Corporate Governance Guidelines
Responsibility of the Board
The primary mission of the Board of Directors (the "Board") of Nextel Communications, Inc. (the "Company") is to advance the interests of the Company's stockholders by creating a business of sustainable value over the long term. The Board is elected to oversee the management of the Company. Senior management is responsible for the oversight of the day-to-day business of the Company and all other matters not required by law, the requirements of the primary trading market or securities exchange on which the Company's securities are traded (the "Relevant Stock Market") or these guidelines to be determined by the Board. The Board's principal oversight functions relate to:
In discharging their obligations, directors should be entitled to rely on the honesty and integrity of the Company's senior executives and its outside advisors and auditors.
A majority of the members of the Board must be “independent” as defined by the requirements of the Relevant Stock Market. The Board must make an affirmative determination with respect to each Director’s independence to the extent required by the Relevant Stock Market. The Board’s present sense is that no more than two Company executives (one of whom shall be the CEO) should serve as directors. The Board presently has 10 members (with one vacancy), and it is the present sense of the Board that a size of between eight and 14 is appropriate. The Board will determine the number of directors as permitted in the Company’s certificate of incorporation or by-laws, as applicable, and will periodically review the size of the Board after consultation with the Corporate Governance and Nominating Committee of the Board.
The Board’s present sense is that the positions of Chairman of the Board and the CEO should be filled by separate persons and that the Chairman of the Board should be an independent director.
Board members are expected to prepare for, attend and participate in Board meetings and meetings of Board committees on which they serve and to devote the time necessary to appropriately discharge their responsibilities. Each Board member is expected to ensure that other commitments do not materially interfere with the member’s service as a director.
The Board's present sense is that no director should serve on the boards of directors of more than three public companies without the permission of the Corporate Governance and Nominating Committee, except for a director whose full-time work is serving as a director, in which case the Board's present sense is that no such director should serve on the boards of directors of more than five public companies without the permission of the Corporate Governance & Nominating Committee. Directors should advise the Chairman of the Board and the Chair of the Corporate Governance and Nominating Committee in advance of accepting an invitation to serve on the board of directors of another public company. Additionally, the CEO and other executive officers must (i) obtain the approval of the Board before accepting membership on the board of any other public company, and (ii) notify the Board through the CEO before accepting membership on any other boards (or similar bodies), including corporate and charitable boards. Each director must notify the chair of the Corporate Governance and Nominating Committee of a change in his or her principal occupation or employment, and offer his or her resignation from the Board in connection with such change. The Board, based upon the recommendation of the Corporate Governance and Nominating Committee, should consider whether a change in an individual's principal occupation or employment may reasonably be expected to directly or indirectly impact that person's ability to fulfill his or her obligations as a director of the Company. Any director who is an employee of the Company should submit his or her resignation upon retirement, resignation or termination. The Board may accept or reject such resignation in its discretion.
The Board's present sense is that it should not establish term limits for directors. While term limits could help insure 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 increasing contribution to the Board as a whole.
The Board's present sense is that age alone should not determine whether an individual should serve as a director and, therefore, does not believe that a mandatory retirement age for directors is appropriate.
The Corporate Governance and Nominating Committee is responsible for reviewing with the Board the appropriate skills and experience required of Board and committee members. This assessment should include factors such as judgment, diversity, experience with businesses and other organizations of comparable (or larger) size, the interplay of the candidate's experience with the experience of other Board members and the requirements of applicable law and the Relevant Stock Market.
The Corporate Governance and Nominating Committee will recommend candidates for election to the Board in accordance with the policies and principles in its charter and the criteria described in these guidelines. The invitation to join the Board should be extended by the Board by either the Chairman of the Board or the Chair of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee will review the nomination of directors for election to the Board.
The Company will establish and review periodically an orientation program for new directors that includes presentations by senior management. Periodically, the Company will provide opportunities for directors to visit the Company's significant facilities in order to provide a greater understanding of the Company's business and operations.
The Board, following review by the Corporate Governance and Nominating Committee, will determine as part of the annual Board evaluation whether other educational measures are appropriate.
Director Compensation and Performance
It is the policy of the Board to provide nonaffiliate directors with a mix of compensation, including an annual retainer comprised of cash and equity-based compensation, meeting fees and annual equity-linked awards, based on continued service on the Board. Proposed changes in Board compensation will be initially reviewed by the Compensation Committee, but any changes in the compensation of directors must be approved by the Board. The Compensation Committee will periodically review the status of Board compensation in relation to other comparable companies and such other factors as it deems appropriate and will discuss its review with the Board. The Board will from time to time establish minimum stock ownership guidelines for directors. Presently, each Board member must beneficially own at least $200,000 of common stock of the Company, subject to the Board's consideration of individual circumstances, which level must be achieved by the later of five years from the date of the member's first election to the Board and November 14, 2007. At least annually, the Corporate Governance and Nominating Committee is expected to provide the Board with an assessment of the Board's performance, and the chair of each Key Committee (as defined below) is expected to do the same for such committee.
