MISSION OF THE EQUIFAX INC. BOARD OF DIRECTORS
The Equifax Inc. Board of Directors serves shareholder interests in the management and growth of a successful business, including optimizing long-term financial returns. The Board is responsible for directing the Company in such a way to ensure this result. This is an active, not a passive, responsibility. The Board has the responsibility to ensure that in good times, as well as difficult ones, management is capably executing its responsibilities. The Board's responsibility is to regularly monitor the effectiveness of management policies and decisions including the execution of its strategies.
In addition to fulfilling its obligations for increased shareholder value, the Board has responsibility to Equifax's customers, employees, and suppliers and to the communities where it operates -- all of whom are essential to a profitable business. All of these responsibilities, however, are founded upon the successful perpetuation of the business.
GUIDELINES ON SIGNIFICANT CORPORATE GOVERNANCE ISSUES
Selection and Composition of the Board
1. Board Membership Criteria
The Governance Committee is responsible for developing and recommending to the Board criteria for selection of qualified directors, including criteria for the evaluation of nominees submitted by the shareholders. More specifically, the criteria to be considered shall include: the highest degree of integrity and ethical standards; independence from management; the ability to provide sound and informed judgment; a history of achievement that reflects superior standards; a willingness to commit sufficient time; possess financial literacy; and other public board memberships should not exceed five at the time a candidate is considered for election.
The Governance Committee will review with the Board, on an annual basis, the appropriate skills and characteristics required of Board members in the context of the current circumstances of the Board at that point in time. This assessment should include consideration of those factors deemed relevant by the Governance Committee and the Board such as issues of diversity, age, professional experience, skills (such as understanding of accounting, finance, markets, technologies, international operations, corporate governance, and industry knowledge) and other board commitments. An individual director's background should be complementary to the Company's needs.
2. Selection and Orientation of New Directors
The Governance Committee is responsible for recommending to the Board a slate of directors for submission to shareholders at the Company's annual meeting, and is also responsible for considering and making recommendations to the Board concerning any nominees for director submitted by the shareholders in accordance with the nomination procedures in the Bylaws and any other policies or procedures adopted by the Governance Committee or the Board in connection with shareholder nominations.
The Board shall be responsible for selecting director nominees and recommending them for election by the shareholders. Shareholders may submit nominees for consideration as set forth in the latest proxy statement. The Board delegates the screening process involved to the Governance Committee with direct input from the Chairman of the Board and the Chief Executive Officer.
The Governance Committee oversees the director orientation and continuing education activities of the Board. The Board and the Company have an orientation process for new directors that includes background materials and meetings with senior management. Continuing education opportunities for directors will be identified and directors are encouraged to participate in appropriate continuing education activities.
3. Extending the Invitation to a Potential Director to Join the Board
The invitation to join the Board should be extended by the Board itself through the Chair of the Governance Committee and the Chairman of the Board.
4. Selection of Chairman and CEO
The Board should be free to make this choice in the best interests of the Company. Therefore, the Board does not have a policy, one way or the other, on whether or not the role of the Chief Executive Officer and Chairman should be separate and, if it is to be separate, whether the Chairman should be selected from among non-employee directors.
5. Lead Director
The Board has adopted a policy that it have a Lead Director, annually selected by non-employee directors from among the non-employee directors, who will convene and chair regularly scheduled executive sessions of the non-employee directors; assist with the dissemination of information among members of the Board, including the Chairman of the Board and the Chief Executive Officer; and confer as appropriate with the Chairman and the Chief Executive Officer on matters involving the Board, including the quality and content of information flow among the Board members. The Lead Director may have such other responsibilities as the non-employee directors may designate from time to time.
For purposes of these Guidelines, "non-employee directors" shall mean only those directors who (1) are not current employees of the Company, or (2) have not been employees of the Company at any time within the past five years.
Board Composition and Performance
6. Size of the Board
The Board believes that the number of directors should not exceed a number that can function efficiently as a body. The Company's Bylaws provide that the number of directors shall be fixed from time to time by the Board.
