A. Governance Philosophy
The importance of effective corporate governance has been a cornerstone of MillerKnoll since becoming a publicly traded company in 1970. Our Board recognizes the need to maintain a strong foundation of governance built on a commitment to ethical standards of business conduct, integrity, professionalism, and purpose. This strong foundation is necessary to foster an environment, both in the boardroom and among the Company's entire workforce, that can allow the Company to adapt to an increasingly complex and faster changing world.
The basic responsibility of directors is to exercise their business judgment in good faith and to act in a manner that they believe to be the best interests of the Company and its shareholders. In order to accomplish this, the Board must be comprised of individuals who by occupation, background and experience are in a position to contribute to the Company's success. This includes a composition of individuals with a willingness to express different and diverse perspectives as well as individuals that demonstrate a willingness to listen, appreciate and consider these viewpoints. While diversity and inclusion has become a relatively recent theme among the investment community, MillerKnoll has experienced the benefits of diversity and inclusion for a number of years.
Our Board recognizes the need to work closely with management to review the Company's strategy and monitor its implementation. While the Board is responsible for promoting the success of the Company and its attendant benefits to our shareholders, it recognizes the needs of the Company's other constituents: our employees, our clients and customers, our vendors, and the global environment in which we live, work and play.
B. Responsibilities of the Board of Directors
General Authority and Responsibility
The Board is elected by our shareholders to oversee their interests and the long-term performance and overall success of the Company. The Board serves as the ultimate decision-making body of the Company except for those matters reserved to or shared with our shareholders. The primary responsibilities of the Board are oversight of the Company's strategy, including the Company's purpose and culture, and reviewing, working with and monitoring management with respect to the successful implementation of the Company's strategy.TheBoard'sdetailed responsibilities, some of which are conducted through empowered Committees of the Board, include:
(a) Selecting, regularly evaluating the performance of, and approving the compensation of the Chief Executive Officer (“CEO”) and other senior executives;
(b) Planning for succession with respect to the position of CEO and monitoring management's succession planning for other senior executives;
(c) Reviewing and, where appropriate, approving the Company's major financial objectives, strategic and operating plans and actions;
(d) Overseeing the conduct of the Company's business to evaluate whether the business is being properly managed;
(e) Overseeing the processes for maintaining the integrity of the Company's financial statements and other public disclosures, and compliance with law and ethics;
(f) Reviewing the major risks facing the Company and helping to develop strategies to address those risks; and
(g) Implementing and overseeing the operation of appropriate reporting systems and controls designed to inform the Board of material risks.
The Board of Directors has delegated to the CEO, working with the other executive officers of the Company, the authority and responsibility for managing the business of the Company in a manner consistent with its overall strategy, including the standards and practices of the Company. The CEO and management are responsible to seek the advice and, in appropriate situations, the approval of the Board with respect to material actions to be taken by the Company. The descriptions of the Board's authority and responsibilities in these Governance Guidelines are not intended to create any binding legal obligations, to interpret applicable laws and regulations or to modify the Company's Articles of Incorporation or Bylaws.
C. Board Composition
1. Size of the Board
The Board will have between nine (9) and thirteen (13) members as determined by the Board of Directors from time to time. The Board also has a Corporate Secretary to the Board who attends meetings but does not vote.
2. Classified Board
Board members are elected for staggered terms of generally three years. As a Company that focuses on innovation, we believe it is critical to maintain Board continuity during product investment and business cycles.
3. No Term Limits
The business of the Company is complex, and the Board believes that term limits have the disadvantage of arbitrarily precluding the contribution of directors who have developed insight and expertise while on the Board. Accordingly, continued service as a director is predicated on each member’s performance and qualifications.
4. Majority Voting for Directors
Our Bylaws require that directors be elected by the affirmative vote of a majority of the votes cast in the election of the nominee, except for contested elections. In any non-contested election of directors, any director nominee who receives a greater number of votes cast "against" his or her election than in favor of his or her election is required to tender his or her resignation to the Board. The Governance and Corporate Responsibility Committee is required to make a recommendation to the Board as to whether to accept or reject the resignation or whether any other action should be taken. The Board is required to act on the Governance and Corporate Responsibility Committee's recommendation and publicly disclose that decision within 90 days from the date of the certification of the election results for that meeting.
