DISCOVERY COMMUNICATIONS, INC. CORPORATE GOVERNANCE GUIDELINES
The Corporate Governance Guidelines (the “Guidelines”), as adopted by the Board of Directors (the “Board”), provides a flexible framework for Board governance over the affairs of Discovery Communications, Inc. (the “Company”) for the benefit of its stockholders.
Roles of Management and the Board
The Company’s officers and employees, under the direction of its Chief Executive Officer (“CEO”) and the oversight of the Board, conduct the Company’s business with the goal of enhancing the long-term value of the Company for the benefit of its stockholders. The Board is elected by the stockholders to oversee the management of the Company and to help assure that the interests of the stockholders are served.
Board Composition and Selection
Under the Company’s charter documents, the Company is to have a Board comprised of not less than 3 nor more than 15 members, with the exact number to be fixed from time to time by the Board (subject to the rights of holders of any series of preferred stock of the Company). While the Board currently believes that the optimal number of members of the Board is between 3 and 15, it retains the discretion to change the number of members from time to time as circumstances may warrant.
Selection of New Director Candidates: Candidates for nomination or reelection to the Board and its committees will be identified by the Nominating and Corporate Governance Committee. Except where the Company is legally required by contract, bylaw or otherwise to provide third parties with the right to nominate directors, the Nominating and Corporate Governance Committee shall be responsible for (i) identifying individuals qualified to become Board members, consistent with criteria approved by the Board, and (ii) recommending to the Board the persons to be nominated for election as directors at any meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board. Director nominees shall be considered for recommendation by the Nominating and Corporate Governance Committee in accordance with these Guidelines, the policies and principles in its charter and the criteria set forth in Attachment A to these Guidelines.
Change of Responsibility of Director: Any director who retires from his or her principal current employment, or who materially changes his or her current position, should notify the Chairperson of the Nominating and Corporate Governance Committee.
Former CEO's Board Membership: The Board believes that the continuation of a former CEO of the Company on the Board is a matter to be decided in each individual instance by the Board, upon recommendation of the Nominating and Corporate Governance Committee.
Independent Directors: A majority of the members of the Board shall be independent directors. To be considered independent: (1) a director must be independent as determined under Rule 4200(a)(15) of The Nasdaq Stock Market, Inc. (“Nasdaq”) rules and (2) in the Board’s judgment, the director must not have a relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In addition, each director should meet the qualifications for Board membership established by the Nominating and Corporate Governance Committee and as set forth in Paragraph 3 below.
Candidates for nomination or reelection to the Board should possess the following qualifications, among others:
the highest level of personal and professional ethics, integrity and values;
expertise that is useful to the Company and complementary to the background and expertise of the other members of the Board;
a willingness and ability to devote the time necessary to carry out the duties and responsibilities of Board membership;
a desire to ensure that the Company's operations and financial reporting are effected in a transparent manner and in compliance with applicable laws, rules and regulations; and
a dedication to the representation of the best interests of the Company and all of its stockholders.
The business and affairs of the Company will be managed under the direction of the Board in accordance with applicable law. To promote the discharge of this responsibility and the efficient conduct of the Board’s business, the Board has developed a number of specific expectations of directors. The principal responsibility of the directors is to oversee the management of the Company and, in so doing, serve the best interests of the Company and its stockholders.
Commitment and Attendance: Directors should make every effort to attend, whether in person or telephonically, all regularly scheduled meetings of the Board and meetings of Board committees on which they serve. Directors are expected to review all materials provided at or in advance of meetings of the Board and its committees.
Participation in Meeting: Each director should be sufficiently familiar with the business of the Company and its subsidiaries to facilitate active and effective participation in the deliberations of the Board and of each committee on which he or she serves.