7. Inside and Outside Directors
On matters of corporate governance, the Board intends that decisions will be made by non-employee directors.
8. Access to Independent Advisors
In the course of fulfilling its duties, the Board shall have the authority to access Company resources, seek advice and assistance from outside consultants, legal counsel or other independent advisors as the Board, in its sole discretion, determines to be necessary or appropriate in carrying out its duties.
It is the policy of the Board that a majority of its members will be independent directors. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with the Company. Independent directors shall meet the independence requirements of the New York Stock Exchange listing requirements (NYSE rules) and such other independence standards applicable to independent Board members as may be in effect from time to time under applicable laws, rules or regulations.
The Board has established guidelines (attached as Appendix A hereto) to assist it in determining director independence, which conform to or are more exacting than the independence requirements of the current NYSE rules. In addition to applying these guidelines, the Board will consider all relevant facts and circumstances in making an independence determination, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation.
The Governance Committee and Board will monitor and review director independence, and the Board will make and publicly disclose its independence determination for each director when the director is first elected to the Board and annually thereafter for all nominees for election as director. If the Board determines that a director who satisfies the NYSE rules is independent even though he or she does not satisfy all of the Company's independence guidelines, this determination will be disclosed and explained in the next proxy statement. Each director shall notify the Board of any change in circumstances that may put his or her independence at issue. If so notified, the Board will reevaluate, as promptly as practicable thereafter, such director's independence.
Audit Committee members shall additionally meet the independence criteria applicable to them under Rule 10A-3 of the Securities Exchange Act of 1934. It is also the sense of the Board that each member of the Compensation, Human Resources & Management Succession Committee should meet the criteria for being a "non-employee director" under Rule 16b-3 of the Securities Exchange Act of 1934 and be an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code.
10. Former Chief Executive Officer's Board Membership
The Board believes this is a matter to be decided on individual circumstances. It is assumed that when the Chief Executive Officer resigns from that position, he/she should submit his/her resignation from the Board at the same time. Whether the individual continues to serve on the Board is a matter for determination by the Board.
11. Directors Who Change Their Present Job Responsibility
The Board believes that individual directors who significantly change the responsibility they held when they were elected to the Board should submit a letter of resignation to the Board. It is not the sense of the Board that the directors who retire, or change the position they held when they came on the Board, should leave the Board in every instance. There should, however, be an opportunity for the Board, through the Governance Committee, to review continued Board membership under these circumstances.
12. Term Limits
While term limits may help ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole. Accordingly, the Board has not established term limits for director service.
As an alternative to term limits, the Governance Committee, in conjunction with the Chief Executive Officer and the Chairman of the Board, will formally review each director's contribution to the Board annually. This will also allow each director the opportunity to conveniently confirm his/her desire to continue as a member of the Board.
The Board believes that the current retirement age of 70 (65 for employee-directors) is appropriate, as stipulated in Section 2.5 of the Bylaws. A director reaching normal retirement age, or a director who changes his/her employer or otherwise has a significant change in job responsibilities or other business or professional relationship, shall submit his/her resignation.
At the request of the Governance Committee, and if ratified by the Board, a director may continue to serve after the normal retirement age or after a change of employer or job responsibilities or other relationships, if he/she continues in a position or in business or professional activities, or possesses special qualifications, that the Governance Committee and Board determine would be of substantial benefit to the Company.
14. Board Compensation Review; Director Stock Ownership Guidelines
The Compensation, Human Resources & Management Succession Committee, as well as the Governance Committee, will annually review the status of Board compensation in relation to comparable U.S. public companies based on such benchmarking data as they deem appropriate. To create a direct linkage with corporate performance, the Board believes that equity in the Company should constitute a meaningful portion of a director's overall compensation. Directors are expected to own Company stock, the value of which is at least four times the annual Board cash retainer, by the fourth anniversary of the date the director was first elected to the Board.
