no. dn-012 august 2010

Enhanced Disclosure in the Dow 30 and Select Financial Companies

Board Diversity and Director Qualificationsby Louis L. Goldberg and Janice Brunner

The analysis of disclosure included in 2010 proxy statements by some of the largest

U.S. public companies shows that a wide variety of attributes, skills and experiences

are being considered for the purpose of determining the most qualified individuals

to serve on the board of directors. All of the surveyed companies cited leadership

roles and at least one director’s experience in the company’s industry or a closely

related industry as a consideration. Even though all of the financial institutions

pointed out risk management as a critical skill, only two non-financial institutions

explicitly mentioned this expertise. All companies said that they consider diversity

in identifying nominees for director.

I ncluded within the recent amendments to Regulation

S-K are two new disclosure requirements that require

companies to reach beyond historical biographical

information and provide investors with some insight into

the board’s thought processes and considerations in

nominating directors. Specifically, under the new rules

companies must disclose whether and how the board

considers diversity in the nomination process as well as

what qualifications, skills and experiences the board

considered in determining that a particular director was

qualified to serve on the board.1

This Director Notes is the third in a series of studies devel-

oped in collaboration with Davis Polk & Wardwell LLP to

provide guidelines and examples to member companies of

The Conference Board on emerging practices following

the SEC enhanced disclosure reform of December 2009.

Director NotesThe 2010 Proxy Season

1 Regulation S-K, Item 401(e) and Item 407(c)(vi). Also see SEC Release No.33-9089; 34-61175 (“Proxy Disclosure Enhancements”), December 16, 2009,available at www.sec.gov/rules/final/2009/33-9089.pdf. The rules applyto proxy and information statements, annual reports and registrationstatements under the Exchange Act, and registration statements under theSecurities Act as well as the Investment Company Act. They do not applyto foreign private issuers. For an extensive discussion of the practicalimplications of the reform, see William M. Kelly and Mutya Fonte Harsch,“Directors’ Duties Under the New SEC Rules on Disclosure Enhancement,”Director Notes No. DN-005, February 2010.

It is based on the analysis of 2010 proxy statements of

the 30 companies in the Dow Jones Industrial Average as

well as those of five additional select financial institutions

(see “The Survey,” below.) Six of these companies filed

their proxy statements prior to the effective date of the

new rules and were therefore excluded from the results.

Because a board’s consideration of director nominees

usually involves a careful weighing of many factors,

including the composition of the board as a whole, the

wide range of responses to these specific disclosure

requirements was not surprising. However, the survey

revealed several expected common themes, including

frequent references to recognized leadership qualities

and an appreciation of diversity.

2 director notes board diversity and director qualifications www.conferenceboard.org

Dow 30 Companies

3M Company

Intel Corporation

Alcoa Inc.

International Business Machines Corporation

American Express Company

Johnson & Johnson

AT&T Inc.

JPMorgan Chase & Co.

Bank of America Corporation

Kraft Foods, Inc.

The Boeing Company

McDonald’s Corporation

Caterpillar Inc.

Merck & Co., Inc

Chevron Corporation

Microsoft Corporationa

Cisco Systems, Inc.a

Pfizer Inc.

The Coca-Cola Company

The Procter & Gamble Companya

E.I. du Pont de Nemours and Company

The Travelers Companies, Inc.

Exxon Mobil Corporation

United Technologies Corporationa

General Electric Company

Verizon Communications Inc.

Wal-Mart Stores, Inc.

Hewlett-Packard Companya

The Walt Disney Companya

The Home Depot, Inc.

Select Financial Institutions

Bank of America Corporationb

Citigroup Inc.

The Goldman Sachs Group, Inc.

JPMorgan Chase & Co.b

Morgan Stanley

The SurveyFindings discussed in this report are based on the analysis of 2010 proxy statements filed withthe U.S. Securities and Exchange Commission by corporations in the Dow Jones Industrial Average,as well as those of select financial institutions. See Appendix 1, on p. 6, for a comparative tablesummarizing the disclosure language used by surveyed companies

a These companies (collectively the “Early Filers”) filed their proxy statement before the effective date of the new RegulationS-K rules or have fiscal year-ends before December 20, 2009. As a result, they are largely excluded from the Survey resultsexcept in instances where the company provided the new disclosures in full voluntarily or the information was available fromanother source, as noted.

b Bank of America and JPMorgan Chase are also in the Dow 30.

Board DiversityThe recent amendments to Item 407(c) of Regulation

S-K require disclosure of whether, and if so how, a

nominating committee considers diversity in identifying

nominees for director. In addition, if the nominating

committee (or the board) has a policy with regard to the

consideration of diversity in identifying director nominees,

the company must disclose how the policy is implemented,

as well as how the nominating committee (or the board)

assesses the effectiveness of its policy.

Of the 27 surveyed companies subject to the Item

407(c) amendments:

• All said that they consider diversity in identifying

nominees for director.

• One said that it has a policy on board diversity.

• Ten companies, including one financial institution,

made an affirmative statement that although the board

considers diversity, it does not have a diversity policy

with respect to board make-up.

In the final rule release, the SEC avoided including a

strict notion of diversity and recognized that “companies

should be allowed to define diversity in ways that they

consider appropriate.” By way of example, the SEC

noted that “some companies may conceptualize diversity

expansively to include differences of viewpoint, profes-

sional experience, education, skill and other individual

qualities and attributes that contribute to board hetero-

geneity, while others may focus on diversity concepts

such as race, gender and national origin.”2

Consistent with the SEC’s notion of varying perspec-

tives, the survey found a spectrum of disclosures

regarding companies’ views of board diversity, with

some companies adopting fairly specific definitions

of diversity and others providing broader references.

While not all companies provided a definition, those

that did articulated the following:

Definitions of DiversityChart 1

0 5 10 15 20 25 30

Executive or Professional Experience (93%)

Background or Viewpoint (85%)

Gender (56%)

National Origin or Ethnicity (52%)

Race (41%)

Age (11%)

Sexual Orientation or Identity (7%)

Financial institutionsTotal

2 SEC Release No. 33-9089.

3 director notes board diversity and director qualifications www.conferenceboard.org

4 director notes board diversity and director qualifications www.conferenceboard.org

Director Qualifications and SkillsFor each director or person nominated or chosen to

become a director, the recent amendments to Item 401

of Regulation S-K require companies to disclose the

specific experience, qualifications, attributes or skills

that lead to the conclusion that the person should serve

on the board at the time that the disclosure is made,

in light of the company’s business and structure.

