CORPORATE GOVERNANCE GUIDELINES
(As Amended February
Role of the Board of
Directors and Management
The Board of
Directors (“Board”) of WellPoint, Inc. (the “Company”) is the ultimate
decision-making body of the Company except with respect to matters reserved
to the shareholders. It oversees and guides the Company’s business through
the exercise of its business judgment in what it reasonably believes to be
in the best interests of the Company and its shareholders. Within this
framework, the Board also considers the interests of other constituents
such as members, associates, business partners and the communities in which
the Company operates. It selects the Chief Executive Officer (“CEO”) who in
turn selects executives (collectively, “Management”) who are charged with
the conduct of the Company’s business in a manner that is consistent with
the direction provided by the Board and the Standards of Ethical Business
Conduct of the Company. Having selected Management, the Board oversees and
monitors their performance. The Board also oversees the Company’s exposure
to major risks and, with the assistance of the Audit Committee, oversees
the processes by which the Company assesses, monitors and manages its
exposure to major risks. In addition, the Board may delegate from time to
time to one or more Board committees the responsibility for assisting in
the oversight of categories of risk.
and Compensation of the Board
Size of the Board
The size and
composition of the Board should be appropriate for effective deliberation
of issues relevant to the Company’s business and related interests and not
exceed a number that can function efficiently as a body. Thus, it is the
policy of the Company that the size of the Board should be within the range
of ten to nineteen members.
It is the policy of
the Company that the Board consists of a majority of independent Directors.
Independence is determined in accordance with the New York Stock Exchange
Listing Standards, as amended from time to time (“Listing Standards”). The
Board has adopted categorical standards (“Categorical Standards”), which
are attached as Appendix A, to assist with the determination of
independence of its members as provided in the Listing Standards. Directors
have an affirmative obligation to inform the Chair of the Board, the CEO
and the Chairperson of the Governance Committee of any changes in their
circumstances or relationships that may impact their designation as
Committee is responsible for developing and recommending to the Board the
appropriate skills and characteristics required of Directors in the context
of the current make-up of the Board. At a minimum, potential Board members
should have personal and professional integrity, business judgment,
relevant experience and skill, knowledge of the health care industry or
experience with businesses or other organizations and sufficient time and
energy to diligently perform their duties. Candidates should be able to
provide insight and practical wisdom based on experience to represent the
interests of all shareholders. In evaluating director candidates, the
Governance Committee considers the interplay of the candidate's experience
with the experience of other Board members, conformity with any
requirements of the Blue Cross and Blue Shield Association, the extent to
which the candidate would be a desirable addition to any committees of the
Board and the overall diversity of the Board.
Election of Directors
The Board is
responsible for selecting the Company’s Director nominees and recommending
them for election by the shareholders. The Governance Committee identifies
individuals believed to be qualified to become Directors and recommends to
the Board the Company’s nominees to stand for election by the shareholders,
or in the case of a vacancy, by the Board. In accordance with the Articles
of Incorporation, in a non-contested election, Directors are elected pursuant
to a majority voting standard, which means that the number of shares voted
“for” a Director must exceed the number of shares voted “against” that
Director. The By-Laws provide that in a non-contested election any
incumbent Director who does not receive a majority of the votes cast in his
or her election must immediately tender his or her resignation to the Board
of Directors, if not previously tendered in connection with his or her
election. The Governance Committee will recommend to the Board whether to
accept the resignation or to take other action.
Executive Officer's Board Membership
It is the policy of
the Company that when a CEO terminates his or her employment with the
Company, he or she should submit a written resignation from the Board at
the same time. Whether the individual continues to serve on the Board is a
matter for discussion at that time by the Board. A former CEO serving on
the Board will not be considered an independent Director for any “cooling
off” period required by the Listing Standards.
