2011 Board Pracices Report by Deloitte

2011 Board Practices Report Design, Composition, and Function
December 2011
Dear Reader: The Society of Corporate Secretaries and Governance Professionals (the Society) and the Deloitte Center for Corporate Governance are pleased to issue the 2011 Board Practices Report (the Report) of companies represented in the Society's membership. This Report is a key component in our efforts to analyze and report on current governance practices. And, as this is the seventh edition, comparative information and trends related to reports published in 1999, 2002, 2005, and 2008, are provided. Topics addressed in the Report keep pace with the dynamic corporate governance environment; thus, this years issue covers new topics such as details on director qualifications, shareholder engagement, social media policies, and the use of technology in the boardroom. The value of this Report lies in the unique data it provides. Based on the responses of over 200 corporate secretaries, where else will you learn how much board meetings are lengthening, that mandatory retirement ages are trending older, that classified boards are only increasing at small-cap companies, and that a majority of audit committees receive reports on tips from internal compliance hotlines at least 2-4 times per year? It also reveals hard-to-come-by data, such as how many times directors have had direct contact with shareholders in the last year, and how many boards are using web portals and tablets to receive their materials. In short, we believe this Report is the only one of its kind tailored specifically to practitioners of corporate governance. We hope it will be a useful tool to you and those executives and boards that you advise. Finally, we sincerely thank the participants for their time; this Report would not be possible without you. Sincerely yours,
Darla C. Stuckey Senior Vice President Policy & Advocacy Society of Corporate Secretaries and Governance Professionals
Maureen P. Errity Director Deloitte LLP Deloitte Center for Corporate Governance
This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, Deloitte means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. 2
Contents
4 6 7 20
Introduction Participant demographics Summary of results and key findings Public company survey results 20 Board selection, recruitment and composition 26 Independent chairman 30 Board meetings and materials 38 Committee structures and roles 45 Audit committee 53 Board orientation and training 58 Board evaluations 61 Strategy 64 Risk oversight, disclosure committee, and political contributions** 69 CEO succession planning 71 CEO performance evaluation 73 Shareholder engagement and shareholder activism 76 Voting and proxy issues 78 Earnings guidance 81 Directors and officers liability insurance 83 Boards use of technology 87 Sustainability 89 Culture/ setting tone at the top 92 Private sessions (Board access to management)** Non-public company survey results
93
107 Director qualifications survey results 108 Leadership qualifications 109 Technical skills 110 Professional experience 111 Ethnicity, gender, and age 114 Appendix A Comparison table of prior year survey results 116 Appendix B 2011 Board practices survey questionnaire
**In this Report, the section header has been modified from the original survey questionnaire.
Introduction
Background The 2011 Board Practices Report (the Report) is the 7th edition put forth by the Society of Corporate Secretaries and Governance Professionals, Inc. (the Society). The first issue was published in 1995, and subsequent editions were made available in 1999, 2000, 2002, 2005, and 2008. The three most recent survey questionnaires and accompanying reports, including those from 2011, were developed in collaboration with Deloitte LLPs Center for Corporate Governance. Each report is based on the results of a survey distributed to the Societys membership, which includes more than 3,000 members representing companies of various sizes, industries, and organization structures. The reports are intended to present timely information on board roles and responsibilities and other topics of corporate governance. To provide trend data, the 2011 questionnaire contained many questions that were asked previously. Where appropriate, questions were removed if they were no longer relevant, and questions were added to account for developments affecting board and governance practices. Industry data was not considered in 2008; therefore, the trend data applies only to market capitalization results. Board Practices Report Questionnaire The 2011 questionnaire included 81 questions (14 more than was on the 2008 survey), covering 19 areas of board practice, including: board meetings and materials, committee structures and roles, risk oversight, and strategy. The survey topics and questions reflect established board practices, as well as policies relating to recent efforts in the areas of governance reform and regulation. New this year was the addition of questions related to political contributions and donations, fifth analyst calls with investors, social media policies, and questions on sustainability. Also new to the questionnaire is a section on director qualifications, which provides data on the survey participants board demographics, attributes, and skills. The choices for answers varied. In most cases, participants could select from either Yes or No responses; in some instances, it was appropriate to provide a numerical range or specific set of responses from which to choose. When appropriate, Not Applicable (represented by N/A) or Dont Know was included in the choices. Because the questionnaire was primarily limited to data not publicly available, Deloitte and the Society researched the proxy statements of the public company survey participants to obtain more information about the board governance practices of these companies. The results can be found in the public company survey results section. Methodology Throughout this Report, percentages were based on the number of responses to a particular question. Due to rounding to the nearest whole digit, there may be cases where percentages may not add up to 100%. A number of questions allowed respondents to supply an answer if none of the provided choices was suitable. In some cases, these "other" responses have been consolidated into appropriate categories. Participant overview A total of 208 survey responses were received and are illustrated in the charts and tables contained in this Report. Survey participants were anonymous and the results provided cannot be attributed to a specific company. Participants were from a number of company types, shown in the table to the right.
Company Type Public Privately held Nonprofit Partnership
Number of Respondents 175 19 12 2
Report contents Participant demographics This section provides information concerning the industry, size, and type of companies that participated in this years survey. Summary of overall results and key findings Responses from all 208 participants from the public, private, and nonprofit companies have been compiled in a table for easy viewing. When answer choices consisted of a numerical range or another specific answer, the affirmative response (Yes) has been provided. When fewer than 208 participants responded to a question, the number of responses is indicated by an n value. Public company survey results The charts in this section represent responses from the 175 public company participants. In addition, the results are broken down by market capitalization and financial versus non-financial industries. When fewer than 175 participants responded to a question, an n value has been provided. Results from the 2008 results have been included, where applicable. Certain charts contain information that was obtained from the proxy statements of the public company survey participants. This data was researched by the authors of this Report and are denoted by a blue border. Non-public company survey results This section includes responses received from participants representing private, partnership, and nonprofit organizations; the results for the 33 participants have been summarized in a tabular format, broken down to show results by company type. When fewer than 33 participants responded to a question, an n value has been provided. Director qualifications survey results New this year is a section providing data on director qualifications, which were segmented into three categories: leadership, technical, and professional. Other data related to director age, gender, and ethnicity is also included. Appendices Comparison table of prior year results: Results from comparable questions in the 1999, 2002, 2005, and 2008 surveys have been consolidated in a table. 2011 Board practices survey questionnaire
Participant demographics
Industry Fifty-two respondents represented financial services companies, a category that consisted of banking, finance, insurance, real estate and construction. Other participating companies were considered non-financial services.
1. What is your organization's industry? 1. What is your organization's industry?
15%
15%
15%
15%
10% 8% 8% 8% 7% 5% 5% 3% 3% 3% 2%
10% 8% 8% 8% 7% 5% 5%
2%
1%
1%
1%
1%
0%
(n=207)
(n=207)
Company type and size There were a total of company type (forin thiscompanywhich are 2. Please specify your 208 participants each survey, type, further classified as follows:value) and percentage of the total the count of respondents (n
count is provided as n value/ percentage)
2. Please specify your company type (for each company type, the count of respondents (n value) and percentage of the total count is provided as n value/ percentage)
Company type Public
Total number of respondents 175 19 12
Financial services industry 38 11 3 0

Small-cap 27/ 16% Large-cap 60/ 34%
Privately held Small-cap Nonprofit Partnership

27/ 16%
2 60/ 34%
Large-cap
For purposes of the 2011 survey and to follow the breakdown used in the 2008 survey, the distribution of public company participants were segregated using the Mid-cap following market capitalization: 88/ 50% Large-cap companies Mid-cap companies Small-cap companies
Small-cap Mid-cap Large-cap
Mid-cap 88/ 50%
> $10 billion 700 million and $10 billion < $700 million
Summary of results and key findings

Summary of results The following table includes the responses to the 2011 questionnaire from all 208 survey participants. For those questions in which fewer than 208 responses were received, an n value has been provided to indicate the number of responses. An asterisk represents questions where a participant was asked to provide a numerical or text response. These responses have been consolidated into categories or ranges.
Organization criteria What is your organizations industry: (n=207) Advertising and publishing Agriculture or mining Banking or finance Energy Healthcare or pharmaceutical Insurance Manufacturing consumer Manufacturing industrial Media/ communications Nonprofit or public admin Professional services Public utility/ utility holding Real estate or construction Retail/ Wholesale Service industries (misc.) Technology (including software) Telecommunications Transportation or distribution Other If Other industry (Please specify): Aerospace Gaming Industrial gases-basic materials Specialty chemical Please specify your company type: Public company Privately held Partnership Nonprofit Board practices Board selection, recruitment and composition Does your organization use a skills matrix or similar tool to periodically assess board composition and fill gaps when selecting new directors? (n=206) Does your organization use written criteria in director selection? (n=207) Does your organization use an executive search/ board director recruiting firm to assist in the recruitment of board directors? Does your organization provide a mechanism for shareholders to nominate candidates to the board?
0% 3% 14% 5% 8% 8% 7% 14% 1% 2% 0% 10% 2% 8% 2% 5% 1% 3% 3%
1a*
84% 9% 1% 6%
Yes
No
3 4 5 6
59%
Yes
41%
No
75%
Yes
25%
No
58%
Yes
42%
No N/A
77%
13%
10%
Yes
No
7 7a*
9a*
10
11
12
12a*
13
Do you have a mandatory retirement policy for directors? If so, at what age is retirement required? (n=132) 70 71 72 73 74 75 Other: formula based on age + years of service Independent chairman Is the independent board chairman also the chairman of the nominating and governance committee? The independent board chairman is also the chairman of the nominating and governance committee No, but our policy would not restrict the same individual from holding both positions Our policy does not permit the same individual from holding both positions Not applicable we do not have an independent chairman Who is responsible for the periodic evaluation and development of the independent chairman? (n=207) The nominating and governance committee The full board Another committee No formal evaluation is performed Not applicable we do not have an independent chairman If another committee, please specify: Another independent director has been appointed to complete this review Executive compensation committee How often is periodic evaluation of the independent chairman performed? Annually Periodically, as needed No formal evaluation is performed Not applicable we do not have an independent chairman Does your policy specify a rotation policy or term limit for the independent chair? (n=207) Rotation policy Term limit Neither Not applicable we do not have an independent chairman Board meetings and materials Does your company permit shareholders to call special shareholder meetings? (n=198) Permitted without any restriction Permitted but with minimum ownership threshold percentages Not permitted If permitted with a minimum ownership threshold, please specify the threshold percentage (e.g., 10, 15, 20, 25%) (n=70) 10% 15-20% 25% 33-35% 50% 66% 75% Majority of shares (not including specific threshold percentages listed above) Other (e.g., as required by state law) How many hours does a typical board meeting last? (Do not count time spent on committee meetings on a board meeting day) (n=207) 1-2 hours 3-5 hours 6-8 hours 9-10 hours More than 10 hours
65% 20% 2% 52% 3% 2% 21% 1%
34%
8% 36% 4% 52%
13% 17% 1% 17% 51%
23% 4% 21% 52%
1% 4% 41% 53%
11% 40% 49%
23% 13% 39% 3% 7% 1% 1% 9% 4%
5% 55% 30% 6% 3%
14
15
16
How far in advance are board meeting materials provided to board members? (n=206) At most five business days before meeting Between five to ten business days before meeting More than ten business days before meeting Materials are not distributed prior to board meetings What is the most common form of board meetings for your organization? Live, face-to-face meetings Live, face-to-face meetings with some directors attending via web-conference or video conference Live, face-to-face meetings with some directors attending via telephone Tele-conference calls How often do you hold board meetings outside of the country in which your company is headquartered? (n=206) Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) We do not hold board meetings outside of the country in which our company is headquartered
37% 61% 2% 0% 90% 1% 5% 3%
1% 3% 24% 71%
Yes No N/A
17 18
19
20
Do you make company owned aircraft available to directors for travel to meetings? 29% 30% (n=207) What amount of reimbursement does your company provide to directors for travel to meetings? Full reimbursement 93% Partial reimbursement 1% None 6% Committee structures and roles How many standing committees does your board have? Two or less 3% Three to five 83% Five or more 13% Please complete the following table with regard to the specific committee practices of your board
40%
Note: For each committee in the following table, the count of respondents (n value) and this percentage of the total count of respondents for the committee is provided as n value/ percentage.
Committee Audit committee
Committee size 1-4 5-9 >10 1-4 5-9 >10 1-4 5-9 >10 1-4 5-9 >10 1-4 5-9 >10 1-4 5-9 >10
All companies 120/ 59% 83/ 41% 1/ 0% 117/ 58% 85/ 42% 0/ 0% 119/ 61% 75/ 38% 1/ 1% 34/ 45% 37/ 49% 5/ 7% 5/ 56% 4/ 44% 0/ 0% 6/ 25% 18/ 75% 0/ 0%
Meeting frequency in a year 1-6 7-11 12 1-6 7-11 12 1-6 7-11 12 1-6 7-11 12 1-6 7-11 12 1-6 7-11 12
All companies 91/ 46% 93/ 47% 16/ 8% 162/ 84% 28/ 14% 4/ 2% 179/ 95% 7/ 4% 2/ 1% 26/ 79% 3/ 9% 4/ 12% 9/ 100% 0/ 0% 0/ 0% 17/ 77% 4/ 18% 1/ 5%
Average length of meetings (hrs) 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3
All companies 47/ 23% 132/ 66% 22/ 11% 70/ 35% 118/ 59% 11/ 6% 121/ 63% 68/ 35% 3/ 2% 30/ 73% 11/ 27% 0/ 0% 3/ 38% 5/ 63% 0/ 0% 6/ 25% 17/ 71% 1/ 4%
Auditor attendance in meetings All (Y/N) companies Yes No Yes No Yes No Yes No Yes No Yes No 196/ 98% 3/ 2% 0/ 0% 186/ 100% 0/ 0% 178/ 100% 0/ 0% 68/ 100% 0/ 0% 12/ 100% 3/ 14% 19/ 86%
Compensation committee Nominating/ corporate governance Executive committee Science & technology committee Risk committee
Committee Strategy committee
Committee size 1-4 5-9 >10 1-4 5-9 >10 1-4 5-9 >10 1-4 5-9 >10
All companies 3/ 25% 7/ 58% 2/ 17% 8/ 53% 7/ 47% 0/ 0% 4/ 40% 6/ 60% 0/ 0% 2/ 25% 4/ 50% 2/ 25%
Meeting frequency in a year 1-6 7-11 12 1-6 7-11 12 1-6 7-11 12 1-6 7-11 12
All companies 11/ 100% 0/ 0% 0/ 0% 15/ 100% 0/ 0% 0/ 0% 10/ 100% 0/ 0% 0/ 0% 5/ 63% 3/ 38% 0/ 0%
Average length of meetings (hrs) 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3 0.5-1.5 2-3 >3
All companies 3/ 25% 7/ 58% 2/ 17% 5/ 36% 9/ 64% 0/ 0% 6/ 60% 4/ 40% 0/ 0% 5/ 63% 3/ 38% 0/ 0%
Auditor attendance in meetings All (Y/N) companies Yes No Yes No Yes No Yes No 0/ 0% 15/ 100% 0/ 0% 15/ 100% 0/ 0% 11/ 100% 2/ 22% 7/ 78%
Environment committee
Corporate responsibility
Disclosure
21
21a*
Which of the following has the primary responsibility for appointing committee members and chairs? Full board 47% Nominating/ corporate governance committee 44% Board chair/ lead director 5% Other 4% If Other, please specify: Chairman makes recommendations which are then acted upon by the full board Executive committee Nominating/ corporate governance committee nominates committee members/ chairs for full board approval
Yes No
22 23 24 24a*
Does your board have a policy to rotate committee chairs? (n=206) Does your board have a policy to rotate committee membership? (n=206) Does your board have limits on audit committee members being able to participate on other organizations audit committees? (n=207) If yes, please specify the limit: (n=88) 1 2 3 4 5 Other Directors should hold participation in other boards to a level that does not adversely impact their ability to serve the companys board and avoid accepting director responsibilities that would create the opportunity for/ appearance of a conflict. Individualized according to demands on time Per NYSE rules The SEC limit Audit committee How often does the audit committee meet annually via: In-person meetings (n=202) 1-4 5-9 10-14 By tele-conference calls (n=161) 1-4 5-9 10-14 By video or web conference (n=3) 1-4 5-9 10-14
22%
Yes
78%
No
21%
Yes
79%
No
45%
55%
2% 42% 43% 6% 1% 6%
25
68% 30% 2% 81% 19% 0% 100% 0% 0%
10
26
How has the frequency of audit committee meetings changed since last year? (n=207) Increased substantially Increased slightly Decreased No change Are audit committee meetings held by phone considered different than in-person meetings for purpose of proxy disclosure? (n=197) Does your organizations audit committee hold a separate meeting to review the earnings release vs. quarterly reviews or are they combined? (n=193) Separate meetings Combined meetings How often do external auditors attend your companys audit committee meetings? (n=206) Frequently (all or almost all audit committee meetings) Sometimes (two to three audit committee meetings a year) Rarely (one audit committee meeting a year) Never Dont know How often does your audit committee meet separately with management? (n=206) Frequently (all or almost all audit committee meetings) Sometimes (two to three audit committee meetings a year) Rarely (one audit committee meeting a year) Never Dont know Which members of management meet separately with the audit committee? (Check all that apply) (n=202) Head of internal audit General counsel Chief executive officer Chief financial officer Chief compliance officer Other If Other, please specify: Representative responses: Controller and/ or chief accounting officer Chief risk officer Chief operating officer
2% 9% 4% 85%
Yes No
27 28
6%
94%
37% 63%
29
93% 4% 2% 0% 0% 81% 15% 2% 2% 0%
30
31
87% 49% 44% 77% 32% 18%
31a*
32
33
Other responses: All members of management except the internal auditor Management group meets with audit committee; Internal audit meets alone with audit committee Risk manager, corporate secretary, chief credit officer, human resources director, controller, director of retail banking, commercial banking manager Secretary and treasurer No meetings How often does your companys audit committee engage specialists for specific matters on their agenda? (n=204) Frequently (five or more times a year) 2% Sometimes (two to four times a year) 18% Rarely (once a year) 53% Never 25% Dont know 2% How often does the audit committee receive reports on internal tips from a compliance hotline? (n=203) Frequently (five or more times a year) 34% Sometimes (two to four times a year) 33% Rarely (once a year) 20% Never 9% Dont know 4%
11
Board orientation and training

Yes No
34 34a
35
35a*
Does your organization have a formal orientation program for new directors (beyond supplying a directors manual)? (n=203) If yes, please check the orientation programs sponsored by your organization for directors: (Choose all that apply) (n=149) Live, in-house session led by an individual serving on the board and/or a staff member of the organization Live training by a third party Internet-based training Does your company train directors on: (Choose all that apply) (n=180) Anti-corruption policies (e.g., FCPA, UK Anti-bribery Act) Insider trading Political contributions Company policies Other regulatory issues related to your business such as privacy, etc. Other formal training If Other, please specify: Representative responses: Code of conduct Ethics Company, operations, and industry specific matters General corporate governance Fiduciary/ director duties
74%
26%
99% 2% 5% 36% 78% 22% 81% 62% 21%
36
36a*
37
37a*
38
Other responses: Basel II BSA/ AML - Section 16 - Reg FD Reinsurance, investment management, marketing Which of the following best describes your boards director education program?: (Choose all that apply) (n=206) Provided in-house by management 71% Provided in-house by a third party 21% Directors are reimbursed for public forums or peer group sessions attended 60% The full board collectively attends a single public forum 1% Other 4% Our board does not have a formal director education program 15% If Other, please specify: Different approaches reflecting the needs of different directors Each board member in a three year period is encouraged to participate in educational programs relevant to the directors committee assignment and/ or recommended best governance practices Once a year training is provided at a board meeting by either in-house or external providers. In addition, directors are encouraged to attend programs sponsored by groups such as NACD, NASDAQ, UCLA, Stanford, etc. Provided by corporate secretary Public webinars Regular store walks with management Relevant reading materials are sent to directors How do your directors learn about director education programs? (Choose all that apply) (n=192) From the corporate secretary or management 85% From other directors 48% From third party mailings 59% Other 5% If Other, please specify: External auditors The nominating/ governance committee may suggest outside education programs All they learn from our company comes through meeting materials/ presentations. Board evaluations How are your directors evaluated? (Choose all that apply) (n=205) Self-evaluation 74% Individual peer-evaluation led by corporate secretary or other in-house personnel 18% Individual peer-evaluation led by a third party facilitator 13% Our organization does not have a formal board performance evaluation process 6% Other 13%
12
38a*
39
If Other, please specify: Annual board/ committee self evaluation facilitated by outside counsel; no formal peer-evaluation Bio, qualifications, meeting attendance all provided to full board; suggested discussion topics given to full board to discuss in private session Board and committee evaluations and lite individual assessments done in executive session Board evaluates board and committee performance via questionnaire, coordinated by corporate secretary Chair of the governance committee meets with all committee chairs and evaluates directors performance and participation Each independent director meets privately with the chairman of the board and the chairman of the corporate governance and nominating committee Evaluation by committee chairs For 2012, moving to a third-party independent evaluation method Individual peer by electronic survey (anonymous) Individual peer-evaluation led by chair of the nominating and corporate governance committee Individual peer-evaluation led by chairman of the board Individual peer-evaluation led by independent lead director - another independent director leads the review of the lead director Individual peer-evaluation led by two chairs (of board and one committee) Individual self and peer-evaluation led by governance committee chair Management evaluation of board No peer-to-peer evaluation program. Facilitated by outside counsel, each director evaluates the full boards performance over the year. Outside advisor periodically engaged to conduct interviews after self-evaluations are done Self-evaluations facilitated by lead director We rotate our approach from year-to-year to keep the process fresh To whom does the evaluation pertain? (Select all that apply) (n=206) Individual board members 42% Board committees 80% Full board as a whole 88% Not applicable 6%
Yes No N/A
40 41
42
42a*
43
44
Have you had a third party evaluate the boards performance? (n=206) 18% 77% 5% How often is the board evaluated? (n=207) More frequently than once a year 1% Less frequently than once a year 4% Once a year 89% Not evaluated 5% Strategy How often are strategic objectives discussed with the board? (n=207) Annually 21% Quarterly 20% At every meeting 50% Other 9% If Other, please specify: Representative responses provided: 2-day semi-annual deep dive; discussion privately with CEO at nearly every meeting Periodically; as developments occur on various aspects of the strategy Semi-annually Some aspect of strategy is discussed at nearly every meeting The entire strategic plan, for the following year and long-term, is discussed once a year. Progress against objectives may be discussed quarterly. There are annual strategy sessions with follow ups by certain businesses during the year How often does your board participate in an off-site strategy meeting with management? (n=205) More frequently than once a year 2% Less frequently than once a year 10% Once a year 60% We do not hold off-site strategy meetings with management 29% How is strategy set at your organization? (n=206) Management develops strategy and the board advises, challenges and approves 92% The board and management develop strategy together 6% The board develops the strategy and management approves and executes 0% Other 1%
13
44a*
45
46
46a*
If Other, please specify: At every meeting, but with special emphasis semi-annually. Continuous collaboration between management and the board Is the level of board involvement in setting strategy increasing or decreasing? (n=206) Increasing 50% Decreasing 0% Remains the same 50% Risk oversight, disclosure committee, and political contributions** How does your board assign risk oversight for the organizations risk management program? (Select all that apply) (n=207) We have a board risk committee 13% The audit committee has primary responsibility for risk oversight 50% Risk oversight responsibilities are spread across all board committees 43% The full board is responsible for risk oversight 54% We have not considered board responsibility for risk oversight 0% Other 8% If Other, please specify: Audit and risk committee Board oversees strategic, operational; committees oversee risk in their respective areas of responsibility; audit committee oversees allocation of oversight response Committees are also charged with risk oversight for the risks within their committee charters Compliance committee Currently evaluating Executive committee is responsible for risk oversight Chief risk officer, risk management structure and management risk committees and board approve risk appetite Internal auditor manages/ designs risk management Management enterprise risk management committee with audit committee chair as boards liaison with reports to full board Nominating & governance committee ensures oversight by a committee or board Risk management is supplemented by senior management reviews and reported up to the board Split between governance and audit committee The safety committee has oversight of specific safety-related risks We have a finance and risk management committee While the board has full responsibility for risk oversight, quarterly activities of the management risk committee are made to the audit committee
Yes No N/A
47 47a 47b
Does your organization have a management disclosure committee as recommended by the SEC for public companies? (n=207) If yes, does the management disclosure committee report to either the board or a board committee? (n=158) If yes, how often? (n=54) Monthly Quarterly Semi-annually Annually No determined frequency; only when needed Does the company align risk oversight/ risk management with the companys strategy? (n=206) Yes No Dont know Does your companys board oversee political contributions and donations made by the company or oversee the political action committees (or similar) of the company? (n=202) Yes No Dont know Has your company imposed any limitations, or reporting obligations, to the company on political contributions by directors? (n=203) Yes No Dont know
78%
Yes
10%
No
12%
34%
66%
0% 87% 2% 0% 11%
48
87% 5% 8%
49
30% 63% 7%
50
11% 82% 7%
14
51
52
52a*
53
54
54a*
CEO succession planning How often does the full board review CEO succession plans? (n=204) More than once a year 23% Once a year 62% Less than once a year (e.g., every two years) 4% Only when a change in circumstance requires 8% Never 2% Who has the primary responsibility over the CEO succession planning process? (n=205) Entire board 37% Compensation committee 24% Nominating/ corporate governance committee 26% Independent directors 4% CEO 3% Other 6% If Other, please specify: As a partnership, the majority partners chairman decides Chairman and CEO, which in turn report status to the board Compensation committee but in practice, the full board Entire board responsible, plan and planning process driven by CEO Executive committee Full board through its executive committee Human resource and governance committee Lead director Small committee of independent directors Special committee composed of lead director and the chairs of the governance and compensation committees CEO performance evaluation How often does the full board review the CEOs performance? (n=205) More than once a year 8% Once a year 86% Less than once a year (e.g., every two years) 0% Only when a change in circumstance requires 3% Never 3% Who has the lead responsibility over the CEO performance evaluation process? (n=204) Entire board 13% Compensation committee 61% Nominating/ corporate governance committee 12% Independent chair or lead director 10% Other 4% If Other, please specify: Compensation committee in conjunction with lead independent director Executive committee Human resource and governance committee Nominating and governance committee and lead director The independent directors (all of whom sit on the executive compensation committee) evaluate the performance of the management directors as a group, and individually, following a presentation by management to the committee Shareholder engagement and shareholder activism
Yes No N/A
55 56 57
Are directors required to attend the annual shareholders meeting? (n=207) Do you have a policy relating to contact between directors and shareholders? (n=206) Have board members had direct contact with shareholder(s) or shareholder groups over the past year? (n=203) Board members have had direct contact Direct contact was made only as arranged or suggested by company management Board members did not have direct contact Not applicable
66%
Yes
23%
No
12%
N/A
45%
45%
10%
21% 15% 51% 13%
15
Yes
No
N/A
58 59
Has your organization been approached by a shareholder activist within the last 12 months? (n=204) Has your board considered holding what is known as a fifth analyst call with investors? (n=207) Yes No Not familiar with the term Not applicable Voting and proxy issues Did your organization receive a shareholder proposal during the 2011 proxy season other than auditor ratification, say-on-pay, or required proposals? (n=207) When does your organization provide reimbursement of expenses related to director election campaigns? (Choose one) (n=206) Reimbursement is provided when the nominee is successful Reimbursement is provided when the nominee achieves a certain percentage of the vote Never Not applicable Is your organization considering adopting a policy or by-law providing reimbursement of expenses related to director election campaigns in light of proxy access? (Choose one) (n=202) Reimbursement would be provided when the nominee is successful Reimbursement would be provided when the nominee achieves a certain percentage of the vote Not considering adopting a policy or by-law Not applicable Earnings guidance Does your organization publicly provide earnings per share (EPS) estimates? (Select all that apply) (n=202) Quarterly earnings per share estimates are provided Annual earnings per share estimates are provided Other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are provided EPS estimates nor other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are not provided Not applicable Does your organization intend to change how it provides EPS estimates or other forward-looking information? (n=205) There is no intention to change the amount of information provided We intend to reduce the amount of information provided We intend to increase the amount of information provided Dont know Not applicable Directors and officers liability insurance Does your organization have directors and officers (D&O) liability insurance? (n=207)
30%
57%
13%
5% 56% 27% 12%