Of the 27 surveyed companies subject to the Item

401 amendments:

• Twenty-two companies (or 81 percent) included this disclosure

as a subsection within each director’s biography.

• Five companies (or 19 percent) included this information

in a separate section that often preceded or followed the

directors’ biographies.

• Four of the five financial institutions surveyed included this

disclosure as a subsection within each director’s biography.

Regulation S-K does not specify the particular information

that should be disclosed; in the release accompanying

the final rules, the SEC indicated that it believes that

“companies and other proponents should be afforded

flexibility in determining the information about a director’s

or nominee’s skills, qualifications or particular area of

expertise that would benefit the company and should

be disclosed to shareholders.”3

The companies reviewed in the survey took advantage

of this flexibility, discussing a wide variety of attributes,

skills and experiences they considered in determining

that the person was qualified to serve. The following

common themes emerged:

• All of the companies surveyed cited leadership roles and

at least one director’s experience in the company’s industry

or a closely related industry as a qualification, skill or

attribute that they considered.

• As many as 26 companies, including all five financial

institutions, cited financial or accounting expertise and/

or pointed out directors’ current or previous positions

on other boards.

• As many as 25 companies mentioned governmental,

public policy or regulatory experience.

However, when it came to the topics of the day of risk

management, corporate governance and compensation

and benefits, the results were mixed:

• All of the financial institutions pointed out risk management

expertise, but only two non-financial companies explicitly

mentioned it.

• Eighteen companies explicitly cited corporate governance

expertise as a consideration, including three financial

institutions.

• Seven companies, including two financial institutions,

pointed to compensation and benefits expertise.

Location of Director Qualificationand Skill Disclosure

Chart 2

Separate section (before or after director bios) Subsection within each bio

81%19

3 SEC Release No. 33-9089.

The specific survey results are further broken down

by Chart 3, which identifies the qualifications, skills,

and experiences most commonly cited as a consideration

in determining that a director should serve. Chart 3

documents only those specific qualifications, skills and

experiences cited in the newly provided disclosure and

does not necessarily capture those attributes that may be

explicit or inferred based on discussion of the board’s

qualifications as a whole, the director’s biographical

information or other information included elsewhere

in the proxy statement.

Director Qualifications and SkillsChart 3

0 5 10 15 20 25 30

Environmental and sustainability (22%)

Risk management (26%)

Compensation and benefits (26%)

Entrepreneurial (33%)

Manufacturing (48%)

Legal (52%)

Engineering, scientific or R&D (52%)

Strategic planning (52%)

Philanthropic or non-profit (56%)

Marketing (59%)

Operations (59%)

Technology (63%)

Corporate governance (67%)

Academia (67%)

Governmental, policy or regulatory (93%)

Outside board experience (96%)

Finance and accounting (96%)

International (100%)

Company’s industry or closely-related industry (100%)

Leadership (100%)

Financial institutionsTotal

5 director notes board diversity and director qualifications www.conferenceboard.org

6 director notes board diversity and director qualifications www.conferenceboard.org

Surv

ey o

f Enh

ance

d D

irect

or a

nd N

omin

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iscl

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lific

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D

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nite

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* D

oes

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nclu

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dditi

onal

ski

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ualif

icat

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xper

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at m

ay b

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plic

it or

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base

d on

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clos

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ard’

s qu

alifi

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s a

who

le, t

he d

irect

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grap

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l inf

orm

atio

n or

oth

er

disc

losu

re.

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issi

on o

f a s

kill,

qua

lific

atio

n or

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erie

nce

does

not

mea

n th

at a

com

pany

’s b

oard

mem

bers

do

not h

ave

such

attr

ibut

es o

r tha

t the

boa

rd d

id n

ot c

onsi

der t

hem

.

Appe

ndix

1Su

rvey

of E

nhan

ced

Dir

ecto

r an

d N

omin

ee D

iscl

osur

e

director notes board diversity and director qualifications www.conferenceboard.org 7

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

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the

boar

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qual

ifica

tions

as

a w

hole

, the

dire

ctor

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iogr

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cal i

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mat

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ther

di

sclo

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. O

mis

sion

of a

ski

ll, q

ualif

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xper

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e do

es n

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ean

that

a c

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boa

rd m

embe

rs d

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t hav

e su

ch a

ttrib

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he b

oard

did

not

con

side

r the

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Sum

mar

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lific

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d as

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eter

min

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that

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son

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ld S

erve

as

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ctor

*

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s C

ompa

ny

Dis

clos

e th

at it

has

a

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ty “

Polic

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(Yes

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iscl

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e R

egar

ding

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side

ratio

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rd D

iver

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co

ntin

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over

nmen

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lic p

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nce

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oles

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e bu

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pay

men

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ork

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usin

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xper

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in tr

ends

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d m

obile

mar

kets

, soc

ial n

etw

orki

ng

and

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r ne

w te

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mer

-driv

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arke

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E

xper

tise

in b

rand

man

agem

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E

xper

tise

in e

cono

mic

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ry, s

tatis

tical

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lysi

s, m

odel

ing

and

anal

yzin

g ec

onom

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ends

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ertis

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glo

bal c

omm

unic

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stem

s, n

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tech

nolo

gy

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xper

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in c

ard

and

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ines

s de

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atio

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xper

tise

in in

form

atio

n te

chno

logy

Lead

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ole

in a

cade

mia

Our

Dire

ctor

s ha

ve h

eld

seni

or p

ositi

ons

as le

ader

s of

var

ious

com

plex

or

gani

zatio

ns a

nd in

gov

ernm

ent,

dem

onst

ratin

g th

eir

abili

ty to

per

form

at t

he

high

est l

evel

s. M

any

of o

ur D

irect

ors

have

bee

n ch

ief e

xecu

tive

or c

hief

op

erat

ing

offic

ers

of la

rge,

glo

bal b

usin

esse

s th

roug

h w

hich

they

hav

e de

velo

ped

expe

rtis

e an

d ex

perie

nce

in c

ore

busi

ness

ski

lls s

uch

as s

trat

egy

and

busi

ness

dev

elop

men

t, in

nova

tion,

ope

ratio

ns, b

rand

man

agem

ent,

finan

ce, c

ompe

nsat

ion

and

lead

ersh

ip d

evel

opm

ent,

com

plia

nce

and

risk

man

agem

ent.

