The Whirlpool Board of Directors has established the following Corporate Governance Guidelines for its operation:
A. Board Leadership. The Board currently sees no reason to separate the office of Chairman and CEO. It may, however, reach this conclusion in the future and if so, appropriate action can be taken. However, the Board believes it is appropriate for the independent Directors to elect one independent Director to serve as Presiding Director. The Presiding Director will perform the following functions:
Preside at executive sessions of the non-management Directors and provide feedback, as appropriate, to the Chairman and CEO;
In consultation with the full Board, coordinate with the Chairman and CEO in establishing the annual agenda and topic items for Board meetings;
In consultation with the full Board, retain independent advisors on behalf of the Board as the Board may determine necessary or appropriate;
Assist the Human Resources Committee with the annual evaluation of the Chairman and CEO’s performance, and in conjunction with the Chair of the Human Resources Committee, meet with the Chairman and CEO to discuss the results of such evaluation;
Perform such other functions as the independent Directors may designate from time to time.
The Presiding Director shall have no greater obligations (fiduciary or otherwise) or liabilities than those of other Directors by reason of serving as the Presiding Director.
B. Size and Composition of the Board. The current size of the Board is about the right number and should remain in the range of 11-15 members. Generally there should be no more than the 3 current inside members on the Board; however, at all times a majority of the Board shall be "independent directors" as that term is defined from time to time by relevant NYSE listing rules or law. Further, the Board shall certify as to the independence of directors in accordance with relevant laws and NYSE listing rules. Availability of uniquely qualified outside Board member candidates or succession planning considerations for external or internal Board members may justify size increases. We have established through the Corporate Governance and Nominating Committee selection criteria that identify desirable skills and experience for prospective Board members and address the issues of diversity and background. The Board, with assistance of the Corporate Governance and Nominating Committee, shall select potential new Board members using the criteria and priorities established from time to time.
C. Board Tenure. The Board currently has a mandatory retirement age of 70 and requires any Director who experiences a position change from that which he or she held at the time of election to volunteer to resign from the Board. The Chairman, with the approval of the Board, may elect to accept or reject such resignation. In addition, a CEO or other executive who retires as an employee of the Company may not continue to serve on the Board following retirement. We believe these practices are appropriate and adequate and do not currently favor the concept of mandatory term limits.
D. Committee Structure and Assignments.
(1) The current committee structure of an Audit
Committee, Finance Committee, Human Resources Committee and
Corporate Governance and Nominating Committee appears
adequate and appropriate for the organization. The
need for other committees may evolve over time and the Board
will initiate discussion in this area if appropriate.
Each committee of the Board will have a written charter that
complies with relevant NYSE listing rules and law. (2)
Rotating committee assignments and leadership at
approximately 4-5 year intervals is currently followed
taking into account considerations such as continuity,
expertise and Board tenure. On an annual basis in
advance of the April Board of Directors meeting, the
Corporate Governance and Nominating Committee, in
consultation with the CEO and the Presiding Director, will
develop and provide Board members with information on
committee tenure and proposed reassignments so that
appropriate committee assignments may be made.
Committee composition will meet all relevant NYSE listing
rules and law.
E. Assessing the Board's Performance. The Board believes it is appropriate to evaluate Board and Committee performance on an annual basis with a focus on the overall performance of the Board and the Committees and not necessarily individual Board or Committee member performance. The Corporate Governance and Nominating Committee, with input from the full Board, will on an annual basis in connection with the election and re-election of Board members, review Board and Committee performance based on these Guidelines, Company By-Laws, and relevant NYSE listing rules and law and make appropriate recommendations to the full Board.
A. Board Meeting Agendas and Practices.
(1) Agendas for Board meetings will be set by the
Chairman and CEO and the Presiding Director in consultation
with the full Board.
(2) In general, time at Board meetings should focus on strategic and major potential problem areas rather than on operational/reporting issues. The Board expects to receive candid and timely information on potential problems and be given an opportunity to discuss strategic decisions before they are made.