Yes No N/A
60 61
30%
55%
14%
1% 0% 31% 68%
62
0% 0% 69% 31%
63
22% 36% 32% 21% 19%
64
59% 1% 1% 18% 20%

Yes No
65 65a 65a*
99%
Yes
1%
No
If yes, does the D&O insurance cover more than designated directors and officers of 32% 68% the organization? (n=198) Please list who else is covered under the D&O policy: Representative responses: All or most employees Select employees, e.g., Employees who serve in nonprofit director positions at company request Employees who serve at the companys request on the boards of subsidiary companies or joint ventures, or portfolio companies. Employees who take responsibilities or roles at the request of the company Employees for securities claims Certain key employees (environmental, investor relations, etc.) who are not officers Employees acting on behalf of the organization Other employees on the disclosure committee and in the finance department Directors and/ or officers of subsidiaries and affiliates Investor Relations
Yes No N/A
66
16
Do any of your directors own individual director liability insurance? (n=207)
1%
27%
72%
66a
67
68
69
70
71
72
If yes, which statement best describes how the individual director liability insurance policies gets funded? (n=2) The director funds his/ her own insurance policy The company funds his/ her own insurance policy Dont know Please indicate how your liability insurance policy limits have changed in the past 12 months: (n=205) Increased Decreased No change Dont know Not applicable Boards use of technology What level best describes your boards involvement with information technology? (n=207) No involvement besides basic email communications Aware of the benefits technology can provide Frequently engaged and up-to-date on latest technology applications Dont know Please specify how your organization distributes board materials. (Select all that apply) Through unsecured e-mail, e.g., Internet Through secure e-mail, e.g., company intranet Through an internal or external board portal Through mailing of hardcopies In-person at board meetings Using an application for the iPad or other tablet device If your organization does not have a board portal, which statement below best explains your companys view on the technology platform? (n=124) We have considered the use of board portals but do not currently see a need for this technology We are currently considering the benefits of the use of board portals We will be introducing this technology in the near future We have not considered board portal technology Would you assess the boards use of technology to be: Increasing Decreasing No change Do your directors engage in social media associated with your organization? Directors engage in social media Some directors engage in social media Directors do not engage in social media Dont know Does your company have a social media policy? (n=205) Sustainability Does your organization prepare and file a separate sustainability report? (n=206) Yes No Dont know If yes, is this report available on your organizations website (n=74) Yes No Dont know Has your organization received a shareholder proposal related to corporate social responsibility initiatives? (n=202) Yes No Dont know
50% 50% 0%
20% 2% 58% 18% 1%
24% 38% 34% 4%
25% 19% 42% 77% 50% 20%
23% 35% 31% 11% 79% 0% 21% 1% 8% 57% 34%

Yes No
73 74
61%
39%
36% 51% 13% 96% 1% 3%
74a
75
22% 75% 2%
17
75a*
If yes, please specify: Most common responses: Disclosure of political contributions and/ or lobbying EEO reporting proposal Human Rights Policy / Participate in communitys development around the company activities Environmental / Climate change disclosure Request for and specific metrics for Sustainability Report Link sustainability to executive compensation Other responses: Animal welfare Divest from specified companies Healthcare reform and affordable premiums To prepare and publish a report based on certain criteria Is the board and its committees involved with reviewing the sustainability effort maintained by the organization? (n=202) Yes 38% No 53% Dont know 9% Culture/ setting the tone at the top Given the new SEC whistleblower rules (May 2011), has your board asked management to take specific steps to continue to enhance a culture of candid and open communication? (n=198) Yes 30% No 61% Dont know 9% How often does your organization conduct cultural surveys? (n=201) Annually 26% Only in certain circumstances 28% We do not conduct cultural surveys 45% If cultural surveys are conducted by your organization, which parties participate? (Select all that apply) (n=177) All employees (including management) 59% All employees under the management level 1% The board 0% Not applicable 40% If cultural surveys are conducted by your organization, does management review the survey findings with the board? (n=177) Management reviews the survey findings with the board 34% Management reviews the survey findings with the board in certain circumstances 19% Management does not review the survey findings with the board 6% Not applicable 41% How do employees receive communication from the board? (Select all that apply) (n=202) Through electronic communication 9% Through verbal communications (e.g., live meetings, voicemails, etc.) 8% The board does not provide communications to employees 84% Only in certain circumstances 6% If certain circumstances apply, please specify Management has communicated on the boards behalf, but there is a possibility that certain circumstances could arise necessitating the direct involvement of the board Had directors address several different employee leadership groups and an employee affinity group In some cases, messages from the board are sent to employees via e-mail Individual directors have participated in several employee forums; several female directors have spoken to groups focused on the advancement of women in the company Only when a major issue arises such as the departure of a CEO The audit committee sends twice yearly emails to all finance and accounting personnel reminding them that they may contact the audit committee or any member with any report regarding misconduct in connection with financial reporting The board communicates regularly with members of management both verbally and electronically, but generally does not communicate with employees otherwise The board has only dealt with a few employees (management, internal audit, legal and controllers group) Through chairman and CEO communications Typically an email communication that is forwarded by the CEO or corporate secretary but it is rare
76
77
78
78a
78b
79
79a*
18
80
Has your company established an anti-hedging policy that applies to directors? (n=199) My company has established an anti-hedging policy that applies to directors My company has not established an anti-hedging policy that applies to directors We are considering the establishment of such a policy Private sessions (Board access to management)** Do non-employee directors have direct access to management below the CEO level (not including boardroom presentations) without CEO approval? (n=202)
56% 32% 12%

Yes No
81
97%
3%
Key findings Presented in this table are some of the most common practices and interesting responses derived from the total participant responses received. Most common practices/ interesting responses 99% 99% 97% 94% 93% 93% 92% 90% 89% 87% 87% 86% 85% 85% Provide live, in-house director orientation sessions led by an individual serving on the board and/or a staff member of the organization Companies that have directors and officers (D&O) liability insurance Non-employee directors have direct access to management below the CEO level (not including boardroom presentations) without CEO approval In-person audit committee meetings and those held by phone are considered the same for purposes of proxy disclosure Companies provide full reimbursement to directors for travel to meetings External auditors attend every meeting or almost every meeting of the company audit committee Management develops strategy and the board advises, challenges and approves Most common form of board meetings are live, face-to-face meetings Boards evaluated once a year Head of internal audit meets separately with the audit committee The company aligns risk oversight/risk management with the companys strategy The full board reviews the CEOs performance once a year No change to the frequency of audit committee meetings since last year Directors learn about director education programs from the corporate secretary or management Question 34a 65 81 27 18 29 44 15 41 31 48 53 26 37
19
Public company survey results

The results in this section represent survey responses by 175 public companies. In order to provide a comprehensive view of the results, findings are presented in the following three formats, and in each case, an n value has been provided to show the actual total participant responses for each question if less than 175 responses were received: All 175 public companies respondents Market capitalization designation, in which there are 27 small-, 88 mid- and 60 large-cap companies Industry classification, in which there are 38 financial services companies and 137 non-financial services companies In some cases, certain data points have been excluded from the chart and instead are provided in a sidebar. To the extent possible, survey questions asked in 2008 are presented along with the 2011 survey results. In 2008, the total number of public company survey participants was 229, which included 53 small-cap, 120 mid-cap, and 56 large-cap companies. Board selection, recruitment and composition Since the 2008 report, small-cap companies appear to have made considerable changes to their practices relating to board composition. Specifically, 59% use a board skills matrix or similar tool, nearly double the number of companies that did so in 2008. Also since 2008, there has been a significant (29%) increase in small-cap companies using written criteria for director selection, and a significant increase of small-cap companies using search firms to assist in recruiting board directors. From an industry perspective, significantly fewer financial services companies (37%) use executive search firms for recruiting directors compared to non-financial services companies (69%). These changes suggest heightened focus on board composition during the past couple of years. The potential for proxy access, which would allow shareholders to nominate
directors on the proxy ballot sent to investors, was one factor that put the spotlight on board composition. However, on July 22, 2011, the final SEC proxy access rule 14a-11 was vacated by the U.S. Court of Appeals. While the SEC has decided not to appeal, many companies are spending more time thinking about the directors they need on their boards to execute their strategy. Further, the SECs proxy disclosure enhancement rules, which took effect February 28, 2010, may also be a factor. These rules require all public companies to disclose more information about director qualifications, including why a director is qualified to serve on the board of a particular company. With this increased focus, more boards are utilizing a board skills matrix and placing emphasis on the specific skills and attributes they need.
Additional information To learn more about board selection, recruitment and composition, read the Deloitte Center for Corporate Governance publication Creating the board your company deserves", available at www.corpgov.deloitte.com.
Creating the board your company deserves The art and science to choosing directors
20
Board selection, recruitment and composition
With regard to question 7 concerning mandatory retirement, 69% of mid-cap companies and 82% of large-cap companies said they have such a policy for directors. For small-cap companies, 44% of the respondents said they had a mandatory retirement policy.
In 2008, no companies had a mandatory retirement age of 75. In 2011, 75 was the mandatory age for retirement at one quarter of the small-cap companies, 13% of mid-cap companies, and 28% of large-cap companies.
3. Does your organization use a skills matrix or similar tool to periodically assess board composition and ll gaps when selecting new directors?
59% Yes 32% 52%
63%
62%
2011 (n=173)
68%
2008 (n=229)
Yes
53%
64%
62%
2011
Financial services (n=38) Non-nancial services (n=135) All public companies (n=173)
4. Does your organization use written criteria in director selection?
81% Yes 52% 71%
78%
77%
2011 (n=174)
83%
2008 (n=229)
Yes
79%
78%
78%
2011
5. Does your organization use an executive search/ board director recruiting rm to assist in the recruitment of board directors?
33% 65% 72%
21
2011
52%
71%
83%
2008 (n=229)
Board selection, recruitment and composition Yes
The the 79% chairman of the board is also 78%CEO

44% 44% Financial services (n=38) 63% 53%
78%
2011 (n=172) 2008 (n=229)
2011
Yes
Non-nancial services (n=136) 39% 54% All public companies (n=174)
Yes
45%
52%
51%
2011
5. Does your organization use an executive search/ board director Small-cap Financial services (n=38) recruiting rm to assist in the recruitment of board directors? Mid-cap Non-nancial services (n=134)
Large-cap All public companies (n=172)
33% Yes 20%

Yes 29%
65%
72%
2011
There is a separate position for lead or presiding director
58%
41% 59%
57%
77%
68% 66%
2008 (n=229) 2011 (n=172)

2008 (n=229)
Yes
37%
Yes 50%
69%
60%
62%
58%
2011
2011
Financial services (n=38) Non-nancial services (n=137) Small-cap Financial services (n=38) All public companies (n=175) Mid-cap Non-nancial services (n=134)
Large-cap All public companies (n=172)
Board classication Since the 2008 report, the push for boards to move 6. Does your organization provide a mechanism for shareholders to nominate candidates to the board? to annual elections of all directors, as opposed to the 2011 (n=172) election of a classified or staggered board structure 52% 42% has grown stronger. The proxy statement research 78% Classified/ 82% 95% Yes 2011 Staggered completed revealed that when compared to 2008, 2008 (n=229) 39% 62% 38% at least 20% more mid- and large-cap companies moved to an annual process. Small-cap companies, 48% 58% 86% 92% 84% 86% 2011 (n=172) 2011 Yes on the other hand, revealed a movement in the other Elected direction with a 13% increase in classified boards. annually
14%
61% 38% Financial services (n=38)
62%
2008 (n=229)
Non-nancial services (n=137)

Classified/ All public companies (n=175) 26% 36% 34% Staggered
2011
Elected 74% annually 7. Do you have a mandatory retirement policy for directors?
64%
66%
2011
Small-cap
Financial services (n=38) Non-nancial services (n=134) 2011 82% All public companies (n=172)
Yes
44%
Mid-cap 69% Large-cap
Yes
71%
Ofcers on the board 69%

7% 2%
70%
2011
2011 (n=172) Chief financial officer 5% services 3% 6% (n=38) 2008 (n=229) Financial
Non-nancial services (n=137) 2011 (n=172) chief 8% 8% 4% operating public companies (n=175) All officer 14% 12% 8% 2008 (n=229)
general counsel/ chief legal officer Other titles 0% 2011 (n=172) 7% 4% 2% 1% 2%
2008 (n=229) 2011 (n=172)
36%
23%
34%
2008 (n=229)
22
Chief financial
annually 61% 38% 62%
36%
23%
34%
2008 (n=229)
2008 (n=229)
Chief financial officer
Classified/ Staggered Elected annually
3%
2% 8%
2011
7%
Board selection, recruitment and composition

8%
26%
36%
34%
2011
74%
64%
66%
Chief operating officer 2011 General counsel/ chief legal officer Other titles
2011
0% 2011 3% 1% 1%
2011 Financial services (n=38) Non-nancial services (n=134) All public companies (n=172)
Ofcers on the board

7% 5% 2% 6% 3% 8% 14% 8%
Chief financial officer chief operating officer general counsel/ chief legal officer Other titles
2011 (n=172) 2008 (n=229)

4%
Directors designated as "independent" on the board

2% 0-3 13%
2011 (n=172)
8% 2008 (n=229)
2011 (n=172)
3% 2008 (n=229) 41% 46% 33% 37% (n=229) 2008 23% 22% 45% 50% 47% 45% 5%
12%
0% 2011 (n=172) 7% 4% 2% 1% 2%
2011 (n=172)
11%
4-6
2008 (n=229) 2011 (n=172)

7-9 34% 10-12 19% 4% 22% 5% 8%
2008 (n=229)
37% 32%
2011 (n=172) 2008 (n=229)
36%
23%
27%
2011 (n=172) 2008 (n=229)
Chief financial officer Chief operating officer General counsel/ chief legal officer Other titles
3%
2% 8%
2011
7% 13 8%
7%
2011 (n=172)
11%2011 2008 (n=229) 3%
0% 2011 3% 1% 1%
0-3
1% 2011 1% 16% 29% 37% 18% 6% 3% 2011 21% 20% 44% 31% 33%
4-6 7-9 10-12 13
2011
41%
2011 2011

2% 0-3
2011 (n=172) 2008 (n=229)
3% 13% Survey results show that small- and mid-cap companies The company has implemented a majority vote policy for uncontested director elections are catching up with the large-cap companies on(n=172) 2011 41% 23% 4-6 implementing majority vote standards. While there 2011 (n=172) 41% 59% 76% 2008 (n=229) 11% 22% 46% has been little change in results of large-cap company Yes 2011 (n=172) 33% 45% research with 76% of companies having a majority vote 37% 2008 (n=229) 18% 39% 74% 7-9 standard in place, there is at least a 20% increase since 2008 (n=229) 32% 50% 37% 2008 among the small- and mid-cap companies. There 2011 (n=172) 19% 47% 27% 66% 61% 62% Yes 2011 is only minimal variation among the financial and non10-12 2008 (n=229) 22% financial services companies. 45% 4% 5% 13 7% 5% 8%
2011 (n=172) 2008 (n=229)
11% 3%
0-3 4-6 7-9 10-12 13
1% 2011 1% 16% 29% 37% 18% 6% 3% 2011 21% 20% 44% 31% 33%
Is there a limit to the number of other directorships your non-employee directors may hold? 2011
41% Yes 14% 2011 23% 3%
2011 (n=172)
46% 45%
2011
2008 (n=229)
Small-cap Mid-cap
Financial services (n=38) Non-nancial services (n=134)
Yes
16%
6% 4%
2011 2011 Board Practices Report Design, Composition, and Function
23
Yes Yes Board selection, recruitment and composition
37% 37%
69% 69%
62% 62%
2011 2011
Small-cap Small-cap Mid-cap Mid-cap Large-cap Large-cap
Financial services (n=38) Financial services (n=38) Non-nancial services (n=137) Non-nancial services (n=137) All public companies (n=175) All public companies (n=175)
6. Does your organization provide a mechanism for shareholders to nominate candidates to the board? 6. Does your organization provide a mechanism for shareholders to nominate candidates to the board?
19%, 16%, and 5% of small-, mid-, and large-cap respondents, respectively, answered No, and 4%, 2%, and 0% of small-, mid-, and large-cap respondents, respectively, answered Not Applicable. 13%,14%, and 8% of all public, non-financial services, and financial services companies, respectively, answered No, and 2%, 2%, and 0% of all public, non-financial services, and financial services companies answered, respectively, Not Applicable.
Yes Yes 78% 78% 82% 82% 95% 95%
2011 2011
Yes Yes
92% 92%
84% 84%
86% 86%
2011 2011
7. Do you have a mandatory retirement policy for directors? 7. Do you have a mandatory retirement policy for directors?
Yes Yes 44% 44% 69% 69% 82% 82%
2011 2011
Yes Yes
71% 71%
69% 69%
70% 70%
2011 2011
Sub-question 7a, not shown, applied to those that had a mandatory retirement policy and asked the age in which directors would need to retire. This question was also asked in 2008. The most common retirement age for directors among all company sizes is 72, with 58%, 53%, and 53% for small-, mid-, and large-cap companies, respectively. When compared to 2008, this represents only a 2% increase in director retirement age of large-cap companies, but a 26% and an 18% increase for small- and mid-cap companies, respectively. Fewer large-cap companies (15%) have set the retirement age at age 70 or younger, compared to 2008 (34%). No companies set the retirement age at 75 in 2008; however, in 2011, 28% of large-cap, of 13% mid-cap, and of 25% small-cap companies set the retirement age at 75. There was no notable distinction in results between the financial and non-financial services companies. Required retirement age Small-cap 2011 2008 17% 42% 0% 11% 58% 32% 0% 0% 0% 16% 25% 0% 0% 0% 0% 0% Mid-cap 2011 23% 2% 53% 5% 0% 13% 2% 2% Large-cap 2011 2008 15% 34% 0% 0% 53% 51% 0% 5% 4% 10% 28% 0% 0% 0% 0% 0%
Director age 70 71 72 73 74 75 78 Other

24
2008 34% 6% 35% 8% 18% 0% 0% 0%
Chief financial officer Chief operating officer General counsel/ chief legal officer Other titles
3%
2% 8%
2011
7% 8% 2011 Board selection, recruitment and composition
0% 2011 3% 1% 1%
4-6
41% 46% 33% 37% 19% 4% 22% 5% 8% 27%
23% 22% 45%
5%
According to the proxy statement research, companies are increasing the number of independent directors on their boards. More companies, small-cap companies in particular, now have 10-12 independent directors on their boards now, as compared to 2008.

2% 0-3 13%
2011 (n=172)
3% 2008 (n=229)
2011 (n=172)
11%
2008 (n=229)
37% 32%
2011 (n=172) 2008 (n=229)
7-9
50% 47% 45%
2011 (n=172) 2008 (n=229)
10-12
13
7%
2011 (n=172) 2008 (n=229)
11% 3%
0-3 4-6 7-9 10-12 13
1% 2011 1% 16% 29% 37% 18% 6% 3% 2011 21% 20% 44% 31% 33%
2011
41%
2011 2011
The company has implemented a majority vote policy for uncontested director elections 2011 (n=172)
41% Yes 18% 39%
59% 74%
76%
2008 (n=229)
Yes
66%
61%
62%
2011
Is there a limit to the number of other directorships your non-employee directors may hold?
14% Yes 23% 46% 45% 3%
2011 (n=172) 2008 (n=229)
Yes
16%
6% 4%
2011
Financial services (n=38) 2011 Board Practices Report Design, Composition, and Function Non-nancial services (n=134) All public companies (n=172)
25
Independent chairman
Independent chairman Board leadership structure has gained significant attention in recent years. Effective for the 2010 proxy season, the SEC Proxy Disclosure Enhancements require a company to disclose whether and why it has chosen to combine or separate the CEO and board chairman positions, and why such a structure is most appropriate for the company. The company must also disclose the role of the lead independent director, if there is one. The majority (63%) of large-cap companies combine the CEO/ board chairman position, and 44% and 44% of smalland of mid-cap companies, respectively, do. Of those with a separate board chairman, fewer than 8% of the
participants reported that the independent chairman is also chairman of the nominating and governance committee. But, many said that their policy would not restrict the same individual from holding both positions. It is also worth noting that of the companies with an independent chairman, the majority of companies reported that they do not have a mechanism, such as a rotation policy or term limits, to rotate individuals serving in this role. When an evaluation of the independent chairman is performed, it is typically done by either the nominating and governance committee or the full board.
Additional information To learn more about the role of the independent chairman, read the Deloitte Center for Corporate Governance publication Board leadership: A global perspective", available at www.corpgov.deloitte.com.
May 2011
Board leadership: A global perspective
Since the 2008 study, 10% more large-cap and 5% more small-cap companies are combining the role of chairman and CEO. A higher percentage of small-cap companies also have a separate position for the lead director since 2008, according to the proxy statement analysis.
The chairman of the board is also the CEO 2011 (n=172) 2008 (n=229)
44% Yes 39%
44% 54%
63% 53%
Yes
45%
52%
51%
2011
There is a separate position for lead or presiding director

41% Yes 29% 59% 66% 57% 68%
2011 (n=172) 2008 (n=229)
Yes
50%
60%
58%
2011
Board classication
14%
26
52% 42%
2011 (n=172)
8. Is the independent board chairman also the chairman of the nominating and governance committee?
The independent board chairman is also the chairman of the nominating and governance committee No, but our policy would not restrict the same individual from holding both positions Our policy does not permit the same individual from holding both positions Not applicable we do not have an independent chairman
5% 52%
11%
9%
2011
38%
25%
2011
4% 5% 3%
2011
33%
49%
67%
2011
The independent board chairman is also the chairman of the nominating and governance committee No, but our policy would not restrict the same individual from holding both positions Our policy does not permit the same individual from holding both positions
11% 7% 8%
2011
42%
34%
35%
2011
5% 4% 4%
2011
Not applicable we do not have an independent chairman
42%
55%
53%
2011
9. Who is responsible for the periodic evaluation and development of the independent chairman?
The nominating and governance committee The full board Another committee No formal evaluation is performed 1%
15% 15%
13% 20%
12% 10%
2011 2011
2011 (n=175)
37% 19% 10%
2011
The nominating and governance committee
8%
14%
13%
2011
27
Not applicable we do not have an independent chairman
42%
55%
53%
2011
9. Who is responsible for the periodic evaluation and development of the independent chairman?
33%, 47%, and 68% of small-, mid-, and large-cap respondents answered, respectively, Not applicable - we do not have an independent chairman to this question. 52%, 55%, and 42% of all public, non-financial services, and financial services companies answered, respectively, Not applicable - we do not have an independent chairman to this question.
The nominating and governance committee The full board Another committee No formal evaluation is performed 1%
15% 15%
13% 20%
12% 10%
2011 2011
2011 (n=175)
37% 19% 10%
2011
The nominating and governance committee The full board
8% 16%
14% 16%
13%
2011
16%
2011
Another committee 3% 1% No formal evaluation is performed
2011
32% 15% 19%
2011
10. How often is periodic evaluation of the independent chairman performed?

