Corporate Governance Principles
The primary responsibility of the directors of W. R. Grace & Co. is to exercise their
business judgment to act in what they reasonably believe to be in the best interests
of the Company, with appropriate consideration of the interests of all of the Company's
stakeholders. Directors will carry out their duties by overseeing and monitoring
the effectiveness of the Company's management. The Board has adopted these principles
to provide a framework for the governance of the Company, and to promote the efficient
functioning of the Board. The Board and management recognize that when the long-term
interests of the Company are advanced and the value of the Company increases, all
stakeholders – shareholders, creditors, employees, customers, suppliers, and the
communities in which the Company does business – will benefit.
1. Composition of the Board
Size. The Board believes that the optimum number of members should range
from six to 10. The Board believes, given the scope and complexity of the Company's
businesses, that this size is large enough to provide for sufficient diversity of
views and experience, and small enough to permit each director to acquire an intimate
understanding of the Company's businesses and make a significant contribution.
Independence. The Board believes that a substantial majority of the
Board should be independent, as defined by New York Stock Exchange rules and other
applicable laws and regulations. To be considered "independent," a director must
be determined by the Board of Directors, after due deliberation, to have no material
relationship with the Company other than as a director. In each case, the Board
shall broadly consider all relevant facts and circumstances and shall apply the
standards set forth in the New York Stock Exchange rules and other applicable laws
Term Limits and Retirement. During the Company's Chapter 11 proceeding,
the Board does not believe that it is appropriate to have any term limit or mandatory
retirement age for its members.
Other Directorships. The Board recognizes the substantial time commitment
required of its members to fulfill their duties. Therefore, any director who wishes
to join the board of directors of another for profit entity shall discuss such position
in advance with the chair of the Nominating and Governance Committee.
2. Board Meetings
Number. The Board should hold a minimum of six regularly scheduled meetings
each year. The Board generally welcomes the attendance of the Company's Leadership
Team at each Board meeting. Directors are expected to attend meetings in person.
In addition, directors are expected to attend the Company's annual meeting of shareholders.
Agendas. The Chair of the Board and the Chief Executive Officer (if
different from the Chair) will establish the agenda for each meeting. If the Chair is not
independent, he or she will solicit input from the Lead Independent Director. Each Board
member is free to suggest items for inclusion in the agenda and is free to raise
at any Board meeting subjects that are not on the agenda. Agenda materials will
be distributed to all directors one week in advance of each meeting to the extent
practicable, so that Board meeting time may be conserved and discussion time may
be increased to address questions of the Board. On those occasions in which the
subject matter is not appropriate to be included in writing in the advance materials,
a presentation will be made at the meeting. Directors should carefully review all
agenda materials prior to the Board meeting and should be prepared to discuss all
scheduled items of business.
The Board will review the Company's long-term strategic plans and annual operating
plans during at least one Board meeting each year. In addition, the Board should
plan on meeting informally on a periodic basis to discuss strategic issues and other
issues of importance to the Company.
Executive Sessions. Non-employee members of the Board generally should
meet in an executive session at the conclusion of each Board meeting, as well as
such other times as they deem appropriate. The lead director should preside at each
session; if the Board has not designated a lead director, the non-employee directors
should alternate the role of presiding director at each session.
3. Director Qualifications
Director Candidates. The Nominating and Governance Committee is responsible
for reviewing with the Board, on an annual basis, the requisite skills and characteristics
of new Board members as well as the composition of the Board as a whole. The Board
should be composed of individuals with a diversity of experience who are persons
of the highest integrity, with the education and experience to understand business
problems and evaluate and propose solutions, with the personality to work well with
others, with a reasoned commitment to the social responsibilities of the Company,
and with the availability of time to assist the Company. The annual assessment should
include a review of the directors' independence, as well as a review of whether
individual directors continue to be qualified to serve as a director. Shareholders
may submit nominations for director nominees in accordance with the Company's By-laws
and applicable laws.
Orientation. New directors will receive a comprehensive orientation
from appropriate executives regarding the Company and its businesses, including
presentations regarding the Company's strategic plans, financial, accounting and
risk management issues, and compliance policies and issues.
Continuing Education. The Board encourages its members to stay current
on best practices in corporate governance. The Board should be updated on new rules
and regulations on a periodic basis as appropriate, whether as part of a Board meeting
or through outside seminars. As part of its review of the Company's businesses,
the Board should conduct an on-site visit to a facility other than the Company's
headquarters in conjunction with a regularly scheduled Board meeting approximately
once every other year.
4. Evaluations and Related Matters
Performance Reviews. The Board will conduct a self-evaluation on an
annual basis to determine whether it and its committees are functioning effectively.
The Board will also conduct an evaluation of the CEO on at least an annual basis.
Management Development and Succession. The CEO should present an annual
report to the Board on the Company's program for management development and succession
planning for key management positions. Succession planning should include policies
and principles for CEO selection and performance review, as well as policies regarding
succession in the event of an emergency or the retirement of the CEO.
5. Board Committees
Standing Committees. The Board will have the following standing committees.
Each standing committee will provide a report of its activities to the Board.
Audit – The Audit Committee will assist the Board
in overseeing (1) the integrity of the Company's financial statements; (2) the Company's
compliance with legal and regulatory requirements; (3) the independent auditor's
qualifications and independence; (4) the performance of the Company's internal audit
function and independent auditor; and (5) the preparation of the internal control
report and an audit committee report as required by the Securities and Exchange
Compensation – The Compensation Committee
will (1) approve all compensation actions with respect to the Company's directors,
executive officers, and other members of senior management; (2) evaluate and approve
the Company's annual and long-term incentive compensation plans (including equity-based
plans), and oversee the general compensation structure, policies, and programs of
the Company; and (3) produce an annual report on executive officer compensation
as required by applicable law.