B. Committee Meetings. The frequency of committee meetings and agendas for such meetings shall be established jointly by the committee chairs and designated management individuals in accordance with committee charters or relevant NYSE listing rules and law. Information reported to the full Board following committee meetings is determined by the Committee chairperson.
C. Information Prior to Meetings,
Presentations and Attendance at Meetings. (1)
The Board should receive routine reports as well as
summaries of major presentations in advance of each Board
meeting. This practice permits more expeditious review
of routine items and facilitates greater discussion and
debate of major decisions.
(2) The attendance of executive officers and other senior management individuals making presentations is appropriate and provides the Board with a first-hand opportunity to evaluate the senior management group.
D. Executive Sessions of the Board. Outside Board members should continue to meet periodically with only the CEO. These sessions should be used for candid discussion of executive management performance and succession issues and to permit the Board and CEO to have a dialogue on critical long-term issues.
At least twice each year (and at such other times as it deems appropriate), the Board will meet independently of any Company insiders to discuss whatever topics it believes are appropriate. These meetings will be chaired by the Presiding Director, or in his absence, the Chairman of the Corporate Governance and Nominating Committee.
E. Review of CEO Compensation. The Human Resources Committee will continue its process of establishing annual written performance goals and objectives for the CEO and then evaluating CEO performance against these goals based on written input from all Board members and the assistance of the Presiding Director. As part of this process, the Committee will review with the full Board its assessment of the CEO's performance in a meeting with no management members in attendance. Following this meeting, the Committee Chair and the Presiding Director will meet with the CEO and provide feedback based on the review, and then follow with a written evaluation to the CEO. The Committee will set the CEO’s compensation based on its evaluation of the CEO’s performance.
F. Approval of Incentive Compensation and Equity-Based Compensation Plans. The Human Resources Committee will make recommendations to the Board with respect to incentive compensation and equity-based compensation plans, and the Board will condition its approval of all equity-based compensation plans on obtaining the approval of the plan by shareholders in accordance with relevant NYSE listing rules and law.
A. Board Access to Senior Management. The Board shall maintain access to Whirlpool's management while recognizing that judgment and discretion should be observed in making such contacts. The Board assumes, in virtually all cases, that the CEO will be aware of such contacts.
B. Board Involvement in Corporate Governance Issues. The Corporate Governance and Nominating Committee shall lead the Board in an annual discussion of major corporate governance issues and shall make recommendations regarding director orientation and continuing education. Any Company position on major corporate governance issues will be discussed in advance with the Corporate Governance and Nominating Committee.
C. Director Responsibilities. Each member of the Board is expected to meet the generally accepted level of performance for a director of a major, publicly held corporation, including regular meeting attendance and advance review of meeting materials.
D. Director Compensation. Compensation for directors shall be established in accordance with the Policy Statement on Board of Director Compensation and in accordance with relevant NYSE listing rules and law.
E. Code of Ethics. The Board will periodically assess the Corporation’s Code of Ethics to assure it addresses appropriate topics, contains compliance standards and procedures, and comports with relevant NYSE listing rules or law. The Board must approve any waiver of the code for Management or Directors and any such waiver must be promptly disclosed to shareholders in accordance with relevant NYSE listing rules and law.
F. Other Board Matters. The Board
will (1) periodically assess the Board’s new director
orientation program and director continuing education
(2) regularly review management succession planning and adopt a process for assuring appropriate succession in the event of an emergency or the retirement of the CEO; and
(3) as appropriate, retain independent advisors to assist it in performing its duties. In consultation with the Board, the Presiding Director may retain independent advisors on behalf of the Board.
G. Modifications to Guiding Principles. The operation of a Board of Directors is a dynamic and evolving process and so these Guiding Principles need also to be periodically reviewed and revised. While no guidelines can cover each and every issue that may surface, we believe these principles set the proper tone for the operation of the Whirlpool Board and will assist us in fulfilling our obligations to the diverse group of Whirlpool owners and other stakeholders.