|
|
 |
|||||||
 |
  |
 |
|
The following guidelines have been approved by the Board of Trustees of Northeast Utilities (the Company) and, along with the charters of the Board committees and the Lead Trustee, provide the framework for the governance of the Company. The Corporate Governance Committee shall review these guidelines on an annual basis, or more frequently if appropriate, and recommend any changes for approval by the Board. Role of the Board of Trustees and Management The business of the Company is conducted by its employees, managers and officers, under the oversight of the Board of Trustees, with the goal of enhancing the long-term value of the Company for its shareholders while also fulfilling its commercial, community and public service obligations. The Board of Trustees is elected by the shareholders to oversee management and to assure that the long term interests of the shareholders are being served. In exercising its oversight over the management of the Company, the Board seeks to ensure that:
Functions of the Board of Trustees In addition to its general oversight of management, the Board also performs a number of specific functions, including:
Meetings of the Board of Trustees The Board of Trustees has at least 9 scheduled meetings a year at which it reviews and discusses reports by management on the performance of the Company, its plans and prospects, as well as immediate issues facing the Company. Trustees are expected to attend all scheduled Board and committee meetings and to review any materials provided in advance of the meeting. Trustee Qualifications Trustees should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment. The Board should represent diverse experience at policy-making levels in business, government, education, community and charitable organizations as well as areas that are relevant to the Company's activities. The Corporate Governance Committee shall also seek diversity in gender, ethnicity and personal background when considering candidates for Board membership. Trustees must be willing to devote sufficient time to carrying out their duties and responsibilities effectively. They should offer their resignation in the event of any significant change in their professional circumstances, including a change in their principal job responsibilities. Each year the Board will evaluate its own processes and the contribution of its members. In addition to other uses, such evaluations are available to the Corporate Governance Committee when nominating candidates for election each year. Absent special circumstances, the Board requests that no Trustee serve on no more than four Boards of other publicly held companies. Likewise, the CEO shall limit his service to no more than three additional Boards of publicly held companies. All members of the Audit Committee shall satisfy the financial literacy requirements of the listing standards of the New York Stock Exchange. The Board shall use all reasonable and prudent efforts to have at least one member of the Audit Committee who is an "audit committee financial expert," as defined under rules promulgated by the Securities and Exchange Commission. In order to ensure adequate time for consideration of the proper business of the Committee, no member of the Audit Committee shall serve on the audit committee of more than two other public companies, unless the Board determines that such service does not impair the member's ability to effectively serve on the Audit Committee. In addition, members of the Audit Committee may not directly or indirectly receive any compensation from the Company other than their trustees' compensation. No person is eligible to be nominated as a candidate for Trustee or for reelection to an additional term as part of the slate of Trustees proposed by the Company after he or she has reached age 72. A Trustee reaching age 72 during a current term may complete the service of that term, but must retire upon the expiration of the term during which he or she reaches age 72. The Board may, in extraordinary circumstances, grant an exception to this policy when it is in the best interest of the Company to do so; however any such exception shall not exceed one year and may not be renewed. It is the policy of the Company that a majority of the members of the Board of Trustees be independent of the management of the Company pursuant to the requirements of the applicable listing standards of the New York Stock Exchange (as such standards may change from time to time). To qualify as "independent", the Board must determine that the trustee has no material relationship with the Company, either directly, or indirectly as a partner, shareholder or officer of an organization that has a relationship with the Company. An examination of whether a director qualifies as independent will be made on an annual basis by the Board, following the receipt of recommendations from the Corporate Governance Committee of the Board. The Board's determinations will be disclosed in the Company's annual meeting proxy statement. The Board has established that a charitable relationship will not be considered to be a material relationship that would impair a trustee's independence if a trustee serves as an officer, director or trustee of a charitable organization and the Company's, or the NU Foundation's, discretionary charitable contributions to the organization, in the aggregate, are less than the greater of either (1) $200,000 or (2) two percent of the organization's total annual charitable receipts or latest publicly available operating budget. For purposes of this determination, any Company matching fund of employee contributions will not be included in the amount of the Company's contributions. The trustee's relationship with the charitable organization must otherwise be consistent with applicable New York Stock Exchange independence standards. Beginning September 13, 2005, any Trustee who joins an additional public company board or takes on a different major business responsibility must so inform the Corporate Governance Committee. The Corporate Governance Committee will review the propriety of that responsibility with the obligations of the Trustee to Northeast Utilities. Board Committees The Board has established the following committees to assist the Board in discharging its responsibilities: (i) the Audit Committee, (ii) the Compensation Committee, (iii) the Corporate Governance Committee, (iv) the