Ethics and Conflicts of Interest: The Company has adopted a Code of Business Conduct and Ethics (the “Code”). Directors are expected to be familiar with and to adhere to that Code, including, for example, its provisions governing conflicts of interest. If a director has an actual or potential conflict of interest (which includes being a party to a proposed “related person transaction”), the director should promptly inform the CEO, the General Counsel and the chairperson of the Nominating and Corporate Governance Committee. Directors should recuse themselves from any decision by the Board or a Board committee that involves or affects their personal, business or professional interests. The Nominating and Corporate Governance Committee or such other independent committee of the Board designated by the Board will resolve any conflict of interest issue involving a director or the CEO or any other executive officer of the Company. No related person transaction may be effected by the Company without the approval of the Nominating and Corporate Governance Committee or such other independent committee of the Board designated by the Board to resolve the conflict of interest. For purposes of these Guidelines, a “related person transaction” refers to any transaction which the Company would be required to disclose pursuant to Item 404 of Regulation S-K.
Other Relationships: The Company values the experience directors bring from their separate business endeavors and from other boards on which they serve. However, the Company recognizes that these commitments may also present demands on a director’s time and availability and may present conflicts, or potential conflicts, of interest. Directors should advise the Chairman of the Board before accepting membership on other boards of directors or committees thereof. Directors should also advise the Chairman of the Board when making changes in other significant commitments involving affiliations with other businesses, charitable organizations or governmental entities. The Chairman of the Board, acting in conjunction with the Chairman of the Nominating and Corporate Governance Committee, shall review all relevant facts and determine if service on such board raises actual or potential conflicts or other significant concerns.
Confidentiality: The proceedings and deliberations of the Board and its committees are confidential. Each director should maintain the confidentiality of information received in connection with his service as a director.
Reliance on Management and Advisors; Indemnification: The directors are entitled to rely on the Company’s senior executives and its outside advisors, auditors and legal counsel, except to the extent that any such person’s integrity, honesty or competence is in doubt. The directors are also entitled to Company-provided indemnification, statutory exculpation and directors’ and officers’ liability insurance.
Presiding Director; Meetings of Independent Directors
The Board will have a presiding director to preside over executive sessions of the independent directors. The role of presiding director will be reviewed annually by the Board. The presiding director will discuss with the independent directors prior to each regularly scheduled Board meeting the need for an executive session. In any event, the independent directors will meet in an executive session at least twice a year.
Separation of the Office of Chairman of the Board and CEO
The Board selects the Company’s CEO and Chairman of the Board in the manner that it determines to be in the best interests of the Company’s stockholders. The Board does not have a policy on whether the offices of Chairman of the Board and CEO should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from among the independent directors or should be an employee of the Company.
Director Access to Management
Each director will have unabridged access to senior management and other employees of the Company in order to become and remain informed about the Company’s business and for any other purpose relevant to the fulfillment of the responsibilities of a member of the Board. Any meetings or contacts that a director wishes to initiate may be arranged through the CEO or the Secretary of the Company or directly by the director.
Selection of Agenda Items: The Chairman of the Board and the Secretary of the Company, in consultation with the Chief Executive Officer, shall prepare an agenda for each Board meeting. Each Board member is free to suggest the inclusion of agenda items and is free to raise, at any Board meeting, subjects that are not on the agenda for that meeting. The agenda shall be distributed in advance to each director unless impracticable.
Frequency and Length of Meetings: The Chairman of the Board, in consultation with the members of the Board, shall determine the frequency and length of the Board meetings. Special meetings may be called from time to time as determined by the needs of the business.
Advance Distribution of Materials: Information and data that are important to the Board’s understanding of the business to be conducted at a Board or committee meeting should generally be distributed in writing to the directors before the meeting, and directors should review these materials in advance of the meeting. The Board acknowledges that certain items to be discussed at a Board or committee meeting may be of an extremely confidential or time-sensitive nature and that the distribution of materials on these matters prior to meetings may not be appropriate or practicable.
Key Committees: The Board shall have at all times an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each such committee shall have a charter that has been approved by the Board. The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.
Assignment of Committee Members: The Nominating and Corporate Governance Committee shall be responsible for recommending to the Board the directors to be appointed to each committee of the Board. Each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall be an “independent director” as defined by the applicable rules of Nasdaq.
Committee Charters: The charters of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall set forth the purposes, goals and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board. The Board shall, from time to time as it deems appropriate, review and reassess the adequacy of each charter and make appropriate changes.
Frequency and Length of Committee Meetings: The chairman of each committee, in consultation with the committee members, shall determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s charter. Special meetings may be called from time to time as determined by the needs of the business and the responsibilities of the committees.