Thi

s ex

pert

ise

and

expe

rienc

e en

able

s th

em to

pro

vide

sou

nd

judg

men

t con

cern

ing

the

issu

es fa

cing

a la

rge,

inte

rnat

iona

l cor

pora

tion

in

toda

y’s

envi

ronm

ent,

prov

ide

over

sigh

t of t

hese

are

as a

t the

Com

pany

and

ev

alua

te o

ur p

erfo

rman

ce. A

ll of

our

Dire

ctor

s al

so h

ave

sign

ifica

nt

expe

rienc

e in

cor

pora

te g

over

nanc

e an

d ov

ersi

ght o

f com

plex

bus

ines

ses

thro

ugh

thei

r po

sitio

ns a

s se

nior

exe

cutiv

es a

nd a

s di

rect

ors

of o

ther

larg

e,

publ

ic c

ompa

nies

. Man

y of

our

Dire

ctor

s ha

ve a

lso

serv

ed a

s m

embe

rs o

f au

dit,

com

pens

atio

n an

d go

vern

ance

com

mitt

ees

at th

ese

com

pani

es, a

s w

ell a

s at

our

Com

pany

. All

of th

ese

skill

s an

d ex

perie

nces

are

per

tinen

t to

the

Com

pany

’s c

urre

nt a

nd e

volv

ing

busi

ness

str

ateg

ies,

as

wel

l as

to th

e B

oard

’s o

vers

ight

rol

e, a

nd e

nabl

e ou

r D

irect

ors

to p

rovi

de d

iver

se

pers

pect

ives

, sou

nd a

dvic

e an

d cr

itica

l vie

wpo

ints

abo

ut th

e is

sues

faci

ng th

e C

ompa

ny.

E

xten

sive

exp

erie

nce

in a

var

iety

of f

ield

s, in

clud

ing:

o

tele

com

mun

icat

ions

, o

tech

nolo

gy,

o pu

blic

acc

ount

ing,

o

educ

atio

n,

o ec

onom

ics,

o

finan

cial

ser

vice

s,

o la

w,

o co

nsum

er m

arke

ting,

o

tran

spor

tatio

n an

d lo

gist

ics,

o

labo

r,

o ac

adem

ic r

esea

rch,

o

cons

ultin

g an

d

o no

n-pr

ofit

orga

niza

tions

.

Inte

rnat

iona

l exp

erie

nce

Lead

ersh

ip s

kills

/role

s

Lega

l exp

erie

nce

Gov

ernm

ent,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Out

side

boa

rd e

xper

ienc

e

Ser

vice

on

boar

ds o

f lar

ge te

leco

mm

unic

atio

ns c

ompa

nies

No

Alth

ough

the

Nom

inat

ing

and

Cor

pora

te G

over

nanc

e C

omm

ittee

doe

s no

t ha

ve a

form

al d

iver

sity

pol

icy,

it b

elie

ves

that

div

ersi

ty is

an

impo

rtan

t fac

tor

in d

eter

min

ing

the

com

posi

tion

of th

e B

oard

.

Con

sum

er b

anki

ng e

xper

ienc

e

Ris

k m

anag

emen

t exp

erie

nce

G

over

nmen

t, pu

blic

pol

icy

or r

egul

ator

y ex

perie

nce

In

vest

men

t ban

king

exp

erie

nce

Le

gal e

xper

ienc

e

A

ccou

ntin

g an

d fin

anci

al e

xper

tise

No

The

com

pany

’s C

orpo

rate

Gov

erna

nce

Gui

delin

es s

peci

fy th

at c

andi

date

s sh

ould

: be

cap

able

of w

orki

ng in

a c

olle

gial

man

ner

with

per

sons

of

dive

rse

educ

atio

nal,

busi

ness

and

cul

tura

l bac

kgro

unds

and

sh

ould

pos

sess

ski

lls a

nd e

xper

tise

that

com

plem

ent t

he a

ttrib

utes

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

8 director notes board diversity and director qualifications www.conferenceboard.org

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

S

trat

egic

pla

nnin

g ex

pert

ise

B

usin

ess

deve

lopm

ent e

xper

tise

O

pera

tions

man

agem

ent e

xper

tise

Le

ader

ship

rol

es/e

xper

ienc

e

E

ntre

pren

euria

l per

spec

tive

F

inan

cial

ser

vice

s in

dust

ry e

xper

ienc

e

Out

side

boa

rd e

xper

ienc

e

Sys

tem

s in

tegr

atio

n an

d te

chno

logy

exp

ertis

e

Con

sum

er b

usin

ess

expe

rienc

e

Inte

rnat

iona

l exp

erie

nce

E

xper

ienc

e in

oth

er r

eces

sion

ary

perio

ds

C

orpo

rate

gov

erna

nce

expe

rienc

e

M

arke

ting

and

com

mun

icat

ions

exp

erie

nce

E

ngin

eerin

g ex

perie

nce

U

nder

stan

ding

of t

he c

ompa

ny’s

bus

ines

s an

d op

erat

ions

Tal

ent d

evel

opm

ent a

nd s

enio

r cl

ient

rel

atio

nshi

p m

anag

emen

t ex

pert

ise

Lo

gist

ics

and

chan

ge m

anag

emen

t exp

ertis

e

Exp

erie

nce

in a

cade

mia

of th

e ex

istin

g di

rect

ors;

and

re

pres

ent a

div

ersi

ty o

f vie

wpo

ints

, bac

kgro

unds

, exp

erie

nces

and

ot

her

dem

ogra

phic

s;

The

Cor

pora

te G

over

nanc

e C

omm

ittee

and

the

Boa

rd m

ay, f

rom

tim

e to

tim

e,

esta

blis

h an

d co

nsid

er o

ther

spe

cific

ski

lls a

nd e

xper

ienc

es th

at th

ey b

elie

ve

our

com

pany

sho

uld

seek

in o

rder

to c

onst

itute

a d

iver

se, b

alan

ced,

co

llabo

rativ

e an

d ef

fect

ive

Boa

rd.

The

Cor

pora

te G

over

nanc

e C

omm

ittee

reg

ular

ly r

evie

ws

Boa

rd c

ompo

sitio

n in

ligh

t of o

ur c

ompa

ny’s

bus

ines

s an

d st

ruct

ure;

the

chan

ging

nee

ds o

f our

co

mpa

ny a

s a

resu

lt of

the

busi

ness

env

ironm

ent;

our

oper

atio

ns, f

inan

cial

co

nditi

ons

and

com

plex

ity; i

ts a

sses

smen

t of t

he B

oard

’s p

erfo

rman

ce; a

nd

inpu

t fro

m s

tock

hold

ers

and

othe

r ke

y co

nstit

uenc

ies.