Finance Committee, (v) the Corporate Responsibility Committee and (vi) the Executive Committee. The committee chairs shall, in accordance with the respective charters applicable to their committees, report the substance of their meetings to the full Board on a regular basis. In addition, the Board may establish, as appropriate, special committees. Board Committee Chair Rotation Guidelines The Board generally favors the periodic rotation of Committee assignments and Committee Chair positions, but also recognizes that at times it may not be in the best interest of the Company to change a Committee assignment or chair position, such as when a Trustee has special knowledge or experience. It is expected that absent unique circumstances, Committee Chairs will serve no more than five years in order to facilitate rotation of chairs while preserving experienced leadership. The Board may, in special circumstances, grant an annual exception to this policy for up to two subsequent years when it is in the best interests of the Company to do so. Provided however this chair rotation guideline does not apply to the Chair of the Executive Committee, who is the Chairman of the Board. Lead Trustee The responsibilities and authority of the Lead Trustee are established in the Lead Trustee charter. The Lead Trustee, together with the Chief Executive Officer, establishes agendas for meetings of the Board. The Lead Trustee is responsible for ensuring that trustees receive relevant information in a timely manner, organizes the Board's annual evaluation of the Chief Executive Officer and provides ongoing information to the Chief Executive Officer on his or her performance. The Lead Trustee also leads the Board in anticipating and responding to problems where management's performance may be in question. The Lead Trustee chairs non management and (in the absence of the Chairman and the Vice Chairman) executive sessions of the Board. The Lead Trustee receives staff support of both a permanent and a temporary nature as appropriate to assist the Lead Trustee in carrying out the foregoing responsibilities. Meetings of Independent Trustees To promote open discussion among the independent trustees and to empower independent trustees to serve as a more effective oversight of management, the independent trustees meet in executive session at least three times a year, or more frequently as they deem appropriate, without management or employee members of the Board of Trustees present. Annual Performance Evaluation of the Board The Board shall perform an annual evaluation of its effectiveness as a body. In addition, each committee of the Board shall evaluate annually its effectiveness in carrying out the duties delegated to it under its charter. The Corporate Governance Committee shall review these evaluations and then present the results for discussion with the full Board. Compensation of Trustees The Compensation Committee shall review and approve the compensation of members of the Board of Trustees who are not employees of the Company. In discharging this duty, the Compensation Committee shall be guided by several goals: compensation should enhance the ability of the Board to attract and retain qualified trustees; compensation should fairly pay trustees for work required in a company of the size and scope of the Company; compensation should align trustees' interests with the long-term interests of shareholders; and there should be adequate additional compensation for committee chairs, the Lead Trustee and any other non employee trustee who is asked by the Board, the Chairman or the Lead Trustee to provide extra Board-related services in the interests of the Company to compensate them for the additional service required of them. Share Ownership Guidelines The Board has determined that each Trustee shall be a shareholder of the Company. Each Trustee has five years from January 2007 to attain ownership of 7,500 common shares and/or restricted stock units of Northeast Utilities, which represents approximately five-times the amount of the annual cash retainer; provided however, that Trustees who join the Board after January 1, 2007 will have five years from January 1 of the year succeeding their date of election to attain ownership of such shares. For purposes of these share ownership guidelines, deferred common shares will count toward the minimum ownership guideline. Management Development and Succession Planning The Corporate Governance and Compensation Committees shall jointly recommend to the Board of Trustees a Chief Executive Officer succession plan and succession process, both in the normal course of business and in the event of an emergency or the retirement of the Chief Executive Officer. The trustees shall evaluate the performance, professional development and potential for growth of senior managers identified by the Chief Executive Officer, with a view to enhancing organizational strength as well as succession planning. Access to Senior Management and Information about the Company Trustees are encouraged to get to know and communicate directly with members of senior management of the Company. Management shall provide:
Access to Independent Advisors The Board and its committees shall have the right at any time to retain and determine the terms of engagement of independent outside financial, legal or other advisors. Trustee Orientation The general counsel and the chief financial officer shall be responsible for providing an orientation for new trustees, and for periodically providing materials or briefing sessions for all trustees on subjects that would assist them in discharging their duties. Each new trustee shall, within three months of election to the Board, spend a day at corporate headquarters for a personal briefing by senior management on the Company's strategic plans, its financial statements, and its key policies and practices. The Corporate Governance Committee shall devise a continuing education plan for the trustees. Availability of Information The charters of each of the Board's Committees, the charter of the Lead Trustee, as well as the Corporate Governance Guidelines and the Company's Code of Conduct and Ethics, will be published on the Company's external website. Paper copies of these documents will be mailed to any shareholder who so requests. Effective: September 11, 2007
Last updated as of 9/18/07 Printer Friendly Page
|
|||
 |
|||||||
|
|||||||
Standards of Business Conduct