Directors Who Change
Their Present Job Responsibility
It is the policy of
the Company that when a Director's principal occupation or business
association changes substantially from the position he or she held when
originally invited to join the Board, the Director will notify in writing
the Chair of the Board, the CEO and the Chairperson of the Governance
Committee and will submit a written resignation from the Board at the same
time. The Board does not believe that Directors who retire or change from
the position they held when they came on the Board should necessarily leave
the Board. There should, however, be an opportunity for the Board to review
the continued appropriateness of Board membership under these
Service on Other
Boards of Directors
Directors must limit
the number of other public company boards on which they serve to four in
order to facilitate effective service on the Company's Board, except that
the CEO must limit the number of other public company boards on which he or
she serves to two boards. Directors should notify in writing the Chair of
the Board, the CEO and the Chairperson of the Governance Committee in
advance of accepting an invitation to serve on the board of another public
company, the audit committee of another board or the board of a health care
The Board does not
believe it should establish term limits. While term limits could help
ensure that there are fresh ideas and viewpoints available to the Board,
they hold the disadvantage of losing the contribution of Directors who have
been able to develop, over a period of time, increasing insight into the
Company and its operations and, therefore, provide an important
contribution to the Board.
It is the policy of
the Company that a Director may not stand for re-election if he or she has
attained the age of 72 prior to the annual meeting of shareholders at which
his or her term of office expires. A Director who attains the age of 72
during his or her term may continue as a Director until his or her term
Invitation to a Potential Director to Join the Board
The invitation to
join the Board should be extended by the Board itself via the Chair of the
Board, the CEO, and the Chairperson of the Governance Committee.
and Continuing Education
The Company has an
orientation process for new Directors that includes
detailed background material on the Company and meetings with Management.
Thereafter, Directors receive materials and briefings on subjects that
assist them in discharging their duties and have the opportunity to
participate in continuing education programs developed and/or presented by
Compensation and Board Stock Ownership Guidelines
Committee annually reviews and recommends to the Board the compensation and
reimbursement arrangements for non-employee Directors. Directors who are
employees of the Company do not receive any compensation for their service
on the Board or any Board committee. To align Directors’ interests with the
interests of shareholders, the Board believes that a meaningful portion of a non-employee Director's compensation should be
provided in common stock. Further, each non-employee Director has an
obligation to own $400,000 of Company common stock (including deferred
shares and phantom stock, but not options) commencing on the later of May
3, 2007 or the fifth anniversary of the date the Director joined the Board.
Selection of Chairman
It is the policy of
the Company that the positions of Chair of the Board and the CEO may be
filled by the same person or by different persons. If the positions of
Chair of the Board and the CEO are filled by the same person or if the
Chair of the Board is not an independent Director, the Company will
designate a Lead Director.
The Lead Director
shall be an independent Director, and, shall be elected annually by a vote
of the independent Directors, effective as of the date of the 2011 annual
The Lead Director has
the following duties and responsibilities:
at meetings of the Board (including executive sessions) and shareholders in
the Chair's absence;
as the liaison between the Chair and the independent Directors;
information sent to the Board;
meeting agendas and schedules for the Board;
the authority to call meetings of the independent Directors; and
§ be available for
consultation and direct communication, if requested by major shareholders.
Functions of the
Access to Outside
The Board believes
that access to outside advisors plays an important role in the discharge of
its duties and responsibilities. As such, each of the Board and its
standing committees has the authority to select, retain, terminate and
approve fees for such outside advisors as it deems appropriate in the
discharge of its duties and responsibilities.
Access to Senior
complete access to Management and are encouraged to visit the Company
facilities and operations.
Board encourages the CEO, from time to time, to bring associates into Board
meetings who: (a) can provide additional insight into the items being
discussed because of personal involvement in these areas, and/or (b) are
associates with future potential that the CEO believes should be given
exposure to the Board.
The Board annually
conducts an evaluation, which is overseen by the Governance Committee, and
oversees the annual evaluation required of the standing committees. In
addition, each Director annually evaluates his or her performance as a
director, and an outside governance expert (or the Lead Director or the
Chair of the Board) reviews the director evaluations and reports to the
Board on his or her findings regarding the director evaluations. Also, the
Board assesses the contribution of individual Directors in connection with
the renomination process.