As

part

of t

his

revi

ew,

the

Cor

pora

te G

over

nanc

e C

omm

ittee

eva

luat

es th

e ef

fect

iven

ess

of th

e B

oard

’s d

irect

or n

omin

atio

n st

anda

rds

– in

clud

ing

its c

riter

ia r

elat

ed to

di

vers

ity –

as

set f

orth

in th

e C

orpo

rate

Gov

erna

nce

Gui

delin

es.

The

[boa

rd] n

omin

ees,

who

ref

lect

our

con

sum

er b

ase

as a

who

le, r

epre

sent

di

vers

e vi

ewpo

ints

and

a b

lend

of h

isto

rical

and

new

per

spec

tives

wor

king

co

llabo

rativ

ely

with

can

did

disc

ussi

on.

Cor

pora

te g

over

nanc

e ex

pert

ise

A

ccou

ntin

g an

d fin

anci

al r

epor

ting

expe

rienc

e

Inst

itutio

nal k

now

ledg

e an

d hi

stor

ical

per

spec

tive

E

xecu

tive

com

pens

atio

n ex

pert

ise

C

orpo

rate

stra

tegy

exp

ertis

e

Env

ironm

enta

l and

ene

rgy

expe

rtis

e

Aer

ospa

ce a

nd a

ircra

ft in

dust

ry e

xper

ienc

e

Gen

eral

cor

pora

te e

xper

tise

O

utsi

de b

oard

exp

erie

nce

T

echn

olog

y ex

perie

nce

C

orpo

rate

fina

nce

expe

rienc

e

Inte

rnat

iona

l bus

ines

s ex

perie

nce

E

ngin

eerin

g ex

perie

nce

Le

ader

ship

rol

es/e

xper

ienc

e

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

Cha

ritab

le g

ivin

g an

d gl

obal

cor

pora

te c

itize

nshi

p ex

perie

nce

Mili

tary

exp

erie

nce

O

pera

tions

exp

erie

nce

E

xper

ienc

e in

aca

dem

ia

No

Our

Cor

pora

te G

over

nanc

e P

rinci

ples

man

date

that

the

Gov

erna

nce,

O

rgan

izat

ion

and

Nom

inat

ing

Com

mitt

ee c

onsi

der

dive

rsity

in it

s ev

alua

tion

of c

andi

date

s fo

r B

oard

mem

bers

hip.

The

Boa

rd b

elie

ves

that

div

ersi

ty w

ith

resp

ect t

o fa

ctor

s su

ch a

s ba

ckgr

ound

, exp

erie

nce,

ski

lls, r

ace,

gen

der

and

natio

nal o

rigin

is a

n im

port

ant c

onsi

dera

tion

in b

oard

com

posi

tion.

The

GO

N

Com

mitt

ee d

iscu

sses

div

ersi

ty c

onsi

dera

tions

in c

onne

ctio

n w

ith e

ach

cand

idat

e, a

s w

ell a

s on

a p

erio

dic

basi

s in

con

nect

ion

with

the

com

posi

tion

of th

e B

oard

as

a w

hole

. In

addi

tion,

bot

h th

e G

ON

Com

mitt

ee a

nd th

e B

oard

co

nduc

t for

mal

sel

f-ev

alua

tions

eac

h ye

ar th

at in

clud

e an

ass

essm

ent o

f w

heth

er th

e G

ON

Com

mitt

ee a

nd th

e B

oard

hav

e ad

equa

tely

con

side

red

dive

rsity

, am

ong

othe

r fa

ctor

s, in

iden

tifyi

ng a

nd d

iscu

ssin

g di

rect

or

cand

idat

es. T

he G

ON

Com

mitt

ee b

elie

ves

that

, as

a gr

oup,

the

nom

inee

s be

low

brin

g a

dive

rse

rang

e of

bac

kgro

unds

, exp

erie

nces

and

per

spec

tives

to

the

Boa

rd’s

del

iber

atio

ns.

The

GO

N C

omm

ittee

rev

iew

s an

nual

ly th

e ap

prop

riate

ski

lls a

nd

char

acte

ristic

s re

quire

d of

Boa

rd m

embe

rs in

ligh

t of t

he c

urre

nt m

ake-

up o

f th

e B

oard

. Thi

s as

sess

men

t inc

lude

s is

sues

of e

xper

tise

(incl

udin

g in

tern

atio

nal e

xper

ienc

e an

d in

dust

ry b

ackg

roun

d), i

ndep

ende

nce,

inte

grity

, di

vers

ity a

nd a

ge, a

s w

ell a

s sk

ills

rela

ting

to o

pera

tions

, man

ufac

turin

g,

finan

ce, m

arke

ting,

tech

nolo

gy a

nd p

ublic

pol

icy.

The

Com

mitt

ee h

as n

ot

esta

blis

hed

spec

ific

min

imum

elig

ibili

ty r

equi

rem

ents

for

Boa

rd m

embe

rs

othe

r th

an in

tegr

ity, t

he c

omm

itmen

t to

act i

n th

e be

st in

tere

sts

of a

ll sh

areh

olde

rs, r

equi

rem

ents

rel

atin

g to

age

and

ens

urin

g th

at a

sub

stan

tial

maj

ority

of t

he B

oard

rem

ains

inde

pend

ent.

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

director notes board diversity and director qualifications www.conferenceboard.org 9

