|GREAT LAKES CHEMICAL CORPORATION
GOVERNANCE GUIDELINE STATEMENT
The Board of Directors (the "Board") of Great Lakes Chemical Corporation (the "Company") has adopted the following guidelines to: (a) assure the Board's effectiveness and independence in evaluating corporate and management performance; and, (b) advise shareholders of the means and processes by which the Board conducts its business. The Board believes its fundamental obligation is to act on behalf of the shareholders in maximizing the long-term value of the Company.
1. Independence. A majority of the Board will consist of independent directors. To be an "independent director" means:
In addition, as to members of the Audit Committee, directors' fees are the only compensation they may receive from the Company, and a director who otherwise is "independent" under this definition, but who also holds 20% or more of the Company's stock (or who is a general partner, controlling shareholder or officer of any such holder) cannot chair, or be a voting member of, the Audit Committee.
2. Nomination and Tenure. As set forth in its charter, the Governance and Nominating Committee, which consists entirely of independent directors, will act as the nominating committee. It will, in consultation with the Chief Executive Officer, review each director's continuation on the Board annually before making its recommendation regarding director nominations.
3. Board Leadership. The Board believes that, in ordinary circumstances, the positions of Chairman and CEO should be combined. The independent directors will designate and publicly disclose a presiding independent director who will chair executive sessions held without the CEO. This "presiding independent directorship" will rotate annually on a basis to be determined by the independent directors. Any interested party wishing to make concerns known to the presiding independent director or to the non-management directors as a group may do so in writing in care of the Secretary of the Company. The Secretary will cause the writings to be forwarded to the directors with or without review by management, as directed by the interested party.
4. Service on Other Boards. The Board believes that directors of the Company should serve on no more than five boards of unaffiliated publicly traded companies, as long as service on those boards does not impact the director's independence under these guidelines.
5. Board Processes. The following are the fundamental processes of the Board:
6. Retirement or Job Change. Directors will not be nominated or renominated after their 72nd birthday. Directors who retire from or otherwise change their principal positions held when they were initially elected to the Board are expected to offer their resignations, but will not necessarily be required to leave the Board.
7. Stock Ownership and Compensation. Each Director is expected to own the greater of 1,500 shares or shares valued at three times the annual retainer within five years of his or her initial election or appointment. The Compensation Committee will periodically review the Company's director compensation practices to ensure they are reasonable, designed to attract top quality directors, and in the best interest of the shareholders.
8. Committees. The Chairman will propose, and the Board will, pursuant to the By-Laws, appoint all committees. The Governance, Audit and Compensation Committees will consist entirely of independent directors.
9. Board Self-Evaluation. The Board will conduct a self-evaluation at least annually to determine whether it, its members, and its committees are functioning effectively.
10. Director Orientation and Continuing Education. The Board will maintain a director orientation for new and continuing directors, and the Company will sponsor individual Board members' continuing director education.
11. Management Succession. The Board's policies on selection and performance review of the CEO and succession in the event of an emergency or the retirement of the CEO are set forth in the published Compensation Committee charter.
12. Review and Update. These guidelines will be reviewed and updated periodically.