It is the policy of
the Company that all major decisions be considered by the Board as a whole.
As a consequence, the Board holds regularly scheduled meetings at least
four times a year, plus special meetings as the need arises.
Selection of Agenda
Items for Board Meetings
The Chair of the
Board and the CEO establish the agenda for each Board meeting, which is
approved by the Lead Director (if a Lead Director is designated). Each
Director is encouraged to suggest the inclusion of item(s) on the agenda.
Distributed in Advance
Information and data
that is important to the Board's understanding of the matters to be
considered at a meeting is distributed in writing by Management before the
Board meets. In some cases, due to timing or the sensitive nature of an
issue, materials are presented only at the Board meeting.
As a general rule,
presentations on specific subjects are sent to the Board in advance so that
Board meeting time may be conserved and discussion time focused on the
issues arising from the presentations.
Board Attendance and
expected to prepare for, attend, and participate in all Board and
applicable committee meetings. Directors are also expected to attend the
annual meeting of shareholders.
Executive Sessions of
Non-Management and Independent Directors
Directors of the Board meet in Executive Session at least four times each
year. Independent Directors of the Board meet in Executive Session at least
twice a year. There is an opportunity to meet in Executive Session at each
regularly scheduled meeting of the Board or any Board Committee. Any
Director may request an Executive Session.
Number, Structure and
Independence of Committees
The Board may
establish committees to assist it in discharging its responsibilities in
accordance with the Company's By-Laws. From time to time, the Board may
want to form a new committee or disband a current committee depending upon
the circumstances. The current five committees are Audit, Compensation,
Executive, Governance, and Planning. The duties and responsibilities of the
committees are set forth in the Company's By-Laws and committee charters.
The Audit, Compensation and Governance Committees consist solely of
independent Directors as determined by the Board consistent with the
Categorical Standards and the Listing Standards. In addition, members of
the Audit Committee meet the independence standards applicable to audit
committee members under the Listing Standards and are financially literate
as defined in the Listing Standards, and at least a majority of the members
qualify as an “audit committee financial expert”. No member of the Audit
Committee may serve on the audit committee of more than two other public
companies unless the Board determines that such simultaneous service would
not impair his or her ability to effectively serve on the Audit Committee.
Rotation of Committee Members
The Board appoints
committee members based on the recommendation of the Governance Committee.
The Board believes that there should be periodic rotation of committee
membership among Directors. However, there may be reasons at a given point
in time to maintain an individual Director's committee membership as an
alternative to rotation.
Frequency and Length
of Committee Meetings
The Chairperson of
the committee, in consultation with the members of the committee,
determines the frequency and length of the meetings of the committee.
The Chairperson of
the committee, in consultation with the members of the committee and
Management, develops the committee's agenda.
Formal Evaluation of
Committee conducts an annual evaluation of the CEO's performance and may
take into consideration any input from the Board. The results are
communicated to the Board and the CEO by the Chairperson of the
Compensation Committee. The evaluation is based on criteria established by
the Compensation Committee and takes into consideration input from the
other Directors. The evaluation is used by the Compensation Committee in
the course of its deliberations when considering the compensation of the
for the CEO
The Board plans for
succession to the position of the CEO, which is overseen by the Executive
Committee. To assist the Board, there is available, on a continuing basis,
the CEO's recommendations for (i) a successor in the event of the
retirement of the CEO and (ii) an interim successor in the event of the
death, disability, or other emergency or termination of the CEO.
Development and Succession Planning
The CEO and the
Executive Committee periodically report to the Board on the Company's
program for the development and succession planning for Management.
Ownership and Holding Requirements
To align Management’s
interests with the interests of shareholders, the Board believes that
Management should own a meaningful amount of common stock of the Company.