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

Inte

rnat

iona

l exp

erie

nce

O

utsi

de b

oard

exp

erie

nce

E

xper

ienc

e in

aca

dem

ia

B

ackg

roun

d in

trad

e-re

late

d is

sues

Kno

wle

dge

of fo

rest

pro

duct

s in

dust

ry

S

trat

egic

pla

nnin

g ex

perie

nce

In

sigh

ts o

n di

vers

ity is

sues

Lead

ersh

ip r

oles

/exp

erie

nce

In

vest

men

t ban

king

exp

erie

nce

F

inan

cial

exp

ertis

e an

d ex

perie

nce

K

now

ledg

e of

cor

pora

te b

est p

ract

ices

Eco

nom

ic e

xper

tise

F

ound

er o

f bus

ines

s

Kno

wle

dge

of e

mer

ging

mar

kets

Exp

erie

nce

in m

erge

rs a

nd a

cqui

sitio

ns

P

rivat

e eq

uity

exp

erie

nce

T

rans

port

atio

n an

d ra

ilroa

d in

dust

ry e

xper

ienc

e

Ext

ensi

ve e

xper

ienc

e an

d kn

owle

dge

of th

e co

mpa

ny

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Man

agem

ent c

onsu

lting

exp

erie

nce

No

Con

sist

ent w

ith th

ese

crite

ria fo

r po

tent

ial d

irect

or c

andi

date

s an

d C

ater

pilla

r’s W

orld

wid

e C

ode

of C

ondu

ct, t

he B

oard

val

ues

dive

rsity

of

tale

nts,

ski

lls, a

bilit

ies

and

expe

rienc

es a

nd b

elie

ves

that

the

dive

rsity

that

ex

ists

on

the

Boa

rd p

rovi

des

sign

ifica

nt b

enef

its to

the

Com

pany

. A

lthou

gh

ther

e is

no

spec

ific

dive

rsity

pol

icy,

the

Gov

erna

nce

Com

mitt

ee m

ay a

lso

cons

ider

the

dive

rsity

of i

ts m

embe

rs a

nd p

oten

tial c

andi

date

s in

sel

ectin

g ne

w d

irect

ors.

Le

ader

ship

rol

e/ex

perie

nce

F

inan

cial

and

acc

ount

ing

expe

rtis

e

Kno

wle

dge

of b

usin

ess

clim

ate

in C

alifo

rnia

and

San

Fra

ncis

co B

ay

area

Cor

pora

te G

over

nanc

e ex

perie

nce

E

xecu

tive

com

pens

atio

n ex

perie

nce

P

rofe

ssio

nal e

thic

s ex

perie

nce

O

pera

tions

exp

erie

nce

A

utom

otiv

e in

dust

ry e

xper

ienc

e

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

Inve

stm

ent b

anki

ng e

xper

ienc

e

Inte

rnat

iona

l exp

erie

nce

E

nviro

nmen

tal e

xper

tise

Le

gal e

xper

ienc

e

Wor

kfor

ce d

evel

opm

ent e

xper

tise

E

xten

sive

exp

erie

nce

with

and

kno

wle

dge

of th

e co

mpa

ny

S

cien

ce a

nd te

chno

logy

exp

erie

nce

R

esea

rch

and

deve

lopm

ent e

xper

tise

M

arke

ting

expe

rtis

e

Str

ateg

y ex

perie

nce

E

xper

tise

in lo

ng-in

vest

men

t cyc

les

M

anuf

actu

ring

expe

rtis

e

Out

side

boa

rd e

xper

ienc

e

Exp

erie

nce

in a

cade

mia

No

The

Com

mitt

ee u

ses

a sk

ills

and

qual

ifica

tions

mat

rix to

ens

ure

that

the

over

all B

oard

mai

ntai

ns a

bal

ance

of k

now

ledg

e an

d ex

perie

nce.

The

C

omm

ittee

car

eful

ly r

evie

ws

all D

irect

or c

andi

date

s, in

clud

ing

curr

ent

Dire

ctor

s, in

ligh

t of t

hese

qua

lific

atio

ns b

ased

on

the

cont

ext o

f the

cur

rent

an

d an

ticip

ated

com

posi

tion

of th

e B

oard

, the

cur

rent

and

ant

icip

ated

op

erat

ing

requ

irem

ents

of t

he C

ompa

ny, a

nd th

e lo

ng-t

erm

inte

rest

s of

st

ockh

olde

rs. I

n co

nduc

ting

this

ass

essm

ent,

the

Com

mitt

ee c

onsi

ders

di

vers

ity, e

duca

tion,

exp

erie

nce,

leng

th o

f ser

vice

and

suc

h ot

her

fact

ors

as

it de

ems

appr

opria

te g

iven

the

curr

ent a

nd a

ntic

ipat

ed n

eeds

of t

he B

oard

an

d th

e C

ompa

ny. T

he C

omm

ittee

and

Boa

rd d

efin

e di

vers

ity b

road

ly to

in

clud

e di

vers

ity o

f pro

fess

iona

l exp

erie

nce

(pol

icy,

bus

ines

s, g

over

nmen

t, ed

ucat

ion,

tech

nolo

gy o

r pu

blic

inte

rest

), g

eogr

aphi

cal l

ocat

ion

and

view

poin

t, as

wel

l as

dive

rsity

of r

ace,

gen

der,

nat

iona

lity

and

ethn

icity

.

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

10 director notes board diversity and director qualifications www.conferenceboard.org

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

Pr

oxy

filin

g pr

eced

ed

effe

ctiv

e da

te o

f new

SE

C d

iscl

osur

e ru

les.

Non

e N

o T

he B

oard

of D

irect

ors’

pol

icy

is to

enc

oura

ge s

elec

tion

of d

irect

ors

who

will

co

ntrib

ute

to C

isco

’s o

vera

ll co

rpor

ate

goal

s: r

espo

nsib

ility

to it

s sh

areh

olde

rs, t

echn

olog

y le

ader

ship

, effe

ctiv

e ex

ecut

ion,

hig

h cu

stom

er

satis

fact

ion

and

supe

rior

empl

oyee

wor

king

env

ironm

ent.

The

Nom

inat

ion

and

Gov

erna

nce

Com

mitt

ee m

ay fr

om ti

me

to ti

me

revi

ew th

e ap

prop

riate

sk

ills

and

char

acte

ristic

s re

quire

d of

boa

rd m

embe

rs, i

nclu

ding

suc

h fa

ctor

s as

bus

ines

s ex

perie

nce,

div

ersi

ty, a

nd p

erso

nal s

kills

in te

chno

logy

, fin

ance

, m

arke

ting,

inte

rnat

iona

l bus

ines

s, fi

nanc

ial r

epor

ting

and

othe

r ar

eas

that

are

ex

pect

ed to

con

trib

ute

to a

n ef

fect

ive

Boa

rd o

f Dire

ctor

s. In

eva

luat

ing

pote

ntia

l can

dida

tes

for

the

Boa

rd o

f Dire

ctor

s, th

e N

omin

atio

n an

d G

over

nanc

e C

omm

ittee

con

side

rs th

ese

fact

ors

in th

e lig

ht o

f the

spe

cific

ne

eds

of th

e B

oard

of D

irect

ors

at th

at ti

me.

