At Mirant, we are committed to effective corporate governance and believe it enhances shareholder value. In furtherance of this commitment, the Board of Directors has established the following Corporate Governance Guidelines.
We are proud to have a strong, independent Board of Directors with diverse backgrounds. Our Audit, Compensation and Nominating and Governance Committees are comprised exclusively of independent directors in accordance with the rules of the New York Stock Exchange and these Guidelines.
A. Role of the Board of Directors
The Board of Directors, which is elected by Mirant's shareholders, oversees the management of the company and its business. The Board selects the senior management team, which is responsible for operating the company's business, and monitors the performance of senior management. The Board's responsibilities also include reviewing Mirant's major financial objectives, strategic and operating plans and actions and significant transactions.
B. Size of Board
Subject to the Certificate of Incorporation and Bylaws, the Board fixes from time to time by resolution the number of directors constituting the Board, guided by the recommendations of the Nominating and Governance Committee. There are currently nine directors on the Board.
The Nominating and Governance Committee is responsible for reviewing with the Board on an annual basis the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board. This assessment takes into consideration all factors deemed relevant by the Board, including, among others, independence, business and professional experience (including current public company boards on which a director serves), ability to devote sufficient time to the affairs of Mirant, and characteristics of the current Board, including diversity, age and skills (such as financial expertise, international experience and experience in the energy industry).
D. Director Independence
Pursuant to the rules of the New York Stock Exchange, a majority of the directors shall be independent. "Independent Director" means a person who is independent of management; free from any relationship that, in the judgment of the Board, would interfere with the exercise of independent judgment as a director; and has no material relationship with Mirant (either directly or as a partner, shareholder or officer of an organization that has a relationship with Mirant).
The Board has adopted the standards set forth in Attachment A to these Guidelines to assist it in assessing the independence of directors.
The Board affirmatively determines the independence of directors annually, based upon the recommendation of the Nominating and Governance Committee.
E. Selection of Director Candidates
The Nominating and Governance Committee is responsible for identifying, reviewing the qualifications of and recruiting candidates for recommendation to the Board for election as Board members. Such committee shall also assess the performance and independence of incumbent directors in determining whether to recommend them for reelection to the Board of Directors. The Nominating and Governance Committee will review the number of other public company boards and board committees on which a director serves to ensure that each board member is able to devote sufficient time to perform his or her duties as a director. It is the Board's responsibility to nominate, and, in certain circumstances (such as to fill vacancies that may occur on the Board) to elect, directors.
F. Directors Who Change Their Present Job Responsibilities
Individual directors who change their principal business association are expected to offer to resign from the Board, subject to the Board's acceptance of the resignation. The Board does not believe that a director in this circumstance should necessarily be required to leave the Board. Rather, the Board believes the Nominating and Governance Committee should have the opportunity to assess each situation based on the individual circumstances and make a recommendation to the Board as to whether to accept the resignation.
G. Retirement Age
Directors shall not stand for re-election to the Board after reaching age 70.
H. Conflicts of Interest/Other Board Service
In order to help assure that directors have sufficient time to devote to their responsibilities, non-employee directors should generally serve on no more than a total of four public company boards (including the Company's board). In addition, directors who also serve as CEOs or in equivalent positions should not serve on more than two boards of public companies in addition to the Company's board. Each director shall obtain the approval of the Chairman of the Board and the Chairman of the Nominating and Governance Committee before agreeing to serve as a director of any other publicly traded company or entering into any business relationships that may conflict with the interests of the Company.
II. Director Responsibilities
Directors are expected to attend in person all regularly scheduled Board and Committee meetings and to participate telephonically when they are unable to attend in person. Directors are expected to attend Mirant's Annual Stockholder Meeting.
B. Executive Sessions
The non-management directors meet at least quarterly in Executive Sessions. Opportunities for these sessions are available before or after each regularly scheduled Board meeting. The Lead Independent Director presides at each session. At least one Executive Session per year addresses succession planning and Chief Executive Officer performance and compensation.
C. Strategic Planning
The Board holds a strategic planning session annually and other pertinent topics, including long-term initiatives and goals, are considered and discussed.
III. Lead Independent Director
The Board considers it to be useful and appropriate to designate a non-employee director to serve in a lead capacity to coordinate the activities of the other non-employee directors and to perform such other duties and responsibilities as the Board may determine. The specific responsibilities of the Lead Independent Director when acting as such shall be as follows:
Serve as Chairman of the Nominating and Governance Committee of the Board;
Develop the agendas for and serve as Chairman of the executive sessions of the Board's non-employee directors; and
Serve as principal liaison between the non-employee directors and the Chairman on sensitive issues.
IV. Board Agenda/Materials
The Chairman of the Board in conjunction with the Lead Independent Director will establish the agenda for the meetings of the Board. Each director is encouraged to suggest items to be included on the agenda. Each director will receive sufficient financial, operational and market information to allow the director to fulfill his or her oversight functions.
B. Board Materials
Written materials generally are sent to Board members in advance of regular meetings so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the materials. Management will endeavor to provide on a timely basis material that is concise, informative and clear. On those occasions in which the subject matter does not lend itself to a written presentation, the subject may be presented orally at the meeting.
V. Director Access to Management and Independent Advisors
A. Board and Committee Access to Senior Management
Directors have unrestricted and full and complete access to management. Furthermore, the Board encourages the Chief Executive Officer, from time to time, to bring other members of management to Board and Committee meetings to provide additional insights into the items being discussed and/or to give them exposure to the Board members.