33%, 48%, and 68% of small-, mid-, and large-cap respondents, respectively, answered Not applicable - we do not have an independent chairman to this question. 53%, 55%, and 42% of all public, non-financial services, and financial services companies, respectively, answered Not applicable - we do not have an independent chairman to this question.
Annually Periodically, as needed No formal evaluation is performed
19%
24%
20%
2011
4% 6%
2011
44%
23%
12%
2011
Annually
21%
22%
22%
2011
Periodically, 3% 4% 3% as needed No formal evaluation is performed
2011
34%
19%
22%
2011
28
11. Does your policy specify a rotation policy or term limit for the independent chair?
Periodically, 3% 4% 3% as needed No formal evaluation is performed
2011
34%
19%
22%
2011
11. Does your policy specify a rotation policy or term limit for the independent chair?
33%, 51%, and 68% of small-, mid-, and large-cap respondents, respectively, answered Not applicable - we do not have an independent chairman to this question.
45% 28%
Rotation policy Term limit
1% 2% 3% 2%
2011 (n=174)
2011 (n=174)
Neither
67%
2011 (n=174)
Rotation policy Term limit
1% 1% 8%
54%, 55%, and 47% of all public, non-financial services, and financial services companies, respectively, answered Not applicable - we do not have an independent chairman to this question.
2011
1% 2%
2011
Neither
45%
42%
43%
2011
29
Board meetings and materials
Board meetings and materials Shareholder proposals on shareholder rights to call special meetings have been frequent ballot items in recent years. This year, survey results show that 52% of small-cap companies, 44% of mid-cap companies, and 61% of large-cap companies provide such rights, mostly with a minimum ownership threshold. Unlike the small- and mid-cap companies, the majority of large-cap companies allow shareholders with a certain ownership threshold to call special meetings. Sub-question 12a, not shown, asked respondents to provide an ownership threshold, and results varied across all company sizes and industry types, as shown in the table on page 31. The most common threshold across all companies was 25% followed by 10%. Board meetings are lengthening. Fewer companies are meeting for 1-2 hours, compared to 2008. Instead, 58%
of boards are meeting for 3-5 hours across all company types, and another 38% are meeting for 6 or more hours. Meeting length varied little between companies in the nonfinancial services and financial services industries. In addition, boards are meeting more frequently; 19% of small-cap, 24% of mid-cap, and 31% of large-cap companies, reported 10 or more board meetings in 2011. In 2008, the percentages were 11% of small-cap, 3% of mid-cap, and 9% of large-cap met that frequently. More boards across all company types are sending materials 5-10 days in advance of meetings, as compared to 5 days or fewer in 2008.
30
12. Does your company permit shareholders to call special shareholder meetings?
Permitted without any restriction Permitted but with minimum ownership threshold percentages No
26%
7%
3%
2011 (n=171)
26%
37%
58%
2011 (n=171)
48%
56%
38%
2011 (n=171)
Permitted without any restriction Permitted but with minimum ownership threshold percentages No
8% 9% 9%
2011
47%
41%
43%
2011
45%
50%
49%
2011
13. How many hours does a typical board meeting last? (Do not count time spent on committee meetings on a board meeting day).
16%
10% 15% 3-5 hours 20%

6-8 hours
4% 5%
1-2 hours
Ownership threshold <10%
4% 5%
2%
Small-cap 2011 (n=174) 50% 0% 0%
Mid-cap 0% 23% 0% 15%
Large-cap 3%
53% 62%
Financial services 0% 17% 0% 17% 50% 0% 0% 17% 0%
Non-financial services 2%
63%
All public companies 1%

2011 (n=174)
0% 2008 (n=229)
63%
15% 3% 12%
2011 55% (n=174)
23% 2% 11% 34% 2% 11% 9% 6%
21% 1% 11% 39% 1% 7% 11% 6%
57% 27% 21% 4% 9% 5%
64%
2008 (n=229)
25% 33% 50%
17% 0% 28% 33% 0%
31%
23% 30% 4% 20% 12% 19% 4%
0% 2008 (n=229) 6% 0% 6%
5% 3% 6% 8%
50.1% 9-10 hours Other

More than 10 hours
2011 (n=174)
2008 (n=229) 0%
2% 2011 (n=174) 3% 2% 3% 2008 (n=229) 4%
1-2 hours
2% 3%
2011
3-5 hours
66%
56%
58%
31
Permitted but with minimum ownership threshold percentages
47%
41%
43%
2011
Committee structures and roles No
45%
50%
49%
2011
13. How many hours does a typical board meeting last? (Do not count time spent on committee meetings on a board meeting day).
4% 5%
2%
2011 (n=174) 2008 (n=229)

63% 57% 53% 62% 31% 28% 20% 30% 63% 64%
16%
4% 5%
1-2 hours
2011 (n=174) 2008 (n=229)
3-5 hours
6-8 hours 4%
27% 21% 9% 5%
2011 (n=174)
2008 (n=229)
2011 (n=174)
5% 3% 6% 8%
9-10 hours
2008 (n=229)
More than 10 hours
2% 2011 (n=174) 3% 2% 3% 2008 (n=229) 4%
1-2 hours
2% 3%
2011
3-5 hours
66%
56%
58%
2011
6-8 hours
21%
32%
29%
2011
9-10 hours
8% 7% 3% 3% 2% 2%
2011
More than 10 hours
2011
14. How far in advance are board meeting materials provided to board members?
At most five business days before meeting
52% 70% 48% 20% 3% 45%
34% 53% 63% 32%
40%
2011 (n=173)
66% 60%
2008 (n=229) 2011 (n=173)
32
Between five to ten business days before meeting
2008 (n=229)
More than ten business
2011 (n=173)
14% Yes 23%
3%
2011 (n=172)
46% 45%
2008 (n=229) Board meetings and materials
Yes
16%
6% 4%
2011
Since 2008, significantly more mid- and large-cap company boards met 10 times or more annually. This surge could possibly be attributed to the financial crisis which increased the need for board involvement in and oversight of various company matters. The proxy research analysis revealed that 26% of all public companies met at least 10 times a year, and another 31% met either 7, 8, or 9 times in 2011.
The number of times a year the board normally meets

4% 2% 2% 2011 (n=172)
2008 (n=229)
22% 30% 8% 2% 2011 (n=172) 27% 15% 8% 28% 23% 24% 13% 15% 8% 10% 8% 8% 19% 19% 17% 25% 2%
2008 (n=229)
15% 23% 19% 21% 11% 4% 5% 7% 5%
2011 (n=172)
30%
2008 (n=229)
2011 (n=172) 2008 (n=229)
2011 (n=172)
2008 (n=229)
15%
2011 (n=172) 2008 (n=229)
11%
4% 6% 4%
2011 (n=172)
3% 2008 (n=229) 24% 9% 3% 2008 (n=229) 31%
10
2011 (n=172)
11%
3 4 5 6 7 8 9 10
2% 2011 2% 13% 8% 11% 11% 11% 5% 7% 7% 14% 23% 16% 10% 6% 10% 15% 8%
2011
13%
2011
20%
2011
2011
2011
2011
42% 21% 26%
2011
The company provides stock-based compensation to non-employee directors

100% Yes 77% 90% 92% 97% 100%
2011 (n=172) 2008 (n=229)
Yes
95%
99%
98%
2011
Financial services (n=38) 2011 Board Practices Report Design, Composition, and Function Non-nancial services (n=134) All public companies (n=172)
33
9-10 hours
8% 7% 3% 3% 2% 2%
2011
More than 10 hours
2011
14. How far in advance are board meeting materials provided to board members?
52% 70% 48% 20% 3% 45%
34% 53% 63% 32%
40%
2011 (n=173)
66% 60%
2008 (n=229) 2011 (n=173)
Between five to ten business days before meeting More than ten business days before meeting
2008 (n=229)
2011 (n=173) 2008 (n=229)
2% 7% 2%
No agenda/background information distributed prior to meeting
0% 2011 (n=173) 3%
2008 (n=229)
42%
38%
39%
2011
Between five to ten business days before meeting
58%
60%
60%
2011
More than ten business days before meeting
2% 2%
2011
No agenda/background information distributed prior to meeting
0%
2011
Financial Services (n=38) Non-Financial Services (n=135) All Public Companies (n=173)
34
15. What is the most common form of board meetings for your organization?
Live, face-to-face meetings
74%
94%
90%
2011
Live, face-to-face meetings with some directors attending via telephone Live, face-to-face meetings with some directors attending via web-conference or video conference
2% 7%
11%
2011
7%
2%
2011
Tele-conference calls
3% 2011 2%
Live, face-to-face meetings
7%
82%
92%
90%
2011
Live, face-to-face meetings with some 13% directors attending via telephone Live, face-to-face meetings with some directors attending via web-conference or video conference
3% 5%
2011
2% 2%
2011
5% 3% 3%
2011
16. How often do you hold board meetings outside of the country in which your company is headquartered?
Frequently (five or more times a year)
2%
2011
Sometimes (two to four times a year)
4% 1% 7%
2011

7% Rarely (once a year) 27% 35%
35
2011
5% 3% 3%
2011
16. How often do you hold board meetings outside of the country in which your company is headquartered?
2%
2011
4% 1% 7%
2011
7%
Rarely (once a year)
27%
35%
2011
We do not hold board meetings outside of the country in which our company is headquartered
89%
69%
58%
2011
1% 1%
2011
3% 4% 3%
2011
18%
29%
27%
2011
79%
66%
69%
2011
17. Do you make company owned aircraft available to directors for travel to meetings?
Yes
11%
18%
66%
2011 (n=174)
Yes
21%
37%
33%
2011

36
18%
29%
27%
2011
79%
66%
69%
2011
17. Do you make company owned aircraft available to directors for travel to meetings?
Yes
11%
18%
66%
2011 (n=174)
Yes
21%
37%
33%
2011
19%, 40%, and 22% of small-, mid-, and large-cap respondents, respectively, answered No, and 70%, 42%, and 12% of small-, mid-, and large-cap respondents, respectively, answered Not Applicable. 30%, 30%, and 32% of all public, non-financial services, and financial services companies, respectively, answered No, and 36%, 33%, and 47% of all public, non-financial services, and financial services companies, respectively, answered Not Applicable.
18. What amount of reimbursement does your company provide to directors for travel to meetings?
Full reimbursment
93%
97%
93%
2011
Full reimbursment
87%
97%
95%
2011
0%, 1%, and 3% of small-, mid-, and large-cap respondents, respectively, answered Partial reimbursement, and 7%, 2%, and 3% of small-, mid-, and large-cap respondents, respectively, answered None. 2%, 1%, and 3% of all public, non-financial services, and financial services companies, respectively, answered Partial reimbursement, and 2%, 1%, and 11% of all public, nonfinancial services, and financial services companies, respectively, answered None.
37
Committee structures and roles
Committee structures and roles Across all public companies, regardless of size or industry, most respondents indicated that their boards had 3-5 standing committees. Twenty-one percent (21%) of financial services companies had more than 5 standing committees, compared to 8% of non-financial services companies. The four most common committees were the audit, compensation, nominating/ corporate governance, and executive. Among respondents who indicated another committee, the finance committee was the most common response. This committee was associated with only midand large-cap respondents and was most prevalent among non-financial services companies. As depicted in the table for question 20: There were no small-cap or financial services companies with an environmental committee. Also, no small-cap companies had a corporate responsibility committee. There were notable differences in the frequency of committee meetings between financial services and nonfinancial services companies. Aside from the audit committee, for which certain communications are required, the auditor was in attendance at only the risk committee and disclosure committee meetings.
19. How many standing committees does your board have?
In comparison to 2008, fewer boards, in particular mid-and large-cap companies, are placing the responsibility for appointing committee members and chairs with the board chair or lead director. At the majority of all public companies, this is the responsibility of the nominating/ corporate governance committee or the full board. Across all public companies, no more than 23% have a policy to rotate committee members or chairs, which is consistent with 2008 results. With regard to whether boards have limits on audit committee members participating on the audit committees of other boards, 65% of small-cap companies have such a limit, a notable increase from the 2008 results, in which 14% set such limits. Both mid- and large-cap companies also reported increases. Of the respondents who stated that they have limits, 43% limited it to 2 additional audit committees, and 42% permitted 3. A few other responses deferred to the limits set by the NYSE or the SEC.
Two or less
4% 1%
2011
Three to five More than 11% five
85%
91%
85%
2011
8%
15%
2011
Two or less
1% 1%
2011
Three to five More than five
79%
91%
88%
2011
21%
11%
8%
2011
Small-cap Mid-cap Large-cap 38
20. Please complete the following table with regard to the specific committee practices of your board Note: For each committee in the following tables, the count of respondents (n value) and this percentage of the total count of respondents for the committee is provided as n value/ percentage. Committees are listed in descending order by count of All public companies respondents as it pertains to a given category. Number of Members
Committee Compensation committee
Committee size 1-4 5-9 10 1-4
Small cap 19/73% 7/27% 0/0% 20/77% 6/23% 0/0% 17/65% 9/35% 0/0% 8/62% 5/38% 0/0% 1/50% 1/50% 0/0% 0/0% 0/0% 0/0% 2/100% 0/0% 0/0% 0/0% 0/0% 0/0% 1/33% 1/33% 1/33% 1/100% 0/0% 0/0%
Mid cap 54/62% 33/38% 0/0% 54/62% 32/37% 1/1% 62/71% 24/28% 1/1% 16/52% 12/39% 3/10% 3/30% 7/70% 0/0% 6/86% 1/14% 0/0% 1/25% 3/75% 0/0% 1/50% 1/50% 0/0% 1/100% 0/0% 0/0% 2/100% 0/0% 0/0%
Large cap 30/50% 30/50% 0/0% 31/52% 29/48% 0/0% 29/49% 30/51% 0/0% 7/41% 9/53% 1/6% 2/25% 6/75% 0/0% 2/25% 6/75% 0/0% 0/0% 1/50% 1/50% 3/50% 3/50% 0/0% 0/0% 2/67% 1/33% 1/25% 3/75% 0/0%
Financial services 20/53% 18/47% 0/0% 17/45% 20/53% 1/3% 21/55% 17/45% 0/0% 11/48% 8/35% 4/17% 3/27% 8/73% 0/0% 0/0% 0/0% 0/0% 1/33% 1/33% 1/33% 1/33% 2/67% 0/0% 1/50% 1/50% 0/0% 2/67% 1/33% 0/0%
Nonfinancial services 83/61% 52/39% 0/0% 88/65% 47/35% 0/0% 87/65% 46/34% 1/1% 20/53% 18/47% 0/0% 3/33% 6/67% 0/0% 8/53% 7/47% 0/0% 2/40% 3/60% 0/0% 3/60% 2/40% 0/0% 1/20% 2/40% 2/40% 2/50% 2/50% 0/0%
All public companies 103/60% 70/40% 0/0% 105/61% 67/39% 1/1% 108/63% 63/37% 1/1% 31/51% 26/43% 4/7% 6/30% 14/70% 0/0% 8/53% 7/47% 0/0% 8/53% 7/47% 0/0% 4/50% 4/50% 0/0% 2/29% 3/43% 2/29% 4/57% 3/43% 0/0%
Audit committee
5-9 10
Nominating/ corporate governance committee Executive committee
1-4 5-9 10 1-4 5-9 10 1-4
Risk committee
5-9 10 1-4
5-9 10 1-4
Strategy committee
5-9 10
Corporate responsibility committee
1-4 5-9 10 1-4
Disclosure committee
5-9 10
Science & technology committee
1-4 5-9 10
39
Meeting frequency
Committee
Meeting frequency in a year 1-6 7-11 12 Other 1-6
Small cap 17/65% 7/27% 2/8% 0/0% 20/77% 4/15% 1/4% 1/4% 25/96% 0/0% 0/0% 1/4% 7/58% 0/0% 0/0% 5/42% 2/100% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 2/100% 0/0% 0/ 0% 0/0% 1/100% 0/0% 0/0% 0/0% 3/100% 0/0% 0/0% 0/0%
Mid cap 33/38% 46/53% 7/8% 0/0% 77/90% 9/10% 0/0% 0/0% 85/99% 1/1% 0/0% 0/0% 7/30% 1/4% 2/9% 13/57% 6/60% 3/30% 0/0% 1/10% 7/78% 0/0% 0/0% 2/22% 2/50% 0/0% 0/0% 2/50% 3/50% 0/0% 0/0% 3/50% 2/50% 0/0% 0/0% 2/50% 1/50% 0/0% 0/0% 1/50%
Large cap 17/29% 35/60% 6/10% 0/0% 39/68% 14/25% 3/5% 1/2% 49/89% 6/11% 0/0% 0/0% 5/50% 1/10% 0/0% 4/40% 6/86% 1/14% 0/0% 0/0% 8/100% 0/0% 0/0% 0/0% 6/100% 0/0% 0/0% 0/0% 2/100% 0/0% 0/0% 0/0% 4/100% 0/0% 0/0% 0/0% 1/33% 2/67% 0/0% 0/0%
Financial services 14/38% 17/46% 6/16% 0/0% 28/76% 4/11% 3/8% 2/5% 33/92% 2/6% 0/0% 1/3% 10/45% 2/9% 2/9% 8/36% 7/78% 2/22% 0/0% 0/0% 1/50% 0/0% 0/0% 1/50% 3/75% 0/0% 0/0% 1/25% 3/75% 0/0% 0/0% 1/25% 3/75% 0/0% 0/0% 1/25% 1/50% 1/50% 0/0% 0/0%
Nonfinancial services 53/40% 71/53% 9/7% 0/0% 108/82% 23/17% 1/1% 0/0% 126/96% 5/4% 0/0% 0/0% 9/39% 0/0% 0/0% 14/61% 7/70% 2/20% 0/0% 1/10% 14/93% 0/0% 0/0% 1/7% 5/83% 0/0% 0/0% 1/17% 4/67% 0/0% 0/0% 2/33% 4/80% 0/0% 0/0% 1/20% 4/67% 1/17% 0/0% 1/17%
All public companies 67/39% 88/52% 15/9% 0/0% 136/80% 27/16% 4/2% 2/1% 159/95% 7/4% 0/0% 1/1% 19/42% 2/4% 2/4% 22/49% 14/74% 4/21% 0/0% 1/5% 15/88% 0/0% 0/0% 2/12% 8/80% 0/0% 0/0% 2/20% 7/70% 0/0% 0/0% 3/30% 7/78% 0/0% 0/0% 2/22% 5/63% 2/25% 0/0% 1/13%
Audit committee
Compensation committee
7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6
Nominating/ corporate governance committee
Executive committee
Risk committee
7-11 12 Other 1-6
7-11 12 Other 1-6 7-11 12 Other 1-6
Strategy committee
7-11 12 Other 1-6 7-11 12 Other
40
Average length of meetings
Committee
Average length of meetings (hrs) 0.5-1.5 2-3 >3 Other 0.5-1.5
Small cap 10/38% 14/54% 2/8% 0/0% 11/42% 14/54% 1/4% 0/0% 19/73% 7/27% 0/0% 0/0% 9/90% 1/10% 0/0% 0/0% 1/50% 1/50% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 0/0% 1/50% 1/50% 0/0% 3/100% 0/0% 0/0% 0/0% 0/0% 1/100% 0/0% 0/0%
Mid cap 20/23% 55/64% 10/12% 1/1% 29/34% 54/63% 3/3% 0/0% 58/67% 28/33% 0/0% 0/0% 9/60% 5/33% 0/0% 1/7% 4/40% 6/60% 0/0% 0/0% 4/57% 3/43% 0/0% 0/0% 1/50% 1/50% 0/0% 0/0% 1/25% 2/50% 1/25% 0/0% 0/0% 1/100% 0/0% 0/0% 1/50% 1/50% 0/0% 0/0%
Large cap 10/17% 45/76% 4/7% 0/0% 19/33% 37/64% 2/3% 0/0% 32/56% 24/42% 1/2% 0/0% 4/57% 2/29% 0/0% 1/14% 1/13% 6/75% 1/13% 0/0% 1/14% 6/86% 0/0% 0/0% 5/83% 1/17% 0/0% 0/0% 1/50% 1/50% 0/0% 0/0% 2/67% 1/33% 0/0% 0/0% 1/33% 2/67% 0/0% 0/0%
Financial services 3/8% 28/74% 7/18% 0/0% 10/26% 26/68% 2/5% 0/0% 21/55% 17/45% 0/0% 0/0% 13/68% 6/32% 0/0% 0/0% 2/18% 8/73% 1/9% 0/0% 0/0% 0/0% 0/0% 0/0% 2/67% 1/33% 0/0% 0/0% 1/33% 2/67% 0/0% 0/0% 1/50% 1/50% 0/0% 0/0% 1/33% 2/67% 0/0% 0/0%
Nonfinancial services 37/28% 86/65% 9/7% 1/1% 49/37% 79/60% 4/3% 0/0% 88/67% 42/32% 1/1% 0/0% 9/69% 2/15% 0/0% 2/15% 4/44% 5/56% 0/0% 0/0% 5/36% 9/64% 0/0% 0/0% 4/80% 1/20% 0/0% 0/0% 1/20% 2/40% 2/40% 0/0% 4/80% 1/20% 0/0% 0/0% 1/33% 2/67% 0/0% 0/0%
All public companies 40/23% 114/67% 16/9% 1/1% 59/35% 105/62% 6/4% 0/0% 109/64% 59/35% 1/1% 0/0% 22/69% 8/25% 0/0% 2/6% 6/30% 13/65% 1/5% 0/0% 5/36% 9/64% 0/0% 0/0% 6/75% 2/25% 0/0% 0/0% 2/25% 4/50% 2/25% 0/0% 5/71% 2/29% 0/0% 0/0% 2/33% 4/67% 0/0% 0/0%
Audit committee
Compensation committee
2-3 >3 Other 0.5-1.5 2-3 >3 Other 0.5-1.5 2-3 >3 Other 0.5-1.5 2-3 >3 Other 0.5-1.5
Nominating/ corporate governance committee
Executive committee
Risk committee
2-3 >3 Other 0.5-1.5
2-3 >3 Other 0.5-1.5 2-3 >3 Other 0.5-1.5
Strategy committee
2-3 >3 Other 0.5-1.5
2-3 >3 Other
41
Auditor attendance in meetings
Committee Audit committee Compensation committee Nominating/ corporate governance committee Executive committee Risk committee Environment committee Strategy committee Corporate responsibility Science & technology committee Disclosure committee
Auditor attendance in meetings (Y/N) Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No
Small cap 57/100% 0/0% 0/0% 55/100% 0/0% 54/100% 0/0% 18/100% 1/13% 7/88% 0/0% 8/100% 0/0% 4/100% 0/0% 7/100% 0/0% 5/100% 1/25% 3/75%
Mid cap 86/100% 0/0% 0/0% 80/100% 0/0% 79/100% 0/0% 24/100% 0/0% 8/100% 0/0% 6/100% 0/0% 4/100% 0/0% 2/100% 0/0% 3/100% 1/100% 0/0%
Large cap 26/100% 0/0% 0/0% 24/100% 0/0% 24/100% 0/0% 12/100% 1/50% 1/50% 0/0% 0/0% 0/0% 2/100% 0/0% 0/0% 0/0% 1/100% 0/0% 2/100%
Financial services 37/100% 0/0% 0/0% 35/100% 0/0% 35/100% 0/0% 21/100% 2/22% 7/78% 0/0% 1/100% 0/0% 4/100% 0/0% 3/100% 0/0% 4/100% 1/50% 1/50%
Nonfinancial services 132/100% 0/0% 0/0% 124/100% 0/0% 122/100% 0/0% 33/100% 0/0% 9/100% 0/0% 13/100% 0/0% 6/100% 0/0% 6/100% 0/0% 5/100% 1/20% 4/80%
All public companies 169/100% 0/0% 0/0% 159/100% 0/0% 157/100% 0/0% 54/100% 2/11% 16/89% 0/0% 14/100% 0/0% 10/100% 0/0% 9/100% 0/0% 9/100% 2/29% 5/71%
42
21. Which of the following has the primary responsibility for appointing committee members and chairs?
44% Full board 55% Nominating/ corporate governance committee Board chair/ lead director 7% 44% 36% 3% 2%
43% 39% 51% 54%
47% 34% 47% 60%
2011 2008 (n=229) 2011 2008 (n=229)
2011
6%
9% 7% 4% 2% 5%
2008 (n=229)
2011
Other 0%
2008 (n=229)
Full board
34%
47%
45%
2011
Nominating/ corporate governance committee Board chair/ lead director
53%
47%
49%
2011
8%
2% 3%
2011
Other
3% 3%
5%
2011
22. Does your board have a policy to rotate committee chairs?
19% Yes 14%
18%
31%
2011 (n=173)
22%
34%
2008 (n=229)
Yes
16%
24%
23%
2011
Financial services (n=37) Non-nancial services (n=136) All public companies (n=173) 2011 Board Practices Report Design, Composition, and Function 43
Board chair/ lead director
8%
2% 3%
2011