In

tern

atio

nal e

xper

ienc

e

Fin

anci

al r

epor

ting

expe

rienc

e

Com

pens

atio

n ex

perie

nce

Le

gal e

xper

ienc

e

Ris

k m

anag

emen

t exp

erie

nce

F

inan

cial

ser

vice

s ex

perie

nce

C

orpo

rate

gov

erna

nce

expe

rienc

e

Con

sum

er b

usin

ess

expe

rienc

e

Lead

ersh

ip r

oles

/exp

erie

nce

O

utsi

de b

oard

exp

erie

nce

R

egul

ator

y co

mpl

ianc

e ex

perie

nce

C

orpo

rate

affa

irs e

xper

ienc

e

Fin

anci

al s

ervi

ces

indu

stry

exp

erie

nce

E

xper

ienc

e in

aca

dem

ia

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

No

Am

ong

the

fact

ors

that

the

nom

inat

ion

and

gove

rnan

ce c

omm

ittee

con

side

rs

whe

n ev

alua

ting

the

com

posi

tion

of th

e bo

ard,

div

ersi

ty is

crit

ical

. For

a

com

pany

like

Citi

, whi

ch o

pera

tes

in o

ver

100

coun

trie

s ar

ound

the

glob

e,

dive

rsity

incl

udes

rac

e, e

thni

city

and

gen

der

as w

ell a

s th

e di

vers

ity o

f the

co

mm

uniti

es a

nd g

eogr

aphi

es in

whi

ch C

iti o

pera

tes.

Incl

uded

in th

e qu

alifi

catio

ns fo

r dire

ctor

s lis

ted

in th

e co

mpa

ny’s

Cor

pora

te G

over

nanc

e G

uide

lines

is “

whe

ther

the

cand

idat

e ha

s sp

ecia

l ski

lls, e

xper

tise

and

back

grou

nd th

at w

ould

com

plem

ent t

he a

ttrib

utes

of t

he e

xist

ing

dire

ctor

s,

taki

ng in

to c

onsi

dera

tion

the

dive

rse

com

mun

ities

and

geo

grap

hies

in w

hich

th

e co

mpa

ny o

pera

tes.

” C

iti’s

boa

rd is

com

mitt

ed to

ens

urin

g th

at it

co

mpr

ises

indi

vidu

als

who

se b

ackg

roun

ds r

efle

ct th

e di

vers

ity r

epre

sent

ed

by o

ur e

mpl

oyee

s, c

usto

mer

s an

d st

akeh

olde

rs. T

he c

andi

date

s no

min

ated

fo

r el

ectio

n at

Citi

’s 2

010

annu

al m

eetin

g ex

empl

ify th

at d

iver

sity

: tw

o no

min

ees

are

wom

en (

13 p

erce

nt)

and

five

nom

inee

s (3

3 pe

rcen

t) –

in

clud

ing

the

chai

rman

and

the

chie

f exe

cutiv

e of

ficer

– a

re A

sian

, Afr

ican

-A

mer

ican

or

His

pani

c. In

add

ition

, eac

h di

rect

or c

andi

date

con

trib

utes

to th

e bo

ard’

s ov

eral

l div

ersi

ty b

y pr

ovid

ing

a va

riety

of p

ersp

ectiv

es, p

erso

nal a

nd

prof

essi

onal

exp

erie

nces

and

bac

kgro

unds

, as

wel

l as

othe

r ch

arac

teris

tics,

su

ch a

s gl

obal

and

inte

rnat

iona

l bus

ines

s ex

perie

nce.

The

boa

rd is

sat

isfie

d th

at th

e cu

rren

t nom

inee

s re

flect

an

appr

opria

te d

iver

sity

of g

ende

r, a

ge,

race

, geo

grap

hica

l bac

kgro

und

and

expe

rienc

e bu

t is

com

mitt

ed to

co

ntin

uing

to c

onsi

der

dive

rsity

issu

es in

eva

luat

ing

the

com

posi

tion

of th

e bo

ard.

Hig

h le

vel o

f fin

anci

al li

tera

cy

D

iver

sity

of r

ace,

eth

nici

ty, g

ende

r, a

ge, c

ultu

ral b

ackg

roun

d or

pr

ofes

sion

al e

xper

ienc

e

Ext

ensi

ve k

now

ledg

e of

the

Com

pany

’s b

usin

ess,

indu

stry

or

man

ufac

turin

g

Mar

ketin

g/m

arke

ting-

Rel

ated

Tec

hnol

ogy

expe

rienc

e

Bro

ad in

tern

atio

nal e

xpos

ure

or s

peci

fic in

-dep

th k

now

ledg

e of

a k

ey

geog

raph

ic g

row

th a

rea

R

elev

ant C

hief

Exe

cutiv

e O

ffice

r/P

resi

dent

Exp

erie

nce

G

over

nmen

tal,

polit

ical

or

dipl

omat

ic e

xper

tise

No

The

Boa

rd d

oes

not h

ave

a sp

ecifi

c di

vers

ity p

olic

y, b

ut c

onsi

ders

div

ersi

ty

of r

ace,

eth

nici

ty, g

ende

r, a

ge, c

ultu

ral b

ackg

roun

d an

d pr

ofes

sion

al

expe

rienc

es in

eva

luat

ing

cand

idat

es fo

r B

oard

mem

bers

hip.

Div

ersi

ty is

im

port

ant b

ecau

se a

var

iety

of p

oint

s of

vie

w c

ontr

ibut

e to

a m

ore

effe

ctiv

e de

cisi

on-m

akin

g pr

oces

s.

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

director notes board diversity and director qualifications www.conferenceboard.org 11

