The following corporate governance principles have been approved and adopted by the Board of Directors of Milacron Inc. These principles, along with Milacron's articles of incorporation, code of regulations, and charters of the various committees of the Board, provide the foundation for our governance.
1. Roles of the Board of Directors and Management
Milacron's business is conducted by its employees, managers, and officers, under the direction of the Chief Executive Officer and with the oversight of the Board, to achieve its objectives and enhance the long-term value of Milacron for its shareholders. The Board is elected by shareholders to oversee management and to assure that Milacron is managed in such a way as to achieve its objectives, and thereby serve the shareholders' interests. Accordingly, management is responsible for managing the company; the Board acts as an advisor and counselor to management, and ultimately monitors its performance.
2. Critical Functions of the Board of Directors
In addition to its general oversight of management, the Board is responsible for the following matters, among other things:
selecting, evaluating, and compensating the Chief Executive Officer;
advising and overseeing the Chief Executive Officer in the selection, evaluation, development, and compensation of senior management;
planning for succession to the position of Chief Executive Officer as well as certain other senior management positions;
considering and approving Milacron's fundamental financial and business strategies and major corporate actions; and
ensuring processes are in place to maintain the integrity of Milacron's financial statements, compliance programs, and relationships with customers, suppliers, and others.
3. Director Qualifications and Selection Process
Integrity, Values, and Experience. Each director should possess the highest personal and professional ethics and integrity, and be devoted to representing the interests of Milacron and its shareholders. A director must be willing to devote sufficient time to carrying out his/her duties and responsibilities effectively. Milacron seeks to have a Board of Directors representing diverse experiences in business, government, education, technology, and in various areas relevant to our businesses. Milacron also will consider the diversity, age, skills, and other factors relevant to a director's overall qualifications in determining a combination of directors that will best serve the needs of the Board and Milacron.
Independence. Milacron's Board of Directors shall at all times be comprised of no less than a majority of directors who meet the criteria for independence required by the Securities and Exchange Commission and the New York Stock Exchange. The Nominating and Corporate Governance Committee of the Board of Directors is responsible for reviewing the qualifications and independence of the members of the Board and its various committees on a periodic basis as well as the composition of the Board as a whole.
Selection Criteria for Board Members. The Nominating and Corporate Governance Committee will develop guidelines for selecting candidates for election to the Board, including minimum qualifications, and periodically review and amend such guidelines as the Committee deems necessary or appropriate. The Criteria for Selecting Director Candidates is available on the Company's website.
Process and Procedures for Identifying Director Candidates. The Nominating and Corporate Governance Committee is responsible for evaluating recommended candidates for election to the Board. The Committee will consider candidates recommended by shareholders, directors, officers, third party search firms, and other sources for nominations as a director. The Committee considers the needs of the Board and evaluates each recommended candidate in light of, among other things, the candidate's qualifications, including those qualifications identified in these Corporate Governance Guidelines and the Criteria for Selecting Candidates for the Board of Directors. This evaluation process should include personal interviews with the candidate by the Chairman of the Board of Directors, the Chairperson of the Nominating and Corporate Governance Committee, and such other members of the Nominating and Corporate Governance Committee as are able to do so.
A shareholder recommendation of a candidate for director should be sent by mail to the Chairperson, Nominating and Corporate Governance Committee, c/o Corporate Secretary, Milacron Inc., 2090 Florence Avenue, Cincinnati, Ohio 45206-2425. Shareholder recommendations must be received no later than the date for submission of shareholder proposals generally.
The recommendation letter must, at a minimum, provide the shareholder's name; address; number and class of shares owned; the candidate's biographical information, including name, residential and business address, telephone number, age, education, accomplishments, employment history (including positions held and current position), and current and former directorships; and the shareholder's opinion as to whether the recommended candidate meets the definitions of "independent," "financially literate," and "financial expert" under the NYSE and SEC rules. The recommendation letter must also provide information that would be required to be disclosed in the solicitation of proxies for election of directors under federal securities laws. The shareholder must include the recommended candidate's statement that he/she meets the requirements and those identified on the Company's website; is willing to complete the Questionnaire required of all officers and directors; will provide such other information as the Committee may reasonably request, and consents to serve on the Board if elected.
Upon receipt of the recommendation letter with appropriate information, the Committee will forward the Questionnaire to the recommended candidate for completion. Following receipt and verification of Questionnaire responses, the Committee will review the recommended candidate's qualifications and make a recommendation. All candidates will be reviewed in the same manner, regardless of the source of recommendation.
