JONES APPAREL GROUP, INC.
The Board of Directors (the "Board") of Jones
Apparel Group, Inc. (the "Company"), acting on the
recommendation of its Nominating/Corporate Governance
Committee, has adopted these corporate governance principles
(the "Guidelines") to assist the Board and its
Committees in the exercise of their responsibilities to the
Company and its stockholders. The Board will review and, if
appropriate, revise these Guidelines from time to time.
These Guidelines should be interpreted in the context of all
applicable laws and the Company’s Certificate of
Incorporation and bylaws and other corporate governance
documents, and are not intended to create legally binding
A. Director Qualifications
The Nominating/Corporate Governance Committee is
responsible for identifying individuals qualified to become
directors and selecting, or recommending that the Board
select, the candidates for all directorships to be filled by
the Board or by the stockholders of the Company.
In connection with the selection and nomination
process, the Nominating/Corporate Governance Committee shall
consider what is the desired experience, mix of skills and
other qualities necessary to assure appropriate Board
composition, taking into account the current Board members and
the specific needs of the Company and the Board. The criteria
for selecting directors shall include such factors as the
candidates’ unquestioned character and integrity, mature
judgment, diversity of background and experience, demonstrated
skills in his/her area of present or past professional,
business, academic or non-profit responsibility, an ability to
work effectively with others, sufficient time to devote to the
affairs of the Company and freedom from conflicts of interest.
The Committee believes that a candidate who satisfies such
factors will (i) advance the Board’s ability to oversee
and direct the affairs and business of the Company, and (ii)
enhance the decision making ability of the Board as a whole in
the best interest of the Company’s shareholders,
including, when applicable, to enhance the ability of
Committees of the Board to fulfill their duties and/or to
satisfy any independence requirements imposed by law,
regulation or New York Stock Exchange listing requirements.
The Nominating/Corporate Governance Committee will consider
director candidates recommended by stockholders provided the
required procedures are followed by stockholders in submitting
recommendations. The Nominating/Corporate Governance Committee
does not intend to alter the manner in which it evaluates
candidates, including the minimum criteria set forth above
based on whether the candidate was recommended by a
stockholder or not.
A majority of the Board shall be comprised of directors
determined by the Board annually to be independent in
accordance with the rules of the New York Stock Exchange, as
in effect from time to time. In making such determination, the
Board shall consider, but not be bound by, any recommendations
made by the Nominating/Corporate Governance Committee
concerning whether each director is or is not independent
under such rules.
In addition to being independent as set forth in A(3)
above, all members of the Audit Committee must also meet the
enhanced independence requirements of the rules of the New
York Stock Exchange for members of the Audit Committee, as in
effect from time to time. At least one member of the Audit
Committee shall be a financial expert as defined by Section
401(h) of Regulation S-K promulgated under the Securities
Exchange Act of 1934 prior to the end of the transition period
for compliance with Section 401(h).
It is the sense of the Board that a size of seven to 11
directors is appropriate, but from time to time the
Nominating/Corporate Governance Committee shall consider and
make recommendations to the Board concerning the appropriate
size of the Board.
Generally, directors should not serve on more than four
Boards of other public companies in addition to the Company’s
Board. Members of the Audit Committee shall not simultaneously
serve on the Audit Committees of more than two other public
companies unless the Board determines that such simultaneous
service would not impair the ability of such member to
effectively serve on the Company’s Audit Committee and
discloses such determination in the Company’s annual
A director shall offer his or her resignation when such
director’s principal occupation or business affiliation
substantially changes. The Nominating/Corporate Governance
Committee will recommend to the Board what action to take with
respect to such director continuing to serve as a director and
whether or not to accept the resignation. Non-independent
directors shall offer his or her resignation as a director
upon resignation, removal or retirement as an officer of the
Company. The Nominating/Corporate Governance Committee will
recommend to the Board what action to take with respect to
such director continuing to serve as a director and whether or
not to accept the resignation.