Reporting Violations or Other Concerns
Anyone who wants to report a concern relating to the Company’s Code or an accounting or auditing matter and wishes to submit the concern confidentially or anonymously may do so via a confidential web-based reporting system, by calling the Ethics Hotline or sending a letter or fax to the General Counsel of the Company. The message will be forwarded to the General Counsel who will evaluate the merits of any concerns received and authorize such follow-up actions, if any, as deemed necessary or appropriate to address the substance of the concern. The General Counsel will provide a summary to the Audit Committee of all concerns submitted as described above, and will provide periodic updates to the Audit Committee until a resolution for each concern is reached.
Retention of Advisors
The Board and each of its committees may engage the services of consultants or advisors for the benefit of the Board or such committee, at the Company’s expense, without consulting or obtaining the approval of any officer of the Company in advance. The Board or a committee must provide notification, as appropriate, to the General Counsel or Chief Operating Officer of the Company when engaging such advisors. Such advisors may be the regular advisors to the Company.
The Company seeks to attract exceptional talent to its Board. Therefore, the Board compensation should be reasonable and competitive, as determined by the Board. The Board should annually review the form and amount of all types of compensation to be paid by the Company to or on behalf of members of the Board, including, without limitation, cash fees, stock incentives and contributions to charities at the behest of Board members. The Board believes that it is appropriate for the Chairman of the Board and the chairmen and members of the committees to receive additional compensation for their services in those positions. However, directors who are employees of the Company will not receive additional compensation for service on the Board or any committee of the Board.
Orientation of New Directors
The Board or a committee designated by the Board may develop and oversee an orientation program for new members of the Board and its committees. The orientation program should provide new directors with comprehensive information about the Company’s business, performance, policies and procedures and the responsibilities and expectations of members of the Board and any committees on which they serve. All other directors are also invited to attend the orientation program.
The Company will encourage the participation of all Board members in continuing education programs, at the expense of the Company, that are relevant to the business and affairs of the Company and the fulfillment of the directors’ responsibilities as members of the Board and any of its committees.
Management Succession Planning
At least annually, the Board will review and develop a succession plan for selecting a successor to the CEO and other members of senior management, both in the event of an emergency and in the ordinary course of business. The succession plan should include an assessment of the experience, performance and skills of possible successors. The Nominating and Corporate Governance Committee will oversee the Board’s annual review on succession planning.
Each year, the Board and the committees will conduct a self-evaluation to determine whether they are functioning effectively. In connection therewith, the Nominating and Corporate Governance Committee will establish a process for the Board and the committees to follow in conducting the self-evaluations and will oversee these evaluations. The Nominating and Corporate Governance Committee will discuss these evaluations and determine what, if any, action should be taken by the Board and its committees to improve their performance.
The Board believes that the policies and procedures described in these Guidelines should remain flexible to facilitate the Board’s ability to respond to changing circumstances and conditions in fulfilling its responsibilities to the Company and its stockholders. Accordingly, the Board reserves the right to amend these Corporate Governance Guidelines or follow different procedures, when deemed appropriate by the Board, from time to time.
Periodic Review of the Corporate Governance Guidelines
The Nominating and Corporate Governance Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of these Guidelines and recommend any proposed changes to the Board for approval.
1. Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.
2. Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the Company.
3. Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board and its committees.
4. Nominees should understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders.
5. Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director.
Directors are selected on the basis of talent and experience. Diversity of background, including diversity of gender, race, ethnic or geographic origin, age, and experience in business, government and education and in media, entertainment and other areas relevant to the Company’s activities are factors in the selection process. As a majority of the Board must consist of individuals who are independent, a nominee’s ability to meet the independence criteria established by Nasdaq is also a factor in the nominee selection process.
Application of Criteria to Existing Directors
The renomination of existing directors should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above. In addition, the Nominating and Corporate Governance Committee shall consider the existing directors’ performance on the Board and any committee in assessing whether they continue to meet these qualifications. Criteria for Composition of the Board
The backgrounds and qualifications of the directors considered as a group should provide a significant breadth of experience, knowledge and abilities that shall assist the Board in fulfilling its responsibilities.