The Board determines its most appropriate leadership structure at a given time. It takes into account various factors, among them: which leadership structure will allow it to most effectively carry out its responsibilities and best represent shareholders’ interests, specific business needs, operating and financial performance, industry conditions, economic and regulatory environments, the results of Board and committee annual self-assessments, the advantages and disadvantages of alternative leadership structures based on circumstances at that time and our corporate governance practices.
The Board believes that independent Board leadership and oversight are very important to Board effectiveness and to promoting the Company’s long-term success. In keeping with this principle, the Board may determine that the CEO also serves as Chairman, but if it does so, it also appoints an Independent Lead Director with substantive responsibilities. Please see our Board Leadership Section for more information.
The Board expects that a director’s other commitments do not interfere with his or her duties as a director.
In addition, service on other boards and committees should be consistent with the Company’s conflict of interest policies.
The Board has adopted the Code of Business Conduct and Ethics for Non-Employee Directors to foster a culture of honesty and integrity, focus on areas of ethical risk, guide independent directors in recognizing and handling ethical issues and provide mechanisms to report unethical conduct. Annually, each independent director must acknowledge in writing that he or she has received, reviewed and understands the Code.
The Board believes that effective enterprise risk management must be an integral part of Board and committee deliberations throughout the year. The Board has ultimate responsibility for risk oversight, but it has delegated primary responsibility for overseeing risk assessment and management to the Audit Committee. Pursuant to its charter, the Audit Committee reviews and discusses risk assessment and risk management guidelines, policies, and processes utilized in the Enterprise Risk Management (“ERM”) process.
Our ERM process is ongoing. It is implemented at all levels of our operations and across business units to identify, assess, monitor, manage, and mitigate risk. Our ERM process facilitates open communication between management and the Board so that the Board and committees understand key risks to the business and performance, the risk management process and how it is functioning, the participants in the process and the information gathered through the process. The Audit Committee annually reviews the functioning of our ERM process as well as the results of our annual ERM risk assessment.
Annually, the Audit Committee reviews and approves management’s recommendation for allocating to the full Board or another committee or retaining for itself responsibility for reviewing and assessing key risk exposures and management’s response to those exposures. Management provides reports to the Board or the appropriate committee in advance of meetings regarding key risks and the actions management has taken to monitor, control and mitigate these risks. Management also attends Board and committee meetings to discuss these reports and provide any updates. The committees report key risk discussions to the Board following their meetings. Board members may also further discuss the risk management process directly with members of management.
During 2018, the Board and committees reviewed and assessed risks related to our business and operations. The Board annually reviews and sometimes reallocates responsibilities among committees. Accordingly, the allocation of responsibilities as shown below may change during 2019.
Director affiliations and related party transactions are reviewed annually to ensure there are no conflicts or relationships that might impair a director's independence from the Company, senior management and our independent registered public accounting firm.
Consistent with our shareholder engagement philosophy, we engage with shareholders to seek their input on emerging issues and to address their questions and concerns. During the year, we engage with a diverse mix of shareholders on a wide range of topics including, among others, the Company’s business, strategy, executive compensation and environmental, social and governance matters. These exchanges are candid and constructive. The Lead Independent Director is available for consultation with the Company’s major shareholders.