Other 5%
3% 3%
2011
22. Does your board have a policy to rotate committee chairs?
19% Yes 14%
18%
31%
2011 (n=173)
22%
34%
2008 (n=229)
Yes
16%
24%
23%
2011
23. Does your board have a policy to rotate committee membership? 2011 (n=173)
11% Yes 4% 21%
20%
25%
28%
2008 (n=229)
Yes
16%
21%
20%
2011
24. Does your board have limits on audit committee members being able to participate on other organizations' audit committees?
65% Yes 14% 36% 42%
52%
57%
2011 (n=174)
2008 (n=229)
Yes
55%
50%
51%
2011
44
Audit committee
Audit committee With regard to audit committee meetings, two thirds of all public companies hold 1-4 in-person meetings each year, and one third hold 5-9 in-person meetings each year. In addition to these meetings, about 80% meet 1-4 times a year via conference call, and another 20% meet 5-9 times per year via conference call. According to 85% of the public company respondents, the number of audit committee meetings has not changed since last year. Only 6% of public company respondents indicated that audit committee meetings held by phone are considered different than in-person meetings for purposes of proxy disclosure. At least 84% of audit committees met with management at all or almost all meetings. The majority of respondents said the members of management who typically attend audit committee meetings are the head of internal audit and the chief financial officer. Respondents across all company sizes and types indicated that other members of management, not included in the list of possible answer choices, were the chief audit officer, chief risk officer, and the controller. One practice not widely utilized is inviting specialists to attend audit committee meetings. Such experts, such as those in the areas of mergers and acquisitions, tax, or
valuation, can provide additional insight beyond the level of what may normally be discussed. Survey results indicate that the audit committees of 28% of public companies never engage specialists for specific matters on their agenda, and 50% do rarely (once a year). In the area of whistleblowing, 46% of small-cap, 71% of mid-cap, and 75% of large-cap company boards receive reports on compliance hotline tips at least 2 times a year. Twenty percent (20%) of the public companies get such reports once a year. Only 22% of the financial services companies reported that their audit committees received reports on compliance hotline tips 5 or more times a year, compared with 39% of non-financial services companies. There is little difference between mid- and large-cap companies. In May 2011, the SEC adopted a program affecting rewards to whistleblowers who voluntarily report certain information to the SEC. In light of these rules, it will be interesting to see the trends in coming years.
Additional information To learn more about audit committee roles and responsibilities, read the Deloitte Center for Corporate Governance publication SEC sets final whistleblower rules, available at www.corpgov.deloitte.com.
June 2011
Hot Topics
SEC Sets Final Whistleblower Rules

The SEC, in an open meeting on May 25, 2011, approved final rules for implementing the whistleblower provisions in Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules passed by a vote of 3 to 2, with commissioners Kathleen Casey and Troy Paredes dissenting.
Background
This is not the first time that reporting suspected violations of securities laws has been addressed in regulations. The SEC has long been authorized to award whistleblowers for reporting insider trading violations. Regulations in this area have also focused on companies internal reporting systems. Specifically, Section 301 of the Sarbanes-Oxley Act and the securities market listing standards require the audit committees of listed companies to establish procedures for: Receiving, retaining, and addressing complaints regarding accounting, internal accounting controls, or auditing matters, whether from internal or external sources, as well as reporting a range of compliance matters, including code of conduct violations The confidential, anonymous submission of employee concerns regarding questionable accounting or auditing matters.
The Dodd-Frank Act gave the SEC enhanced authority to provide rewards through extending the whistleblower rewards to any securities law violations and increasing the potential size of the rewards. In November 2010, the SEC proposed rules to implement the Whistleblower Incentives & Protection Program created in the Dodd-Frank Act. The SEC received numerous comment letters regarding the proposed rules, many of which expressed concern about potential unintended consequences. One common concern for the effectiveness of companies internal whistleblower systems and their compliance and ethics programs was that whistleblowers would bypass internal reporting systems in order to report externally to receive an award.
Final Rules
The SEC rules provide for rewards of 10 to 30 percent of monetary sanctions for whistleblowers who voluntarily report to the SEC original information leading to securities law enforcement actions that recover more than $1 million. In determining the $1 million threshold, several factors will be considered, including the potential aggregation of multiple sanctions arising from information provided by a single source. Original Information Original information is defined in the final rules as information that is: (i) derived from the independent knowledge or independent analysis of the whistleblower; (ii) not already known to the [SEC] from any other source, unless the whistleblower is the original source of the information; (iii) not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from
Copyright 2011 Deloitte Development LLC. All rights reserved.
Hot TopicsJune 2011 1
45
Small-cap Mid-cap
Audit committee
Large-cap
b. By video or web conference

1-4 times per year 5-9 times per year 10-14 times per year 0% 0% 100% 100%
2011 (n=2)
2011 (n=2) 2011 (n=2)
25. How often does the audit committee meet annually via: a. In-person 1-4 times per year 1-4 times per year 5-9 times per year 5-9 times per year 10-14 times per year 10-14 times per year
100% 0% 19% 0% 4% 2% 3% 77% 2011 26% 46% 72%
100% 51%
100%
2011
2011 (n=171)
2011 (n=171)
2011 2011 (n=171) Financial services (n=1) Non-nancial services (n=1)

57%
Small-cap Mid-cap Large-cap 1-4 times per year

5-9 times per year 10-14 times per year
All public companies (n=2) 69%

30% 32%
66%
2011
38% 5% 1% 2%
2011
2011
b. By video or web conference

100% 100% 2011 (n=2) Only 2 year per participants responded to survey question 25b one mid-cap company and one large-cap company. Results revealed that the audit committees of both companies meet annually via video or web conference 1-4 times a year. 5-9 times per year 0% 0% 1-4 times
2011 (n=2) 2011 (n=2)
10-14 times per year
c. By tele-conference calls
1-4 times 1-4 times per year per year 5-9 times 5-9 times per year per year 10-14 times 10-14 times per year per year 100% 88% 12% 0% 100% 100% 2011 (n=141)
81%
75%
2011
2011 19% 25% 2011 2011 (n=141)
2011 (n=141)
0% 0%
Small-cap Mid-cap 1-4 times Large-cap per year

5-9 times per year 10-14 times per year 21% 0% 79% 21% 21%
Financial services (n=1) Non-nancial services (n=1) 79% All public companies (n=2) 2011
79%
2011
2011
46
Audit committee
26. How has the frequency of audit committee meetings changed since last year?
Increased substantially Increased slightly
1% 3% 8% 7%
2011 (n=174)
10% 4% 6% 5%
2011 (n=174)
Decreased
2011 (n=174)
No change
88%
86%
82%
2011 (n=174)
Increased substantially Increased slightly
2% 2% 11%
2011
7% 8% 4% 5%
2011
Decreased
11%
2011
No change
79%
87%
85%
2011
27. Are audit committee meetings held by phone considered different than in-person meetings for purpose of proxy disclosure?
Yes
8%
7%
3%
2011 (n=174)
Yes
5%
6%
6%
2011
47
Decreased
4% 5%
11%
2011
Audit committee
No change
79%
87%
85%
2011
27. Are audit committee meetings held by phone considered different than in-person meetings for purpose of proxy disclosure?
Yes
8%
7%
3%
2011 (n=174)
Yes
5%
6%
6%
2011
28. Does your organization's audit committee hold a separate meeting to review the earnings release vs. quarterly reviews or are they combined?
Separate meetings Combined meetings
38%
40%
40%
2011 (n=174)
62%
60%
60%
2011 (n=174)
45%
38%
40%
2011
55%
62%
60%
2011
29. How often do external auditors attend your company's audit committee meetings?
Frequently (all or almost all audit committee meetings) Frequently (all or almost all audit committee meetings)
100%
99%
98%
2011 (n=173)
100%
99%
99%
2011
48
45%
38%
40%
2011
55%
62%
60%
2011
Audit committee
29. How often do external auditors attend your company's audit committee meetings?
Frequently (all or almost all audit committee meetings) Frequently (all or almost all audit committee meetings)
100%
99%
98%
2011 (n=173)
100%
99%
99%
1% and 2% of mid-, and large-cap respondents, respectively, answered Sometimes (two to three audit committee meetings a year). 1% and 1% of all public and non-financial services companies, respectively, answered Sometimes (two to three audit committee meetings a year). Answer choices Rarely (one audit committee meeting a year), Never, and Dont Know received 0% responses across all company sizes, and across all public companies and industry types.
2011
30. How often does your audit committee meet separately with management?
Frequently (all or almost all audit committee meetings) Sometimes (two to three audit committee meetings a year) Rarely (one audit committee meeting a year) 27%
73% 11% 8%
84%
90%
2011 (n=174)
Answer choices Never and Dont Know received 1% from mid-cap respondents. Answer choices Never and Dont Know received 1% of responses from both all public and non-financial services companies.
2011 (n=174)
2% 2011 (n=174) 2%
Frequently (all or almost all audit committee meetings) Sometimes (two to three audit committee meetings a year) Rarely (one audit committee meeting a year) 11% 18%
82% 13%
85%
84%
2011
2011
2% 2011 2%
31. Which members of management meet separately with the audit committee? (Check all that apply)
Head of internal audit General counsel 35%
65% 49%
91% 57%
98%
2011 (n=173) 2011 Board Practices Report Design, Composition, and Function
49
2011 (n=173)
Mid-cap Large-cap
Audit committee
Non-nancial services (n=136) All public companies (n=174)
31. Which members of management meet separately with the audit committee? (Check all that apply)
Head of internal audit General counsel Chief executive officer Chief financial officer Chief compliance officer Other 35% 31% 11% 35% 50% 73% 26% 25% 40%
65% 49% 53%
91% 57% 30% 85%
98%
2011 (n=173)
2011 (n=173) 2011 (n=173)

73%
2011 (n=173)
2011 (n=173)
2011 (n=173)
Head of internal audit General counsel Chief executive officer Chief financial officer Chief compliance officer Other 32% 24% 18% 50% 47% 61%
92% 50% 44%
89% 50% 45% 84%
90%
2011
2011 2011
79%
2011
33% 19%
32%
2011
2011
32. How often does your company's audit committee engage specialists for specic matters on their agenda?
Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never 8%
4% 3%
2011 (n=173)
22% 42% 17%
2011 (n=173)
57% 20% 37%
43%
2011 (n=173)
35% 12% 1%
2011 (n=173)
Don't know
2011 (n=173)
Frequently (five or more times a year) Sometimes (two to four times a year)
1% 2%
5%
2011
18%
18% 47%
18%
2011
50
51%
50%
2011
officer Chief financial officer Chief compliance officer Other
47% 61% 32% 24% 18% 33% 19%
44%
45% 84%
2011
79%
2011
Audit committee
32%
2011
2011
32. How often does your company's audit committee engage specialists for specic matters on their agenda?
Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never 8%
4% 3%
2011 (n=173)
22% 42% 17%
2011 (n=173)
57% 20% 37%
43%
2011 (n=173)
35% 12% 1%
2011 (n=173)
Don't know
2011 (n=173)
Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never
1% 2%
5%
2011
18%
18% 47%
18%
2011
51% 27% 28%
50%
2011
29% 3% 2%
2011
Don't know
2011
33. How often does the audit committee receive reports on internal tips from a compliance hotline?
27% 19% 23% 23% 8% 5% 2% 7% 33% 20% 2%
38% 41% 19%
34%
2011 (n=172)
2011 (n=172)
2011 (n=172)
2011 (n=172)
Don't know
2011 (n=172)
Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year)
22% 43% 11% 22%
39% 31% 20%
35% 34%
2011
2011
2011
51
times a year) Rarely (once a year) 47% 29% 3% 2% 27% 51% 28% 50%
2011
Audit committee
Never
2011
Don't know
2011
33. How often does the audit committee receive reports on internal tips from a compliance hotline?
27% 19% 23% 23% 8% 5% 2% 7% 33% 20% 2%
38% 41% 19%
34%
2011 (n=172)
2011 (n=172)
2011 (n=172)
2011 (n=172)
Don't know
2011 (n=172)
22% 43% 11% 16% 8% 22% 5% 8% 3% 4%
39% 31% 20%
35% 34%
2011
2011
2011
2011
Don't know
2011
52
Board orientation and training When asked whether their organizations have a formal orientation program for directors, responses from mid- and large-cap companies remained virtually unchanged since 2008. However, 85% of small-cap company respondents said they do have a program, up from 32% three years ago. Virtually all public companies (99%) used the form of a live, in-house session led by an individual on the board or staff member of the organization. Orientation training by a third party or via the Internet was not widely used. Similarly, director training generally consists of in-house, management-led programs. Only 19% of small-cap, 26% mid-cap, and 22% of large-cap companies use third-party providers. However, if a director chooses to attend an external program, a large majority of the public companies would reimburse the expense.
Of the answer choices provided, the topic most companies of all sizes addressed in their director training was insider trading, followed by company policies. At sub-question 35a, not shown, some respondents mentioned other responses, which included topics such as code of conduct and ethics, industry trends, and general corporate governance and directors' duties. From an industry perspective, more non-financial services companies (43%) focused training on anti-corruption polices than those in financial services (18%). Also, 71% of financial services companies train directors on other regulatory issues related to the business, as opposed to 58% of non-financial services. Across all company sizes and industries, respondents indicated that corporate secretaries or other management informed directors about education programs available to them.
34. Does your organization have a formal orientation program for new directors (beyond supplying a directors' manual)?
85% Yes 32% 71%
72%
82%
2011 (n=171)
87%
2008 (n=229)
Yes
74%
78%
77%
2011 (n=171)
34a. If yes, please check the orientation programs sponsored by your organization for directors: (Choose all that apply)
Live, in-house session led by an individual serving on the board and/or a staff member of the organization Live training by a third party 5% 2%
100%
100%
98%
2011 (n=130)
2011 (n=130)
Internet-based training
5% 4%
2011 (n=130)
53
Yes 32% 71% 87%
2008 (n=229)

Yes 74% 78% 77%
2011 (n=171)
34a. If yes, please check the orientation programs sponsored by your organization for directors: (Choose all that apply)
5% and 4% of mid- and large-cap respondents, respectively, answered Internetbased training, and 5% and 2% of small- and mid-cap respondents, respectively, answered Live training by a third party. 4%, 4%, and 4% of all public, non-financial services, and financial services companies, respectively, answered Internetbased training, and 2% and 2% of all public and non-financial services companies, respectively, answered Live training by a third party.
100%
100%
98%
2011 (n=130)
2011 (n=130)
5% 4%
2011 (n=130)
96%
100%
99%
2011
2011
4% 4% 4%
2011
35. Does your company train directors on: (Choose all that apply)
Anti-corruption policies (e.g. FCPA, UK Anti-bribery Act) Insider trading Political contributions Company policies Other regulatory issues related to your business such as privacy, etc. Other formal training 17% 25%
35%
34% 91% 22%
42%
2011 (n=154)
92% 84%
2011 (n=154)
2011 (n=154)
84% 62% 56% 69%
87% 70% 17% 17% 24%
2011 (n=154)
2011 (n=154)
2011 (n=154)
54
Anti-corruption policies (e.g. FCPA, UK Anti-bribery Act)
18%
43%
37%
2011
4% 4%
2011
35. Does your company train directors on: (Choose all that apply)
Anti-corruption policies (e.g. FCPA, UK Anti-bribery Act) Insider trading Political contributions Company policies Other regulatory issues related to your business such as privacy, etc. Other formal training 17% 25%
35%
34% 91% 22%
42%
2011 (n=154)
92% 84%
2011 (n=154)
2011 (n=154)
84% 62% 56% 69%
87% 70% 17% 17% 24%
2011 (n=154)
2011 (n=154)
2011 (n=154)
Anti-corruption policies (e.g. FCPA, UK Anti-bribery Act) Insider trading Political contributions Company policies Other regulatory issues related to your business such as privacy, etc. Other formal training
18%
43% 88%
37%
2011
89% 89%
2011
15%
25%
23%
2011
79% 58% 61% 79%
79% 71% 24% 18% 19%
2011
2011
2011
36. Which of the following best describes your board's director education program?: (Choose all that apply)
Provided in-house by management Provided in-house by a third party Directors are reimbursed for public forums or peer group sessions attended The full board collectively attends a single public forum Our board does not have a formal director education program Other
58% 19% 26% 58% 2% 2011 (n=173) 13% 12% 19% 22%
76%
75%
2011 (n=173)
2011 (n=173)
65% 69%
2011 (n=173)
2011 (n=173)
4% 2% 7%
2011 (n=173)
Provided in-house by management Provided in-house by a third party Directors are reimbursed for public forums or peer group sessions attended The full board collectively attends a single public forum
82% 21% 24% 63% 1% 2011 1% 24%
70%
73%
2011
2011
66% 65%
55
Company policies
79% 71% 24% 18% 19% 58%
79% 61%
79%
2011
Other regulatory issues related to your business such as privacy, etc. Other formal training
2011
2011
36. Which of the following best describes your board's director education program?: (Choose all that apply)
58% 19% 26% 58% 2% 2011 (n=173) 13% 12% 19% 22%
76%
75%
2011 (n=173)
2011 (n=173)
65% 69%
2011 (n=173)
2011 (n=173)
4% 2% 7%
2011 (n=173)
82% 21% 24% 63% 1% 2011 1% 11% 14% 13% 24%
70%
73%
2011
2011
66% 65%
2011
2011
3% 4% 4%
2011
37. How do your directors learn about director education programs? (Choose all that apply)
From the corporate secretary or management From other directors From third party mailings 42%
83%
87%
82%
2011 (n=163)
61%
42%
2011 (n=163)
58% 8% 4% 7%
69%
62%
2011 (n=163)
Other
2011 (n=163)
From the corporate secretary or management From other directors 51%
80%
86%
85%
2011
52%
52%
2011
56
From third 60% 66% 65%
2011
or peer group sessions attended The full board collectively attends a single public forum Our board does not have a formal director education program Other
63% 1% 2011 1% 11% 14% 13%
66%
65%
2011
2011
3% 4% 4%
2011
37. How do your directors learn about director education programs? (Choose all that apply)
83%
87%
82%
2011 (n=163)
61%
42%
2011 (n=163)
58% 8% 4% 7%
69%
62%
2011 (n=163)
Other
2011 (n=163)
80%
86%
85%
2011
52%
52%
2011
60% 6% 5% 6%
66%
65%
2011
Other
2011
57
Board evaluations
Board evaluations Directors from nearly all (79%) companies in the survey population perform self-evaluations, which typically pertain to the full board and board committees. However, 43% of all boards evaluate individual board members. Since 2008, there has been a sizeable increase in the number of small- and mid-cap companies that have employed a third party to evaluate the boards performance. Still, just 18% of all public companies surveyed do so. Also since 2008, there has been a 21% increase in the number of small-cap companies that perform board evaluations.
Some respondents specifically stated other ways in which directors are evaluated. These responses included: Bio, qualifications, meeting attendancesuggested discussion topics given to full board to discuss in private session Each independent director meets privately with the chairman of the board and the chairman of the corporate governance and nominating committee Evaluation by committee chairs Management evaluation of board We rotate our approach from year to year to keep the process fresh.
38. How are your directors evaluated? (Choose all that apply)
Self-evaluation
85%
78%
77%
2011 (n=173)
Individual peer-evaluation led by corporate secretary or other in- 15% 20% 17% house personnel Individual peer-evaluation led by a third party facilitator Our organization does not have a formal board performance evaluation process Other 8% 14% 13%
2011 (n=173)
2011 (n=173)
4% 2% 8% 9%
2011 (n=173)
22%
2011 (n=173)
Self-evaluation Individual peer-evaluation led by corporate secretary or other inhouse personnel Individual peer-evaluation led by a third party facilitator Our organization does not have a formal board performance evaluation process Other
82% 18% 18% 18% 14% 13% 8%
78%
79%
2011
2011
2011
3% 1% 1% 11% 14%
2011
13%
2011
39. To whom does the evaluation pertain? (Select all that apply)
Full board as a whole
92%
94%
97%
2011 (n=173)
58
Board committees
77%
90%
90%
2011 (n=173)
Individual peer-evaluation led by a third party facilitator Our organization does not have a formal board performance evaluation process Other
14%
13%
8%
2011
3% 1% 1% 11% 14%
2011
13%
Board evaluations
2011
39. To whom does the evaluation pertain? (Select all that apply)
2% of large-cap respondents answered Not Applicable. 1% of all public and 1% of non-financial services companies answered Not Applicable.
Full board as a whole Board committees Individual board members 46%
92%
94%
97%
2011 (n=173)
77%
90%
90%
2011 (n=173)
44%
42%
2011 (n=173)
Full board as a whole Board committees Individual board members 32%
95%
95%
95%
2011
79%
90%
88%
2011
47%
43%
2011
40. Have you had a third party evaluate the board's performance?
12% Yes 3% 7% 14%
24%
12%
2011 (n=173)
2008 (n=190)
Yes
18%
18%
18%
2011
Small-Cap Mid-Cap Large-Cap
Financial Services (n=38) Non-Financial Services (n=135) All Public Companies (n=173)
41. How often is the board evaluated?

1%
59
Board evaluations
41. How often is the board evaluated?

1% 3% 5%
2011 (n=173) 2008 (n=229)
More frequently than once a year
Less frequently than once a year (e.g. every two years)
4% 2011 (n=173) 3% 14% 2% 2008 (n=229) 2% 96% 59% 93% 95% 98% 97%
2011 (n=173) 2008 (n=229)
Once a year
Not evaluated
0% 21%
2011 (n=173)
6% 2008 (n=229)
More frequently than once a year
3% 1% 2% 3% 2%
2011
Less frequently than once a year (e.g. every two years)
2011
Once a year
97%
96%
96%
2011
Not evaluated
0%
2011
60
Strategy
Strategy Being involved in the strategic direction of the company is one of the primary roles of a board. However, such board involvement can vary across companies. As a result of the financial crisis, there has been an increased focus on board involvement in discussing an organizations strategy; directors are expected to play a more active role in strategic development as well as in the ongoing monitoring of the execution of strategy. Results of the questions relating to strategic objectives show that 52% of all public companies discuss such objectives at every board meeting, and 62% hold an annual offsite strategy meeting with management. This latter trend is more prevalent among the mid- and large-cap companies.
When asked how the level of board involvement in setting strategy has changed, 58% of small-cap and 53% of mid-cap companies said it was increasing, while 60% of large-cap companies said it has remained the same. With regard to how strategy is developed, more than 90% of all public companies said that management develops strategy and the board advises, challenges, and approves it. No respondent indicated that the board develops strategy, and only 15% of small-cap companies indicated the board and management develop strategy together.
Additional information To learn more about the boards role in strategy, read the Deloitte Center for Corporate Governance publication Shaping a Risk Intelligent strategy, available at www.corpgov.deloitte.com.
Shaping a Risk Intelligent strategy Confronting assumptions to find risk and opportunity
42. How often are strategic objectives discussed with the board?
Annually Quarterly At every meeting Other
15% 27%
17%
23% 19% 13%
2011 (n=174) 2011 (n=174) 50% 52% 2011 (n=174)
58% 14% 12% 2011 (n=174)
Annually Quarterly At every meeting Other
24% 18%
18% 18% 47%
19% 18%
2011 2011 53% 52%
2011
11% 11% 11% 2011
2011 Board Practices Report Design, Composition, and Function 61
Small-cap Mid-cap
Strategy
Large-cap
43. How often does your board participate in an off-site strategy meeting with management?
More than once a year Less than once a year (e.g. every two years) Once a year We do not hold off-site strategy meetings with management
2%
2011 (n=173)
4% 6%
12%
2011 (n=173)
54%
64%
63%
2011 (n=173)
42%
30%
23%
2011 (n=173)
More frequently than once a year Less frequently than once a year (e.g. every two years) Once a year We do not hold off-site strategy meetings with management
1% 1%
2011
13% 6% 8%
2011
58%
64%
62%
2011
29%
30%
29%
2011
44. How is strategy set at your organization?

Management develops strategy and the board advises, challenges and approves The board and management develop strategy together The board develops the strategy and management approves and executes 15%
85%
94%
92%
2011 (n=173)
5% 5%
2011 (n=173)
0%
2011 (n=173)
Management develops strategy and the board advises, challenges and approves The board and management develop strategy together The board develops the strategy and management approves and executes 0% 5% 7% 6%
92%
92%
92%
2011
2011
2011
62
(e.g. every two years) Once a year We do not hold off-site strategy meetings with management 58% 64% 62%
2011
Strategy
29%
30%
29%
2011
44. How is strategy set at your organization?

