The following Corporate Governance
Guidelines have been adopted by the Board of Directors of CDW Corporation
("CDW" or the "Company") to assist the Board in the
exercise of its responsibilities. These guidelines reflect the Board's
commitment to monitor the effectiveness of policy and decision-making at both
the Board and management levels, with the objective of enhancing shareholder
value over the long term. The Board intends that these guidelines serve as a
flexible framework, not as a set of binding legal obligations, and should be
interpreted in the context of all applicable laws and regulations, the
Company's charter documents and other governing documents. The guidelines are
subject to future refinement or changes as the Board may find necessary or
advisable for CDW in order to achieve these objectives.
Board Composition and Selection; Independent Directors
1. Board Size. The Board
believes is an
appropriate size based on the Company's present circumstances. The Board
periodically evaluates whether a larger or smaller slate of directors would
2. Selection of Board Members. All Board members
are elected annually by the Company's shareholders, except as noted below
with respect to vacancies. Each year at the Company's annual meeting, the
Board recommends a slate of directors for election by shareholders. The
Board's recommendations are based on its determination (using advice and
information supplied by the Nominating Committee) as to the suitability of
each individual, and the slate as a whole, to serve as directors of the
Company, taking into account the membership criteria discussed below. The
Board's recommendations must be approved by a majority of the directors.
The Board may fill vacancies in existing or new director positions. Such
directors elected by the Board serve only until the next election of
directors unless elected by the shareholders to a further term at that
3. Board Membership Criteria. The Nominating
Committee works with the Board on an annual basis to determine the
appropriate characteristics, skills and experience for the Board as a whole
and its individual members. In evaluating the suitability of individual
Board members, the Board takes into account many factors, including general
understanding of marketing, finance and other disciplines relevant to the
success of a publicly-traded company in today's business environment;
understanding of CDW's business; education and
professional background and reputation for integrity. The Board evaluates
each individual in the context of the Board as a whole, with the objective
of recommending a group that can best perpetuate the success of the
business and represent shareholder interests through the exercise of sound
judgment, using its diversity of experience. In determining whether to
recommend a director for re-election, the Nominating Committee also
considers the director's past attendance at meetings and participation in
and contributions to the activities of the Board.
4. Board Composition - Mix of Management and Independent
Directors. The Board believes that, except during periods of
temporary vacancies, a substantial majority of its directors must be
independent. In determining the independence of a director, the Board will
apply the definition of "independent director" in the listing
standards of The Nasdaq Stock Market, Inc. and
applicable laws and regulations.
5. Term Limits. The Board does not believe it
should limit the number of terms for which an individual may serve as a
director. Directors who have served on the Board for an extended period of
time are able to provide valuable insight into the operations and future of
the Company based on their experience with and understanding of the
Company's history, policies and objectives. The Board believes that, as an
alternative to term limits, it can ensure that the Board continues to
evolve and adopt new viewpoints through the evaluation and nomination
process described in these guidelines.
6. Retirement Policy. The Board believes that 72
is an appropriate retirement age for outside directors, although the Board
may determine, in special circumstances, that this
policy should not apply with respect to any particular director. This
policy shall not apply to any director over the age of 72 and in office as
of the date of the adoption of these guidelines by the Board.
7. Directors with Significant Job Changes. The
Board believes that any director who retires from his or her present
employment, or who materially changes his or her position, should tender a
written resignation to the Board. The Board, and specifically the
Nominating Committee, would then evaluate whether the Board should accept
the resignation based on a review of whether the individual continues to
satisfy the Board's membership criteria in light of his or her changed
8. Selection of CEO and Chairman. The Board
selects the Company's CEO and Chairman in the manner that it determines to
be in the best interests of the Company's shareholders.
9. Limitation on Other Board Service. Directors
who are currently serving as the chief executive officer or other executive
officer of a public company may serve on a total of no more than three
public company boards. Directors who are not currently serving as a chief
executive officer or other executive officer of a public company may serve
on no more than four public company boards.
10. Charitable Contributions. The Company may on
occasion make contributions to charitable organizations with which a director
is affiliated. All such contributions shall be reasonable in amount. No
contribution shall be made if to do so would cause the director to no
longer be considered an "independent director" within the meaning
of the listing standards of The Nasdaq Stock
11. Conflicts of Interest. All directors must
comply with the applicable provisions of the Conflicts of Interest section
of the Company's Code of Business Conduct and Ethics. If an actual or
potential conflict of interest develops for any reason, including, without
limitation, because of a change in the business operations of the Company
or a subsidiary, or in a director's circumstances, the director should
immediately report such matter to the General Counsel of the Company for
evaluation. The General Counsel shall have the discretion to report any or
all such actual or potential conflicts to the Chairman of the Corporate
Governance Committee for review and determination, but is required to
report to the Chairman of the Corporate Governance Committee all such
conflicts that are material. For purposes of this policy, an actual or
potential conflict of interest is considered to be material if it would
require proxy statement disclosure or if it involves a relationship with a
competitor of the Company. The requirement that the General Counsel notify
the Corporate Governance Committee as to the existence of actual or
potential conflicts of interest that are material is in addition to the
requirement, set forth in the Audit Committee Charter, that the Audit
Committee review and approve all related-party transactions. If a
significant conflict cannot be resolved, the director may be required to
If a director has a personal interest in a matter before the Board, the
director must disclose the interest to the Board, excuse himself
or herself from participation in the discussion and not vote on the matter.
Board Meetings; Involvement of Senior Management
12. Board Meetings - Agenda. The Chairman of
the Board and CEO will set the agenda for each Board meeting, and will
distribute this agenda in advance to each director. The Chairman of the
Board and CEO shall, as appropriate, solicit suggestions from other
directors as to agenda items for Board meetings.