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Inve

stm

ent m

anag

emen

t exp

erie

nce

In

tern

atio

nal e

xper

ienc

e

Cor

pora

te g

over

nanc

e ex

pert

ise

H

uman

res

ourc

es e

xper

tise

In

form

atio

n te

chno

logy

exp

ertis

e

Com

pens

atio

n co

mm

ittee

exp

erie

nce

In

vest

or r

elat

ions

exp

ertis

e

Sci

ence

and

tech

nolo

gy p

ersp

ectiv

e

Lead

ersh

ip r

oles

/exp

erie

nce

E

nviro

nmen

tal e

xper

ienc

e

Non

-gov

ernm

enta

l org

aniz

atio

n ex

perie

nce

R

esea

rch

and

deve

lopm

ent e

xper

ienc

e

Fin

ance

and

acc

ount

ing

expe

rienc

e

Mar

ketin

g ex

perie

nce

M

anuf

actu

ring

expe

rienc

e

New

bus

ines

s de

velo

pmen

t exp

erie

nce

P

rivat

e eq

uity

exp

erie

nce

S

uppl

y ch

ain

and

leve

rage

d se

rvic

es e

xper

tise

C

onsu

mer

pro

duct

s ex

perie

nce

O

utsi

de b

oard

exp

erie

nce

E

xper

ienc

e in

aca

dem

ia

Le

gal e

xper

ienc

e

No

The

Boa

rd d

oes

not h

ave

a fo

rmal

pol

icy

with

res

pect

to d

iver

sity

. How

ever

, th

e B

oard

and

the

Cor

pora

te G

over

nanc

e C

omm

ittee

eac

h be

lieve

that

it is

es

sent

ial t

hat t

he B

oard

mem

bers

rep

rese

nt d

iver

se v

iew

poin

ts, w

ith a

bro

ad

arra

y of

exp

erie

nces

, pro

fess

ions

, ski

lls, g

eogr

aphi

c re

pres

enta

tion

and

back

grou

nds

that

, whe

n co

nsid

ered

as

a gr

oup,

pro

vide

a s

uffic

ient

mix

of

pers

pect

ives

to a

llow

the

Boa

rd to

bes

t ful

fill i

ts r

espo

nsib

ilitie

s to

the

long

-te

rm in

tere

sts

of th

e C

ompa

ny's

sto

ckho

lder

s.

Dire

ctor

s ar

e se

lect

ed fo

r th

eir

inte

grity

and

cha

ract

er; s

ound

, ind

epen

dent

ju

dgm

ent;

brea

dth

of e

xper

ienc

e, in

sigh

t and

kno

wle

dge;

and

bus

ines

s ac

umen

. Lea

ders

hip

skill

s, s

cien

tific

or

tech

nolo

gy e

xper

tise,

fam

iliar

ity w

ith

issu

es a

ffect

ing

glob

al b

usin

esse

s in

div

erse

indu

strie

s, p

rior

gove

rnm

ent

serv

ice,

and

div

ersi

ty a

re a

mon

g th

e re

leva

nt c

riter

ia, w

hich

will

var

y ov

er

time

depe

ndin

g on

the

need

s of

the

Boa

rd.

The

Cor

pora

te G

over

nanc

e C

omm

ittee

con

side

rs c

andi

date

s fo

r po

tent

ial n

omin

atio

n to

rec

omm

end

for

appr

oval

by

the

full

Boa

rd.

Fin

ance

, tax

, bud

get a

nd m

acro

econ

omic

pol

icy

expe

rienc

e

Gov

ernm

ent,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Out

side

boa

rd e

xper

ienc

e

Affi

liatio

n w

ith a

lead

ing

acad

emic

inst

itutio

n

Lega

l exp

erie

nce

P

hila

nthr

opic

/non

-pro

fit e

xper

ienc

e

Cor

pora

te g

over

nanc

e ex

pert

ise

In

tern

atio

nal e

xper

ienc

e

Lead

ersh

ip r

oles

/exp

erie

nce

Sci

entif

ic e

xper

ienc

e

R

esea

rch

expe

rienc

e

Exp

erie

nce

with

com

pany

’s d

omes

tic a

nd in

tern

atio

nal o

pera

tions

No

The

Gui

delin

es fo

r th

e S

elec

tion

of N

on-E

mpl

oyee

Dire

ctor

s st

ate:

“Exx

onM

obil

reco

gniz

es th

e st

reng

th a

nd e

ffect

iven

ess

of th

e B

oard

ref

lect

s th

e ba

lanc

e, e

xper

ienc

e, a

nd d

iver

sity

of t

he in

divi

dual

dire

ctor

s; th

eir

com

mitm

ent;

and

impo

rtan

tly, t

he a

bilit

y of

dire

ctor

s to

wor

k ef

fect

ivel

y as

a

grou

p in

car

ryin

g ou

t the

ir re

spon

sibi

litie

s. E

xxon

Mob

il se

eks

cand

idat

es w

ith

dive

rse

back

grou

nds

who

pos

sess

kno

wle

dge

and

skill

s in

are

as o

f im

port

ance

to th

e C

orpo

ratio

n.”

In a

dditi

on to

see

king

a d

iver

se s

et o

f bus

ines

s or

aca

dem

ic e

xper

ienc

es,

the

Com

mitt

ee s

eeks

a m

ix o

f nom

inee

s w

hose

per

spec

tives

ref

lect

div

erse

lif

e ex

perie

nces

and

bac

kgro

unds

, as

wel

l as

gend

er a

nd e

thni

c di

vers

ity.

The

Com

mitt

ee d

oes

not u

se q

uota

s bu

t con

side

rs d

iver

sity

alo

ng w

ith th

e ot

her

requ

irem

ents

of t

he S

elec

tion

Gui

delin

es w

hen

eval

uatin

g po

tent

ial n

ew

dire

ctor

s. T

he C

omm

ittee

has

als

o in

stru

cted

its

exec

utiv

e se

arch

firm

to

incl

ude

dive

rsity

as

part

of t

he c

andi

date

sea

rch

crite

ria.

Lead

ersh

ip r

oles

/exp

erie

nce

F

inan

ce a

nd a

ccou

ntin

g ex

perie

nce

In

dust

ry e

xper

ienc

e

Tec

hnol

ogy

expe

rienc

e

Inte

rnat

iona

l exp

erie

nce

No

We

belie

ve th

at o

ur d

irect

ors

shou

ld p

osse

ss th

e hi

ghes

t per

sona

l and

pr

ofes

sion

al e

thic

s, in

tegr

ity a

nd v

alue

s, a

nd b

e co

mm

itted

to r

epre

sent

ing

the

long

-ter

m in

tere

sts

of th

e sh

areo

wne

rs. T

hey

mus

t als

o ha

ve a

n in

quis

itive

and

obj

ectiv

e pe

rspe

ctiv

e, p

ract

ical

wis

dom

and

mat

ure

judg

men

t. W

e al

so e

ndea

vor

to h

ave

a B

oard

rep

rese

ntin

g a

rang

e of

exp

erie

nces

at

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

12 director notes board diversity and director qualifications www.conferenceboard.org

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

P

hila

nthr

opic

/non

-pro

fit e

xper

ienc

e

Mar

ketin

g ex

perie

nce

E

xper

ienc

e in

aca

dem

ia

H

ealth

care

/pha

rmac

eutic

als

expe

rienc

e

C

onsu

mer

pro

duct

s ex

perie

nce

M

anuf

actu

ring

expe

rienc

e

Fin

anci

al s

ervi

ces

expe

rienc

e

Ene

rgy

indu

stry

exp

erie

nce

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Tra

nspo

rtat

ion

indu

stry

exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rtis

e

Res

earc

h ex

perie

nce

O

utsi

de b

oard

exp

erie

nce

polic

y-m

akin

g le

vels

in b

usin

ess,

gov

ernm

ent,

educ

atio

n an

d te

chno

logy

and

in

are

as th

at a

re r

elev

ant t

o th

e co

mpa

ny’s

glo

bal a

ctiv

ities

. The

eva

luat

ion

of

dire

ctor

nom

inee

s by

the

Man

agem

ent,

Dev

elop

men

t and

Com

pens

atio

n C

omm

ittee

(M

DC

C)

also

take

s in

to a

ccou

nt d

iver

sity

of a

ge a

nd

back

grou

nd.