5. Director Independence
A majority of the members of the Board must be “Independent Directors,” as that term is defined in the listing requirements of Nasdaq. Each year, the Board affirmatively determines the independence of each member who qualifies as an Independent Director.
6. Business Relationships with Directors and Executive Officers
Any transaction between the Company and any executive officer or director of the Company (including that person's family members, persons sharing the same residence, and/or affiliated organizations) must be disclosed to the Board of Directors and is subject to review and approval in accordance with the Company's policy on related party transactions. Directors and executive officers are encouraged to disclose any transaction or relationship that may present a conflict of interest for review and, if necessary, approval pursuant to Company policy. (1)
7. Selection of New Directors
The Governance and Corporate Responsibility Committee screens all potential candidates for participation on the Board and makes recommendations to the Board for appointments and nominations. This Committee's Charter obligates the Committee to evaluate persons recommended as director candidates in the same manner, irrespective of the source of the initial recommendation. The Board may fill vacancies within the range established in our Bylaws.
8. Board Member Criteria
To meet the needs of our Company in a rapidly changing environment, MillerKnoll requires a high-performance Board whose members subscribe to our values and meet the specific resource needs of the business. As an appropriate check and balance to the management team, employees other than the President and CEO will not normally be members of the Board. The Governance and Corporate Responsibility Committee is responsible for determining and reviewing with the Board from time to time the attributes and experience appropriate for Board members in the context of the current make-up of the Board, including experience and knowledge of the Company's history and culture; technical experience and backgrounds such as manufacturing, design, marketing, technology, finance, management structure and philosophy, experience as a senior executive in a public company and diversity. These factors, and others as considered useful by the Board and by the Governance and Corporate Responsibility Committee, are reviewed in the context of an assessment of the needs of the Board.
9. Other Board Memberships
Board members are limited to no more than three public company boards if the Board member is employed on a substantially full-time basis and no more than five if the Board member is not employed on full-time basis.
10. Directors with a Material Change in Status
A director who retires or changes the principal occupation he or she held since last elected to the Board, is required to submit his or her resignation from the Board. The Governance and Corporate Responsibility Committee is required to review and recommend to the Board whether to accept or reject the tendered resignation.
Any employee who becomes a member of the Board, including the CEO, is required to resign from the Board upon termination of employment. The employee may be invited, however, to serve the remainder of his or her term and be nominated for additional terms at the discretion of the Board.
11. Retirement Policy
Under our Bylaws, no person may be elected as a director after he or she attains age seventy-two (72). Also, a director who attains age seventy-two (72) while in office is required to tender his or her written resignation, which resignation shall be effective as of (or no later than) the annual meeting of shareholders at or immediately after such person attains age seventy-two (72).
12. Separation of the Position of Chairperson and CEO
The Board believes the roles of CEO and Chairperson should normally be separated. If the positions are combined, however, the Board will closely monitor the performance and working relationship between the CEO/Chairperson and the Board. In addition, if the positions are combined, the Board will establish a Lead Director who is an independent director, has appropriate authority and duties to act as a liaison between the directors and the CEO/Chairman, and will chair meetings of the independent directors.
13. Board Compensation
It is the policy of the Board that Board compensation should be a mix of cash and equity-based compensation. Directors who are full-time employees of the Company will not be paid for Board participation in addition to their regular employee compensation. Independent directors may not receive consulting, advisory or other compensatory fees from the Company in addition to director compensation.
14. Stock Ownership Guidelines
It is the policy of the Board that all directors, consistent with their responsibilities to the shareholders of the Company as a whole, hold an equity interest in the Company. Toward this end, the Board requires that each director have an equity interest after one year on the Board. The Board encourages each director within five years of joining the Board to have shares of common stock or options for common stock of the Company with a value of at least five times the amount of the annual cash retainer paid to each director.
The Board, through the Executive Compensation Committee, maintains stock ownership guidelines for executive officers.
The Board recognizes that exceptions to this policy may be necessary or appropriate in individual cases and may approve such exceptions. The Board may also approve a policy recognizing compliance with stock ownership guidelines once a director or officer has achieved the required ownership even if that ownership falls below the required values due to a reduction in the market price of the Company's stock.
