|Highlights | Committee Composition | Principles | Code of Conduct | Insider Transactions|
In order to help stockholders understand the roles and responsibilities of the Board of Directors (the "Board") and the governance practices of Coinstar, Inc. (the "Company"), the following is a description of the Company's corporate governance principles and current practices. The Nominating and Governance Committee reviews and revises, as appropriate, these practices annually.
RESPONSIBILITIES OF THE BOARD
The Company's business is conducted by its employees, managers and corporate officers led by the chief executive officer ("CEO"), with oversight from the Board. The Board selects the CEO and works with the CEO to elect/appoint other corporate officers who are charged with managing the business of the Company. The Board has the responsibility of overseeing, counseling and directing the corporate officers to ensure that the long-term interests of the Company are being served. The Board and the corporate officers recognize that the long-term interests of the Company are advanced when they are responsive to the concerns of stockholders, customers, suppliers, business partners, employees and communities.
The basic responsibility of the directors is to exercise reasonable business judgment on behalf of the Company. In discharging this obligation, directors rely on, among other things, the Company's corporate officers, outside advisors and auditors.
CEO Performance Evaluation
The CEO presents his performance goals and objectives for the upcoming year to the non-employee directors for their approval. The non-employee directors then meet privately to discuss the CEO's performance for the current year against his performance objectives; they review that evaluation with the CEO. The Compensation Committee uses this performance evaluation in the course of its deliberations when considering the CEO's compensation in accordance with the policies and procedures in that Committee's charter.
CEO and Senior Management
The Board views CEO selection and senior management succession as one of its most important responsibilities. The CEO reports annually to the Board and the Nominating and Governance Committee on planning for CEO succession. The Nominating and Governance Committee annually reviews and reports to the Board on senior management succession planning. When succession of the CEO occurs, this Committee manages the process of identifying and selecting the new CEO with the full participation of each of the non-employee directors.
It is the policy of the Company that the positions of CEO and Chair of the Board shall not be held by the same person. The Board believes that separating these two positions is in the best interests of the Company.
Ethics and Conflicts of Interest
The Board expects the directors, officers and employees to act ethically at all times and acknowledge their adherence to the policies comprising the Company's Code of Ethics and Code of Conduct. The Board will promptly disclose any waivers from the Company's Code of Conduct granted to any director or executive officer, as required. If an actual or potential conflict of interest arises for a director, the director shall promptly inform the Chair of the Board or the Chair of the Nominating and Governance Committee. All directors will recuse themselves from any discussion or decision affecting their personal, business or professional interests, as appropriate. The Company shall not, directly or indirectly, extend or maintain credit, arrange for or renew an extension of credit in the form of a personal loan to or for any director or executive officer.
Board's Interaction With Stakeholders
The CEO and certain other corporate officers are responsible for establishing effective communications with the Company's stakeholders, including stockholders, customers, communities, employees, suppliers, creditors and corporate partners. It is the general policy of the Board that management speaks for the Company.
COMMUNICATIONS WITH STAKEHOLDERS
Stockholders and other stakeholders may contact an individual director, the Board as a group, or a specified Board committee or group, including the independent directors as a group, by the following means:
Mail: Board of Directors – Coinstar, Inc.
Each communication should specify the applicable addressee or addressees to be contacted as well as the general topic of the communication. The Company will initially receive and process communications before forwarding them to the addressee.
Communications also may be referred to other areas within the Company. The Company generally will not forward to the directors a stakeholder communication that it determines to be primarily commercial in nature or related to an improper or irrelevant topic, or that requests general information about the Company.
Concerns about questionable accounting or auditing matters or possible violations of the Coinstar Code of Conduct or the Coinstar Code of Ethics should be reported pursuant to the procedures outlined in the applicable code or policy.
The Board, in consultation with the Nominating and Governance Committee, periodically evaluates whether its size is appropriate in light of the background and experience of its members and with the goal of encouraging and maintaining productive deliberations. The Board will have a majority of directors who meet the criteria for independence of the Nasdaq Global Select Market and the (or such other independence-related criteria applicable to the Company from time to time).
The Nominating and Governance Committee reviews annually the appropriate skills and characteristics required of Board members in light of the current make-up of the Board. This assessment includes issues of expertise (including retail, public company and policy-making experience), independence, personal and professional ethics, integrity, values and diversity, as well as skills relating to finance, public policy, management and business. Beyond ensuring that a majority of the Board remains independent, the Committee has not established specific minimum eligibility requirements for Board members other than integrity and the commitment to act in the best interests of all stockholders.
The Board does not believe it should limit the number of terms for which an individual may serve as a director. Directors who have served on the Board for an extended period of time are able to provide valuable insight into the operations and future of the Company based on their experience with and understanding of the Company's history, policies and objectives. The Board believes that, as an alternative to term limits, it can ensure that the Board continues to evolve and adopt new viewpoints through the evaluation and nomination process described in these Corporate Governance Principles as well as the Nominating and Governance Committee Charter.