Management develops strategy and the board advises, challenges and approves The board and management develop strategy together The board develops the strategy and management approves and executes 15%
85%
94%
92%
2011 (n=173)
1% and 2% of mid-, and large-cap respondents, respectively, answered Other. 2%, 1%, and 3% of all public companies, non-financial services companies, and financial services companies, respectively, answered Other.
5% 5%
2011 (n=173)
0%
2011 (n=173)
Management develops strategy and the board advises, challenges and approves The board and management develop strategy together The board develops the strategy and management approves and executes 0% 5% 7% 6%
92%
92%
92%
2011
2011
2011
45. Is the level of board involvement in setting strategy increasing or decreasing?

2% of large-cap respondents, respectively, answered Decreasing. 1% of all public and 3% of financial services companies, respectively, answered Decreasing.
Increasing
58%
53%
38%
2011 (n=174)
Remains the same
42%
47%
60%
2011 (n=174)
Increasing
45%
50%
49%
2011
Remains the same
53%
50%
51%
2011
63
Risk oversight, disclosure committee, and political contributions
Risk oversight, disclosure committee, and political contributions** Risk oversight is a fundamental role of any director, and Of the companies with a management disclosure in the current governance environment, there is increased committee, 45% of small-cap companies say the pressure from investors and regulators for boards to spend committee reports to the board or a board committee, more time on overseeing risk management. How boards compared to 37% and 29% of mid- and large-cap approach risk oversight appears to be decidedly mixed, companies, respectively. Across all company sizes and with many respondents assigning primary responsibility industries, a majority of the management disclosure to the audit committee at small- and mid-cap companies, committees who do report directly to the board or a board but only 30% of large-cap companies indicating this. With committee do so on a quarterly basis. regard to the industry sectors, 32% of financial services companies, as compared to 8% of non-financial services Gaining attention in recent years is political spending companies, have a board risk committee. Given the nature transparency and accountability from public companies, of their business, the risks they face, and a rapidly evolving with specific focus on board oversight to ensure political regulatory climate, companies in the financial services spending of corporate funds is aligned with the best industry tend to have more developed risk oversight and interests of the company and its shareholders. Much of management practices. this attention can be attributed to the controversial case of Citizens United v. Federal Election Commission in which, in While there is no legal obligation for public companies to 2010, the Supreme Court ruled it a First Amendment right establish a management disclosure committee, the SEC for corporations and unions to be able to participate in the recommends it and 89% of all public companies have one. political process. Twenty-nine (29%) of all public companies There has been an trend for public companies to form and 52% of large-cap company respondents said their one, especially in the small- and large-cap companies, boards oversee political contributions and donations made which have shown 20% and 12% increases, respectively, by the company. Across all public companies, less than since 2008. From an industry perspective, fewer financial 10% have imposed limitations or reporting obligations on services companies (82%) have this committee, compared political contributions made by directors of the company. to non-financial services companies (91%).
Additional information To learn more about the boards role in risk oversight, read publications in the Deloitte Risk Intelligent whitepaper series, and also the Risk Intelligent proxy disclosures 2011 publication, available at www.corpgov.deloitte.com.
Risk Intelligent proxy disclosures 2011: Have risk-oversight practices improved?
**In this Report, the section header has been modified from the original survey questionnaire. 64
46. How does your board assign risk oversight for the organization's risk management program? (Select all that apply)
We have a board risk committee 8% 14% 15% The audit committee has primary responsibility for risk oversight Risk oversight responsibilities are spread across all board committees The full board is responsible for risk oversight We have not considered board repsonsibility for risk oversight Other 0% 12% 62% 50% 58%
2011 (n=174)
56% 45% 56% 52% 60% 30%
2011 (n=174) 2011 (n=174) 2011 (n=174)
2011 (n=174)
6% 7%
2011 (n=174)
8%
We have a board risk committee The audit committee has primary responsibility for risk oversight Risk oversight responsibilities are spread across all board committees The full board is responsible for risk oversight We have not considered board responsibility for risk oversight Other 0%
32%
13%
2011
46% 51% 62% 48% 57% 48%
55% 39% 42%
2011 2011 2011
2011
5% 7%
13%
2011
47. Does your organization have a management disclosure committee as recommended by the SEC for public companies?
81% Yes 61% 86%
88% 83%
95%
2011 (n=174) 2008 (n=229)
Yes
82%
91%
89%
2011
47a. If yes, does the management disclosure committee report to either the board or a board committee?
45% Yes 62%
37%
29% 63%
2011 (n=151)
57%
2008 (n=181)
Yes
39%
34%
35%
2011
65
Risk oversight responsibilities are spread across all board committees The full board is responsible for risk oversight Risk oversight, disclosure committee, and political contributions We have not considered board responsibility for risk oversight Other
39% 42% 0% 13%
51% 62%
48% 57%
2011 2011
2011
5% 7%
2011
47. Does your organization have a management disclosure committee as recommended by the SEC for public companies?
In 2011, 19%, 11%, and 5% of small-, mid-, and large-cap respondents, respectively, answered No, and in 2008, 25%, 9%, and 17% of small-, mid-, and large-cap respondents, respectively, answered No. In 2011, 1% of mid-cap respondents, respectively, answered Not Applicable, and in 2008, 14% and 5% of small- and mid-cap respondents, respectively, answered Not Applicable. 10%, 8%, and 18% of all public, non-financial services, and financial services companies, respectively, answered No, and 1% of both all public and non-financial services companies, respectively, answered Not Applicable.
81% Yes 61% 86%
88% 83%
95%
2011 (n=174) 2008 (n=229)
Yes
82%
91%
89%
2011
47a. If yes, does the management disclosure committee report to either the board or a board committee?
45% Yes 62%
37%
29% 63%
2011 (n=151)
57%
2008 (n=181)
Yes
39%
34%
35%
2011
47b. If yes, how often?
Quarterly
89% 7% 11% 7%
93%
87%
2011 (n=53)
Semi-annually No determined frequency; only when needed
2011 (n=53) 2011 (n=53)
13%
Quarterly 2% 2% 12% 9%
100%
85%
89%
2011
2011
2011
66
48. Does the company align risk oversight/ risk management with the company's strategy?
45% Yes 62%
37%
29% 63%
2011 (n=151)
57%
2008 (n=181) Risk oversight, disclosure committee, and political contributions
Yes
39%
34%
35%
2011
47b. If yes, how often?
Quarterly
89% 7% 11% 7%
93%
87%
2011 (n=53)
None (0%) of respondents answered Monthly or Annually.
2011 (n=53) 2011 (n=53)
13%
Quarterly 2% 2% 12% 9%
100%
85%
89%
2011
2011
2011
48. Does the company align risk oversight/ risk management with the company's strategy?
Yes
85%
89%
90%
2011 (n=174)
2011 (n=173)
Yes
87%
89%
88% 2011
4%, 3%, and 5% of small-, mid-, and large-cap respondents, respectively, answered No, and 12%, 8%, and 5% of small-, mid-, and large-cap respondents answered Dont know. 5% of non-financial services companies, respectively, answered No, and 6% and 3% of non-financial services and non-financial services companies, respectively, answered Dont know.
2011
49. Does your company's board oversee political contributions and donations made by the company or oversee the political action committees (or similar) of the company?
12%
Yes
20%
52%
2011 (n=171)

No 81% 72% 45%
67
2011 (n=171)
Mid-cap Large-cap
49. Does your company's board oversee political contributions and donations made by the company or oversee the political action committees (or similar) of the company?
12%
Yes
20%
52%
2011 (n=171)
No 8% 8% 3%
81%
72%
45%
2011 (n=171)
Don't know
2011 (n=171)
Yes
39%
26%
29%
2011
No
55%
67%
64%
2011
5%
Don't know
7% 6%
2011
50. Has your company imposed any limitations, or reporting obligations, to the company on political contributions by directors?
8% 11% 2011 (n=172) 5% 85% 8% 8% 3% 80% 92%
Yes
No
2011 (n=172)
Don't know
2011 (n=172)
Yes
13%
7% 9%
2011
No 3% 7% 6%
84%
85%
85%
2011
Don't know
2011
68
CEO succession planning
CEO succession planning CEO succession planning includes both planned (e.g., retirement) and unexpected (e.g., hit by a bus or ousted) scenarios. When compared to a similar question asked in 2008, results to question 51 show that more companies are reviewing succession plans as a matter of course rather than when prompted by circumstantial changes. Specifically, there is a 31% increase since 2008 in small-cap companies reviewing CEO succession plans annually, while 11% more mid-cap companies and 14% more large-cap companies review these plans more than once a year. With regard to who has primary responsibility over the succession planning process, 43% of large-cap companies assigned the task to the entire board, and the majority of the remaining Large-cap companies assign responsibility
to the nominating/ corporate governance committee and the compensation committee. Most small-cap companies assigned the responsibility to the nominating/ corporate governance committee; responses from mid-cap companies were mixed. When compared to results from the 2008 report, the data shows a shift from the delegation of this responsibility from the entire board to the nominating/corporate governance committee for small-cap companies. From an industry perspective, most financial services companies delegated the responsibility to the nominating/ corporate governance committee where results were varied for non-financial services companies. Other responses included the chairman and CEO, an executive committee, a special committee, and a small committee of independent directors.
51. How often does the full board review CEO succession plans?
More than once a year Once a year Less than once a year (e.g. every two years) Only when a change in circumstance requires Never
26%
33% 81%
2011 (n=173)
64% 60%
2011 (n=173)
6% 2% 19% 2%
2011 (n=173)
3% 3%
2011 (n=173)
2011 (n=173)
More than once a year Once a year
21%
26% 66%
25%
2011
65%
65%
2011
Less than once a year (e.g. every two 8% years) Only when a change in circumstance requires Never
2% 2011 3% 5% 6% 2011 6%
1% 2011 1%
52. Who has the primary responsibility over the CEO succession planning process?
Less than once a year (e.g. every two 8% years)
2% 2011 3% 5% 6% 2011 6%
CEO succession planning
Only when a change in circumstance requires Never
1% 2011 1%
52. Who has the primary responsibility over the CEO succession planning process?
Entire board Compensation committee Nominating/ corporate governance committee Independent directors CEO Other
16% 16%
38% 29% 60% 22%
43%
2011 (n=172)
2011 (n=172)
23% 23%
2011 (n=172)
8% 1% 2% 6% 7%
3% 2011 (n=172) 3%
2011 (n=172) 2011 (n=172)
Entire board Compensation committee Nominating/ corporate governance committee Independent directors 5% CEO Other 4%
29% 26% 42% 24%
39% 24% 25%
37%
2011
2011
28%
2011
2011 2011 2011
1% 1%
6% 5% 3%
70
CEO performance evaluation
CEO performance evaluation A primary board responsibility is the evaluation of the CEO. Consistent with 2008 survey results, most companies assign this responsibility to the compensation committee. Further, 87% of all public companies indicated that this happens annually.
53. How often does the full board review the CEO's performance?
9% 12%
More than once a year Once a year Only when a change in circumstance requires
2011 (n=173)
92% 8% 1% 2%
87%
83%
2011 (n=173)
1% of mid-cap respondents, respectively, answered Less than once a year (e.g. every two years), and 1% and 3% of mid-, and large-cap respondents, respectively, answered Never. 1% and 1% of all public and financial services companies, respectively, answered Less than once a year (e.g. every two years), and 2% and 2% of all public and financial services companies answered, respectively, Never.
2011 (n=173)
More than once a year Once a year Only when a change in circumstance requires 3% 2% 2%
11% 9%
2011 2011 87%
97%
84%
2011
2011
54. Who has the lead responsibility over the CEO performance evaluation process?
Entire board
8% 11%
17% 54%
2011 (n=173)
Compensation committee Nominating/ corporate governance committee Independent chair or lead director Other 15% 23% 1% 5%
68%
60%
2011 (n=173)
11% 12% 8% 7%
2011 (n=173) 2011 (n=173)
2011 (n=173)

Entire board 16% 13% 3%
71
2011
Mid-cap Large-cap
CEO performance evaluation
54. Who has the lead responsibility over the CEO performance evaluation process?
Entire board
8% 11%
17% 54%
2011 (n=173)
Compensation committee Nominating/ corporate governance committee Independent chair or lead director Other 15% 23% 1% 5%
68%
60%
2011 (n=173)
11% 12% 8% 7%
2011 (n=173) 2011 (n=173)
2011 (n=173)
Entire board
16%
13% 3% 63%
2011
Compensation committee Nominating/ corporate governance committee Independent chair or lead director Other
63%
63%
2011
18%
10% 12%
2011
8% 10% 10% 8% 1% 2%
2011
2011
72
Shareholder engagement and shareholder activism
Shareholder engagement and shareholder activism While not a new topic, shareholder activism continues to be in the spotlight, primarily due to regulatory changes that emphasize investor rights. Such activism can arise for a number of reasons, such as poor performance, discontent with executive compensation, a desire for majority voting, or a companys position on environmental concerns. Because activism can come in the form of aggressive tactics, board communication with activist shareholders is critical. Boards and management are increasingly considering communications strategies for effectively interacting with their shareholders. Since 2008, a greater number of small- and mid-cap companies require directors to attend annual shareholder meetings. A smaller number of large-cap companies have required attendance. Since 2008, there has also been an increase in large-cap companies that have a policy regarding contact between directors and shareholders, but a decrease for mid- and small-cap companies.
Directors at 44% of small-cap companies, 30% at mid-cap companies, and 47% of large-cap companies have had some form of contact with shareholders during the past year. This represents 53% of financial services and 34% of financial and non-financial services companies. A question similar to number 57 was asked in 2008 and results show an increase of director/ shareholder contact of approximately 15%. Finally, 60% of large-cap companies have been approached by a shareholder activist in the past year, compared to 27% of mid-cap companies and just 8% of small-cap companies. Sixty-four percent (64%) of public companies have not considered holding a fifth analyst call with investors, with 29% of public companies unfamiliar with the term. A fifth analyst call is an emerging idea to conduct a teleconference with investors, akin to a quarterly earnings call (hence "fifth"), devoted to corporate governance.
Additional information To learn more about Shareholder engagement and shareholder activism, read the Deloitte Center for Corporate Governance publication Shareholder activism: Reinforcing practices, available at www.corpgov.deloitte.com.
March 2011
Hot Topics
Shareholder Activism: Reinforcing Practices

Although shareholder activism is by no means a new topic, it continues to attract attention, especially in light of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as recent SEC rulings. There is a common theme to these regulatory changes: increasing the rights of the investor. Shareholder activism continues to be a subject of considerable debate, including whether it results in positive or negative consequences for a company. Such activism has acquired a somewhat negative connotation given the aggressive tactics employed by a small number of prominent investors. However, alternatively, there are many investors who engage with company management in a constructive and collaborative way and often take the position of long-term investor allies of the company. Dialogue with these investors can often have beneficial impacts on a company. Some ways in which shareholder activism can produce positive and beneficial impacts for the company is when it increases the performance of the company relative to its peer group, or when environmental, social, or governance (ES&G) issues that may have otherwise gone unaddressed are attended to by the company based on dialogue with shareholders. For instance, some investment institutions that serve as active, engaged investor advocates have developed new policies on governance that also include ES&G issues. Shareholder activism, regardless of whether it is adversarial or proactive in nature, can take many forms, and can arise from a variety of situations. For instance, activism can result from a perception of inefficiency in the companys capital structure, or an observation that the company may not have an adequate takeover defense. Shareholder advocates may notice opportunities for companies to strengthen their own sustainability policies, which may have a long-term constructive role and produce additional shareholder value. Additionally, through the increasing use of social networking technologies, the number of activist campaigns is rapidly growing and gaining critical mass. In preparing for and responding to shareholder activism and advocacy in any form, management and the board should consider three leading practices: identifying the relevant source issues and company attributes, assembling a response team, and developing a communication strategy.
Identify
Members of management and the board should identify and stay up to date on issues and company attributes that could be the source for shareholder activism. They should be aware of the shareholders who may act and the mechanisms available to activist shareholders. As noted above, there may be only a small number of shareholders who fit into the category of activist. Therefore, it is critical to have a strong understanding of the shareholder base, what these shareholders priorities are, and how to respond. First, company leadership should identify attributes that may make the company vulnerable to an activist investor, such as underperformance as measured by earnings;
Copyright 2011 Deloitte Development LLC. All rights reserved.
Hot TopicsMarch 2011 1
55. Are directors required to attend the annual shareholders meeting?
69% Yes 61% 68%
82%
65%
2011 (n=174)
In 2011, 31%, 18%, and 33% of small-, mid-, and large-cap respondents, respectively, answered No, and in 2008, 30%, 29%, and 21% of small-, mid-, and large-cap respondents, respectively, answered No. In 2011, 2% of large-cap respondents answered Not Applicable, and in 2008, 9% and 3% of small- and mid-cap respondents, respectively, answered Not Applicable. 24% and 32% of non-financial services and financial services companies, respectively, answered No, and 1% of non-financial services companies answered Not Applicable.
79%
2008 (n=229)
Yes
68%
76%
74%
2011
56. Do you have a policy relating to contact between directors and shareholders?
73
Yes 61% 68% 79%
2008 (n=229)
Shareholder engagement and shareholder activism

Yes 68% 76% 74%
2011
56. Do you have a policy relating to contact between directors and shareholders?
35% Yes 41%
54%
55%
2011 (n=173)
55%
49%
2008 (n=221)
Yes
61%
49%
51%
2011
57. Have board members had direct contact with shareholder(s) or shareholder groups over the past year?
Board members have had direct contact Direct contact was made only as arranged or suggested by company management Board members did not have direct contact Not applicable
28% 16% 15% 52% 4% 2%
15% 22%
25%
2011 (n=170)
2011 (n=170)
67% 53%
2011 (n=170)
2011 (n=170)
Board members have had direct contact Direct contact was made only as arranged or suggested by company management Board members did not have direct contact Not applicable
29% 24% 45% 3% 2% 2%
18% 16%
21% 18%
2011 2011
64% 60%
2011
2011
58. Has your organization been approached by a shareholder activist within the last 12 months?
Yes
8%
27%
60%
2011 (n=171)
Yes
25%
39%
36%
2011
74
Small-cap Mid-cap
Financial services (n=36) Non-nancial services (n=135)
Direct contact was made only as arranged or suggested by company management Board members did not have direct contact Not applicable
24% 45% 3% 2% 2%
16%
18%
2011
64% 60%
2011 Shareholder engagement and shareholder activism
2011
58. Has your organization been approached by a shareholder activist within the last 12 months? 92%, 73%, and 38% of small-, mid-, and large-cap respondents, respectively, answered No, and 2% of large-cap respondents answered Not Applicable. 64%, 61% and 75% of all public, non-financial services, and financial services companies, respectively, answered No, and 1% of both all public and non-financial services companies answered Not Applicable.
Yes
8%
27%
60%
2011 (n=171)
Yes
25%
39%
36%
2011
59. Has your board considered holding what is known as a fth analyst call with investors?
Yes No Not familiar with the term Not applicable
8%
10% 3% 54% 38%
2011 (n=174)
63% 34% 18%
70%
2011 (n=174)
2011 (n=174)
2% 2011 (n=174)
Yes No Not familiar with the term Not applicable 21%
8% 6% 6%
2011
62% 29% 64%
71% 32%
2011
2011
1% 1% 2011
75
Voting and proxy issues
Voting and proxy issues Outside of auditor ratification, say on pay or required proposals, such as equity plan approvals, other common shareholder votes pertained to shareholder proposals on corporate social responsibility, political contributions, and rights to call special meetings. While survey respondents did not specify what types of proposals their companies received, 68% of large-cap companies had received a shareholder proposal, compared to 8% of small-cap companies and 22% of mid-cap companies. From an
industry perspective, there was about 10% variation between the financial services (29%) and non-financial services (38%) companies. It is important to note that this survey was administered prior to July 2011, when the U.S. Court of Appeals vacated the SECs final proxy access rules. However, shareholder proposals on proxy access on a company-by-company basis were not affected by the court ruling.
60. Did your organization receive a shareholder proposal during the 2011 proxy season other than auditor ratication, say-on-pay, or required proposals?
96%, 77%, and 32% of small-, mid-, and large-cap respondents, respectively, answered No, and 1% of mid-cap respondents answered Not Applicable. 64%, 62% and 71% of all public, non-financial services, and financial services companies, respectively, answered No, and 1% of both all public and non-financial services companies answered Not Applicable.
Yes
8%
22%
68%
2011 (n=174)
Yes
29%
38%
36%
2011
61. When does your organization provide reimbursement of expenses related to director election campaigns? (Choose one)
Reimbursement is provided when the nominee is successful Reimbursement is provided when the nominee achieves a certain percentage of the vote Never Not applicable
1% 2% 0%
2011 (n=173) 2011 (n=173)
30%
29% 70%
48% 70%
2011 (n=173)
50%
2011 (n=173)
1% 1% 0%
2011 2011
37% 63% 36% 36% 63%
2011
63%
2011
Small-cap
76
Mid-cap Large-cap
Yes
8%
22%
68%
2011 (n=174)
Voting and proxy issues
Yes
29%
38%
36%
2011
61. When does your organization provide reimbursement of expenses related to director election campaigns? (Choose one)
1% 2% 0%
2011 (n=173) 2011 (n=173)
30%
29% 70%
48% 70%
2011 (n=173)
50%
2011 (n=173)
1% 1% 0%
2011 2011
37% 63% 36% 36% 63%
2011
63%
2011
62. Is your organization considering adopting a policy or by-law providing reimbursement of expenses related to director election campaigns in light of proxy access?
Reimbursement would be provided when the nominee is successful Reimbursement would be provided when the nominee achieves a certain percentage of the vote Not considering adopting a policy or by-law Not applicable
2% 0%
2011 (n=170) 2011 (n=170)

81% 74% 10% 88%
2011 (n=170)
19%
26%
2011 (n=170)
Reimbursement would be provided when the nominee is successful Reimbursement would be provided when the nominee achieves a certain percentage of the vote Not considering adopting a policy or by-law Not applicable
1% 1% 0%
2011 2011
82% 80% 80%
2011
18% 20% 19%
2011
5 6
8% 11%
14% 23% 16% 10% 6%
13%
2011
20% 15%
2011
7 11% Voting and proxy issues & Earnings guidance 8 11% 9 10 5% 7%
2011
10%
2011
2011
42% 21% 26%
2011
The company provides stock-based compensation to non-employee directors

100% Yes 77% 90% 92% 97% 100%
2011 (n=172) 2008 (n=229)
Yes
95%
99%
98%
2011
Earnings guidance When compared to 2008 survey results, significantly more companies of all sizes are providing annual earnings per share (EPS) estimates, with increases of 12% for small-cap, 11% for mid-cap, and 23% for large-cap companies. Forty three percent (43%) of all companies provide annual EPS estimate guidance, and 25% provide quarterly guidance. Further, since 2008, 27% more mid-cap and 22% more
large-cap companies are providing other types of forwardlooking information, such as estimates of net income, revenue, and operating cash flow. It is interesting to note that more financial services companies (41%) do not provide EPS estimates or other type of forward-looking information compared to non-financial services companies (19%).
Additional information To learn more about Earnings guidance, read the Deloitte Center for Corporate Governance publication Earnings guidance: The current state of play, available at www.corpgov.deloitte.com.
Earnings Guidance: The Current State of Play

A Follow-up Discussion of Earnings Guidance and Other Forward-looking Information Provided to Investors
June 2009
78
Earnings guidance
63. Does your organization publicly provide earnings per share (EPS) estimates? (Select all that apply)
Quarterly earnings per share estimates are provided
12% 13% 16% 4%
25% 26% 42% 31%
32% 32%
2011 (n=170) 2008 (n=222)

55%
Annual earnings per share estimates are provided Other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are provided EPS estimates nor other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are not provided Not applicable
2011 (n=170)
32% 44% 17% 15%
2008 (n=222)
37%
24% 22%
2011 (n=170)
2008 (n=222)
18% 21% 20% 23%
52% 55% 4% 8% 4% 6% 3%
2011 (n=170) 2008 (n=222)
2011 (n=170)
2008 (n=222)
Quarterly earnings per share estimates are provided
16%
28%
25%
2011
Annual earnings per share estimates are provided Other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are provided EPS estimates nor other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are not provided Not applicable
16%
50%
43%
2011
22%
43%
38%
2011
41%
19%
24%
2011
14%
3% 5%
2011
64. Does your organization intend to change how it provides EPS estimates or other forward-looking information?
There is no intention to change the amount of information provided We intend to reduce the amount of information provided We intend to increase the amount of information provided Don't know 2% 2% 4% 2% 23% 8% 8% 8%
65%
70%
70%
2011 (n=172)
2011 (n=172) 2011 (n=172)
17% 20%
2011 (n=172)
Not applicable
2011 (n=172)
79
etc.) are provided EPS estimates nor other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are not provided Voting and proxy issues & Earnings guidance Not applicable 14% 41% 19% 24%
2011
3% 5%
2011
64. Does your organization intend to change how it provides EPS estimates or other forward-looking information?
There is no intention to change the amount of information provided We intend to reduce the amount of information provided We intend to increase the amount of information provided Don't know 2% 2% 4% 2% 23% 8% 8% 8%
65%
70%
70%
2011 (n=172)
2011 (n=172) 2011 (n=172)
17% 20%
2011 (n=172)
Not applicable
2011 (n=172)
There is no intention to change the amount of information provided We intend to reduce the amount of information provided We intend to increase the amount of information provided Don't know 3% 1% 2% 2% 2% 26% 18%
53%
74%
69%
2011
2011
2011
17% 19% 5% 8%
2011
Not applicable
2011
80
Directors and officers liability insurance
Directors and officers liability insurance Consistent with the 2008 survey findings, almost all companies have directors and officers ("D&O") liability insurance. However, since 2008 there have been increases in small- and large-cap companies, 14% and 20% respectively, insuring more than only the designated officers and directors. As to whom this extended coverage applies, some responses provided by survey participants included: Directors and officers of affiliates and subsidiaries Most employees of the organization Employees acting on behalf of the organization
Employees serving as directors or officers at nonprofit organizations or at certain for-profit organizations at the request of the company Certain employees, such as in-house attorneys, controllers, and heads of investor relations. Most companies have not changed their policy limits in the past 12 months, but 15%, 24%, and 20% of small-, mid-, and large-cap companies, respectively, did increase their limits. This represents 18% of financial services companies and 22% of non-financial services companies.
65. Does your organization have directors and ofcers (D&O) liability insurance?
100% Yes 93% 98% 100% 100% 98%
2011 (n=174) 2008 (n=229)
Yes
100%
99%
99%
2011
65a. If yes, does the D&O insurance cover more than designated directors and ofcers of the organization?
Yes 13%
27% 30%
29% 21%
41%
2011 (n=169)
2008 (n=223)
Yes
28%
34%
33%
2011
66. Do any of your directors own individual director liability insurance?
Yes No Don't know
1% 26%
2011 (n=174)
33% 74% 20%
2011 (n=174)
66% 80%
2011 (n=174)