B. Director Responsibilities
It is the responsibility of the directors to perform
their duties in good faith in a manner they reasonably believe
to be in the best interests of the Company, and to perform
their duties of care and loyalty. In discharging that
obligation, directors should be entitled to rely in good faith
on the honesty and integrity of the Company’s senior
executives and its outside advisors and auditors, to the
fullest extent permitted by law.
It is the responsibility of the directors to represent
the interests of the Company’s stockholders in
maintaining and enhancing the success of the Company’s
business, including optimizing long-term returns to increase
It is the responsibility of the directors to select and
retain a well-qualified Chief Executive Officer ("CEO")
of high integrity, and to oversee selection of other members
of senior management.
It is the responsibility of the directors to oversee
and interact with senior management with respect to key
aspects of the business including strategic planning,
management development and succession, operating performance,
and stockholder returns. The Board shall review and, where
appropriate, approve fundamental operating, financial, risk
management and other corporate strategies, as well as major
plans and objectives and shall monitor the effectiveness of
management policies and decisions, including the execution of
strategies. At least annually, the Board shall review the
Company’s long-term strategic plans and the principal
issues that the Company may face in the future.
The directors shall provide general advice and counsel
to the Company’s CEO and senior management.
The Audit Committee of the Board of Directors has sole
responsibility to appoint, determine compensation, and
terminate the independent accounting firm that audits the
Company’s financial statements.
It is the responsibility of the non-management
directors to hold annually at least three regularly scheduled
executive sessions. The non-management directors shall
designate the director who shall preside at such meetings.
This procedure will be disclosed in the Company’s annual
proxy statement. The Company will also disclose in the annual
proxy statement a method for interested parties to contact,
directly and confidentially, the presiding director, or
non-management directors as a group. In addition, it is also
the responsibility of the independent directors to hold
annually at least one executive session meeting.
Regular attendance at Board and Committee meetings is
expected. It is also expected that Directors will attend each
Annual Meeting of Stockholders. Directors are expected to
spend the time needed and meet as frequently as necessary to
properly discharge their responsibilities.
Meeting materials should be reviewed in advance by
directors. The Company shall distribute, sufficiently in
advance of meetings to permit meaningful review, any written
materials that are important to the Board’s
understanding of the agenda items and other topics to be
considered at a Board meeting unless a meeting must be held on
short notice or if such materials would otherwise contain
highly confidential or sensitive information and therefore
will only be distributed at the meeting.
The Chairperson of the Board will establish the agenda
for each Board meeting. At the beginning of the year the
Chairperson of the Board will establish a schedule of agenda
subjects to be discussed during the year (to the degree this
can be foreseen). Each Board member is free to suggest the
inclusion of items on the agenda. Each Board member is free to
raise at any Board meeting subjects that are not on the agenda
for that meeting.
Maintaining confidentiality of information and
deliberations is of critical importance. Information learned
during the course of service on the Board and its Committees
is to be held confidential and used solely in furtherance of
the Company’s business.
Written minutes of each meeting of the Board in the
form approved by the Board shall be duly filed in the Company
C. Board Committees
The Board shall at all times have an Audit Committee, a
Compensation Committee, and a Nominating/Corporate Governance
Committee, each comprised solely of independent directors. The
Board may establish or maintain additional committees as the
Board deems necessary or appropriate from time to time. Each
of the Committees shall operate in accordance with applicable
law, its charter, and the applicable rules of the Securities
and Exchange Commission and the New York Stock Exchange.