B. Board Access to Independent Advisors
The Board and its committees have access to any independent advisors that the Board or the relevant committee (consistent with the provisions of its charter) deems appropriate.
VI. Director Compensation
A. Board Compensation Review
Changes in Board compensation are made at the recommendation of the Compensation Committee and approval by the Board.
B. Director Stock Ownership
The Board believes that, to align the interests of directors and stockholders, all directors should own an amount of the Company's stock that is significant in light of the director's individual means. It is expected that, within three years of joining the Company's board, a director shall own at least 7,500 shares of the Company's stock. The Board will evaluate whether exceptions should be made for any director on whom this requirement would impose a financial hardship
VII. Director Orientation and Continuing Education
A. Orientation for New Directors
Mirant provides formal orientation for new directors on Mirant's capital structure and organization, business units, strategic plan, significant financial, accounting and risk management issues, governance policies, code of conduct, vision and mind set.
B. Continuing Education for Directors
Continuing education programs for Board members may include a mix of in-house and third party presentations and programs.
A. Committee Structure
The current standing committees are Audit, Compensation, and Nominating and Governance. The Board may form and disband new, temporary or permanent committees, depending upon circumstances from time to time. All committees report regularly to the full Board on their activities.
B. Assignment of Committee Members
The Nominating and Governance Committee is responsible for recommending to the full Board the assignment of directors to the committees of the Board and the appointment of committee chairs.
C. Executive Sessions
Each permanent Board committee also meets in Executive Session periodically as required by its charter, as determined by its chair, or at the request of any committee member. The chair of the committee shall preside at each session. Opportunities for these sessions are available before or after each regularly scheduled committee meeting.
At each regular meeting of the Board, each Committee Chairman will report to the Board on the business conducted by his or her Committee. The minutes of each Committee meeting shall also be distributed to the Board.
E. Meeting Attendance
Any director may attend any meeting of any Board Committee.
IX. Management Succession/Evaluation
A. Succession Planning
The Chief Executive Officer reports annually, first to the Compensation Committee, and then to an Executive Session of the Board, on succession planning.
The Chief Executive Officer will also make available, on a continuing basis, the Chief Executive Officer's recommendation concerning who should assume the Chief Executive Officer's role in the event the Chief Executive Officer becomes unable to perform his duties.
B. Formal Evaluation of the Chief Executive Officer
The Compensation Committee formally evaluates the Chief Executive Officer's performance annually and reviews the evaluation with the non-management directors. After receiving feedback from them, the chair of the committee reviews the evaluation with the Chief Executive Officer. The evaluation is based upon objective criteria including the performance of Mirant and the Chief Executive Officer's achievement of goals previously approved by the Compensation Committee. The evaluation is used by the Compensation Committee in determining the compensation of the Chief Executive Officer.
X. Annual Evaluation of the Board
The Board formally conducts an annual evaluation to assess and enhance its effectiveness. The Nominating and Governance Committee oversees this evaluation and the Board's overall effectiveness. This evaluation will also include a review of the structure, composition and functioning of the Board and its Committees. Each of the Board's committees also conducts an annual evaluation.
Each committee also reviews and assesses the adequacy of its charter annually and recommends changes to the Board as appropriate.
XI. Review of Guidelines
The Board has adopted the written corporate governance guidelines set forth above as a framework for the governance of the Company. The Nominating and Governance Committee reviews the guidelines annually and reports to the full Board on the committee's findings and recommendations. As necessary, the guidelines are revised and updated by the full Board based upon the recommendations of the Nominating and Governance Committee.
An "independent" director is a director the Board of Directors has determined has no material relationship with Mirant Corporation (the "Company"), either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company.
For purposes of this definition, the Board has determined that a director of the Company is not "independent" if:
1.1.The director is, or has been within the last three years, an employee of the Company, or an immediate family member of the director is, or has been within the last three years, an executive officer of the Company.
2.1.The director, or an immediate family member of the director, has received during any 12-month period during the last three years more than $120,000 in direct compensation from the Company, other than director and 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). Compensation received by an immediate family member for service as an employee (other than an executive officer) is not considered for purposes of this standard.
3.1.The director is a current partner or employee of the Company's internal or external auditor; an immediate family member of the director is a current partner of the Company's internal or external auditor; an immediate family member of the director is a current employee of the Company's internal or external auditor and personally works on the Company’s audit; or the director, or an immediate family member of the director, was within the last three years a partner or employee of the Company's internal or external auditor and personally worked on the Company's audit within that time.
4.1.The director, or an immediate family member of the director, is or within the last three years has been, employed as an executive officer of another company where any of the Company's present executive officers serves or served at the same time on that company's compensation committee.
5.1.The director is a current employee, or has an immediate family member who is a current executive officer, of another company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of the other company's consolidated gross annual revenues.
6.1.The director is or in the past three years has been an executive officer of a charitable organization to which the Company made contributions in an amount which in any single fiscal year exceeds the greater of $1 million or 2% of such charitable organization's consolidated gross annual revenues.
An "immediate family" member includes a director's spouse, parents, children, siblings, mother and father-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee) who shares the director's home.
For purposes of determining the independence of Audit Committee members only, a director is not considered independent for purposes of serving on the Audit Committee, and may not serve on the Audit Committee, if:
1.1.The director, other than in his or her capacity as a member of the Audit Committee, the Board of Directors, or any other Board committee accepts, directly or indirectly, any consulting, advisory or other compensatory fee from the Company, provided that, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company (provided that such compensation is not contingent in any way on continued service); or
2.1.The director is an affiliated person of the Company (other than in the director's capacity as a member of the Board of Directors of the Company).