Nominating and Governance – The
Nominating and Governance Committee will (1) set criteria for, and identify individuals
qualified to become, Board members; and recommend to the Board the director nominees
for the annual meeting of shareholders; (2) develop and recommend to the Board appropriate
corporate governance principles applicable to the Company; and (3) oversee the evaluation
of the Board and management.
Corporate Responsibility – The
Corporate Responsibility Committee will assist the Company's Board of Directors
and management in addressing the Company's responsibilities as a global corporate
citizen (including its responsibilities to its various stakeholders, such as shareholders,
customers, employees and the communities in which the Company operates).
The Board may establish and delegate authority to additional committees as necessary
Committee Members. All of the members of standing committees will be
independent directors, as defined by New York Stock Exchange rules and other applicable
laws and regulations. Standing committee members, including the committee chair,
will be appointed by the Board upon recommendation of the Nominating and Governance
Committee, with consideration of the desires of individual directors. It is the
sense of the Board that consideration should be given to rotating standing committee
members periodically, but the Board does not feel that rotation should be mandated
as a policy. The Board may remove committee members with or without cause.
Charters. Each committee will have its own charter, to be approved
by the Board. The charters will set forth the purposes, goals and responsibilities
of the committees as well as qualifications for committee membership, procedures
for committee member appointment and removal, committee structure and operations
and committee reporting to the Board. The charters will also provide that each committee
will annually evaluate its performance.
Temporary Committees. The Board may establish and delegate authority
to such temporary committees as it may deem necessary or appropriate from time to
time. Temporary committees may include independent, non-employee or employee directors
as determined by the Board. Members of any temporary committee, including the committee
chair, will be appointed by the Board. The Board may remove members of any temporary
committee with or without cause.
6. Access to Management and Outside Advisors
Directors will have full and free access to officers, employees and outside advisors
of the Company. Any meetings with management may be arranged by the CEO or the Secretary.
The Board and each committee will have the power to hire independent legal, financial
or other advisors as they deem necessary or appropriate, without consulting or obtaining
the approval of any officer of the Company.
7. Director Compensation
The Compensation Committee will determine the form and amount of director compensation.
Compensation will be set at a level that is consistent with market practices, taking
into account the size and scope of the Company's businesses and the responsibilities
of the directors compared with peer group companies. The total compensation package
should be designed to attract and retain highly qualified directors and should align
the directors' interests with the long-term interests of the Company and its stakeholders.
For Audit Committee members, this compensation package will be the only compensation
that a director receives from the Company. For directors not serving on the Audit
Committee, additional compensation for other assignments should be limited in scope
and duration and must be approved by the Board after a review of its possible effects
on the independence of the director.
8. Review of Related Person Transactions
The Board recognizes that related person transactions can present conflicts of interest,
or the appearance thereof, and therefore has adopted this policy with respect to
related person transactions. For purposes of this policy, a "related person transaction"
is a transaction that is required to be disclosed pursuant to Item 404(a) of Regulation
S-K of the Securities and Exchange Commission. Item 404(a) generally requires disclosure
of transactions in which the Company is a participant, the amount involved exceeds
$120,000 and in which any related person (such as an executive officer, director,
director nominee, 5% stockholder or any of their respective family members) has
a direct or indirect material interest. Each related person transaction shall be
reviewed, determined to be in, or not inconsistent with, the best interests of the
Company and its stockholders and approved or ratified by: (A) the disinterested
members of the Audit Committee, if the disinterested members of the Audit Committee
constitute a majority of the members of the Audit Committee, or (B) the disinterested
members of the Board. In the event a related person transaction is entered into
without prior approval under this policy and, after review by the Audit Committee
or the Board, as the case may be, such transaction is not ratified pursuant to this
policy, management shall make all reasonable efforts to cancel or annul such transaction.
9. Code of Conduct and Ethics
The Board will oversee and adhere to the Company's business ethics, conflicts of
interest and other corporate policies and procedures and will be expected to certify
compliance with such policies and procedures on an annual basis and to the same
extent as the Company's officers and employees. The Board will resolve any conflict
of interest question involving the CEO or any direct report of the CEO. If an actual
or potential conflict of interest arises for (1) a director, the director will promptly
inform the Chair or (2) the Chair, the Chair will promptly inform the Chair of the
Audit Committee. If a significant conflict exists and cannot be resolved, the director
should resign. All directors will recuse themselves from any discussion or decision
affecting their personal, business or professional interests.
10. Risk Management Oversight
The Board, in an oversight role, should review on at least an annual basis the Company’s
enterprise risk management program. The Board should consider and provide guidance where
appropriate on whether the risk management processes are functioning properly and adapted
to the Company’s strategy, culture, risk appetite and value-generation objectives.
11. Communications to the Audit Committee or Board
Any employee, customer, shareholder or other interested person who has a concern
regarding accounting, internal controls or auditing matters, or any other matter
regarding business ethics or conflicts of interest may address those concerns through
the Company's ethics hotline or directly by writing to the Chair of the Audit Committee.
Procedures for expressing concerns will be included in the Company's business ethics
policy, which will be posted on the Company's web site.
12 . Annual Review of Guidelines
The Nominating and Governance Committee will review these guidelines on an annual
basis. Any recommendations for changes to these guidelines will be submitted to
the Board for approval.
Approved by the Board of Directors
Date: January 24, 2013