Changes in Board compensation, if any, will be based upon recommendation of the Compensation, Human Resources & Management Succession Committee, with concurrence by the Governance Committee.
15. Executive Sessions of Outside Directors
The non-employee directors of the Board will meet without management present at each regularly scheduled meeting of the Board and such meetings will be convened and chaired by the Lead Director. If one or more non-employee directors are not also independent directors, the independent directors shall meet in executive session at least annually in addition to any meetings of the non-employee directors. The format of these meetings will include, in part, a discussion with the Chief Executive Officer on each occasion.
16. Assessing the Board's Performance
The Governance Committee is responsible to report annually to the Board an assessment of the Board's performance. This should be done following the end of each fiscal year and at the same time as the report on Board membership criteria. This assessment should be of the Board's contribution as a whole and specifically review areas in which the Board and/or the management contribution may be improved. Its purpose is to increase the overall effectiveness of the Board and its Committees.
17. Board's Interaction with Investors, Press, Customers, etc.
The Chairman of the Board and Chief Executive Officer is responsible for establishing effective communications with the Company's stakeholder groups, i.e., shareholders, customers, Company associates, communities, suppliers, creditors, governments, and corporate partners. It is the policy of the Board that management speaks for the Company.
The Board believes that it is important for directors to make themselves available to the Company's stakeholders by attendance at each Annual Meeting of Shareholders.
Shareholders interested in communicating directly with Board members may do so by writing to them in care of the Corporate Secretary, Equifax Inc., 1550 Peachtree Street, N.W., Atlanta, Georgia 30309. Correspondence will be forwarded as directed by the shareholder. The Company may first review such communications and screen out solicitations for goods and services and similar inappropriate communications unrelated to the Company or its business. All concerns related to audit or accounting matters will be referred to the Audit Committee.
Board Relationship to Management
18. Regular Attendance of Non Directors at Board Meetings
With the advice and consent of the Chairman of the Board and the Chief Executive Officer, the Board welcomes attendance at Board meetings of non-Board members who are members of management.
19. Board Access to Management
Board members have complete access to Company management and employees. Board members will ensure, in their judgment, that contact is not distracting to the business operations of the Company.
Furthermore, the Board encourages management to, from time to time, bring managers into Board meetings who: (a) can provide additional insight into the items being discussed because of personal involvement in these areas, and/or (b) represent managers with future potential that the senior management believes should be given exposure to the Board.
20. Board Meetings - Scheduling and Attendance
The Chairman of the Board is responsible for scheduling meetings of the Board. Meetings may be scheduled as in-person or telephone meetings. The Board and Committees may also act by unanimous written consent. Directors are responsible for attendance, either in-person or telephonically, at all meetings of the Board and Committees on which they serve.
21. Selection of Agenda Items for Meetings
The Chairman of the Board and the Chief Executive Officer (if the Chairman is not the Chief Executive Officer) will establish the agenda for each Board meeting. Each Board member may suggest the inclusion of item(s) on the agenda.
22. Board Materials Distributed in Advance
It is the sense of the Board that information and data that is important to the Board's understanding of the business be distributed in writing to the Board before the Board meets. As a general rule, presentations on specific subjects should be sent to the Board members in advance so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the material.
23. Number, Structure and Independence of Committees
The Governance Committee has the responsibility to recommend to the Board which Board Committees to form, and the composition and responsibilities of such Committees. The current Committees are Audit; Executive; Compensation, Human Resources & Management Succession; Governance; and Finance. Committee membership, with the exception of the Executive and Finance Committees, must consist solely of independent, non-employee directors.
24. Assignment and Rotation of Committee Members
The Governance Committee is responsible, after consultation with the Chairman of the Board and the Chief Executive Officer, and with consideration of the skills and desires of individual Board members, for recommending to the Board the assignment of Board members to various Committees.
It is the sense of the Board that consideration should be given to rotating Committee members and Committee chairs periodically at five-year intervals, but the Board does not mandate a policy of such rotation since there may be reasons to maintain an individual director's committee membership or committee chair for a longer period.
