Our corporate governance principles focus our business activities on sustainable value creation and prescribe a management culture conforming to recognized standards of good corporate governance and a policy of transparent communication. Our board of directors provides oversight of the company’s affairs and has adopted comprehensive corporate standards and policies that govern our operations and provide a framework for our actions. Our code of business conduct sets the expectations we have for our directors, management, and associates in operating a responsible company, and guides the decisions we make and the way we conduct business. Our corporate governance guidelines outline a set of procedures and standards to ensure the board fulfills its responsibilities. The board has adopted a number of other governance policies, including board communication, compensation clawback, related party transactions, fair disclosure, and trading in company security policies. For additional information about our corporate governance policies, please review our latest proxy statement and the Corporate Governance section of the Investor Relations portion of our website.
The Nominating and Corporate Governance Committee is responsible for assisting our board in oversight of corporate governance at HD Supply. The Nominating and Corporate Governance Committee regularly reviews board composition and our governance policies to ensure compliance with applicable law and best practices to help shape the ongoing governance of our company. The committee is also responsible for leading the recruitment of qualified board members to bring fresh perspectives and new ideas into our boardroom and recommending annual director nominations to the board.
|Board Independence||Seven of our eight directors are independent.|
|Independent Lead Director||Our independent directors regularly meet in private executive sessions without management.
We have an independent lead director, who serves as the presiding director at the executive sessions of the independent directors.
All committees of the board are comprised exclusively of independent directors.
|Board Oversight||The board regularly devotes substantial time to HD Supply’s strategic priorities, focusing on assessing our progress to date, as well as on strategic initiatives and risks over the short and long term. The board believes that although short-term performance is important, it should be assessed in the context of HD Supply’s long-term goals.|
|Risk Oversight||The board has overall responsibility for oversight of risk management and reviews our major financial, operational, compliance, reputational and strategic risks, including steps to monitor, manage and mitigate such risks.
Each board committee is responsible for oversight of risk management practices for categories of risks relevant to its functions.
|Annual Board Assessments||The board and each board committee conducts an annual assessment of their effectiveness as a group.|
|Board Refreshment||The Nominating and Corporate Governance Committee of the board regularly evaluates the composition of the board, including director tenure and years of committee service, and, from time to time, recommends changes intended to bring diversity of thought and fresh perspectives into our boardroom.
Maintaining a board diverse in gender, race, geography, experience, and fields of expertise is important for the company to maintain a competitive advantage. The Board seeks members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity.
|Stockholder Outreach||Management has in the past engaged in wide-ranging dialogue with our major institutional investors. Both the company and the board benefit greatly from the insights, experiences and ideas exchanged during these engagements. We are committed to continuing this dialogue with our stockholders in the future.|
|Board Declassification – Annual Elections||The board evaluates on an ongoing basis our corporate governance policies. It recently evaluated the current need for a classified board structure and determined that declassification would be in the best interests of the company and its stockholders. At our Annual Meeting, we are asking our stockholders to approve an amendment to our Certificate of Incorporation and Bylaws to declassify our board and provide for the annual election of directors.|
|Stock Ownership Guidelines and Holding Period Requirements||We amended our stock ownership guidelines for our independent directors in 2017 to increase the required ownership from three to five times the annual cash board retainer. Our independent directors must now own at least $450,000 of our common stock within five years of joining the board. All directors, other than the directors who joined the board during 2017, satisfied the prior guidelines of three times the annual cash board retainer as of the May 2017 annual meeting date. Assuming a stock price of at least $34.50, all directors, other than the directors who joined the board during 2017, will satisfy the increased ownership guidelines of five times the annual cash board retainer by the 2018 annual meeting date.
Our CEO must own at least five times, our CFO and each of our executive officers who is in charge of a principal business unit must own three times, and each other executive officer must own one times, his or her annual base salary in our common stock within the later of five years from the 2013 effective date of the policy or the date he or she becomes an executive officer. All of our named executive officers currently satisfy the stock ownership guidelines.
Our directors and executives must hold 50% of their vested awards until the ownership guidelines are satisfied and, once satisfied, must hold sufficient shares to satisfy the guidelines at all times.
|Compensation Clawback||In the event of a significant restatement of financial results, the board may recoup cash incentive bonuses and equity awards granted to our executive officers.|
|Director Orientation and Continuing Education||We provide orientation for new directors and provide our directors with materials or briefing sessions on subjects that we believe will assist them in discharging their duties. We also engage third parties to provide either in-boardroom or dinner meeting education to our directors. To supplement the education we provide, we encourage our directors to attend external programs and reimburse up to $5,000 annually for the costs of attending such programs.|