Retirement. Directors shall retire from the Board effective at the Board meeting next following their 72nd birthday. Under very special circumstances, with the approval of the Board, exceptions can be made to this policy.
Changes in Directors' Primary Responsibilities. Every director must notify the Chairman of the Board of his or her retirement, of any change in employer, and of any other significant change in the director's principal professional occupation, and in connection with any such change, offer his or her resignation from the Board for consideration by the Nominating and Corporate Governance Committee. The Board, upon recommendation from the Nominating and Corporate Governance Committee, then considers the continued appropriateness of Board membership under the new circumstances and the action, if any, to be taken with respect to the offer of resignation.
Service on Other Boards of Directors. A director should advise the Chairman of the Board and the Chairperson of the Nominating and Corporate Governance Committee in advance of accepting an invitation to serve as a director of another public company. The Nominating and Corporate Governance Committee will review whether such Board membership may unduly impact the ability of the director to fulfill his/her responsibilities as a director of Milacron and, if so, shall make a recommendation to the Board.
Chairman of the Board. Milacron has no fixed policy with respect to the separation of the offices of Chairman of the Board and the Chief Executive Officer. We believe that this issue is part of the succession planning process, and that it is in the best interests of Milacron for the Board of Directors to retain flexibility in allocating the responsibilities of these two offices in any way that seems best for Milacron at a given point in time.
4. Size of the Board of Directors, Term, and Term Limits
Milacron's Bylaws provide that the Board shall have no less than eight and no more than fifteen directors, the exact number of directors to be determined from time to time by resolution adopted by the affirmative vote of a majority of the Board then in office. Each director shall serve a term of three years commencing on the date of the annual meeting at which the director is elected. The Board of Directors shall be divided into three classes, each of which shall be composed, as nearly as may be, of one-third of the directors, with the directors in each class to be elected at the annual meeting of shareholders every third year. The Nominating and Corporate Governance Committee shall not consider for re-election to the Board of Directors of the Company any non-employee director who has served on the Board for twelve years. Under special circumstances, with the approval of the Board, exceptions can be made to this policy.
5. Board and Shareholder Meetings
Number of Meetings. Milacron's Board of Directors will have no less than five scheduled meetings of the full Board of Directors each year. If necessary, the Board may have one or more special meetings during the year as circumstances may require.
Attendance and Preparation. Each director is expected to attend all Board meetings and all meetings of committees on which the director serves. A director should notify Milacron's Secretary as soon as practical if he/she is unable to attend a meeting. Each director is expected to spend the amount of time and effort needed, and to meet as frequently as necessary, to properly discharge his/her responsibilities. Information and data that are important to the directors' understanding of the business to be conducted at a Board or committee meeting generally should be distributed in writing to the directors before the meeting. Each director should review these materials in advance of the meeting.
Meeting Agendas. The Chairman of the Board, in consultation with the Presiding Director and the appropriate members of management, and subject to input from other directors, will establish the agenda for each Board meeting. The Board of Directors will review Milacron's long-term strategic plans and the principal issues that Milacron will face in the future during at least one Board meeting each year. Directors are encouraged to suggest the inclusion of additional items on meeting agendas.
Executive Sessions; Presiding Director. The Board will hold executive sessions including only non-employee directors at each of its regularly scheduled meetings. During the executive session at the first regularly scheduled board meeting each calendar year, the non-employee directors shall elect a presiding director ("Presiding Director") for a term of one year.
The Presiding Director is responsible for coordinating the activities of the non-employee directors. Among other things, the Presiding Director sets the agenda for and leads the executive sessions held by the Board regularly, and briefs the Chairman and Chief Executive Officer on any issues arising out of these sessions. The Presiding Director also acts as the principal liaison to the Chairman and Chief Executive Officer for the views, and any concerns and issues, expressed by the independent directors, though all directors continue to interact one-on-one with the Chairman and Chief Executive Officer, as needed and as appropriate. The Chairman and Chief Executive Officer consults with the Presiding Director for input in setting the agenda for Board meetings and the Board meeting schedule. The Presiding Director consults with the other directors and advises the Chairman about the quality, quantity, and timeliness of Board information and the Board's decision-making processes.
Annual Meeting of Shareholders. The Company has no formal policy as to whether directors are required to attend annual shareholder meetings. The Company will revisit its position on this matter from time to time.
