to the Board.
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