3%
81
Yes
27% 13% 30%
29% 21%
41%
2011 (n=169)
Directors and officers liability insurance
2008 (n=223)
Yes
28%
34%
33%
2011
66. Do any of your directors own individual director liability insurance?
Yes No Don't know
1% 26%
2011 (n=174)
33% 74% 20%
2011 (n=174)
66% 80%
2011 (n=174)
Yes No Don't know
3% 2011 1% 26% 28% 71% 28%
2011
72% 72%
2011
67. Please indicate how your liability insurance policy limits have changed in the past 12 months:
Increased Decreased No change Don't know Not applicable 26% 4% 2% 15% 7% 2% 2% 24% 20%
2011 (n=173)
2011 (n=173)
48% 12% 22% 62% 55%
2011 (n=173)
2011 (n=173)
2011 (n=173)
Increased Decreased No change Don't know Not applicable
18% 4% 3%
22%
21%
2011
2011
61% 56% 17% 57%
2011
18% 3% 1% 1%
17%
2011
2011
82
Boards use of technology
Boards use of technology According to the majority of public company respondents, most directors are frequently engaged and up-to-date on the latest technology applications, or are aware of technological benefits. Not surprisingly, 79% of all public company respondents stated their boards use of technology is increasing. New to the survey this year was the option for respondents to indicate whether their organization distributes board materials using a portal application for a tablet device or other smart phone. Nineteen percent (19%) of all public companies, which consists primarily of large-cap companies, use such a distribution medium. Specifically, 28% of boards of large-cap companies are using tablets, and 66% of all public companies use or are considering the use of portals in the near future. Other methods of distribution included the Internet and intranet; there was minimal change in this area since 2008. However, there were significant decreases from the 2008 study relative to the printed forms of board materials, as a result of the portal and tablet distribution method noted above. Specifically, 21% fewer small-cap, 7% fewer
mid-cap, and 14% fewer large-cap companies are mailing hard copy materials and 29%, 14%, and 20% fewer small-, mid-, and large-cap companies, respectively, are distributing materials at board meetings since 2008. Facebook, LinkedIn, Twitter, and other forms of social media are becoming widely used forums for companies to interact with their clients, consumers, other stakeholders, and the general public. While 58% of public company respondents indicated that their directors do not engage in social media associated with their organizations, 35% did not know whether this took place. The benefits of social media are abundant, but if used ineffectively or inappropriately, could lead to negative implications for the company, thus affecting the board. To mitigate such risks, a company might establish a policy to address how social media is expected to be used by all employees. Sixty-one percent (61%) of all public companies in this survey have such a policy, which represents 52% of small-cap, 57% of mid-cap, and 70% of large-cap companies.
68. What level best describes your board's involvement with information technology?
No involvement besides basic email communications Aware of the benefits technology can provide Frequently engaged and up-to-date on latest technology applications Don't know 19%
19% 22% 41%
29% 32%
23%
2011 (n=174)
50% 37% 23%
2011 (n=174) 2011 (n=174)
2% 2011 (n=174) 3%
No involvement besides basic email communications Aware of the benefits technology can provide Frequently engaged and up-to-date on latest technology applications
26% 37% 32%
25% 37% 33%
25%
2011
37% 33%
2011
2011
Don't know 5% 5% 5%
2011
69. Please specify how your organization distributes board materials. (Select all that apply)
Through unsecured e-mail, e.g. Internet Through secure e-mail, e.g.
26%
28%
22%
2011
83
15% 20% 15%
2011
communications Aware of the benefits technology can provide 37% 32% 33% 37%
2011
37% 33%
2011
Frequently engaged and up-to-date on latest technology applications
2011
Don't know 5% 5% 5%
2011
69. Please specify how your organization distributes board materials. (Select all that apply)
Through unsecured e-mail, e.g. Internet
26%
28%
22%
2011
Through secure e-mail, e.g. 15% 20% 15% company intranet Through an internal or external board portal Through mailing of hardcopies In-person at board meetings Using an application for the iPad or other tablet device 7% 30% 63% 44% 17% 28% 42%
2011
45% 82% 57% 50%
2011
80%
2011
2011
2011
Through unsecured e-mail, e.g. Internet Through secure e-mail, e.g. company intranet Through an internal or external board portal Through mailing of hardcopies In-person at board meetings Using an application for the iPad or other tablet device
29% 32% 37%
25%
26%
2011
14% 18% 2011 42% 84% 61% 50% 41%
2011
77% 53% 78%
2011
2011
11%
22%
19%
2011
70. If your organization does not have a board portal, which statement below best explains your company's view on the technology platform?
We have considered the use of board portals but do not currently see a need for this technology We are currently considering the benefits of the use of board portals We will be introducing this technology in the near future 17% 13%
22% 56%
30%
16% 28% 35%
2011 (n=103)
35%
2011 (n=103)
33%
2011 (n=103)
We have not considered board 6% 9% portal technology
2011 (n=103)
We have considered the use of board portals but do not currently see a need for this technology We are currently considering the benefits of the use of board portals We will be introducing this technology in the near future
21% 42% 29% 8% 10% 10%
25%
24% 33% 32%
2011
35% 31%
2011
2011
84
We have not considered board portal technology
2011
external board portal Through mailing of hardcopies In-person at board meetings Using an application for the iPad or other tablet device 11%
37% 84% 61% 22% 19%
42%
41%
2011
77% 78% 53%
2011 Boards use of technology
50%
2011
2011
70. If your organization does not have a board portal, which statement below best explains your company's view on the technology platform?
We have considered the use of board portals but do not currently see a need for this technology We are currently considering the benefits of the use of board portals We will be introducing this technology in the near future 17% 13%
22% 56%
30%
16% 28% 35%
2011 (n=103)
35%
2011 (n=103)
33%
2011 (n=103)
We have not considered board 6% 9% portal technology
2011 (n=103)
We have considered the use of board portals but do not currently see a need for this technology We are currently considering the benefits of the use of board portals We will be introducing this technology in the near future We have not considered board portal technology
21% 42% 29% 8% 10% 10%
25%
24% 33% 32%
2011
35% 31%
2011
2011
2011
71. Would you assess the board's use of technology to be:
Increasing
70%
84%
75%
2011
No change
30%
16%
25%
2011
Increasing
79%
79%
79%
2011
No change
21%
21%
21%
2011
72. Do your directors engage in social media associated with your organization?
Directors engage in social media
0%
2011
85
Increasing
79%
79%
79%
2011
No change
21%
21%
21%
2011
72. Do your directors engage in social media associated with your organization?
Directors engage in social media Some directors engage in social media Directors do not engage in social media Don't know
0%
2011
5%
15% 7%
2011
57% 36% 28% 67%
41% 44%
2011
2011
Directors engage in social media Some directors engage in social media Directors do not engage in social media Don't know
0% 16%
2011
5% 7% 53%
2011
59% 36% 35% 58%
2011
32%
2011
73. Does your company have a social media policy?
Yes
52%
57%
70%
2011 (n=173)
Yes
66%
59%
61%
2011
86
Sustainability
Sustainability In recent years, companies have experienced pressure and interest from shareholders to establish or enhance corporate responsibility and sustainability (CRS) initiatives. Fifty-seven percent (57%) of large-cap companies have received a shareholder proposal related to CRS for 2011. Some respondents specified the types of CRS proposals received, such as political contributions, global warming/ climate change, human rights, equal employment opportunity, and animal welfare.
The boards of 41% of all public company respondents are involved in reviewing the sustainability efforts of the organization. This represents 24% of financial services and 46% of non-financial services companies, and 11%, 35%, and 63% of small-, mid-, and large-cap companies, respectively. With regard to whether a separate sustainability report is published, 4% of small-cap companies do so, as compared to 31% of mid-cap companies and 68% of large-cap companies.
74. Does your organization prepare and le a separate sustainability report?
Yes
4%
31%
68%
2011 (n=173)
No
70%
60%
23%
2011 (n=173)
Don't know
26%
8% 8%
2011 (n=173)
Yes
16%
47%
40%
2011
No
63%
45%
49%
2011
Don't know
21%
8% 11%
2011
74a. If yes, is this report available on your organization's website 4% of mid-cap respondents answered Dont know. 1% and 2% of all public and non-financial services companies, respectively, answered Dont know.
Yes
100%
96%
100%
2011 (n=69)
Yes
100%
98%
99%
2011
75. Has your organization received a shareholder proposal related to corporate social responsibility initiatives? 2011 Board Practices Report Design, Composition, and Function
87
Yes
100%
96%
100%
2011 (n=69)
Sustainability
Yes 100% 98% 99%
2011
75. Has your organization received a shareholder proposal related to corporate social responsibility initiatives? 100%, 89%, and 43% of small-, mid-, and large-cap respondents, respectively, answered No, and 1% of mid-cap respondents answered Dont know. 76%, 74%, and 75% of financial services, non-financial services, and all public companies, respectively, answered No. 1% of both all public and non-financial services companies answered Dont know.
Yes
10%
2011 (n=174)
57%
2011 (n=174)
Yes
24%
25%
25%
2011
76. Is the board and its committees involved with reviewing the sustainability effort maintained by the organization?
Yes
11%
35%
63%
2011 (n=172)
No
67%
59%
32%
2011 (n=172)
Don't know
22%
6% 5%
2011 (n=172)
Yes
24%
46%
41%
2011
No
62%
47%
51%
2011
Don't know
14% 7% 8%
2011
88
Culture/ setting tone at the top
Culture/ setting tone at the top The board plays a crucial role in helping to define and establish an organizations culture and the ethical environment it promotes. The boards role in overseeing company compliance programs was most recently affected by whistleblower rules put forth by the SEC, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules, which pertain to how employees report compliance violations, will likely cause companies to take further action to foster a culture of accountability. As of the date of this survey, it is too early to see any results. In fact, 62% of all public company respondents indicated that their boards have not asked management to take specific steps to enhance their culture. Almost none of the small-cap companies conduct cultural surveys, whereas 54% of mid-cap companies and 68% of large-cap companies do, either annually or in certain circumstances. Fewer financial services companies
conduct such surveys compared to non-financial services companies. Virtually all respondents stated that participants of the cultural survey include all employees (including management), and across all public companies, management reviews the survey findings with the board. Boards typically do not communicate directly to employees according to 86% of the companies surveyed. Of the 5% that do in certain circumstances, communications include: directors addressing several employee leadership groups or employee affinity groups; individual directors participating in several employee forums; and female directors speaking to groups focused on the advancement of women in the company.
77. Given the new SEC whistleblower rules (May 2011), has your board asked management to take specic steps to continue to enhance a culture of candid and open communication?
Yes
27%
28%
28%
2011 (n=169)
No
58%
63%
63%
2011 (n=169)
Don't know
15%
9% 9%
2011 (n=169)
Yes
29%
27%
28%
2011
No
61%
63%
62%
2011
Don't know
11% 10% 10%
2011
78. How often does your organization conduct cultural surveys?
Annually
15%
21%
40%
2011 (n=168) 2011 Board Practices Report Design, Composition, and Function 89
Only in certain
15%
33%
28%
2011 (n=168)
No
61%
63%
62%
2011

Don't know 11% 10% 10%
2011
78. How often does your organization conduct cultural surveys?
Annually
15%
21%
40%
2011 (n=168)
Only in certain circumstances We do not conduct cultural surveys
15%
33%
28%
2011 (n=168)
69%
46%
32%
2011 (n=168)
Annually
19%
29%
27%
2011
Only in certain circumstances We do not conduct cultural surveys
27%
29%
29%
2011
54%
42%
45%
2011
78a. If cultural surveys are conducted by your organization, which parties participate? (Select all that apply)
All employees (including management) All employees under the management level The board Not applicable 1%
36%
62%
70%
2011 (n=145)
2011 (n=145)
0% 2011 (n=145) 64% 36% 32%
2011 (n=145)
All employees (including management) All employees under the management level The board Not applicable 1% 1% 0%
49%
65%
61%
2011
2011 2011
51% 35% 39%
2011
90
78b. If cultural surveys are conducted by your organization, does management review the survey ndings with the board?
management) All employees under the management level The board Not applicable 1% 1% 0%
2011 2011
51% 35% 39%
2011
78b. If cultural surveys are conducted by your organization, does management review the survey ndings with the board?
Management reviews the survey findings with the board
23%
39%
36%
2011 (n=146)
Management reviews the survey findings with the board in 9% 18% 25% certain circumstances Management does not review the survey findings with the 5% 8% 2011 (n=146) board Not applicable 4% 64%
2011 (n=146)
38%
32%
2011 (n=146)
Management reviews the survey findings with the board Management reviews the survey findings with the board in certain circumstances Management does not review the survey findings with the board Not applicable
29% 20% 7% 5% 19%
38% 19%
36%
2011
2011
2011
51% 36% 40%
2011
79. How do employees receive communication from the board? (Select all that apply)
Through electronic communication Through verbal communications (e.g., live meetings, voicemails, etc.) The board does not provide communications to employees Only in certain circumstances 4% 11% 2011 (n=170) 5% 8% 11% 2011 (n=170) 5% 92% 6% 5% 81% 90%
2011 (n=170)
2011 (n=170)
Through electronic communication Through verbal communications (e.g., live meetings, voicemails, etc.) The board does not provide communications to employees Only in certain circumstances
8% 8% 8% 6% 8% 16%
2011 2011
81% 5% 5% 5%
87%
86%
2011
2011
Financial services (n=37) Non-nancial services (n=133) All public companies (n=170) 2011 Board Practices Report Design, Composition, and Function 91
80. Has your company established an anti-hedging policy that applies to directors?
communication Through verbal 2011 communications (e.g., live 16% meetings, voicemails, etc.) The board does not Culture/ setting tone at the top & Private sessions (Board access to management) provide communications 81% to employees 6% 8% Only in certain circumstances 5% 5% 5%
87%
86%
2011
2011
My company has established an anti-hedging policy that applies to directors My company has not established an anti-hedging policy that applies to directors We are considering the establishment of such a policy
68%
59%
70%
2011 (n=171)
16%
26%
18%
2011 (n=171)
16% 15%
12%
2011 (n=171)
My company has established an anti-hedging policy that applies to directors My company has not established an anti-hedging policy that applies to directors We are considering the establishment of such a policy
55%
67%
64%
2011
34%
18%
22%
2011
11% 15%
14%
2011
Private sessions (Board access to management)**

81. Do non-employee directors have direct access to management below the CEO level (not including boardroom presentations) without CEO approval?
100% Yes 91%
97%
97%
2011 (n=171)
97%
92%
2008
Yes
95%
98%
97%
2011
92
Non-public company survey results

This section of the Report is designated to cover the survey results of board practices specific to non-public companies. While many organizations in this category already voluntarily adopt the governance practices of public companies, this section will provide insight into current non-public company board practices being employed. Thirty-three participants were included in the non-public company sector, which was comprised of 12 nonprofit organizations, 19 private companies, and 2 partnerships. Results in this section of the Report have been refined to the survey questions most applicable to non-public companies. An n value has been provided for any question in which fewer than 33 participants responded. An asterisk represents any question where a participant was asked to provide a numerical or text response. These responses have been consolidated into categories or ranges. Key findings The 2008 report had 274 respondents, which included 16 nonprofit companies and 29 private companies. During the three-year period, there have been notable trends in the board practices of these companies as follows: 9% more private companies are using a skills matrix or similar tool to assess board composition. 26% more private companies are using written criteria to select directors. 20% more nonprofit organizations and 9% fewer private companies are using an executive search/ board director recruiting firm. 37% more nonprofit company board meetings are lasting 6 to 8 hours; 7% and 25% fewer nonprofit companies are meeting 1 to 2 hours and 3 to 5 hours, respectively. 46% more nonprofit organizations are sending board meeting materials between 5-10 business days in advance; 21% fewer are sending at most 5 days in advance, and 25% fewer nonprofit organizations are sending these materials more than 10 days in advance. 17% of nonprofit organizations now have limits on audit committee members serving on the audit committees of other companies; 7% more private companies have such limits. 19% more nonprofit organizations and 27% more private companies have a formal orientation program for new directors (beyond supplying a directors manual). 33% more nonprofit organizations evaluate the board annually, and 27% more nonprofit organizations now conduct board evaluations. 15% more in private companies that have a management disclosure committee.
50% more nonprofit organizations and 27% more private companies use a board portal to distribute board meeting materials; 27% fewer nonprofit organizations distribute these materials through hard copies; 24% fewer private 19% more nonprofit organizations and 14% more private companies send board meeting materials via unsecured companies are assigning responsibility for appointing email, and 46% fewer private companies distribute this committee members and chairs to the board chair/ material at board meetings. lead director; 17% more in nonprofit organizations are assigning the responsibility to the full board. 38% fewer nonprofit organizations and 8% more private companies have a policy to rotate committee chairs.
Additional information Additional information and resources on the topics discussed in the table on the following pages are available at the Deloitte Center for Corporate Governance website at www.corpgov.deloitte.com.
All non-public companies (n=33)
Private and partnership (n=21)
Question Organizational criteria 1 What is your organizations industry? Agriculture or mining Banking or finance Energy Healthcare or pharmaceutical Insurance Manufacturing industrial Nonprofit or public admin Professional services Real estate or construction Retail/Wholesale Technology (including software) Telecommunications 2 Please specify your company type: Nonprofit Partnership Privately held Board practices Board selection, recruitment and composition 3 Does your organization use a skills matrix or similar tool to periodically assess board composition and fill gaps when selecting new directors? Does your organization use written criteria in director selection? Does your organization use an executive search/ board director recruiting firm to assist in the recruitment of board directors? Does your organization provide a mechanism for shareholders to nominate candidates to the board?
3% 18% 3% 12% 21% 6% 15% 3% 3% 6% 3% 6% 36% 6% 58%
0% 8% 8% 25% 17% 0% 42% 0% 0% 0% 0% 0%
5% 24% 0% 5% 24% 10% 0% 5% 5% 10% 5% 10%
Yes
No
N/A
45%
67%
Yes
33%
55%
33%
No
67%
N/A
61%
67%
Yes
57%
39%
33%
No
43%
N/A
33%
33%
Yes
33%
67%
67%
No
67%
N/A
33%
25%
Yes
38%
12%
0%
No
19%
55%
75%
N/A
7 7a*
Do you have a mandatory retirement policy 42% 42% 43% 55% 58% 52% 3% for directors? If so, at what age is retirement required? (n=13) (n=5) (n=8) 70 31% 40% 25% 71 0% 0% 0% 72 38% 40% 38% 73 8% 0% 13% 74 0% 0% 0% 75 23% 20% 25% Independent chairman Is the independent board chairman also the chairman of the nominating and governance committee? The independent board chairman is also the chairman of the nominating and governance committee No, but our policy would not restrict the same individual from holding both positions Our policy does not permit the same individual from holding both positions Not applicable we do not have an independent chairman 6% 36% 6% 52% 8% 50% 8% 33% 5% 29% 5% 62%
94
Private and partnership (n=21) 43% 5%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
Question 9 Who is responsible for the periodic evaluation and development of the independent chairman? The nominating and governance committee The full board Another committee No formal evaluation is performed Not applicable we do not have an Independent chairman 9a* If another committee, please specify: Executive compensation committee 10
(n=32) (n=11) 16% 25% 3% 9% 47% 27% 36% 9% 9% 18% 10% 19% 0% 10% 62%
How often is periodic evaluation of the independent chairman performed? Annually 30% 42% 24% Periodically, as needed 9% 17% 5% No formal evaluation is performed 12% 17% 10% Not applicable we do not have an 48% 25% 62% Independent chairman 11 Does your policy specify a rotation policy or term limit for the independent chair? Rotation policy 3% 0% 5% Term limit 15% 25% 10% Neither 33% 50% 24% Not applicable we do not have an indepen48% 25% 62% dent chairman Board meetings and materials 12 Does your company permit shareholders to (n=27) (n=8) (n=19) call special shareholder meetings? Permitted without any restriction 26% 13% 32% Permitted but with minimum ownership 22% 13% 26% threshold percentages Not permitted 52% 75% 42% 12a* If permitted with a minimum ownership threshold, please specify the threshold percentage (e.g. 10, 15, 20, 25%): 10% 20% 100% 0% 25% 40% 0% 50% Depends on situation 20% 0% 25% Majority of shares 20% 0% 25% 13 How many hours does a typical board meeting last? (Do not count time spent on committee meetings on a board meeting day). 1-2 hours 15% 8% 19% 3-5 hours 39% 25% 48% 6-8 hours 33% 50% 24% 9-10 hours 3% 0% 5% More than 10 hours 9% 17% 5% 14 How far in advance are board meeting materials provided to board members? At most five business days before meeting 30% 17% 38% Between five to ten business days before 67% 83% 57% meeting More than ten business days before meeting 3% 0% 5% Materials are not distributed prior to board 0% 0% 0% meetings
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
95
Question 15 What is the most common form of board meetings for your organization? Live, face-to-face meetings 94% 100% 90% Live, face-to-face meetings with some directors attending via web-conference or video 0% 0% 0% conference Live, face-to-face meetings with some directors 3% 0% 5% attending via telephone Tele-conference calls 3% 0% 5% 16 How often do you hold board meetings outside of the country in which your (n=32) (n=20) company is headquartered? Frequently (five or more times a year) 0% 0% 0% Sometimes (two to four times a year) 3% 0% 5% Rarely (once a year) 9% 0% 15% We do not hold board meetings outside of the 88% 100% 80% country in which our company is headquartered
Yes
No
N/A
17 18
Do you make company owned aircraft available to directors for travel to meetings?
9%
8%
10%
30%
42%
24%
61%
50%
What amount of reimbursement does your company provide to directors for travel to meetings? Full reimbursement 82% 83% 81% Partial reimbursement 0% 0% 0% None 18% 17% 19% Committee structures and roles 19 How many standing committees does your board have? (n=33) Two or less 15% 17% 14% Three to five 58% 25% 76% Five or more 27% 58% 10% 20 SEE PAGES 97 & 98 21 Which of the following has the primary responsibility for appointing committee members and chairs? Full board 58% 42% 67% Nominating/ corporate governance committee 18% 33% 10% Board chair/ lead director 15% 25% 10% Other 9% 0% 14% 21a* If Other, please specify: Executive committee Nominating/ corporate governance committee makes recommendations; board approves
Yes
No
N/A
22
Does your board have a policy to rotate committee chairs? Does your board have a policy to rotate committee membership? Does your board have limits on audit committee members being able to participate on other organizations audit committees?
18%
17%
Yes
19%
82%
83%
No
81%
N/A
23
24%
17%
Yes
29%
76%
83%
No
71%
N/A
24
15%
17%
14%
85%
83%
86%
96
Private and partnership (n=21) 67%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
20
Please complete the following table with regard to the specific committee practices of your board
Note: For each committee in the following tables, the count of respondents (n value) and this percentage of the total count of respondents for the committee is provided as n value/ percentage.
Private and partnership
Nonprofit
Number of members Committee 1-4 Audit committee 5-9 10 Other 1-4 Compensation committee 5-9 10 Other 1-4 Nominating / corporate governance 5-9 10 Other 1-4 Executive committee 5-9 10 Other 1-4 Science & technology 5-9 10 Other 1-4 Risk committee 5-9 10 Other 1-4 Strategy committee 5-9 10 Other 1-4 Environment committee 5-9 10 Other 1-4 Corporate responsibility 5-9 10 Other 1-4 Disclosure 5-9 10 Other
15 / 48% 16 / 52% 0 / 0% 0 / 0% 14 / 48% 15 / 52% 0 / 0% 0 / 0% 11 / 48% 12 / 52% 0 / 0% 0 / 0% 3 / 20% 11 / 73% 1 / 0% 0 / 0% 1 / 50% 1 / 50% 0 / 0% 0 / 0% 0 / 0% 4 / 100% 0 / 0% 0 / 0% 0 / 0% 3 / 75% 1 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 2 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0%
4 / 36% 7 / 64% 0 / 0% 0 / 0% 2 / 22% 7 / 78% 0 / 0% 0 / 0% 3 / 30% 7 / 70% 0 / 0% 0 / 0% 0 / 0% 5 / 83% 1 / 17% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 2 / 67% 1 / 33% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0%
11 / 55% 9 / 45% 0 / 0% 0 / 0% 12 / 60% 8 / 40% 0 / 0% 0 / 0% 8 / 62% 5 / 39% 0 / 0% 0 / 0% 3 / 33% 6 / 67% 0 / 0% 0 / 0% 1 / 50% 1 / 50% 0 / 0% 0 / 0% 0 / 0% 3 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0%
1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other 1-6 7-11 12 Other
24 / 80% 4 / 13% 2 / 0% 0 / 0% 27 / 100% 0 / 0% 0 / 0% 0 / 0% 20 / 91% 0 / 0% 2 / 0% 0 / 0% 8 / 73% 1 / 9% 2 / 0% 0 / 0% 2 / 100% 0 / 0% 0 / 0% 0 / 0% 3 / 75% 0 / 0% 1 / 0% 0 / 0% 4 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 2 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0%
8 / 73% 2 / 18% 1 / 9% 0 / 0% 9 / 100% 0/0% 0/0% 0 / 0% 8 / 80% 1 / 10% 1/ 10% 0 / 0% 4 / 67% 1 / 33% 0/ 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 3 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0%
Nonprofit
Meeting frequency in a year
16 / 80% 2 / 10% 1 / 5% 1 / 5% 18 / 90% 0 / 0% 0 / 0% 2 / 10% 12 / 92% 0 / 0% 0 /0% 1 / 8% 6 / 75% 2 / 25% 0 / 0% 0 / 0% 2 / 100% 0 / 0% 0 / 0% 0 / 0% 2 / 67% 0 / 0% 1 / 33% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0%
All non-public companies
All non-public companies
97
Nonprofit
Committee
0.5-1.5 Audit committee 2-3 4 Other 0.5-1.5 Compensation committee 2-3 4 Other Nominating / corporate governance 0.5-1.5 2-3 4 Other 0.5-1.5 Executive committee 2-3 4 Other 0.5-1.5 Science & technology 2-3 4 Other 0.5-1.5 Risk committee 2-3 4 Other 0.5-1.5 Strategy committee 2-3 4 Other 0.5-1.5 Environment committee 2-3 4 Other 0.5-1.5 Corporate responsibility 2-3 4 Other 0.5-1.5 Disclosure 2-3 4 Other
6 / 19% 19 / 61% 6 / 0% 0 / 0% 11 / 38% 13 /45% 5 / 0% 0 / 0% 12 / 52% 9 / 39% 2 / 0% 0 / 0% 8 / 73% 3 / 27% 0 / 0% 0 / 0% 1, 50% 1 / 50% 0 / 0% 0 / 0% 0 / 0% 4 / 100% 0 / 0% 0 / 0% 1 / 25% 3 / 75% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 2 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0%
2 / 18% 6 / 55% 3 / 27% 0 / 0% 3 / 33% 5 / 56% 1 / 11% 0 / 0% 5 / 50% 5 / 50% 0 / 0% 0 / 0% 3 / 60% 2 / 40% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 1 / 33% 2 / 67% 0/ 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0%
4 / 20% 13 / 65% 3 /15% 0 / 0% 7 / 35% 9 / 45% 4 / 20% 0 / 0% 7 / 54% 4 / 31% 1 / 8% 0 / 0% 5 / 83% 1 / 17% 0 /0% 0 / 0% 1 / 50% 1 / 50% 0 / 0% 0 / 0% 0 / 0% 3 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 0 / 0%
Yes No
27 / 90% 3 / 10%
Nonprofit
Auditor attendance in meetings (Y/N)
Yes No
0 / 0% 27 / 100%
19 / 100%
Yes No
0 / 0% 21 / 100%
12 / 100%
Yes No
0 / 0% 14 / 100%
Yes No
0 / 0% 2 / 100%
Yes No
1 / 33% 2 / 67%
Yes No
0 / 0% 4 / 100%
Yes No
0 / 0% 0 / 0%
Yes No
0 / 0% 1 / 100%
Yes No
0 / 0% 1 / 100%
98
Private and partnership 19 / 95% 1 / 5% 0 / 0% 0 / 0% 0 / 0% 8 / 100% 0 / 0% 2 / 100% 1 / 33% 2 / 67% 0 / 0% 1 / 100% 0 / 0% 0 / 0% 0 / 0% 1 / 100% 0 / 0% 1 / 100%
All nonpublic companies
All nonpublic companies
Average length of meetings (hrs)
Question 24a* If yes, please specify the limit: 2 3 Directors should hold participation in other boards to a level that does not adversely impact their ability to serve the companys board and avoid accepting director responsibilities that would create the opportunity for/appearance of a conflict. 25
(n=5) 40% 40%
(n=2) 0% 50%
(n=3) 67% 33%
20%
50%
Audit committee How often does the audit committee meet annually via: In-person meetings (n=31) (n=11) (n=20) 1-4 81% 55% 95% 5-9 19% 45% 5% 10-14 0% 0% 0% By video or web conference 1-4 5-9 10-14 (n=1) 100% 0% 0% (n=1) 100% 0% 0%
0% 0% 0%
26
28
29
30
By tele-conference calls (n=20) (n=6) (n=14) 1-4 95% 83% 100% 5-9 5% 17% 0% 10-14 0% 0% 0% How has the frequency of audit committee meetings changed since last year? Increased substantially 3% 8% 0% Increased slightly 12% 25% 5% Decreased 0% 0% 0% No change 85% 67% 95% Does your organizations audit committee hold a separate meeting to review the (n=19) (n=6) (n=13) earnings release vs. quarterly reviews or are they combined? Separate meetings 16% 17% 15% Combined meetings 84% 83% 85% How often do external auditors attend your companys audit committee meetings? Frequently (all or almost all audit committee 64% 67% 62% meetings) Sometimes (two to three audit committee 21% 17% 24% meetings a year) Rarely (one audit committee meeting a year) 12% 8% 14% Never 3% 8% 0% Dont know 0% 0% 0% How often does your audit committee (n=32) (n=11) meet separately with management? Frequently (all or almost all audit committee 59% 45% 67% meetings) Sometimes (two to three audit committee 28% 27% 29% meetings a year) Rarely (one audit committee meeting a year) 3% 9% 0% Never 9% 18% 5% Dont know 0% 0% 0%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
99
Question 31 Which members of management meet separately with the audit committee? (Check all that apply) Head of internal audit General counsel Chief executive officer Chief financial officer Chief compliance officer Other 31a* If Other, please specify: Controller Controller/ principal accounting officer Secretary and treasurer 32 How often does your companys audit committee engage specialists for specific matters on their agenda? Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never Dont know How often does the audit committee receive reports on internal tips from a compliance hotline? Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never Dont know Board orientation and training Does your organization have a formal orientation program for new directors (beyond supplying a directors manual)? If yes, please check the orientation programs sponsored by your organization for directors: (Choose all that apply) Live, in-house session led by an individual serving on the board and/or a staff member of the organization Live training by a third party Internet-based training Does your company train directors on: (Choose all that apply) Anti-corruption policies (e.g. FCPA, UK Antibribery Act) Insider trading Political contributions Company policies Other regulatory issues related to your business such as privacy, etc. Other formal training
(n=29) (n=10) (n=19) 72% 45% 38% 66% 31% 14% 80% 70% 40% 70% 50% 20% 68% 32% 37% 63% 21% 11%

