Board Succession Planning and Refreshment

The Board selects new director-nominees for election to the Board and recommends directors for re-election based on the recommendations of the Corporate Governance and Nominating Committee. The Committee regularly reviews board composition to ensure that our Board as a whole reflects the experiences, qualifications, and attributes necessary to provide effective oversight of our strategy and risks to the business. The Committee considers business trends and emerging risks, and solicits the input of the full Board in identifying these characteristics. The Committee has determined that the characteristics appearing in the matrix under “Item 1 – Directors and Nominees for Election as Directors” above are currently the most important to our Company’s strategy and risk oversight.

In assessing board composition, the Committee also takes into consideration planned retirement dates under the Corporate Governance Guidelines’ age 72 retirement provision. We believe it is valuable to have directors with varying lengths of service in order to strike the right balance between board refreshment and continuity. The three independent directors who joined the Board in the past five years bring new experiences and fresh perspectives. Our directors with longer terms of service provide stability and continuity to the Board. In addition, they have deep knowledge of our operations, significant exposure during various economic cycles to both our business and our industry, and an understanding of the evolution of our strategy. The average tenure of our independent director-nominees is 8 years.

The composition, characteristics, and needs of the Board change over time and are considered by the Corporate Governance and Nominating Committee in determining whether to undertake a director search and if so, in establishing the desirable candidate profile. The Committee recognizes the benefits of a board membership reflecting differences in viewpoints, professional and life experiences, education, skills, race, gender, ethnicity, national origin, and age, and considers these benefits in each independent director search. In addition, the Committee has identified desired personal traits or director candidates which include a reputation for personal and professional integrity; strength of character; sound business judgment; the availability and commitment to devote sufficient time to director duties; strong interpersonal and communication skills; independence; the ability to represent the long-term interests of all shareholders; and the absence of any conflicts of interest.