25. Frequency and Length of Committee Meetings
Committee Chair, in consultation with Committee members, will determine the frequency, and the length, of Committee meetings
26. Committee Agendas
Committee Chair, in consultation with Committee members and management, will develop Committee agendas.
27. Succession Planning
The Chair of the Compensation, Human Resources & Management Succession Committee will report annually to the Board on succession planning. There should also be available, on a continuing basis, the Chief Executive Officer's recommendation as to a successor should he/she be unexpectedly rendered unable to perform the duties of such office.
28. Management Development
The Chief Executive Officer will report annually to the Board concerning the Company's program for management development. This report should be given to the Board at the same time as the succession planning report noted above.
29. Code of Ethics and Compliance Programs
The Board expects all directors, officers and employees to act with the highest standards of integrity and adhere to the Company's policies and applicable code of conduct, ethics and compliance program. Directors also are required to act at all times in accordance with the requirements of the Company's Code of Conduct and Ethics for Directors and compliance program, including its insider trading policy. The Audit Committee of the Board annually reviews and oversees compliance with the Company's ethics and compliance programs.
APPENDIX A TO EQUIFAX INC. GUIDELINES ON SIGNIFICANT CORPORATE GOVERNANCE ISSUES
Guidelines for Determining the Independence of Directors
The Board of Directors of Equifax Inc. ("Equifax") believes that a majority of its members should be independent non-employee directors. The Board annually reviews all commercial and charitable relationships that directors may have with Equifax to determine whether our directors are, in fact, independent. To assist it in determining director independence, the Board has established the following guidelines that are consistent with the current listing standards of the New York Stock Exchange
A director will not be considered independent if, within the preceding three years,
- the director was an employee of, or an immediate family member of the director was an executive officer of, Equifax;
- the director or an immediate family member of the director has received during any 12-month period more than $100,000 in direct compensation from Equifax, other than director fees and pension or other deferred compensation for prior service to Equifax (provided such compensation is not contingent in any way on continued service);
- the director or an immediate family member is or was employed as an executive officer of another company where any of Equifax's present executive officers at the same time serves or served on that company's compensation committee; or
- the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Equifax for property or services in an amount which exceeds or exceeded the greater of $1 million or 2% of such other company's consolidated gross revenues.
A director will not be considered independent if (i) the director or an immediate family member is a current partner of the firm that is Equifax's internal or independent auditor; (ii) the director is a current employee of such a firm; (iii) an immediate family member of the director is a current employee of such a firm and who participates in the firm's audit, assurance or tax compliance (but not tax planning) practice; or (iv) the director or an immediate family member was within the preceding three years (but is no longer) a partner or employee of such a firm and personally worked on Equifax's audit within that time.
The following commercial or charitable relationships will not, by themselves, impair a director's independence:
- a director is an executive officer of another company which is indebted to Equifax, or to which Equifax is indebted, and the total amount of either company's indebtedness to the other is less than two percent of the total consolidated assets of the company he or she serves as an executive officer;
- a director serves as an officer, director or trustee of a charitable organization and the charitable contributions of Equifax or the Equifax Foundation to such organization are less than the greater of (i) $100,000 or (ii) two percent of the organization's total annual charitable receipts (Equifax or Equifax Foundation automatic matching of employee charitable contributions will not be included in the amount of Equifax or Equifax Foundation contributions for this purpose); and
- a director is an executive officer of another company that does business with Equifax and the annual revenue derived from that business by either company accounts for less than (i) $1,000,000 or (ii) two percent, whichever is greater, of the consolidated gross revenues of such company.
For relationships not covered by these guidelines, the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be made by the directors who satisfy the independence guidelines set forth above. Equifax will explain in its proxy statement the basis for any determination by the Board that a relationship is not material if the relationship does not satisfy one of the specific categories of immaterial relationships identified above.
Audit Committee members may not accept, directly or indirectly, any consulting, advisory or other compensatory fee from Equifax (other than director fees and pension or other deferred compensation for prior service to Equifax).