5% 20% 65% 10% 0%
(n=31) (n=11) (n=20) 3% 16% 68% 13% 0% 0% 9% 73% 18% 0%
33
(n=31) (n=11) (n=20) 29% 26% 23% 16% 6% 45% 9% 18% 9% 18%
Yes
20% 35% 25% 20% 0%

No N/A
34
59% 82% (n=32) (n=11) (n=19)
48%
41%
18%
52%
34a
(n=9) (n=10)
95% 0% 5%
100% 11% 11%
90% 0% 10%
35
(n=26) (n=11) (n=15) 27% 12% 15% 88% 65% 27% 9% 9% 18% 82% 73% 36% 40% 13% 13% 93% 60% 20%
100
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
Question 35a* If Other, please specify: Annual compliance training Background on the company, board practices, introductions to executives Basel II Financial overview
Reinsurance, investment management, marketing 36 Which of the following best describes your boards director education program?: (Choose all that apply) Provided in-house by management 64% 67% 62% Provided in-house by a third party 9% 0% 14% Directors are reimbursed for public forums or 30% 58% 14% peer group sessions attended The full board collectively attends a single public 0% 0% 0% forum Our board does not have a formal director 24% 8% 33% education program Other 6% 17% 0% 36a* If Other, please specify: Each board member in a three year period of time is encouraged to participate in educational programs relevant to the directors committee assignment and/or recommended best governance practices Provided by corporate secretary
How do your directors learn about director education programs? (Choose all that apply) From the corporate secretary or management From other directors From third party mailings Other 37a* If Other, please specify: Other response pertained to payment of director memberships to a governance organization. Board evaluations 38 How are your directors evaluated? (Choose all that apply) Self-evaluation Individual peer-evaluation led by corporate secretary or other in-house personnel Individual peer-evaluation led by a third party facilitator Our organization does not have a formal board performance evaluation process Other 38a* If Other, please specify: Board evaluation - evaluation of boards practices Chair of the governance committee meets with all committee chairs and evaluates directors performance and participation Full board self evaluation
37
(n=29) 90% 19% 24% 39% 100% 33% 8% 0%
(n=17) 82% 24% 35% 6%
(n=32) 50% 16% 13% 34% 13% 58% 25% 0% 25% 25% (n=20) 45% 10% 20% 40% 5%

Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
Question 39 To whom does the evaluation pertain? (Select all that apply) Individual board members 33% 42% Board committees 36% 33% Full board as a whole 55% 67% Not applicable 36% 25%
Yes
29% 38% 48% 43%

No N/A
40 41
Have you had a third party evaluate the boards performance? How often is the board evaluated? More frequently than once a year Once a year Not evaluated
18% 0% 55% 33%
25% 0% 58% 17%
14% 0% 52% 43%
52%
58%
48%
30%
17%
42
43
Strategy How often are strategic objectives discussed with the board? Annually 30% 25% 33% Quarterly 30% 33% 29% At every meeting 39% 42% 38% Other 0% 0% How often does your board participate in an (n=20) off-site strategy meeting with management? (n=32) More frequently than once a year 9% 17% 5% Less frequently than once a year 22% 8% 30% Once a year 44% 58% 35% We do not hold off-site strategy meetings with 25% 17% 30% management How is strategy set at your organization? Management develops strategy and the board 94% 92% 95% advises, challenges and approves The board and management develop strategy 6% 8% 5% together The board develops the strategy and manage0% 0% 0% ment approves and executes Other 0% 0% 0% Is the level of board involvement in setting (n=32) (n=11) strategy increasing or decreasing? Increasing 56% 55% 57% Decreasing 0% 0% 0% Remains the same 44% 45% 43% Risk oversight, disclosure committee, and political contributions** How does your board assign risk oversight for the organizations risk management program? (Select all that apply) We have a board risk committee The audit committee has primary responsibility for risk oversight Risk oversight responsibilities are spread across all board committees The full board is responsible for risk oversight We have not considered board responsibility for risk oversight Other 9% 61% 18% 36% 3% 15% 8% 67% 17% 17% 8% 25% 10% 57% 19% 48% 0% 10%
44
45
46
102
Private and partnership (n=21) 38%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
Question 46a* If Other, please specify: Committees are also charged with risk oversight for the risks within their committee charters Currently evaluating Executive committee is responsible for risk oversight Internal auditor manages/designs risk management 47 Does your organization have a management disclosure committee as recommended by the SEC for public companies?

Yes No N/A
21%
8%
Yes
29%
9%
8%
No
10%
70%
83%
N/A
47a
47b
48
49
50
51
52
If yes, does the management disclosure 14% 0% 17% committee report to either the board or a 86% 100% 83% (n=7) (n=1) (n=6) board committee? If yes, how often? (n=1) (n=1) Monthly Quarterly Semi-annually Annually No determined frequency; only when needed 100% 100% Does the company align risk oversight/ risk management with the companys strategy? Yes 79% 75% 81% No 9% 17% 5% Dont Know 12% 8% 14% Does your companys board oversee political contributions and donations made by the company or oversee the political (n=31) (n=11) (n=20) action committees (or similar) of the company? Yes 32% 36% 30% No 55% 45% 60% Dont Know 13% 18% 10% Has your company imposed any limitations, or reporting obligations, to the (n=31) (n=19) company on political contributions by director? Yes 26% 33% 21% No 65% 67% 63% Dont Know 10% 0% 16% CEO succession planning How often does the full board review CEO (n=31) (n=11) (n=20) succession plans? More than once a year 13% 9% 15% Once a year 45% 36% 50% Less than once a year (e.g. every two years) 6% 9% 5% Only when a change in circumstance requires 22% 18% 25% Never 13% 27% 5% Who has the primary responsibility over the CEO succession planning process? Entire board 40% 17% 48% Compensation committee 23% 25% 24% Nominating/ corporate governance committee 10% 33% 0% Independent directors 3% 0% 5% CEO 13% 8% 14% Other 10% 17% 10%
0%
0%
Private and partnership (n=21) 62% 0%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
103
Question 52a* If Other, please specify: As a partnership, the majority partners chairman decides Human resource and governance committee CEO performance evaluation How often does the full board review the CEOs performance? More than once a year Once a year Less than once a year (e.g. every two years) Only when a change in circumstance requires Never 54 Who has the lead responsibility over the CEO performance evaluation process? Entire board Compensation committee Nominating/ corporate governance committee Independent chair or lead director Other 54a* If Other, please specify: Executive committee 53 Human resource and governance committee Directors and officers liability insurance

(n=32) 3% 81% 0% 6% 9% (n=31) 16% 48% 13% 10% 13% 8% 42% 25% 8% 17% 8% 83% 0% 0% 8% (n=20) 0% 80% 0% 10% 10% (n=19) 21% 53% 5% 11% 11%
Yes
No N/A
65
Does your organization have directors and officers (D&O) liability insurance?
94%
92%
Yes
95%
6%
8%
No
5%
N/A
65a
If yes, does the D&O insurance cover more than designated directors and officers of the 31% organization? (n=29) 65a* Please list who else is covered under the D&O policy: Representative responses include: All employees Employees serving on the board of the companys subsidiaries, portfolio companies, or affiliates Representative employees
22%
35%
69%
78%
65%
66
66a
67
104
Retirement plan committee (internal); others with approval of board. Do any of your directors own individual director liability insurance? Yes 3% 0% 5% No 21% 33% 14% Dont know 76% 67% 81% If yes, which statement best describes how the individual director liability insurance (n=1) (n=0) (n=1) policies gets funded? The director funds his/ her own insurance policy 0% 0% 0% The company funds his/ her own insurance policy 100% 0% 100% Dont know 0% 0% 0% Please indicate how your liability insurance policy limits have changed in the past 12 (n=32) (n=20) months: Increased 16% 8% 20% Decreased 0% 0% 0% No change 59% 67% 55% Dont know 22% 17% 25% Not applicable 3% 8% 0%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
Question Boards use of technology 68 What level best describes your boards involvement with information technology? No involvement besides basic email 15% 8% 19% communications Aware of the benefits technology can provide 42% 50% 38% Frequently engaged and up-to-date on latest 42% 42% 43% technology applications Dont know 0% 0% 0% 69 Please specify how your organization distributes board materials. (Select all that apply) Through unsecured e-mail, e.g. Internet 18% 33% 10% Through secure e-mail, e.g. company intranet 27% 25% 29% Through an internal or external board portal 48% 50% 48% Through mailing of hardcopies 73% 67% 76% In-person at board meetings 36% 42% 33% Using an application for the iPad or other tablet 24% 33% 19% device 70 If your organization does not have a board portal, which statement below best (n=21) (n=8) (n=13) explains your companys view on the technology platform? We have considered the use of board portals but 14% 0% 23% do not currently see a need for this technology We are currently considering the benefits of the 38% 50% 31% use of board portals We will be introducing this technology in the 29% 38% 23% near future We have not considered board portal technology 19% 13% 23% 71 Would you assess the boards use of technology to be: Increasing 79% 75% 81% Decreasing 0% 0% 0% No change 21% 25% 19% 72 Do your directors engage in social media associated with your organization? Directors engage in social media 6% 8% 5% Some directors engage in social media 12% 17% 10% Directors do not engage in social media 55% 50% 57% Dont know 27% 25% 29%
Yes No
N/A
73
74
74a
76
Does your company have a social media 63% 67% 60% 38% policy? (n=32) (n=20) Sustainability Does your organization prepare and file a separate sustainability report? Yes 15% 8% 19% No 64% 58% 67% Dont know 21% 33% 14% If yes, is this report available on your organi(n=5) (n=1) (n=4) zations website Yes 60% 100% 50% No 20% 0% 25% Dont know 20% 0% 25% Is the board and its committees involved with reviewing the sustainability effort (n=30) (n=9) maintained by the organization? Yes 20% 11% 24% No 67% 67% 67% Dont know 13% 22% 10%
33%
40%
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
105
Question Culture/ setting the tone at the top 77 Given the new SEC whistleblower rules (May 2011), has your board asked management to take specific steps to continue (n=29) (n=9) to enhance a culture of candid and open communication? Yes 41% 33% No 55% 56% Dont know 3% 11% 78 How often does your organization conduct cultural surveys? Annually 24% 25% Only in certain circumstances 27% 17% We do not conduct cultural surveys 48% 58% 78a If cultural surveys are conducted by your organization, which parties participate? (n=32) (Select all that apply) All employees (including management) 53% 42% All employees under the management level 0% 0% The board 0% 0% Not applicable 47% 58% 78b If cultural surveys are conducted by your organization, does management review the (n=31) survey findings with the board? Management reviews the survey findings with 29% 33% the board Management reviews the survey findings with 16% 8% the board in certain circumstances Management does not review the survey findings 6% 0% with the board Not applicable 48% 58% 79 How do employees receive communication (n=32) from the board? (Select all that apply) Through electronic communication 16% 25% Through verbal communications (e.g., live 6% 8% meetings, voicemails, etc.) The board does not provide communications to 72% 50% employees Only in certain circumstances 16% 25% 79a* If certain circumstances apply, please specify CEO is chairman of the board Only when a major issue arises such as the departure of a CEO Through chairman and CEO communications Typically an email communication that is forwarded by the CEO or corporate secretary - but it is rare Private sessions (Board access to management)** 81 Do non-employee directors have direct access to management below the CEO level 94% (not including boardroom presentations) (n=31) without CEO approval?
(n=20)
45% 55% 0% 24% 33% 43% (n=20) 60% 0% 0% 40% (n=19) 26% 21% 11% 42% (n=20) 10% 5% 85% 10%

Yes No N/A
100%
90% (n=20)
6%
0%
10%
106
Nonprofit (n=12)
Nonprofit (n=12)
Nonprofit (n=12)
Director qualifications survey results

The degree to which a board has diverse experience and demographics can affect how effectively it functions and provides oversight to the company. The SECs enhanced proxy disclosures are shining a spotlight on how boards approach their composition. These rules, which became effective February 2010, require companies to explain why they have nominated certain individuals to the board, why existing directors are qualified to serve on the board, and how diversity is considered in the nomination process. This section of the Report takes a look at the composition of directors serving on the boards of the survey respondents with respect to age, gender, and ethnicity, in addition to Leadership qualifications, Technical skills, and Professional experience. For each of the leadership qualifications, technical skills, and professional experience categories, results are broken down by financial services and non-financial services industries, as well as by board sizes of less than or equal to 10, and greater than 10. Results relating to age, gender, and ethnicity categories have been analyzed in terms of market capitalization and industry, and these results specifically apply to the public company participants. The total number of directors in this analysis (leadership qualifications, technical skills, and professional experience) sections is 1,505. The percentages in the categories do not sum to 100% as a director can possess more than one of the skills present. The total number of directors referenced in the gender, age and ethnicity sections varied, and as such, an n value has been provided to show the actual number of respondents in these categories. As this is the first year that a director qualifications section has been included, no comparative data is available.
Additional information To learn more about director qualifications, read the Deloitte Center for Corporate Governance publication Creating the board your company deserves", available at www.corpgov.deloitte.com.
Creating the board your company deserves The art and science to choosing directors
107
Leadership qualifications With respect to leadership qualifications among the participants boards, two types of attributes were studied: the degree to which directors had diversity of thought perspective and the experience related to ethics and compliance. Both can be viewed as critical for boards having an open mindset and leading to thorough and productive boardroom discussions. Further, directors play a role in setting tone at the top and much of this is done though the oversight of an ethics and compliance program. While no significant differences existed with board size, there was at least a 21% difference between the financial services and non-financial services
companies with respect to both categories, with non-financial services placing emphasis on both categories. Some participants noted specific other leadership skills possessed by the directors on their boards, which included having an independent opinion, the ability to analyze organizational and strategic challenges, and being inquisitive and knowledgeable about business.
Leadership Qualications*
Diversity of thought perspective Ethics and compliance
26%
31%
22%
30%
Other 2% 3%
Board size 10 Board Size > 10 (n=1,505)
Diversity of thought perspective Ethics and compliance
18%
39%
15%
37%
Other
4%
1%
Financial services industry Non-nancial services industry (n=1,505)
*An answer choice in the Leadership qualifications chart has been modified from the original survey questionnaire. The word "and" has been replaced with "of" where it reads "Diversity and thought perspective". We believe survey participants Technical Qualications understood it as such.
Operations International Business Exposure Mergers and Acquisitions Industry (similar to respective company)
6% 5% 4% 6% 8% 6% 18% 23% 21% 18% 27%
30%
108
Risk Management Corporate Governance
Ethics and compliance
22%
30%
Other 2% 3%
Board size 10 Board Size > 10 (n=1,505)
Technical skills The purpose of the technical qualifications section was to gain perspective as to the types of expertise and training that could be found on the boards of the participants companies. There was little distinction between boards comprised of 10 or fewer directors and those comprised of more than 10 directors. Analysis from an industry perspective shows a wider variation across most technical qualifications. Compared to the financial services companies, more non-financial services boards had directors with skills in the areas of operations, international business exposure, mergers and acquisitions, industry experience (relevant to the respective company), risk
Technical skills 17%
management, and corporate governance. It is not surprising that these are prevalent skills given a current business environment that is facing heightened mergers and acquisitions activity, increased focus on global expansion, and greater exposure to enterprise risks. Some of the common responses in the Other category included accounting, MBA/financial expertise, manufacturing experience, and management.
16%
14% 14%
15% 13% 9% 8% 9% 7% 7% 8% 7% 6% 5% 6% 6% 5% 6% 4% 3% 6% 5% 4% 4% 5% 4% 5% 4% 4% 3% 5% 3% 3% 3% 3% 2% 2% 2% 2% 1% 2% 1% 2%
19% 16% 13% 13% 11% 11%
Board size > 10 Board size 10 (n=1,505)
30%
27%
23% 21% 18% 18% 6% 8% 6%
3% 13% 13% 10% 4% 5% 3% 10% 3% 8% 3% 8% 2% 8% 2% 7% 2% 7% 1% 8% 2% 7% 3% 5% 4% 4% 1% 5% 2% 4% 2% 2% 2% 1% 2% 1%
6%
5%
4%
1% 3%
Non-nancial services industry Financial services industry (n=1,505) 2011 Board Practices Report Design, Composition, and Function 109
Non-nancial services industry Financial services industry (n=1,505)
Professional experience Results in this section provide insight into the various types of career and work experience among the boards of directors of survey participants. The most common types of professional experience were outside public and nonprofit board service, strategic planning, CEO experience, and audit and compensation committee service. Compared to smaller boards, larger boards tended to have more external directors with outside nonprofit board service, CEO experience, finance committee experience, and community access and affiliation. There was much more discrepancy between the financial services and non-financial services industries. The most common qualification in this category was
outside public board service (37%) and strategic planning (33%) for nonfinancial services companies, and outside nonprofit board service (11%) and strategic planning (10%) for financial services companies. The common Other responses received in this section were broad business experience, executive experience, high-level managerial experience, and financial oversight.
Professional experience
20%
24%
25%
20%
17%
16%
17%
15% 13%
13% 10% 13% 9%
20%
23%
4% 9%
3% 9%
17%
17%
15%
16%
14%
3% 7%
4% 4%
4% 4%
3% 4%
1% 5%
4% 2% 2% <1%
2% 1%
1% 1%
<1% 1%
<1% 1%
<1% <1%
Board size > 10 Board size 10 (n=1,505)
37%
33%
31%
30%
25%
25%
24%
21% 7%
19% 7%
13% 6%
3% 10% 6% 6%
3% 7%
7%
10%
11%
1% 7%
5% 3%
7%
7%
7%
7%
1% 6%
4% 2%
4%
4%
2% 1%
1% 1%
1% <1%
1% <1% 1% <1%
Non-nancial services industry Financial services industry 110 (n=1,505)
Ethnicity, gender, and age A directors ethnicity, gender, and age could have an impact on a boards composition similar to the effect of the directors technical and professional expertise. Directors with differing ethnicity, gender, and age bring about a unique experience and perspective to the boardroom. Currently, white males in the age ranges of 51 to 60 and 61 to 70 represented 18% and 28%, respectively, of all directors. There is an indication that this may be changing. Increasingly, boards are adding more diversity, whether of ethnicity, gender, or age. According to survey results, non-white board members represented about 17% of all directors, and women represented 19%. With respect to age, directors between 61 to 70 years old made up 48% of all boards, followed by 35% in the 51 to 60 range. Age is also a changing board demographic. While some boards appear to be tapping into the knowledge and insight of Generation Xers, it nevertheless appears that, on average, board members are aged 51 or older.
Ethnicity
3% 7% 3% 1% 4% <1%
White Asian Black Two or more races American Indian or Native American Hispanic or Latino Native Hawaiin or other Pacic Islander (n=1,330)
83%
White Asian Black Two or more races American Indian or Native American Hispanic or Latino Native Hawaiian or other Pacific Islander 1% 4% 3%
91%
80%
83%
5% 6% 9% 2% 4% 1%
1% 2% 3% 4% 0%
White Asian Black Two or more races American Indian or Native American Hispanic or Latino Native Hawaiian or other Pacific Islander
84% 2% 3% 3% 7% 7% 7% 4% 2% 3% 1% 1% 2% 4% 4% 0%
83%
83%
Financial services (n=253) Non-nancial services (n=884) All public companies (n=1,137)
111
Gender
19%
Male Female (n=1,291)