D. Board Meetings and Materials
1. Scheduling and Selection of Agenda Items for Board Meetings
Board meetings are scheduled in advance and typically will be held every quarter plus an annual meeting. In addition to regularly scheduled meetings, additional Board meetings maybe called upon appropriate notice at any time to address specific needs of the Company. The Board may also take action from time to time by unanimous written consent.
The Chairperson of the Board, in consultation with the CEO (or with the Lead Director if the Chairperson and CEO positions are held by the same person), and with theassistance of management, prepares the agenda for each meeting and distributes it in advance to the Board. Each director may propose the inclusion of items on the agenda, request the presence of or a report by any member of the Company's management, or at any Board meeting raise subjects that are not on the agenda for that meeting.
The annual cycle of agenda items for Board meetings is expected to change on a periodic basis to reflect, among other things, Board requests, changing business andlegal issues and the work done by the Board Committees. It is expected that the Board will have regularly scheduled presentations from finance, product development,operations, sales and marketing, human resources, the Company's vertical markets, Corporate Social Responsibility initiatives and the other major business segments of the Company. The Board's annual agenda will include the long-term strategic plan for the Company and the principal issues facing the Company or those it expects to face in the future.
2. Board Material Distributed in Advance
Information that is important to the Board's understanding of the business, Board and Committee meeting minutes, agenda items, and materials related to agenda items are distributed in writing (either in hard copy or electronically) to the Board or posted on the Company's Executive Website, or made available through other electronic sources, before the Board meets. Supplemental written materials are provided to the Board on a periodic basis and at any time upon request of Board members.
As a general rule, materials on specific agenda topics should be sent to the Board and Committee members in advance so meeting time may be conserved and discussion time focused on questions that the Board or Committee has about the material.
Board members are expected to rigorously prepare for, attend, and participate in all Board and applicable Committee meetings. Each Board member is expected toensure that other existing and planned future commitments do not materially interfere with the member's service as a director. (2)
3. Access to Employees and Board Presentations
The Board has complete access to contact and meet with MillerKnoll employees. The Board encourages management to schedule managers to present at Board meetings who: (a) can provide additional insight into the items being discussed because of personal involvement in these areas, or (b) have future potential that management believes should be given exposure to the Board.
4. Independent Directors’ Discussions
The Board's policy is to have a separate meeting time for the independent directors during each regularly scheduled Board meeting. The Chairperson or the Lead Director will assume the responsibility of chairing the meetings of independent directors and shall bear such further responsibilities that the independent directors as awhole might designate from time to time.
5. Board Communications with Shareholders
Shareholders who wish to communicate with one or more members of the Board of Directors may do so by addressing written comments, c/o the Corporate Secretary,855 East Main Avenue, P.O. Box 302, Zeeland, Michigan 49464-0302. The Corporate Secretary will receive the correspondence and forward it to the Governance andCorporate Responsibility Committee and to any director or directors to whom the communication is directed. The Corporate Secretary is authorized to forward communications that are clearly more appropriately addressed by other departments, such as customer service, human resources or accounting, to the appropriate department. Communications that are forwarded to other departments will be made available to any director who wishes to review them. Individual Board members may, from time to time, meet or otherwise communicate with analysts, the media, any personnel of the Company or any constituencies that are involved with the Company, but only with prior approval of the Board or the Executive Committee or with the knowledge and approval of and coordination with management and, in mostinstances, only at the request of management.
6. Review of Directors and the Board
The Governance and Corporate Responsibility Committee, in conjunction with the CEO, will conduct a biennial review of the overall Board and individual directors. Thisreview includes feedback from the Board and may include input from management and external resources. In addition, the Governance and Corporate Responsibility Committee is required to conduct an evaluation of incumbent directors prior to re-nomination to the Board.
7. Director Orientation and Continuing Education
The Governance and Corporate Responsibility Committee, in conjunction with the CEO, is responsible for new director orientation programs and for director continuingeducation programs. The orientation programs are designed to familiarize new directors with the Company's businesses, strategies, and challenges and to assist new directors in developing and maintaining skills necessary or appropriate for the performance of their responsibilities. Continuing education programs for Board membersmay include a mix of in-house and third-party seminars.
