The Xerox Board of Directors represents our shareholders' interest in the company's successful operation. This active responsibility includes optimizing long-term financial returns and delivering value to our customers, employees, suppliers, communities and other key stakeholders. The Board is accountable for the company executing its responsibilities in a legal and ethical manner in any business environment.
The Corporate Governance Committee of the Board also provides oversight of the company's role as a corporate citizen, which includes review of significant shareholder relations issues and environmental and corporate social responsibility matters; it ensures that our actions align with our core values and priorities for citizenship. To that end, members of the Board have reviewed a detailed outline of this report and support its disclosures. Each director stands for re-election every year at the company's annual shareholder meeting.
In 2011 we have evolved our environmental sustainability governance structure to align with our progress on the journey toward embedding all aspects of environmental sustainability into business strategy and operational processes. With this transition from strategy to implementation in 2011 we established an Environmental Sustainability Steering Committee that is chaired by the President of Xerox Global Business and Services Group and includes executive representation from across the business. This committee champions and guides the corporate environmental sustainability program. The Steering Committee seeks to ensure that environmental sustainability considerations are integrated into all key business decisions and is responsible for establishing strategic priorities that align with corporate goals.
Xerox’s Corporate Governance guidelines are available at www.xerox.com/governance.Independence of the Board
Based on standards for independence developed by the New York Stock Exchange, the Xerox Board is currently 90% independent. It includes one non-independent director: Xerox Chairman and CEO Ursula M. Burns.
More information on the Board’s independence is available at www.xerox.com/governance.Criteria for Membership
The Corporate Governance Committee of the Xerox Board considers candidates for Board membership recommended by Board members, management, shareholders and others. The Corporate Governance Guidelines require that a substantial majority of the Board should consist of independent directors and that management representation on the Board should be limited to senior company management. There are no specific minimum qualifications that the Corporate Governance Committee believes must be met by prospective candidates; however, the Corporate Governance Committee applies criteria set forth in our Corporate Governance Guidelines which include, among other things, the candidate’s broad perspective, integrity, independence of judgment, experience, expertise, diversity, ability to make independent analytical inquiries, understanding of the company’s business environment and willingness to devote adequate time and effort to Board responsibilities. Nominees should bring a variety of business backgrounds, experiences and perspectives to the Board. The Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees.Director Election
In an uncontested election, each director is elected by the affirmative vote of a majority of the total votes cast for the director. Any incumbent nominee who receives a greater number of “votes against” than “for” his or her election is required to submit his or her resignation promptly. The remaining independent directors then evaluate relevant facts and circumstances and determine whether to accept or reject the resignation. Following the official results of the election, the Board is required to promptly disclose, in a filing with the Securities and Exchange Commission, its decision and the reasons for it.Requirement for Ownership of Shares
All non-employee directors are expected to establish a meaningful equity ownership interest in the company. This requirement is achieved by paying directors at least two-thirds of their Board membership fees in deferred stock units, which are required to be held until one year after termination of Board service.Access to Management, Employees and Advisors
Board members have complete access to the Company’s senior management and other employees and, at the company’s expense, are authorized to obtain advice and assistance from outside professional advisors of their choosing.Interaction with Stakeholders
Board members are expected to attend the company’s annual meeting of shareholders and be available to speak with Xerox stakeholders. To communicate with the non-management directors, you may directly contact the Chairman of the Xerox Corporate Governance Committee at the “Contact the Board” link that appears on the company’s website at: www.xerox.com/governance.Executive Sessions of Outside Directors
Each regularly scheduled Board meeting includes an executive session of only the independent directors. The Board annually rotates the appointment of the Chairman of the Corporate Governance Committee and the Compensation Committee as the lead independent director, whose responsibilities include: presiding at executive sessions of the independent directors; calling special meetings of the independent directors, as needed; and serving as liaison on Board-wide issues between the independent directors and the Chief Executive Officer, as needed.Board Committees
Xerox has four standing committees: Audit, Compensation, Corporate Governance and Finance. Each is composed entirely of independent directors.
The purpose of the Audit Committee is to assist in Board oversight of the: (1) integrity of the company’s financial statements; (2) compliance with legal and regulatory requirements; (3) company’s risk assessment policies and practices, including the Enterprise Risk Management process; (4) independent auditors’ qualifications and independence; (5) performance of our independent auditors and internal audit function; (6) Code of Business Conduct and ethics; and (7) preparation of the Audit Committee report to be included in our annual proxy statement.
The purpose of the Compensation Committee is to: (1) discharge the responsibilities of the Board relating to compensation of the company’s officers; (2) oversee the evaluation of the Chief Executive Officer and other executive officers; (3) set the compensation of, and review and approve performance goals and objectives for, the Chief Executive Officer and other executive officers; (4) oversee the administration of the company’s executive compensation plans; (5) prepare a Compensation Committee report required by the applicable SEC rules; (6) consult with the Chief Executive Officer and advise the Board with respect to senior management succession planning; (7) retain and terminate the consulting firms engaged to assist the Committee in the evaluation of the compensation of the CEO and senior management; and (8) review and approve employment, severance, change-in-control, termination and retirement arrangements for executive officers.
The purpose of the Corporate Governance Committee is to: (1) identify individuals qualified to become Board members; (2) recommend to the Board individuals to serve as directors of the company and on committees of the Board; (3) advise the Board with respect to Board composition, procedures and committees; (4) develop, recommend to the Board and annually review a set of corporate governance principles applicable to the company; (5) evaluate and make recommendations to the Board with respect to the compensation of directors; (6) oversee the annual evaluation of the Board and committees; and (7) administer the company’s related Person Transactions Policy.
The purpose of the Finance Committee is to: (1) review the company’s cash position, capital structure and strategies, financing strategies and insurance coverage and dividend policy; and (2) review the adequacy of funding of the company’s funded retirement plans and welfare benefit plans.
The purpose and responsibilities for each of these committees are outlined in committee charters adopted by the Board, which are available at www.xerox.com/governance.