The Board has considered this proposal and concluded for the reasons described below that its adoption is not in the best interests of the Company and its shareholders.
First, the Board believes that it should retain dis- cretion to designate the Chairman of the Board based on such criteria as it deems appropriate from time to time. To this end, under the Company’s Corporate Governance Guidelines, the Board is required to select its Chairman based upon such criteria as the Nominating and Corporate Governance Committee recommends and the Directors believe to be in the best inter- ests of the Company at a given point in time. This process includes consideration of whether the roles of Chairman and Chief Executive Offi- cer should be combined or separated based upon the Company’s needs and the strengths and talents of its executives at any given time. Should the Board determine that the best inter- ests of the Company would be advanced by ask- ing a Director with more than a “nontrivial professional, familial or financial connection” to the Company to chair the Board, the Board be- lieves it should have the discretion to appoint that individual as Chairman of the Board. Second, the Board has implemented policies which are intended to promote the Board’s independence. If the Board appoints a Chairman of the Board who is not an independent Director, the Company’s Corporate Governance
Guidelines require the Board to designate an independent Director to serve as Presiding Director. The selection of Presiding Director is made at a meeting (or that portion of a meeting) at which only independent Directors are present. The Company’s Corporate Governance
Guidelines further require that the independent Directors meet in executive sessions at which the Presiding Director presides. The position of Presiding Director is intended to provide a check and balance on the role and responsibilities of a non-independent Chairman of the Board. The Company’s current Chairman of the Board is Mr. Harold McGraw III. Because Mr. McGraw does not meet the New York Stock Exchange
standards of independence due to his prior service as our President and Chief Executive Officer, the Board has appointed Mr. Edward B. Rust, Jr., the Chairman of the Nominating and Corporate Governance Committee, as the Presiding Director of the Board for the period April 30, 2014 through April 29, 2015. Under our Corporate Governance Guidelines, the Presiding Director has the following responsibilities: (i) be readily available to be consulted by any of the senior executives of the Company as to any concerns they may have about the Company; (ii) be readily available to all Directors to
communicate their issues and concerns to the Chairman or the Chief Executive Officer; (iii) be readily available to the Chief Executive Officer to offer counsel; (iv) preside at all meetings of the Board at which the Chairman is not present, including all meetings of nonmanagement Directors and all executive sessions of the independent Directors; (v) authority to call meetings of the independent Directors including in the event of a crisis and/or the incapacitation of the Chief Executive Officer; (vi) communicate Directors’ feedback to the Chief Executive Officer from the meetings of the non- management Directors and from informal conversations with Directors; (vii) communicate Directors’ feedback to the Chairman and the Chief Executive Officer from the executive sessions of the independent Directors; (viii) review the proposed agenda for each upcoming Board meeting and the annual Board calendar; (ix) review and approve meeting schedules to assure there is sufficient time for discussion of all agenda items; (x) consult with the other Directors and advise the Chief Executive Officer about the quality and timeliness of the materials distributed to the Board; (xi) review and approve the materials and information sent to the Board; (xii) interview, along with the Chief Executive Officer, the Chairman and the Nominating and Corporate Governance Committee, candidates for the Board; and (xiii) assist the Nominating and Corporate Governance Committee with broad issues of corporate governance. Finally, the Directors believe that the policy supported by the proponent is vague, ill-advised
and unworkable. The proponent is supporting a policy that would require the appointment of a Chairman “whose only nontrivial professional, familial or financial connection to the company or its CEO is the directorship”. Under this standard, it is impossible to determine what would constitute “a nontrivial professional, familial or financial connection”. If ownership of Company stock would violate this standard, none of the Company’s independent Directors would qualify for service as Chairman of the Board due to the stock ownership requirements of the Company’s Non-Employee Director Stock Ownership Guidelines. The Board believes that the stock ownership requirements of this policy
are important in establishing a commonality of interests between the Company’s Directors and shareholders.
For each of the above-stated reasons, the Direc- tors believe that adoption of this proposal is not in the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS SHAREHOLDER PROPOSAL.Unless you specify otherwise, the Board intends the accompanying proxy to be voted against this proposal.
Item 6. Other Matters
The Board knows of no other matters which may properly be brought before the Annual Meeting. How- ever, if other matters should properly come before the Meeting, it is the intention of those named in the solicited proxy to vote such proxy in accordance with their best judgment.
By Order of the Board of Directors. SCOTT L. BENNETT
Senior Vice President, Associate General Counsel and Secretary
New York, New York March 18, 2015
Appendix A