8. Attendance at Annual Shareholders Meeting
The Company encourages each director to attend the Company’s annual meeting of shareholders.
Each Board member is required to maintain as confidential all information about or relating to the Company received in his or her capacity as a director. (3)
E. Board Committees
1. Committees Committees are established by the Board from time to time as required by Nasdaq and to facilitate and assist in the execution of the Board's responsibilities. Committees may be standing or ad hoc. There are currently four standing committees: Executive Committee, Audit Committee, Compensation Committee,and the Governance and Corporate Responsibility Committee.
Each member of the Audit Committee, Compensation Committee, and Governance and Corporate Responsibility Committee must be independent, as provided under the Nasdaq Rules, and each member of the Audit Committee must meet the independence standards imposed by the Sarbanes-Oxley Act of 2002.
Each committee has a written charter, approved by the Board, which describes that committee's general authority and responsibilities, each of which is posted onthe Company's website. Each committee is required to undertake an annual review of its charter and recommend to the Board any revisions as are considered appropriate.
Each committee has the authority to engage outside experts, advisors, and counsel to the extent it considers appropriate to assist that committee in its work. Also, eachcommittee is required to regularly report to the Board concerning its respective activities. The following is a summary of the general responsibilities of the four standingcommittees, the details of which are set forth in the respective committee charters.
2. The Executive Committee may act on behalf of the Board of Directors subject to limitations in the Company’s bylaws subject to the following limitations as outlined in the Executive Committee Charter: (4)
a. Amend the Company’s articles of incorporation or bylaws;
b. Adopt a merger agreement;
c. Recommend to shareholders the sale or other disposition of all or substantially all the property and assets of the Company;
d. Recommend to the shareholders that the Company be dissolved or that a plan of dissolution be revoked;
e. Fill vacancies in the Board; or
f. Declare a dividend or authorize the issuance of shares unless this power is granted by specific resolution of the Board.
3. Audit Committee
The Audit Committee is responsible for (a) the hiring, oversight and compensation of the independent certified public accountants that audit the Company's financial statements, (b) reviewing the integrity of the Company's compliance framework and financial reporting processes, and (c) reviewing the plans, activities, organizational structure, and qualification of the Company's Business Risk group.
4. Compensation Committee
The Compensation Committee reviews and recommends to the Board the annual compensation and program, including goals and objectives, of the CEO, approves the salaries and other matters relating to compensation of other executive officers of the Company, and administers the Company's Long-Term Incentive Plan.
5. Governance and Corporate Responsibility Committee
The Governance and Corporate Responsibility Committee reviews and reports to the Board on matters of corporate governance (that is, the relationships of the Board,the shareholders and management in determining the direction and performance of the Company) and on the adoption and monitoring of corporate policies to comply with statutory and regulatory requirements. It also reviews and addresses these Governance Guidelines and recommends revisions as appropriate.
The Governance and Corporate Responsibility Committee is required to review all proposals submitted by shareholders for action at the Annual Shareholders' Meeting and recommend action by the Board with regard to each such proposal. The Governance and Corporate Responsibility Committee also makes recommendations to the Board regarding the size and composition of the Board, establishes procedures for the nomination process, recommends candidates for election or appointment tothe Board, recommends members and chairpersons of committees, and recommends to the Board compensation for directors, committee members, and committee chairpersons. This committee is also responsible for the review and assessment of the Company's goals and objectives relating to environmental, social, and governance matters.
6. Assignment and Term of Service of the Committee Members
The Board is responsible for the annual appointment of Committee members and Committee chairpersons.
F. Availability of Guidelines
These Governance Guidelines are posted on the Company’s website and referenced in the Company’s annual proxy materials.
(1) To coordinate with Related Party Transaction Policy, which is under review and will be reviewed for any material updates at the next Committee meeting
(2) Moved from C.8 above as not a matter of "criteria".
(3) Moved from C.8 above as not a matter of "criteria".
(4) Listed limitations on Committee authority as Executive Committees are generally disfavored by certain institutional investors.
Effective July 2022