The Nominating/Corporate Governance Committee shall
recommend members of the Board of Directors to serve on the
Committees of the Board, giving consideration to the criteria
for service on each Committee as set forth in the charter for
such Committee, as well as to any other factors the Committee
deems relevant, and where appropriate, make recommendations
regarding the removal of any member of any Committee. The
Nominating/Corporate Governance Committee shall make such
investigation as it deems necessary in making its
recommendation to the Board concerning the independence under
the New York Stock Exchange rules of each director, including
each director who is recommended to serve as a member of the
Audit, Compensation or Nominating/Corporate Governance
Each of the three standing Committees will have its own
charter. The charters will set forth the purposes, goals and
responsibilities of the Committees as well as qualifications
for Committee membership, procedures for Committee member
appointment and removal, Committee structure and operations
and Committee reporting to the Board. The charters will also
provide that each Committee will annually evaluate its
The Chairperson of each Committee, in consultation with
the Committee members, will determine the frequency and length
of the Committee meetings consistent with any requirements set
forth in the Committee’s charter. During the year, the
Chairperson of each Committee, in consultation with the
appropriate members of the Committee and, where appropriate,
management, will develop the agenda for each meeting. A report
regarding each Committee meeting will be provided to the full
Board as appropriate. The Chairperson of each Committee will
report to the full Board regarding matters that should be
brought to the attention of the Board.
D. Director Compensation
Non-employee directors and Committee chairs shall
receive reasonable compensation for their services, as may be
determined from time to time by the Board upon recommendation
of the Nominating/Corporate Governance Committee. Compensation
for non-employee directors and Committee chairs shall be
consistent with the practices of other similarly situated
companies but shall not be at a level or in a form that would
call into question the Board’s objectivity.
Directors who are employees receive no additional pay
for serving as directors.
Directors who are members of the Audit Committee may
receive no compensation from the Company other than the fees
they receive for serving as directors.
The Company shall provide reasonable directors and
officers’ liability insurance for directors and shall
indemnify the directors to the fullest extent permitted by law
and the Company’s certificate of incorporation and
E. Director Access to Management and Independent Advisors
The Board is expected to be highly interactive with
senior management. It is Board policy that executive officers
and other members of senior management who report directly to
the CEO be present at Board meetings at the invitation of the
Board. The Board encourages such executive officers and senior
management to make presentations, or to include in discussions
at Board meetings managers and other employees who (1) can
provide insight into the matters being discussed because of
their functional expertise and/or personal involvement in such
matters and/or (2) are individuals with high potential whom
such executive officers and senior management believe the
directors should have the opportunity to meet and evaluate.
The Board and each Committee have the power to hire
independent legal, financial or other advisors as they may
deem necessary, without consulting or obtaining the approval
of any officer of the Company in advance.
F. Director Orientation and Continuing Education
The Board shall implement and maintain an orientation
program for newly elected directors and continuing education
programs for all directors, each as developed by the
Nominating/Corporate Governance Committee. These programs
shall include presentations by senior management on the
Company’s strategic plans, its significant financial,
accounting and risk management issues, its compliance
programs, its Code of Ethics, its management structure and
executive officers and its internal and independent auditors.
The orientation program may also include visits to certain of
the Company’s significant facilities, to the extent
practical. All directors are invited to participate in the
orientation and continuing education programs.
G. CEO Evaluation, Management Succession and CEO
The Nominating/Corporate Governance Committee will
conduct an annual review of the CEO’s performance, as
set forth in its charter. The Board will review the
Nominating/Corporate Governance Committee’s report in
order to ensure that the CEO is providing the best leadership
for the Company in the long- and short-term.
The Nominating/Corporate Governance Committee shall
make an annual report to the Board on succession planning and
management development for senior management including the
CEO. This succession planning includes the development of
policies and principles for the succession of the CEO
including, but not limited to, succession in the event of
retirement or emergency.
The Compensation Committee is responsible for making
recommendations to the Board concerning annual and long-term
performance goals for the CEO, for evaluating his or her
performance against such goals, and for setting the CEO’s
compensation based upon such evaluation.
H. Annual Performance Evaluation of the Board
The Board and its Committees will conduct a
self-evaluation at least annually to determine whether it and
its Committees are functioning effectively.
The Board will also review the Nominating/Corporate
Governance Committee’s periodic recommendations
concerning the performance and effectiveness of the Board and
As of February 12, 2004