Corporate Governance
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| Corporate Governance Guidelines | Management & Directors | Committee Charters | Committee Composition | Code of Business Conduct and Ethics |
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Solid principles of corporate governance are a key part of our commitment to be a good corporate citizen. The Board of Directors of The Scotts Miracle-Gro Company have adopted strict corporate governance guidelines to promote the effective functioning of the Board, its committees and the Company. The Board will review these guidelines on a regular basis to ensure they address new facts and circumstances and evolving corporate governance issues.
The Board of Directors (the “Board”) of The Scotts Miracle-Gro Company (the “Company”), acting on the recommendation of its Governance and Nominating Committee, has adopted these Corporate Governance Guidelines (the “Guidelines”) in order to codify internal Board policies and procedures. As such, they reflect the Board’s current views with respect to certain matters of Board composition and practice and are subject to change from time to time. They do not establish legal duties of the Board or any committee of the Board, and are not intended to change or interpret any federal or state law, rule or regulation, or the Company’s Articles of Incorporation or Code of Regulations.
A. Size of Board. The Board shall determine the appropriate size of the Board from time to time within the limits specified in the Company’s Articles of Incorporation and Code of Regulations. The Board currently considers the optimum size of the Board to be 12 members. However, the Board periodically evaluates whether a larger or smaller size would be preferable. B. Independence. The Board will have a majority of directors who satisfy the criteria for “independent directors” pursuant to the rules of the New York Stock Exchange (the “NYSE”). The Board shall make a determination as to the independence of each director at least annually. C. Board Membership Criteria. The Governance and Nominating Committee will recommend to the Board nominees for board membership in accordance with the procedures and criteria set forth in that committee’s charter. Directors should generally meet the following expectations:
D. Retirement Age for Directors. In general, a director should not stand for re-election once he or she has reached the age of 72 years old. However, the Board will review individual circumstances and may from time to time choose to renominate a director who is 72 years old or older. E. Management Director Resignation/Termination. In the event a management director resigns or is terminated, for any reason, as an employee of the Company, such director shall promptly tender a resignation as a director to the Chairman of the Board, or if such director is the Chairman of the Board then to the Chairperson of the Governance and Nominating Committee. Upon receipt of such resignation, the Board shall promptly determine whether or not to accept the resignation after obtaining a recommendation from the Governance and Nominating Committee. A. General. The basic responsibility of the directors is to exercise their business judgment in accordance with applicable law and to act in what they reasonably believe is in the best interests of the Company and its shareholders. B. Functions of the Board. The business of the Company is conducted by its employees and officers under the direction of the Chief Executive Officer and the oversight of the Board. The Board performs a number of specific functions, including:
C. Attendance. Each director is expected to attend all Board meetings and meetings of committees of the Board of which such director is a member, unless circumstances prevent attendance. Directors should be adequately prepared for, and ready to fully participate in, each such meeting. D. Advance Distribution of Materials. To the extent feasible, information and materials that are relevant to the directors’ understanding of agenda items at an upcoming Board or committee meeting should be distributed to all of the directors sufficiently in advance of the meeting to permit prior review. The Board understands that certain matters that are discussed at Board and committee meetings are of an extremely confidential and sensitive nature and that the distribution of materials on these matters before such meetings may not be advisable. E. Equity Ownership. The Board recognizes that ownership by directors of stock of the Company is believed to strengthen their commitment to the long-term future of the Company and further align their interests with those of the shareholders generally. Non-employee directors are ordinarily expected to beneficially own shares of the Company’s common stock having a value of at least two times their annual retainer (including shares owned outright and common stock units in a deferred compensation account). Each director is given four years from the date of initial election to the Board or the date of adoption of these Guidelines, whichever is later, to reach the minimum ownership level. III. Access to Management, Employees and Independent Advisors A. Access to Management. The Board shall have complete access to management and other Company employees to ensure that directors can ask questions and gather the information necessary to fulfill their duties. The Board may specify a protocol for making such inquiries. The Board encourages management to invite Company personnel to any Board or committee meeting at which their presence and expertise would be helpful to the Board in considering matters under discussion. B. Access to Independent Advisors. Board members shall have the authority to hire, at the expense of the Company, such independent legal, financial, accounting and other advisors as they deem necessary or appropriate to fulfill their respective or collective duties. The Company’s executive officers shall not receive additional compensation for their service as directors. Compensation for non-employee directors should be competitive with those of public corporations of comparable size. The Governance and Nominating Committee shall determine the amount and form of director