Corporate Governance: Director Nominations
To be recommended by the Governance Committee for election to the Board, a nominee must:
- Meet the expectations for directors set out in the Corporate Governance Guidelines approved by the Board;
- Demonstrate the qualities and capabilities determined important by the Governance Committee as described below;
- Comply with the other policies of the Board applicable to service as a director, including those set out in the Corporate Governance Guidelines, and the requirements for orientation and continuing education approved by the Board for directors;
- Not have conflicts or commitments that would impair the candidate's ability to attend scheduled Board meetings or annual shareholders meetings;
- Not hold positions that would result in a violation of legal requirements, such as anti-trust prohibitions on interlocking relationships between competitors;
- Meet any applicable legal or regulatory requirements for directors of government contractors
As provided in EDS' Corporate Governance Guidelines, nominees for Director will be selected on the basis of their integrity, experience, achievements, judgment, intelligence, personal character, ability to make independent analytical inquiries, willingness to devote adequate time to Board duties, and likelihood that s/he will be able to serve on the Board for a sustained period. In connection with the selection of nominees for Director, due consideration will be given to the Board's overall balance of diversity of perspectives, backgrounds and experiences. Accordingly, the Governance Committee will also consider factors such as global experience, experience as a director of a large public company and knowledge of particular industries.
Although not an automatically disqualifying factor, the inability of a candidate to meet independence standards of the New York Stock Exchange (“NYSE”) will weigh negatively in any assessment of a candidate's suitability, as will a candidate's service on a number of Boards exceeding the standards contained in EDS' Corporate Governance Guidelines. At least one director should meet the qualifications required of an Audit Committee Financial Expert as defined by applicable regulations of the Securities and Exchange Commission (“SEC”) and at least three directors must meet the requirements for Audit Committee membership required by the NYSE and the SEC.
The Governance Committee intends to continue to use a variety of means for identifying nominees for director, including outside search firms and recommendations from current Board members and from shareholders. In determining whether to nominate a candidate, the Governance Committee will consider the current composition and capabilities of serving Board members, as well as additional capabilities considered necessary or desirable in light of existing Company needs and then assess the need for new or additional members to provide those capabilities.
Unless well known to one or more members of the Governance Committee, normally at least one member of the Governance Committee will interview a prospective candidate who is identified as having high potential to satisfy the expectations, requirements, qualities and capabilities for Board membership. The Governance Committee may elect to contact other sources, including persons serving on another board with the candidate, as they deem appropriate to develop a well-rounded view of the candidate. Reports from those interviews or from Governance Committee members with personal knowledge and experience with a candidate, resumes, information provided by other contacts and any other information deemed relevant by the Governance Committee will be considered in determining whether a candidate – or which of several potential candidates – should be nominated.
In considering whether to nominate directors who are eligible to stand for re-election, the Governance Committee considers attendance at Board and committee meetings, compliance with EDS' Corporate Governance Guidelines (including satisfying the expectations for individual directors), as well as whether the director continues to possess the qualities and capabilities considered necessary or desirable, any input from other Board members concerning the performance of that director and the independence of the director.
Shareholder Nominations
The Governance Committee, which is responsible for the nomination of candidates for appointment or election to the EDS Board of Directors, will consider candidates recommended by EDS shareholders who beneficially own at the time of the recommendation not less than 1% of the Company's outstanding stock (“Qualifying Shareholders”).
Generally speaking, the manner in which the Governance Committee evaluates nominees for director recommended by a Qualifying Shareholder will be the same as that for nominees from other sources. However, the Governance Committee will seek and consider information concerning the relationship between a Qualifying Shareholder's nominee and that Qualifying Shareholder to determine whether the nominee can effectively represent the interests of all shareholders.
Qualifying Shareholders wishing to make such recommendations to the Governance Committee for its consideration may do so by submitting a completed “Shareholder Recommendation of Candidate for Director” form via mail addressed as follows:
- Secretary of the EDS Governance Committee
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5400 Legacy Drive
Mail Stop H3-3C-47
Plano, Texas 75024
The Shareholder Recommendation of Candidate for Director form is available to download or may be obtained by mailing a request for a copy of the form to the Secretary of the Governance Committee at the address above.
The Governance Committee must have both adequate time to consider a shareholder recommendation and current relevant information regarding a candidate. Accordingly, shareholders who wish to recommend a nominee for election as director at the next annual shareholders' meeting should submit a completed form not earlier than October 1 of the year preceding the annual meeting and not later than 120 days prior to one-year anniversary of the date the proxy statement for the preceding annual meeting was released to shareholders. If the date of the next annual meeting is moved to more than 30 days from the anniversary date of the preceding annual meeting, the deadline for receipt of this form shall be a reasonable time before EDS begins to print and mail its proxy statement as established by the Corporate Secretary and disclosed in the proxy statement for the preceding annual meeting.
Generally speaking, candidates recommended by Qualifying Shareholders will be evaluated under the same process specified in General Standards and Process outlined above and described in the Company's SEC filings. However, except in unusual circumstances, the Governance Committee will not evaluate a Qualifying Shareholder-recommended candidate unless and until the Qualifying Shareholder advises that the potential candidate has indicated a willingness to serve as a director, to comply with the expectations and requirements for Board service publicly disclosed by the Company and to provide all of the information required to conduct an evaluation.
Shareholders who wish to nominate a person for election as a director at the annual meeting (as opposed to making a recommendation to the Governance Committee) may do so in accordance with the Bylaw procedures described in the Company's most recent proxy statement, either in addition to or in lieu of making a recommendation to the Governance Committee.