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business judgment, industry knowledge, corporate
governance and global markets. The Company’s
Guidelines on Significant Corporate Governance Issues
provide that diversity is a factor the Corporate
Governance Committee should consider in nominating
Directors. The diversity of Board and Committee
members (which would include gender, ethnicity, race,
color, and national origin) is one of the specified criteria
considered by the Board as part of its annual self-
evaluation.
The Corporate Governance Committee identifies
potential nominees by asking current Directors and
executive officers to notify the Corporate Governance
Committee if they become aware of persons that meet
the criteria described above and who have had a
change in circumstances that might make them
available to serve on the Board (for example, if an
individual has retired as chief executive officer or chief
financial officer of a public company or exited
government or military service). The Corporate
Governance Committee may also, from time to time,
engage firms that specialize in identifying Director
candidates. As described above, the Corporate
Governance Committee will also consider candidates
recommended by shareholders.
Once the Corporate Governance Committee identifies a
person as a potential candidate, the Corporate
Governance Committee may collect and review publicly
available information regarding the potential candidate
to assess whether that person should receive further
consideration. If the Corporate Governance Committee
determines that the candidate warrants further
consideration, the Chairman or another member of the
Corporate Governance Committee will contact the
person. Generally, if the person expresses a willingness
to be considered and to serve on the Board, the
Corporate Governance Committee requests information
from the candidate, reviews the
person’s
accomplishments and qualifications relative to any other
candidates that the Corporate Governance Committee
might be considering, and conducts one or more
interviews with the candidate. In certain instances,
Corporate Governance Committee members may
contact one or more references provided by the
candidate or may contact other members of the
business community or other persons that may have
greater firsthand knowledge of the candidate’s
accomplishments.
The
Corporate
Governance
Committee’s evaluation process does not vary based
on whether or not a candidate is recommended by a
shareholder, although, as stated above, the Board may
take into consideration the number of shares held by
the recommending shareholder and the length of time
that such shares have been held.
Enterprise-Wide Risk Oversight
Our Board of Directors oversees an enterprise-wide
approach to risk management, designed to support the
achievement of organizational objectives, including
strategic objectives, to improve long-term organizational
performance and enhance shareholder value. A
fundamental part of risk management is not only
understanding the risks a company faces and what
steps management is taking to manage those risks, but
also understanding what level of risk is appropriate for
the company. The involvement of the full Board of
Directors in setting the Company’s business strategy is
a key part of its assessment of management’s appetite
for risk and also a determination of what constitutes an
appropriate level of risk for the Company.
While the Board of Directors has the ultimate oversight
responsibility for the risk management process, various
committees of the Board also have responsibility for risk
management. The Audit Committee charter provides
that one of the Audit Committee’s responsibilities and
duties is compliance oversight. The Audit Committee
charter provides that the Audit Committee shall discuss
guidelines and policies governing the process by which
senior management of the Company and the relevant
departments of the Company assess and manage the
Company’s exposure to risk, as well as the Company’s
major financial risk exposures and the steps
management has taken to monitor and control such
exposures.
The Investment and Investment Risk Committee assists
the Board of Directors by providing oversight of the
investment process and investment risk management of
the Company and its subsidiaries by reviewing and
approving the investment policies, strategies,
transactions and performances. The “investment
process” is the process by which all investable cash
flows of the Company and its subsidiaries are invested,
and by which investments are managed to emphasize
safety, liquidity, returns, tax considerations, applicable
laws and regulations, and conformity to the needs of
each Company. The “investment risk” includes, but is
not limited to liquidity risk, market risk, and credit risk.
“Liquidity risk” is risk stemming from the lack of
marketability of an investment that cannot be bought or
sold quickly enough to prevent or minimize a loss.
“Market risk” is the risk that as a result of market
movements, a firm may be exposed to fluctuations in
the value of its assets, the amount of its liabilities, or the
income from its assets. “Credit risk” is the risk of loss a
firm is exposed to if a counterparty fails to perform its
contractual obligations, including failure to perform them
in a timely manner.
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