compensation to be recommended to the Board in accordance with the provisions of that committee's charter. Changes in director compensation, if any, should be approved by the Board upon the recommendation of the Governance and Nominating Committee. A. Number and Type of Committees. The Board currently has five committees: Audit Committee, Compensation and Organization Committee, Finance Committee, Governance and Nominating Committee and Innovation & Technology Committee. From time to time, the Board may want to form a new committee or disband a current committee depending upon the circumstances. The Board, however, will have at all times an Audit Committee, a Compensation and Organization Committee, and a Governance and Nominating Committee in compliance with applicable law and the rules of the NYSE. B. Composition of Committees and Committee Chairpersons. Each of the Audit, Compensation and Organization, and Governance and Nominating Committees will consist of members meeting any requirements set forth in the applicable charter, including any requirement that such committee consist solely of independent directors as defined by applicable law and the rules of the NYSE. The Board, after considering the desires of individual directors and the recommendation of the Governance and Nominating Committee, is responsible for the appointment of committee members and committee chairpersons. C. Frequency, Length and Agenda of Committee Meetings. Each committee chairperson, in consultation with committee members, will determine the frequency and length of the meetings of the committee, and the agenda for the meetings. D. Charters. Each of the Audit, Compensation and Organization, and Governance and Nominating Committees will have its own written charter which will be approved by the full Board. Each charter will, among other things, set forth the purposes and duties of the committee (including those set forth in applicable law and the rules of the NYSE). E. Outside Advisors. Each committee shall have the authority to hire, at the expense of the Company, such independent legal, financial, accounting and other advisors as it deems necessary or appropriate to fulfill its duties. VI. Director Orientation and Continuing Education A. Orientation. Management will provide an orientation program for new directors to familiarize them with the Company’s business, strategic plans, management team and significant legal, financial and accounting issues. B. Continuing Director Education. Directors are encouraged to maintain and enhance their ability to perform their duties as directors of the Company by pursuing continuing director education opportunities. The Company will, from time to time, provide materials or resources to assist them. A. Selection of Chairman. The Board shall select the Chairman of the Board after receiving recommendations from the Governance and Nominating Committee. B. Selection of Chief Executive Officer. The Board shall select the Chief Executive Officer of the Company after receiving recommendations from the Compensation and Organization Committee. C. Review of Chief Executive Officer. The non-management directors of the Board, led by the members of the Compensation and Organization Committee, will conduct an annual review of the performance of the Chief Executive Officer. The evaluation should be based on objective criteria, including performance of the Company’s business, accomplishment of long-term strategic objectives, and development of management. D. Succession Policy. The Board, led by the members of the Compensation and Organization Committee, shall conduct an annual review of succession planning. The review shall focus on evaluating potential successors to the Chief Executive Officer. The Chief Executive Officer shall make available his or her recommendations and evaluations of potential successors, as well as leadership development plans and programs, to the full Board. VIII. Annual Performance Evaluation of the Board The Board, led by the Governance and Nominating Committee, shall conduct an annual self-evaluation to determine whether the Board and its committees are functioning effectively. The non-management directors (as defined by the rules of the NYSE) shall meet at regularly scheduled executive sessions (without management participation), and the independent directors shall meet in executive session as appropriate matters for their consideration arise, but, in any event, at least once a year. The agenda of these executive sessions shall include such topics as the participating directors shall determine. The Board shall, from time to time, after receiving recommendations from the Governance and Nominating Committee, either (A) appoint a presiding director for these executive sessions, (B) designate the procedure by which a presiding director is selected for each executive session, or (C) appoint a lead independent director, whose responsibilities may include presiding at the executive sessions. Any director who has a concern about the Company’s accounting, internal accounting controls or auditing matters shall communicate that concern directly to the Chairperson of the Audit Committee. Anyone who has a concern about the Company’s accounting, internal accounting controls or auditing matters may communicate that concern confidentially and anonymously to a trained specialist (24 hours a day, 7 days a week, 365 days a year) by calling the Company’s Ethics & Compliance HelpLine at (800) 736-0379. Concerns may also be reported directly to the Chairperson of the Audit Committee. Such communications may be made confidentially and anonymously by delivering a written report in a sealed envelope marked “Confidential” to either of the following addresses:
The Scotts Miracle-Gro Company The General Counsel and the Chief Ethics & Compliance Officer will take care to ensure that any sealed confidential report to the Audit Committee received pursuant to the preceding procedures is delivered to the Chairperson of the Audit Committee (who is a non-management director) without being unsealed. All such concerns will be reviewed and addressed as appropriate by the Audit Committee pursuant to the Company’s polices and procedures. As amended through May 7, 2009 |