Other Boards and Committees
Without specific approval from the Board, no director may serve on more than five public company boards (including the Company's Board) and no member of the Audit Committee may serve on more than three public company audit committees (including the Company's Audit Committee). In addition, directors who also serve as chief executive officers of public companies or in positions with equivalent responsibilities generally should not serve on more than two public company boards, including the Company's Board, in addition to their employer's board. In calculating service on a public company board or audit committee, service on a board or audit committee of a parent and its wholly-owned subsidiary counts as service on a single board or audit committee.
Selection of Directors
Under the Bylaws, as amended, the Board has authority to fill vacancies on the Board and to nominate candidates for election by the stockholders. The screening process is handled by the Nominating and Governance Committee in accordance with the policies and principles in its charter with direct input from the other directors. In considering nomination of incumbent directors, the Nominating and Governance Committee may take into account a variety of factors, including any changes in a director's professional or personal circumstances.
Director Compensation and Stock Ownership
The form and amount of director compensation will be determined by the Compensation Committee. The Compensation Committee periodically reviews and compares the Company's Board compensation to director compensation at peer companies that are also benchmarks for the Company's executive compensation program.
It is the general policy of the Board that its compensation should be a mix of cash and equity-based compensation with a significant portion of such compensation in the form of the Company's stock.The Company encourages directors to own equity in the Company. The Company has stock ownership guidelines in place for non-employee directors and officers and expects them to follow those guidelines.
BOARD AND COMMITTEE MEETINGS
The Board will generally hold six regularly scheduled meetings per year and will hold additional special meetings as necessary. Each director is expected to attend both regularly scheduled and special meetings, as well as the Annual Meeting of Stockholders, except if unusual circumstances make attendance impractical.
Board Agenda and Meetings
The Chair of the Board, the CEO and the committee Chairs establish the agendas for Board and committee meetings. Each director is free to suggest items for the agenda, and each director is free to raise at any Board meeting subjects that are not on the agenda for that meeting. Information and data that are important to the Board's understanding of the matters to be covered at a Board meeting will generally be distributed to the directors before the meeting whenever feasible and appropriate. Directors are expected to review in advance any materials sent to them in order to take part in a meaningful deliberation at the meeting.
The independent directors have the opportunity to meet in executive session to consider such matters as they deem appropriate, without management being present, as a regularly-scheduled agenda item for Board meetings, as appropriate. The Chair of the Board acts as the Chair of the executive sessions of the independent directors. The format for such executive sessions is considered by the Nominating and Governance Committee.
Director Access to Officers and Employees
Directors have full and free access to officers and employees of the Company. Any meeting or contact that a director wishes to initiate may be arranged through the CEO or the Corporate Secretary.
COMMITTEES OF THE BOARD
The Board has the following core committees:
Only non-employee directors serve on these committees. Rotation of committee Chairs and members of these committees is considered periodically, as appropriate. Members of the Audit Committee periodically meet privately with representatives of the Company's independent auditors, and with the Company's Chief Financial Officer.
Each of these committees has a written charter, approved by the Board, which describes the committee's general authority and responsibilities. Each committee undertakes an annual review of its charter and works with the Nominating and Governance Committee to make appropriate revisions. The Board may, from time to time, establish and maintain additional committees.
The Board is responsible for the appointment of committee members and committee Chairs according to criteria that it determines to be in the best interest of the Company and its stockholders, following consultation with the Nominating and Governance Committee as appropriate.
The Chair of each committee is responsible for developing, together with relevant Company personnel, the committee's general agenda and objectives and for setting the specific agenda for committee meetings. The committee Chair generally reports on the items discussed and actions taken at their meetings to the Board following each committee meeting. Committee materials are generally provided to the committee members in advance of the meeting whenever feasible and appropriate so as to allow members time to prepare for a discussion of the items at the meeting. The committee Chair and members will determine the frequency and length of committee meetings consistent with the committee's charter. Members of the Board's committees are expected to attend all meetings, except if unusual circumstances make attendance impractical.
INDEPENDENT ADVICEThe Board and its committees may seek legal, financial or other expert advice from sources independent of management.
BOARD AND COMMITTEE PERFORMANCE EVALUATION
With the goal of increasing the effectiveness of the Board and its relationship to management, the Nominating and Governance Committee assists the Board in evaluating the Board's performance as a whole. The evaluation process, which occurs annually, includes a survey of the individual views of all directors, which are then shared with the full Board and with management. In addition, each of the committees performs a similar annual self-evaluation.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
The Nominating and Governance Committee and management are responsible for director orientation programs and for director continuing education programs to assist directors in maintaining skills necessary or appropriate for the performance of their responsibilities.