Except for employment arrangements with those members of the Company's management that serve on the Company's Board and commercial arrangements entered into in the ordinary course of business on arm's length terms that are consistent with the requirements of the Relevant Stock Market, the Company does not engage in transactions with directors or their affiliates if the transaction would cast into doubt the independence of a director or is otherwise prohibited by law, rule or regulation. This prohibition includes any extension, maintenance or renewal of an extension of credit to any director or member of management of the Company. This prohibition also includes significant business dealings with directors or their affiliates, substantial charitable contributions by the Company to organizations in which a director is affiliated, and consulting contracts with, or other indirect forms of compensation to, a director. Any waiver of this policy may be approved only by the Board or the Audit Committee and must be promptly disclosed to the public. All related-party transactions must be reviewed and approved by the Audit Committee as required by the Relevant Stock Market and the Audit Committee charter and, if applicable, by the Interested Party of the Board.
Board meetings are scheduled in advance and held not less than quarterly. The Board holds special meetings as required. The Chairman of the Board and the CEO will establish the agenda for each Board meeting. Each Board member may submit suggested items to be included on the agenda. Board members may also raise subjects that are not on the agenda at any meeting. Information that is important to the Board's understanding of the Company's business should be distributed to the Board members a reasonable period of time before the Board meeting.
The independent directors will have regularly scheduled meetings at which only independent directors are present. Meetings of the independent directors will generally occur on the same day as regularly scheduled Board meetings; however, the Chairman of the Board or a majority of the independent directors may call a meeting of the independent directors at any time. The Chairman of the Board will supervise the conduct of the meetings of independent directors, communicate the results of the meetings to the CEO, as appropriate, and have such other responsibilities consistent with his or her role as the independent directors may designate from time to time.
Directors will have full access to officers and employees of the Company and, as the Chairman of the Board or any committee chair determines to be necessary and appropriate, the Company's independent advisers, including legal counsel and independent accountants. The Board and each committee shall have authority to hire independent legal, financial and other advisors as they deem necessary, and shall notify the Chairman of the Board of any such action. Any meetings or contacts that a director wishes to initiate may be arranged through the CEO or the Corporate Secretary or directly by the director. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company and will, to the extent appropriate, provide the Chairman of the Board and the CEO with a copy of any written communications between a director and an officer or employee of, or adviser to, the Company. The Board encourages senior management to invite to Board meetings officers and other key employees who can provide additional insight into the items being discussed, or that senior management believes should be given exposure to the Board.
The Board believes that senior management speaks for the Company. Individual Board members may, from time to time, meet or otherwise communicate with the media or various constituencies that are involved with the Company, but it is expected that Board members would do so with the knowledge of senior management and, in most instances, at the request of senior management.
The Board will have at all times an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee (the "Key Committees"). The Board may also have such other committees as it deems appropriate from time to time. Unless the Board otherwise determines in a specific instance, all members of the Key Committees must be "independent" under the criteria established by the Relevant Stock Market and applicable law. Committees will receive authority exclusively through delegation from the Board through the by-laws, Board resolutions, committee charters or as provided by these guidelines. All committee actions must be ratified by the Board before becoming effective unless taken pursuant to an express delegation of authority. In addition to the authority granted under these guidelines or under each committee's respective charter, the Board and each committee have the power to hire independent legal, financial or other advisors as they may deem necessary upon approval of the Chairman of the Board or the chair of the relevant committee with no requirement to consult or obtain the approval of senior management.
Committee members will be appointed by the Board with consideration of the requirements of applicable law and the Relevant Stock Market, the background of the various directors, the desires of individual directors and other factors as the Board from time to time deems relevant. Consideration will be given to rotating committee members and chairs periodically, but the Board's present sense is that rotation should not be mandated as a policy. Committee chairs will be selected by the Board. Each committee chair, in consultation with the committee members and the CEO, will determine the frequency of committee meetings consistent with the committee's charter, provided that a majority of committee members may call a meeting of the committee on which they are members at any time. Each Committee shall hold executive session from time to time as required or deemed necessary by any member.
Each Key Committee will have a written charter approved by the Board. These charters will set forth the purposes and responsibilities of the Key Committees as well as qualifications for committee membership and such other matters as the Board from time to time deems relevant. These charters will also provide that each Key Committee will annually evaluate its performance. The Key Committee charters will be posted on the Company's website.
The Board will select the CEO. The Compensation Committee will conduct an annual review of the performance of the CEO, the officers who report directly to the CEO and any other executive officers of the Company in light of the goals and objectives of the Company. The Compensation Committee will set executive officer compensation based on such factors as it deems appropriate.
The Corporate Governance and Nominating Committee will periodically make a report to the Board on succession planning. The Company's succession plan will include appropriate contingencies in case the Chairman of the Board or the CEO retires or is incapacitated. The Board, with the assistance of the Corporate Governance and Nominating Committee, will evaluate potential successors to the Chairman of the Board and the CEO. The Chairman of the Board and the CEO should at all times make available their recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
Conduct of the Board
The Board will perform its duties and responsibilities in accordance with the Company's certificate of incorporation, by-laws, code of corporate conduct and applicable laws, rules and regulations. State and federal laws, as well as the requirements of the Relevant Stock Market, impose numerous requirements relating to the functioning of the Board of Directors. The Board intends to comply with these requirements. While the Board is familiar with the requirements, the Board necessarily relies on management and counsel to identify specific requirements applicable to the Board and the decisions it is called upon to make. In addition to these requirements, the Board has adopted the guidelines set forth above to assist it in carrying out its functions. The Board will operate within these guidelines and, when applicable, apply them to particular actions or decisions in the manner it determines to be in the best interests of the Company.
The Board will periodically review and amend these Corporate Governance Guidelines as it deems appropriate.