81%
Male
85%
82%
80%
Female
15% 18%
20%
Male
80%
82%
82%
Female
20%
18%
18%
Age 0% 1%
10%
6%
35%
112
48%
Age range (23-30) Age range (31-40) Age range (41-50) Age range (51-60) Age range (61-70)
Age 0% 1%
10%
6%
35%
Age range (23-30) Age range (31-40) Age range (41-50) Age range (51-60) Age range (61-70) Age range (71+) (n=1,267)
48%
Age range (23-30) Age range (31-40) Age range (41-50) Age range (51-60) Age range (61-70) Age range (71+)
0% 1% 1% 7% 6% 6% 37% 42% 13% 9% 9% 42% 43% 28% 56%
0% 1% 1% 7% 6% 6% 35% 46% 11% 9% 10% 37% 48% 36% 48%
113
Appendix A Comparison table of prior year survey results

This table presents results to the Yes and No questions that were asked in prior surveys. Blank areas, where a percentage is not provided, indicates a question that was not asked for that particular year. 2008 Board practices Written criteria for use in director selection Skills matrix or other method to periodically assess board composition and fill gaps when selecting new directors Mandatory retirement age for directors All directors elected annually Policy requiring attendance of nonemployee directors at annual meeting of shareholders Chairman and CEO positions split (as policy, not just transition situation) Lead outside director (formally designated; more than informal leadership) Materials sent <5 business days before meeting Materials sent 5-10 business days before meeting Materials sent >10 business days before meeting Are board materials distributed electronically through e-mail? Are board materials distributed electronically through secure Intranet? Are board materials distributed as print copies? Does your organization distribute board materials through an externally hosted board portal? Are materials distributed in person at board meetings? Non-employee directors have direct access to management below CEO level (more than boardroom presentations) without CEO approval Formal orientation program for new directors (more than supplying a directors manual) Does your organization use an outside executive search/ board director recruiting firm to assist in the recruitment of board directors? Yes 65% 49% 55% 49% 60% No 35% 51% 45% 51% 24% 15% N/A 2005 Yes 72% 48% 67% 43% 47% No 28% 52% 33% 57% 53% 2002 Yes 37% 39% 54% No 63% 61% 46% 1999 Yes 35% 21% 57% No 65% 79% 43%
49% 49% 57% 37% 5% 34% 18% 88%
51% 51%
41%
59%
23% 13%
77% 87% 51% 31% 92%
17% 10%
83% 90%
60% 37% 3% 66% 82% 12% 47% 9% 97%
40% 63% 97% 53% 91% 3%
49% 69% 8%
15%
85%
72%
28%
93%
7%
83%
17%
60%
40%
37%
63%
40%
60%
50%
50%
114
2008 Board practices Policy to rotate chair Policy to rotate committee membership Does your board have limits on audit committee members being able to participate on other organizations audit committees? Does your organization have a management disclosure committee as recommended by the SEC for public companies? Does the disclosure committee periodically report to the board or a board committee? Have you had a third party evaluate the boards performance? Have board members had direct contact with shareholder groups over the past year? Does your organization provide a mechanism for shareholders to nominate candidates to the board? Has your organization implemented a majority vote director election policy in non-contested elections? Provide quarterly earnings per share estimates Provide annual earnings per share estimates Provide other types of forward looking information (e.g., net income, revenue, operating cash flow, etc.) Do not provide EPS Does your company provide stock-based compensation to non-employee directors? Does your organization have directors and officers (D&O) liability insurance? Does the D&O insurance cover more than designated directors and officers of the organization? Does your organization have directors and officers (D&O) liability insurance? Does the D&O insurance cover more than designated directors and officers of the organization? Yes 22% 19% No 78% 81% N/A
2005 Yes No
2002 Yes No
1999 Yes No
27%
73%
68%
13%
19%
61% 9%
39% 91%
29%
67%
3%
82%
15%
3%
42%
54%
4%
24% 25%
17% 28% 76% 96% 7% 4% 18%
24%
76%
96% 24%
4% 76%
115
Appendix B 2011 Board practices survey questionnaire
2011 Board Practices Survey Questionnaire

Please complete this survey on your company's board practices - answering all questions to the best of your ability.The results of this survey will be used for our 2011 Board Practices Report.
Part B: Board Practices

Board Selection, Recruitment and Composition
3. Does your organization use a skills matrix or similar tool to periodically assess board composition and fill gaps when selecting new directors? Yes No 4. Does your organization use written criteria in director selection? Yes No 5. Does your organization use an executive search/board director recruiting firm to assist in the recruitment of board directors?
Part A: Organizational Criteria

These questions will allow us to track all the following responses by company type/ industry. 1.Please specify your organization's industry: (Choose one) Advertising and publishing Agriculture or mining Banking or finance Energy Healthcare or pharmaceutical Insurance Manufacturing consumer Manufacturing industrial Media/communications Non-Profit or public admin a) If Other, please specify: Professional services Public utility/utility holding Real estate or construction Retail/Wholesale Service industries (misc.) Technology (including software) Telecommunications Transportation or distribution Other
Yes No 6. Does your organization provide a mechanism for shareholders to nominate candidates to the board? Yes No Not applicable 7. Do you have a mandatory retirement policy for directors? Yes No Not applicable
2.Please specify your company type: Public company Privately held Partnership Non-profit a) If public, please provide your ticker symbol:
a) If so, at what age is retirement required?
Independent Chairman
8. Is the independent board chairman also the chairman of the Nominating and Governance committee? The independent board chairman is also the chairman of the Nominating and Governance committee No, but our policy would not restrict the same individual from holding both positions Our policy does not permit the same individual from holding both positions Not applicable we do not have an independent chairman
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116
9. Who is responsible for the periodic evaluation and development of the independent chairman? The Nominating and Governance committee The full board Another committee No formal evaluation is performed Not applicable we do not have an independent chairman a) If another committee, please specify:
13. How many hours does a typical board meeting last? (Do not count time spent on committee meetings on a board meeting day). 1-2 hours 3-5 hours 6-8 hours 9-10 hours More than 10 hours 14. How far in advance are board meeting materials provided to board members? At most five business days before meeting
10. How often is periodic evaluation of the independent chairman performed? Annually Periodically, as needed No formal evaluation is performed Not applicable we do not have an independent chairman 11. Does your policy specify a rotation policy or term limit for the independent chair? Rotation policy Term limit Neither Not applicable we do not have an independent chairman
Between five to ten business days before meeting More than ten business days before meeting Materials are not distributed prior to board meetings 15. What is the most common form of board meetings for your organization? Live, face-to-face meetings Live, face-to-face meetings with some directors attending via web-conference or video conference Live, face-to-face meetings with some directors attending via telephone Tele-conference calls 16. How often do you hold board meetings outside of the country in which your company is headquartered? Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) We do not hold board meetings outside of the country in which our company is headquartered 17.Do you make company owned aircraft available to directors for travel to meetings? Yes No No applicable
Board Meetings and Materials

12. Does your company permit shareholders to call special shareholder meetings? Permitted without any restriction Permitted but with minimum ownership threshold percentages Not permitted a) If permitted with a minimum ownership threshold, please specify the threshold percentage (e.g. 10, 15, 20, 25%):
117
13. How many hours does a typical board meeting last? (Do not count time spent on committee meetings on a board meeting day). 1-2 hours 3-5 hours 6-8 hours 9-10 hours More than 10 hours 14. How far in advance are board meeting materials provided to board members? At most five business days before meeting Between five to ten business days before meeting More than ten business days before meeting Materials are not distributed prior to board meetings 15. What is the most common form of board meetings for your organization? Live, face-to-face meetings Live, face-to-face meetings with some directors attending via web-conference or video conference Live, face-to-face meetings with some directors attending via telephone Tele-conference calls 16. How often do you hold board meetings outside of the country in which your company is headquartered? Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) We do not hold board meetings outside of the country in which our company is headquartered 17.Do you make company owned aircraft available to directors for travel to meetings? Yes No No applicable
18. What amount of reimbursement does your company provide to directors for travel to meetings? Full reimbursement Partial reimbursement None
Committee Structures and Roles

19. How many standing committees does your board have? Two or less Three to five Five or more 20. Please complete the following table with regard to the specific committee practices of your board: Committee Audit Compensation Nominating/ Corporate Governance Executive Science & Technology Risk Strategy Environmental Corporate Responsibility Disclosure Other: Please specify: Other: Please specify: Other: Please specify: Other: Please specify: Other: Please specify: 21. Which of the following has the primary responsibility for appointing committee members and chairs? Full Board Nominating/Corporate Governance Committee Board Chair/Lead Director Other Number of members Meeting frequency Average length of meetings Auditor attendance in meetings (Y/N)
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22. Does your board have a policy to rotate committee chairs? Yes No 23. Does your board have a policy to rotate committee membership? Yes No 24. Does your board have limits on audit committee members being able to participate on other organizations audit committees? Yes No a) If yes, please specify the limit:
28. Does your organizations audit committee hold a separate meeting to review the earnings release vs. quarterly reviews or are they combined? Separate meetings Combined meetings 29. How often do external auditors attend your companys audit committee meetings? Frequently (all or almost all audit committee meetings) Sometimes (two to three audit committee meetings a year) Rarely (one audit committee meeting a year) Never Dont know 30. How often does your audit committee meet separately with management? Frequently (all or almost all audit committee meetings) Sometimes (two to three audit committee meetings a year) Rarely (one audit committee meeting a year) Never Dont know 31. Which members of management meet separately with the audit committee? (Check all that apply) Head of Internal Audit
Audit Committee 25. How often does the audit committee meet annually via: Frequency In-person meetings By video or web conference By tele-conference calls 26. How has the frequency of audit committee meetings changed since last year? Increased substantially Increased slightly Decreased No change 27. Are audit committee meetings held by phone considered different than in-person meetings for purpose of proxy disclosure? Yes No
General Counsel Chief Executive Officer Chief Financial Officer Chief Compliance Officer Other a) If Other, please specify:
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32. How often does your companys audit committee engage specialists for specific matters on their agenda? Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never Dont know 33.How often does the audit committee receive reports on internal tips from a compliance hotline? Frequently (five or more times a year) Sometimes (two to four times a year) Rarely (once a year) Never Dont know Board Orientation and Training 34. Does your organization have a formal orientation program for new directors (beyond supplying a directors' manual)? Yes No a) If yes, please check the orientation programs sponsored by your organization for directors: (Choose all that apply) Live, in-house session lead by an individual serving on the board and/or a staff member of the organization Live training by a third party Internet-based training 35. Does your company train directors on: (Choose all that apply) Anti-corruption policies (e.g. FCPA, UK Anti-bribery Act) Insider trading Political contributions Company policies Other regulatory issues related to your business such as privacy, etc. Other formal training a) If Other, please specify:
36. Which of the following best describes your boards director education program?: (Choose all that apply) Provided in-house by management Provided in-house by a third party Directors are reimbursed for public forums or peer group sessions attended The full board collectively attends a single public forum Other Our board does not have a formal director education program a) If Other, please describe:
37. How do your directors learn about director education programs? (Choose all that apply) From the corporate secretary or management From other directors From third party mailings Other a) If Other, please specify:
Board Evaluations
38. How are your directors evaluated? (Choose all that apply) Self-evaluation Individual peer-evaluation led by corporate secretary or other in-house personnel Individual peer-evaluation led by a third party facilitator Our organization does not have a formal board performance evaluation process Other a) If Other, please describe:
39. To whom does the evaluation pertain? (Select all that apply) Individual board members Board committees Full board as a whole Not applicable
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120
40. Have you had a third party evaluate the board's performance? (Choose one) Yes No Not applicable 41. How often is the board evaluated? More frequently than once a year Less frequently than once a year Once a year Not evaluated
45. Is the level of board involvement in setting strategy increasing or decreasing? Increasing Decreasing Remains the same
Risk Oversight
46. How does your board assign risk oversight for the organizations risk management program? (Select all that apply) We have a board risk committee The audit committee has primary responsibility for risk oversight Risk oversight responsibilities are spread across all board committees The full board is responsible for risk oversight We have not considered board responsibility for risk oversight Other a) If Other, please specify:
Strategy
42. How often are strategic objectives discussed with the board? Annually Quarterly At every meeting Other 43. How often does your board participate in an off-site strategy meeting with management? More frequently than once a year Less frequently than once a year Once a year We do not hold off-site strategy meetings with management 44. How is strategy set at your organization? Management develops strategy and the board advises, challenges and approves The board and management develop strategy together The board develops the strategy and management approves and executes Other a) If Other, please specify:
47. Does your organization have a management disclosure committee as recommended by the SEC for public companies? Yes No Not applicable a) If yes, does the management disclosure committee report to either the board or a board committee? Yes No i) If yes, how often? Monthly Quarterly Semi-annually Annually No determined frequency; only when needed
11
12
121
48. Does the company align risk oversight/ risk management with the companys strategy? Yes No Dont know
CEO Performance Evaluation

53. How often does the full board review the CEOs performance? More than once a year Once a year Less than once a year (e.g. every two years) Only when a change in circumstance requires Never 54. Who has the lead responsibility over the CEO performance evaluation process? Entire board Compensation Committee Nominating/Corporate Governance Committee Independent Chair or Lead Director Other b) If Other, please specify:
49. Does your companys board oversee political contributions and donations made by the company or oversee the political action committees (or similar) of the company? Yes No Dont know 50. Has your company imposed any limitations, or reporting obligations, to the company on political contributions by directors? Yes No Dont know
CEO Succession Planning

51. How often does the full board review CEO succession plans? More than once a year Once a year Less than once a year (e.g. every two years) Only when a change in circumstance requires Never 52. Who has the primary responsibility over the CEO succession planning process? Entire board Compensation Committee Nominating/Corporate Governance Committee Independent directors CEO Other a) If Other, please specify:
Shareholder Engagement and Shareholder Activism

55. Are directors required to attend the annual shareholders meeting? Yes No Not applicable 56. Do you have a policy relating to contact between directors and shareholders? Yes No Not applicable
13
14
122
57. Have board members had direct contact with shareholder(s) or shareholder groups over the past year? Board members have had direct contact Direct contact was made only as arranged or suggested by company management Board members did not have direct contact Not applicable 58. Has your organization been approached by a shareholder activist within the last 12 months? Yes No Not applicable 59. Has your board considered holding what is known as a Fifth Analyst call with investors? Yes No Not familiar with the term Not applicable
62. Is your organization considering adopting a policy or by-law providing reimbursement of expenses related to director election campaigns in light of proxy access? (Choose one) Reimbursement would be provided when the nominee is successful Reimbursement would be provided when the nominee achieves a certain percentage of the vote Not considering adopting a policy or by-law Not applicable
Earnings guidance
63. Does your organization publicly provide earnings per share (EPS) estimates? (Select all that apply) Quarterly earnings per share estimates are provided Annual earnings per share estimates are provided Other types of forward-looking information (e.g., net income, revenue, operating cash flow, etc.) are provided EPS estimates nor other types of forwardlooking information (e.g., net income, revenue, operating cash flow, etc.) are not provided Not applicable 64. Does your organization intend to change how it provides EPS estimates or other forward-looking information? There is no intention to change the amount of information provided We intend to reduce the amount of information provided We intend to increase the amount of information provided Dont know Not applicable
Voting and Proxy Issues

60. Did your organization receive a shareholder proposal during the 2011 proxy season other than auditor ratification, say-on-pay, or required proposals? Yes No Not applicable 61. When does your organization provide reimbursement of expenses related to director election campaigns? (Choose one) Reimbursement is provided when the nominee is successful Reimbursement is provided when the nominee achieves a certain percentage of the vote Never Not applicable
Directors and Officers Liability Insurance

65. Does your organization have directors and officers (D&O) liability insurance? Yes No
15
16
123
a) If yes, does the D&O insurance cover more than designated directors and officers of the organization? Yes No i) Please list who else is covered under the D&O policy:
69. Please specify how your organization distributes board materials. (Select all that apply) Through unsecured e-mail, e.g. Internet Through secure e-mail, e.g. Company Intranet Through an internal or external board portal Through mailing of hardcopies In-person at board meetings Using an application for the ipad or other tablet device
66. Do any of your directors own individual director liability insurance? Yes No Dont know a) If yes, which statement best describes how the individual director liability insurance policies gets funded? The director funds his/ her own insurance policy The company funds his/ her own insurance policy Dont know 67. Please indicate how your liability insurance policy limits have changed in the past 12 months: Increased Decreased No change Dont know Not applicable 70. If your organization does not have a board portal, which statement below best explains your companys view on the technology platform? We have considered the use of board portals but do not currently see a need for this technology We are currently considering the benefits of the use of board portals We will be introducing this technology in the near future We have not considered board portal technology 71. Would you assess the boards use of technology to be: Increasing Decreasing No change 72. Do your directors engage in social media associated with your organization? Directors engage in social media Some directors engage in social media Directors do not engage in social media Dont know 73. Does your company have a social media policy? Yes No
Boards Use of Technology

68. What level best describes your boards involvement with information technology? No involvement besides basic email communications Aware of the benefits technology can provide Frequently engaged and up-to-date on latest technology applications Dont know
17
18
124
Sustainability
74. Does your organization prepare and file a separate sustainability report? Yes No Dont know a) If yes, is this report available on your organizations website Yes No Dont know 75. Has your organization received a shareholder proposal related to corporate social responsibility initiatives? Yes No Dont know a) If yes, please specify:
a) If cultural surveys are conducted by your organization, which parties participate? (Select all that apply) All employees (including management) All employees under the management level The board Not applicable b) If cultural surveys are conducted by your organization, does management review the survey findings with the board? Management reviews the survey findings with the board Management reviews the survey findings with the board in certain circumstances Management does not review the survey findings with the board Not applicable 79. How do employees receive communication from the board? (Select all that apply) Through electronic communication Through verbal communications (e.g., live meetings, voicemails, etc.) The board does not provide communications to employees
76. Is the board and its committees involved with reviewing the sustainability effort maintained by the organization? Yes No Dont know
Only in certain circumstances a) If certain circumstances apply, please specify:
Culture/ Setting the Tone at the Top

77. Given the new SEC whistleblower rules (May 2011), has your board asked management to take specific steps to continue to enhance a culture of candid and open communication? Yes No Dont know 78. How often does your organization conduct cultural surveys? Annually Only in certain circumstances We do not conduct cultural surveys
My company has established an anti-hedging policy that applies to directors My company has not established an antihedging policy that applies to directors We are considering the establishment of such a policy
Private Sessions
81.Do non-employee directors have direct access to management below the CEO level (not including boardroom presentations) without CEO approval? Yes No
19
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PART C: Director Qualifications Matrix

Please check boxes in the matrix below to indicate the qualifications, ethnicity, gender, and age of each of the directors that serves on your companys board. Director names do not need to be disclosed. Director
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Director
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Investment Banking Other Financial Services Technology/ IT Human Resources Compensation and Benefits Management Consulting Environmental and Sustainability Engineering, Scientific Medical Profession Research and Development Other Technical 1 (Please specify): Other Technical 2 (Please specify): Other Technical 3 (Please specify): Professional Qualifications Entrepreneurial Strategic Planning Business Development Government Relations/ Service/ Regulatory Agency Military Service (4 armed forces) Labor Union Community Affiliation/Access Lobbying Academia Company CEO (Chief Executive Officer) Company CFO (Chief Financial Officer)
Leadership Qualifications Diversity and thought perspective Ethics and compliance Other leadership 1 (please specify): Other leadership 2 (please specify): Other leadership 3 (please specify): Technical Qualifications Certified Public Accountant (CPA) Juris Doctor (JD, Esq) Certified Financial Analyst (CFA) Medical Doctor (e.g, MD, DO, DDS) Operations Corporate Governance Risk Management Mergers and Acquisitions Business Restructuring Marketing Public Relations International Business Exposure Industry (similar to respective company) Commercial Banking
21
22
126
Director
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 2 3 4 5 6 7
Director
8 9 10 11 12 13 14 15
Company COO (Chief Operating Officer) Company CIO (Chief Information Officer) Company CTO (Chief Technology Officer) Audit Committee Compensation Committee Nominating & Corporate Governance Committee Risk Committee Environmental Finance Committee Outside Public Company Board Service Outside Private Company Board Service Outside Not-for-profit Board Service Other professional 1 (please specify): Other professional 2 (please specify): Other professional 3 (please specify): Ethnicity, gender, and age Black Asian American Indian or Native American Hispanic or Latino Native Hawaiian or other Pacific Islander White Two or More Races Gender (Male) Gender (Female)
23
Survey Completed! Thank you for completing our 2011 Board Practices Survey. Please submit your completed form to the conference registration desk, or you may mail or fax it back to: Society of Corporate Secretaries and Governance Professionals 521 Fifth Avenue New York, NY 10175 Fax: (212) 681-2005 Attn: Russell Benasaraf
About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Copyright 2011 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited
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About Deloitte Deloitte refers to one or more of Deloitte LLP. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/ us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2011 Society of Corporate Secretaries and Governance Professionals and Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

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2011 Board Practices Report Design, Composition, and Function

2011 Board Practices Report Design, Composition, and Function

Company Type Public Privately held Nonprofit Partnership

Number of Respondents 175 19 12 2

2011 Board Practices Report Design, Composition, and Function

Company type Public

Total number of respondents 175 19 12

Financial services industry 38 11 3 0

Privately held Small-cap Nonprofit Partnership

Mid-cap 88/ 50%

Small-cap Mid-cap Large-cap

Summary of results and key findings

0% 3% 14% 5% 8% 8% 7% 14% 1% 2% 0% 10% 2% 8% 2% 5% 1% 3% 3%

2011 Board Practices Report Design, Composition, and Function

65% 20% 2% 52% 3% 2% 21% 1%

13% 17% 1% 17% 51%

23% 4% 21% 52%

11% 40% 49%

23% 13% 39% 3% 7% 1% 1% 9% 4%

37% 61% 2% 0% 90% 1% 5% 3%

Committee Audit committee

2011 Board Practices Report Design, Composition, and Function

Committee Strategy committee

68% 30% 2% 81% 19% 0% 100% 0% 0%

93% 4% 2% 0% 0% 81% 15% 2% 2% 0%

87% 49% 44% 77% 32% 18%

2011 Board Practices Report Design, Composition, and Function

Board orientation and training

99% 2% 5% 36% 78% 22% 81% 62% 21%

2011 Board Practices Report Design, Composition, and Function

21% 15% 51% 13%

2011 Board Practices Report Design, Composition, and Function

5% 56% 27% 12%

22% 36% 32% 21% 19%

59% 1% 1% 18% 20%

Do any of your directors own individual director liability insurance? (n=207)

20% 2% 58% 18% 1%

24% 38% 34% 4%

25% 19% 42% 77% 50% 20%

23% 35% 31% 11% 79% 0% 21% 1% 8% 57% 34%

36% 51% 13% 96% 1% 3%

2011 Board Practices Report Design, Composition, and Function

56% 32% 12%

2011 Board Practices Report Design, Composition, and Function

Public company survey results

Board selection, recruitment and composition

59% Yes 32% 52%

Small-cap Mid-cap Large-cap

4. Does your organization use written criteria in director selection?

81% Yes 52% 71%

Small-cap Mid-cap Large-cap

Board selection, recruitment and composition Yes

The the 79% chairman of the board is also 78%CEO

Small-cap Mid-cap Large-cap

Non-nancial services (n=136) 39% 54% All public companies (n=174)

33% Yes 20%

There is a separate position for lead or presiding director

2008 (n=229) 2011 (n=172)

Small-cap Mid-cap Large-cap

Small-cap Mid-cap Large-cap

61% 38% Financial services (n=38)

Non-nancial services (n=137)

Mid-cap 69% Large-cap