Thus, the Board has adopted Stock Ownership Requirements that require the
CEO to own five times his or her base salary commencing on the later of May
3, 2007 or the fifth anniversary of the date he or she became CEO. Other
members of Management have a similar requirement that varies from one and
one-half to three times the person's base salary depending upon his or her
position. In addition effective as of January 1, 2010, the Board has
adopted Stock Holding Requirements that require the CEO and other members
of Management to hold 50% of the profit shares acquired from stock option
exercises and restricted stock vesting until the Stock Ownership
Requirements are met.
Standards of Ethical
Business Conduct, Reports Concerning Accounting Matters and Communications
with the Board
The Company will not
extend credit or arrange for the extension of credit in the form of a
personal loan to Directors or Management.
Standards of Ethical
The Company has
adopted Standards of Ethical Business Conduct (the “Standards”) for
Directors, Management and other associates of the Company. The purpose of
the Standards is to focus on areas of ethical risk, provide guidance in
recognizing and dealing with ethical issues, provide mechanisms to report
unethical conduct and help foster a culture of honesty and integrity. The
Standards are posted on the Company's web site.
Everyone is expected
to act in accordance with the requirements of the Standards. Waivers of the
Standards for any Director, the CEO, the Chief Financial Officer and other
Executive Officers may only be made by the Board or by a Board committee
composed of independent Directors. Any such waiver will be posted on the
Company web site and otherwise disclosed as required by law.
Any reports of
concerns regarding accounting, internal auditing controls, auditing matters
or other irregularities or concerns, will be brought
to the attention of the Chairperson of the Audit Committee. These reports
may be anonymous if made using the Corporate Ethics and Compliance HelpLine (877) 725-2702.
communicate with the Board by submitting an e-mail to the Board at email@example.com.
Communications that are intended specifically for non-management directors
or any individual director should be sent to the e-mail address above to
the attention of the Lead Director if a Lead Director is designated or
otherwise to the attention of the Chair of the Board. Individuals may also
communicate with the Board by submitting a letter to the Company's
Secretary at WellPoint, Inc., 120 Monument Circle, Mail
No. IN0102-B315, Indianapolis, Indiana 46204.
individuals may communicate with the Chairperson of the following
committees by submitting an e-mail to:
Chairperson of the
Audit Committee: firstname.lastname@example.org
Chairperson of the Compensation Committee: email@example.com
Chairperson of the Governance Committee: firstname.lastname@example.org
Annual Review of
Corporate Governance Guidelines
Governance Guidelines are reviewed by the Governance Committee and the
Board at least once a year. Changes to these guidelines will be made
pursuant to a vote of the independent Directors.
An “independent” director is a director whom the Board of
Directors has determined has no material relationship with WellPoint, Inc.,
or any of its consolidated subsidiaries (collectively, the “Company”),
either directly, or as a partner, shareholder or officer of an organization
that has a relationship with the Company.
following individuals shall not be deemed an "independent"
director of the Company:
director who is an employee or whose immediate family member is an
executive officer of the Company until three years after the end of such
director who receives or whose immediate family member is an executive officer
of the Company and receives more than $120,000 during any twelve-month
period in direct compensation from the Company (other than director or
committee fees and pension or other forms of deferred compensation for
prior service, provided such compensation is not contingent in any way on
continued service) until three years after he or she ceases to receive more
than $120,000 during any twelve-month period in such compensation;
A director who is a current partner or employee of a firm that is the Company’s
internal or external auditor; (b) a director whose immediate family member
is a current partner of such a firm; (c) a director whose immediate family
member is a current employee of such a firm and personally works on the
Company’s audit; or (d) a director who was, or a director whose immediate
family member was, within the last three years a partner or employee of
such a firm and personally worked on the Company’s audit within that time;
director who is employed or whose immediate family member is employed as an
executive officer of another company where any of the Company’s present
executives serve on that company’s compensation committee until three years
after the end of such service or employment relationship; or or
director who is an executive officer or an employee, or whose immediate
family member is an executive officer, of another 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 other company’s consolidated gross revenues until
three years after falling below such threshold.
An “immediate family
member” includes a person's spouse, parents, children, siblings, mothers
and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law,
and anyone (other than domestic employees) who share such person's home.