GUIDELINES

 

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 7 to 12 is an appropriate size based on the Company's present circumstances. The Board periodically evaluates whether a larger or smaller slate of directors would be preferable.

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 time.

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 status.

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 Market, Inc.

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 resign.

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.

 

 




Performance Evaluation; Succession Planning; Compensation

 

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 the CEO.

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 appropriate.

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.

 

 



Committees

 

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.

 

 



Miscellaneous

 

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 Company facilities.

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.