6. Board Committees
Standing Committees. The Board will have at all times an Audit Committee, a Personnel and Compensation Committee, a Nominating and Corporate Governance Committee, and a Finance Committee. All of the members of these committees will be directors who then meet the independence criteria required by the Securities and Exchange Commission and the New York Stock Exchange, other than the Finance Committee. The Board of Directors may create additional standing and ad hoc committees as deemed appropriate from time to time.
Committee Charters. Each committee will have its own charter. Each charter will set forth the purposes, goals, and responsibilities of the committee as well as certain specific qualifications for committee membership and procedures for committee member appointment. Each charter will address the nature of items that, and the frequency with which, the committee will report to the full Board of Directors. Each charter will require the committee to annually evaluate its own performance.
Committee Meetings and Agendas. The chairperson of each committee, in consultation with the committee members and Milacron's Chief Executive Officer and senior executives, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee's charter. The chairperson of each committee, in consultation with the appropriate members of the committee and senior executives, will develop the committee's agenda for each meeting. At the beginning of the year each committee will establish a schedule of agenda subjects to be discussed during the year, to the degree these can be foreseen. The meeting schedule for each committee will be furnished to all directors.
Engagement of Advisors. The Board or any committee has the authority to seek legal or other expert advice from a source independent of management, including the authority to approve the expert's fees and terms of retention. The expense of such legal or other expert shall be paid by Milacron. The Board and/or the committee that engages such advisor(s) should promptly notify Milacron's Secretary of such engagement so that the Secretary can confirm the independence of such advisor(s) and make the necessary arrangements for the payment of fees to such advisor(s).
7. Director Access to Officers and Employees
Contacts. Directors shall have full and free access to officers and employees of Milacron. Any meetings or contacts that a director wishes to initiate should be arranged through the Chief Executive Officer. A director will use his/her judgment to ensure that any such contact is not disruptive to the business operations of Milacron and will, to the extent not inappropriate, copy the Chief Executive Officer on any written communications between a director and an officer or employee of Milacron.
Participation in Meetings. The Chief Executive Officer may invite members of senior management to attend Board meetings for the purpose of participating in discussions.
8. Director Compensation
The form and amount of director compensation will be determined by the full Board of Directors on the recommendation of the Nominating and Corporate Governance Committee in accordance with the policies and principles set forth herein, in its charter, and any exchange or other applicable rules. The Nominating and Corporate Governance Committee will conduct an annual review of director compensation. Generally, the Board seeks to set director compensation at levels that fairly compensate directors for their responsibilities as directors and that are consistent with compensation levels at companies of similar size and nature as Milacron. The Board of Directors and the Nominating and Corporate Governance Committee will consider that the independence of directors may be jeopardized if director compensation and perquisites exceed customary levels, if Milacron makes substantial charitable contributions to organizations with which a director is affiliated, or if Milacron enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated.
9. Director Orientation and Continuing Education
Milacron will establish, or identify and provide access to, appropriate orientation programs, seminars, or materials for newly elected directors of Milacron for their benefit prior to or within a reasonable period of time after their election as a director. The program or materials will include information to familiarize new directors with Milacron's strategic plans, its significant financial, accounting and risk management issues, and its key policies and practices.
Milacron encourages directors to periodically obtain materials or attend appropriate programs or seminars concerning the responsibilities and best practices and procedures of directors of publicly traded companies. Milacron will reimburse a director's reasonable expenses in this regard.
10. Management Succession
The Personnel and Compensation Committee will be responsible for policies and principles for Chief Executive Officer selection and performance review, as well as policies regarding succession in the event of an emergency or the retirement of the Chief Executive Officer.
11. Annual Performance Evaluation
The Nominating and Corporate Governance Committee will coordinate an annual evaluation of the performance of the Board and each of its committees. The Chairperson for each committee shall oversee the evaluation process for his/her respective committee. The Chairperson of the Nominating and Corporate Governance Committee shall oversee the evaluation process for the entire Board.
12. Periodic Review
The Nominating and Corporate Governance Committee will re-evaluate these guidelines periodically and recommend to the Board any revisions that it deems necessary or appropriate for the Board to discharge its responsibilities more effectively.
The Board will make arrangements with Company management to regularly communicate the Corporate Governance Guidelines, information on the directors, chairpersons and members of committees, and the reports of such committees to shareholders and employees. Such information will be posted on the Company's website in accordance with the proposed rules of the New York Stock Exchange. Communications from shareholders or other interested parties to the Board or to any specified individual director(s) should be sent to the attention of the Corporate Secretary in a sealed envelope clearly marked "Confidential." The Secretary will directly forward the communication unopened to the presiding director or non-management directors, as appropriate.