13. Advance Distribution of Materials. All
information relevant to the Board's understanding of matters to be
discussed at an upcoming Board meeting should be distributed in writing or
electronically to all members in advance, whenever feasible and
appropriate. This will help facilitate the efficient use of meeting time.
In preparing this information, management should ensure that the materials
distributed are as concise as possible, yet give directors sufficient
information to make informed decisions. The Board acknowledges that certain
items to be discussed at Board meetings are of an extremely sensitive
nature and that the distribution of materials on these matters prior to
Board meetings may not be appropriate.
14. Access to Coworkers. The Board should have
access to Company coworkers in order to ensure that directors can ask all
questions and ascertain all information necessary to fulfill their duties.
Directors shall notify the CEO in advance of contacting any coworker and
shall use judgment to ensure that any such contact is not unduly disruptive
to the business of the Company.
Management is encouraged to invite Company personnel to any Board meeting
at which their presence and expertise would help the Board have a full
understanding of matters being considered.
15. Executive Sessions of Independent Directors.
The independent directors of the Company will meet regularly in executive
session, i.e., with no management directors or management present. These
executive session discussions may include such topics as the independent
directors determine. During these executive sessions, the independent
directors shall have access to members of management and other guests as
the independent directors determine.
16. Lead Director. The Chairman of the Corporate
Governance Committee shall be responsible for chairing the regular sessions
of, and otherwise providing leadership to, the independent directors.
17. Annual CEO Evaluation. The Chairman of
the Corporate Governance Committee shall lead a review at least annually of
the performance of the CEO. The results of this review are communicated to
18. Succession Planning. As part of the annual
officer evaluation process, the Compensation and Stock Option Committee
works with the CEO to plan for CEO succession, as well as to develop plans
for interim succession for the CEO in the event of an unexpected
occurrence. Succession planning may be reviewed more frequently by the Board
as it deems warranted.
19. Board Self-Evaluation. The Corporate
Governance Committee is responsible for facilitating an annual evaluation
of the performance of the full Board and reports its conclusions to the
Board. The Corporate Governance Committee's report should generally include
an assessment of the Board's compliance with the principles set forth in
these guidelines, as well as identification of areas in which the Board
could improve its performance.
20. Director Compensation. Company management should
report to the Corporate Governance Committee or the full Board on an annual
basis as to how the Company's director compensation practices compare with
those of comparable public corporations. The Corporate Governance Committee
shall lead the Board, as necessary, in reviewing its director compensation
practices and considering whether changes to such practices are
No non-management director shall receive any compensation from the Company
other than his or her compensation as a director.
21. Stock Ownership Guidelines. The Board
believes that, in order to more closely align the interests of directors
with the interests of the Company's shareholders, all directors should
maintain a minimum level of ownership of shares of the Company's common
stock. The Corporate Governance Committee is responsible for establishing
and periodically reviewing the share ownership guidelines for directors. As
of the date hereof, those guidelines call for directors to own a minimum of
2,000 shares of Company common stock by no later than five years from (a)
the date of the Board's adoption of these Corporate Governance Guidelines
or (b) the date on which the director joins the Board.
22. Number and
Type of Committees. The Board has four committees - an Audit Committee,
a Compensation and Stock Option Committee, a
Corporate Governance Committee and a Nominating Committee. The Board may
add new committees or remove existing committees as it deems advisable in
the fulfillment of its primary responsibilities. Each committee will
perform its duties as assigned by the Board of Directors in compliance with
Company by-laws and the Committee's charter. Committee duties are described
briefly as follows:
Audit Committee. The Audit Committee oversees the
Company's accounting and audit processes. The committee is directly responsible
for the appointment, compensation, retention and oversight of the
Company's independent auditors.
Compensation and Stock Option Committee. The
Compensation and Stock Option Committee (i)
discharges the Board's responsibilities relating to compensation of the
Company's executive officers and (ii) reviews and recommends to the Board
compensation plans, policies and programs intended to attract, retain and
appropriately reward coworkers.
Corporate Governance Committee. The Corporate
Governance Committee is responsible for developing and recommending to
the Board policies and practices with respect to corporate governance.
Nominating Committee. The Nominating Committee is
responsible for identifying, evaluating and recommending to the Board
individuals qualified to be directors of the Company.
23. Composition of Committees; Committee Chairpersons.
The Audit Committee, the Compensation Committeesand
Stock Option Committee and the Nominating Committee consist solely of
independent directors. The Corporate Governance Committee consists of a
substantial majority of independent directors. The Board is responsible for
the appointment of committee members and committee chairpersons according
to criteria that it determines to be in the best interest of the Company
and its shareholders.
24. Committee Meetings and Agenda. The
chairperson of each committee is responsible for developing, together with relevant
Company managers, the committee's general agenda and objectives and for
setting the specific agenda for committee meetings. The chairperson and
committee members will determine the frequency and length of committee
meetings consistent with the committee's charter.
25. Ability to Retain Outside Advisors. The Board will
have all resources and authority necessary to discharge its duties,
including the authority to retain outside counsel or other experts or
consultants, as it deems appropriate.
26. Orientation for New Board Members. The
Corporate Governance Committee is responsible for oversight of the orientation
process for new directors. This process includes cultural orientation,
background material on strategies, competition, and financial history,
technology demonstrations, meetings with senior management and visits to
27. Director Education. The Company will, as
appropriate, make available educational programs for directors.
28. Review of Governance Guidelines. The Board
will periodically review these guidelines, as well as consider other
corporate governance principles that may, from time to time, merit
consideration by the Board.