1. Size of the Board
The Board will have between nine (9) and thirteen (13) members unless otherwise determined by shareholder approval. The Board also has a Secretary to the Board who attends meetings but does not vote.
2. Classified Board
Board members shall be elected for staggered terms of generally three years. As a company that focuses on innovation we believe it is critical to maintain Board continuity during product investment and business cycles. There shall be a majority of independent directors on the Board.
3. Board Definition of What Constitutes Independence for non-employee Directors
Our company defines an "independent" director in accord with the NASDAQ National Market requirements for independent directors (NASDAQ Stock Market Rule 4200). Because it is not possible to anticipate or explicitly provide for all potential conflicts of interest that may affect independence, the Board is also responsible to affirmatively determine that each independent director has no other material relationship with the company or its affiliates or with any executive officer of the company or his or her affiliates. A relationship will be considered "material" if in the judgment of the Board it would interfere with the director's independent judgment.
4. Business Relationships with Directors and Executive Officers
Any transaction between the Company and any executive officer or director of the Company (including that person's spouse, children, stepchildren, parents, stepparents, siblings, parents-in-law, children-in-law, siblings-in-law and persons sharing the same residence) must be disclosed to the Board of Directors and is subject to the approval of the Board of Directors or the Nominating and Governance Committee unless the proposed transaction is part of a general program available to all directors or employees equally under an existing policy or is a purchase of Company products consistent with the price and terms of other transactions of similar size with other purchasers.
5. Selection of New Director
The Nominating and Governance Committee screens all potential candidates for participation on the Board. The Board will fill vacancies within the range established in the by-laws. All new directors will stand for vote by the shareholders after the term for which they were appointed expires.
6. Board Membership Criteria
To meet the needs of our company in a rapidly changing environment, Herman Miller requires a high-performance Board whose members subscribe to our values and meet the specific resource needs of the business. As an appropriate check and balance to the management team, employees other than the CEO and President will not normally be members of the Board. The Nominating and Governance Committee is responsible for reviewing with the Board from time to time the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board. This assessment includes mix of technical experience and backgrounds such as manufacturing, technology, finance, marketing and design, understanding of the company's history, and public company experience. These factors, and others as considered useful by the Board, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time.
Board members are expected to rigorously prepare for, attend, and participate in all Board and applicable Committee meetings. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member's service as a director.
7. Other Board Memberships.
Board members will disclose all involvement in business and philanthropic boards. These commitments will be considered as part of the annual review process. Board members are limited to no more than four public company boards if the Board member is employed on a substantially full-time basis and no more than six if the Board member is not employed on a full-time basis.
8. Directors with a Material Change in Status
Board members who retire or change positions held when they came on the Board, or otherwise have a material change in status, should offer to resign from the Board. Although this will prompt a review by the Nominating and Governance Committee, the change may have no impact on the member's ability to continue to participate on the Board.
Any employee who becomes a member of the Board, including the CEO, will resign from the Board upon termination of employment. The employee may be invited, however, to serve the remainder of his or her term and be nominated for additional terms at the discretion of the Board.
9. Retirement Policy
A director who turns 72 years of age during a term will retire at the annual meeting following his or her 72nd birthday. Election to the Board does not confer the right to continued nomination or re-election until retirement age. The Board, like the company it serves, intends to be a learning body and is dedicated to the principle of renewal to ensure the balance it needs to serve the company well.
10. Separation of the Position of Chairperson and CEO.
The Board believes the roles of CEO and Chairperson should normally be separated. If the positions are combined, the Board will closely monitor the performance and working relationship between the CEO/Chairperson and the Board and will establish a Lead Director who acts as a liaison between directors and the CEO/Chairman and who chairs meetings of the independent directors.
11. Board Compensation
It is the policy of the Board that Board compensation should be a mix of cash and equity-based compensation, with a minimum of 50% required to be in equity, unless the director has met the stock ownership guidelines. Directors who are full-time employees of the Company will not be paid for Board participation in addition to their regular employee compensation. Independent directors may not receive consulting, advisory or other compensatory fees from the company in addition to their Board compensation.
12. Stock Ownership Guidelines
It is the policy of the Board that all directors, consistent with their responsibilities to the stockholders of the company as a whole, hold an equity interest in the company. Toward this end, the Board requires that each director will have an equity interest after one year on the Board, and within five years the Board encourages the directors to have shares of common stock of the company with a value of at least three times the amount of the annual retainer paid to each director.
The Board, through the Executive Compensation Committee, will maintain stock ownership guidelines for executive officers.
The Board recognizes that exceptions to this policy may be necessary or appropriate in individual cases, and may approve such exceptions from time to time as it deems appropriate in the interest of the company's stockholders.