E

xten

sive

kno

wle

dge

of fi

rm’s

bus

ines

s

Le

ader

ship

rol

es/e

xper

ienc

es

O

utsi

de b

oard

exp

erie

nce

F

inan

cial

ser

vice

s ex

perie

nce

In

tern

atio

nal e

xper

ienc

e

Fin

anci

al m

arke

ts e

xper

tise

R

isk

man

agem

ent e

xper

tise

C

orpo

rate

gov

erna

nce

expe

rtis

e

Exp

erie

nce

gain

ed a

nd c

ontr

ibut

ions

mad

e du

ring

tenu

re a

s di

rect

or o

f th

e co

mpa

ny

A

ccou

ntin

g an

d au

ditin

g ex

pert

ise

E

ntre

pren

euria

l exp

erie

nce

No

In id

entif

ying

and

rec

omm

endi

ng n

omin

ees

for

posi

tions

on

our

Boa

rd, o

ur

Cor

pora

te G

over

nanc

e an

d N

omin

atin

g C

omm

ittee

pla

ces

prim

ary

emph

asis

on

the

crite

ria s

et fo

rth

in o

ur C

orpo

rate

Gov

erna

nce

Gui

delin

es,

incl

udin

g . .

. di

vers

ity o

f vie

wpo

ints

, bac

kgro

unds

, exp

erie

nces

and

oth

er

dem

ogra

phic

s

We

belie

ve th

at o

ur fi

rm b

enef

its fr

om h

avin

g di

rect

ors

with

a d

iver

sity

of

view

poin

ts, b

ackg

roun

ds, e

xper

ienc

es a

nd o

ther

dem

ogra

phic

s. A

s no

ted

abov

e, a

mon

g th

e fa

ctor

s th

e C

orpo

rate

Gov

erna

nce

and

Nom

inat

ing

Com

mitt

ee c

onsi

ders

in id

entif

ying

and

eva

luat

ing

a po

tent

ial n

omin

ee is

the

exte

nt to

whi

ch th

e no

min

ee w

ould

add

to th

e di

vers

ity o

f our

Boa

rd, a

nd th

e C

omm

ittee

con

side

rs th

e sa

me

fact

ors

in d

eter

min

ing

whe

ther

to r

e-no

min

ate

incu

mbe

nt d

irect

ors.

In b

oth

case

s, th

e C

omm

ittee

ass

esse

s th

e di

vers

ity o

f ou

r B

oard

and

how

a n

omin

ee w

ould

enh

ance

that

div

ersi

ty.

[M]e

mbe

rs o

f our

Boa

rd .

. . h

ave

had

a gr

eat d

iver

sity

of e

xper

ienc

es a

nd

brin

g to

our

Boa

rd a

wid

e va

riety

of v

iew

s th

at s

tren

gthe

n th

eir

abili

ty to

gui

de

our

firm

. The

y ha

ve h

ad e

xten

sive

invo

lvem

ent i

n in

tern

atio

nal b

usin

ess

and

emer

ging

mar

kets

and

dee

p pr

ofes

sion

al e

xper

ienc

e ac

ross

a b

road

ran

ge o

f in

dust

ries,

incl

udin

g fin

anci

al s

ervi

ces,

con

sum

er p

rodu

cts,

ret

ail,

indu

stria

l re

sour

ces

and

man

ufac

turin

g.

Pr

oxy

filin

g pr

eced

ed

effe

ctiv

e da

te o

f new

SE

C d

iscl

osur

e ru

les.

Non

e N

o N

one

F

inan

ce a

nd a

ccou

ntin

g ex

perie

nce

S

uppl

y ch

ain

expe

rienc

e

Mar

ketin

g ex

perie

nce

In

form

atio

n te

chno

logy

exp

erie

nce

R

eal e

stat

e ex

perie

nce

No

The

Nom

inat

ing

and

Cor

pora

te G

over

nanc

e C

omm

ittee

rec

ogni

zes

the

impo

rtan

ce o

f sel

ectin

g di

rect

ors

from

var

ious

bac

kgro

unds

and

pro

fess

ions

in

ord

er to

ens

ure

that

the

Boa

rd a

s a

grou

p ha

s a

wea

lth o

f exp

erie

nces

to

info

rm it

s de

cisi

ons.

Con

sist

ent w

ith th

is p

hilo

soph

y, a

fter

focu

sing

on

the

skill

s an

d ex

perie

nce

nece

ssar

y to

mee

t the

cor

e ne

eds

of th

e C

ompa

ny, a

s

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

director notes board diversity and director qualifications www.conferenceboard.org 13

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

Le

ader

ship

rol

es/e

xper

ienc

e

Ret

ail e

xper

ienc

e

Inte

rnat

iona

l exp

erie

nce

C

orpo

rate

str

ateg

y de

velo

pmen

t

Und

erst

andi

ng o

f Flo

rida

mar

ket

O

utsi

de b

oard

exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rtis

e

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

wel

l as

the

basi

c qu

alifi

catio

ns s

et fo

rth

abov

e, th

e N

omin

atin

g an

d C

orpo

rate

G

over

nanc

e C

omm

ittee

con

side

rs th

e pe

rson

al a

ttrib

utes

of i

ndiv

idua

l no

min

ees,

incl

udin

g et

hnic

, rac

ial a

nd g

ende

r di

vers

ity. T

he N

omin

atin

g an

d C

orpo

rate

Gov

erna

nce

Com

mitt

ee a

sses

ses

the

com

posi

tion

of th

e B

oard

at

leas

t onc

e a

year

and

mor

e fr

eque

ntly

as

need

ed, p

artic

ular

ly w

hen

cons

ider

ing

pote

ntia

l new

can

dida

tes

In

tern

atio

nal e

xper

ienc

e

Lega

l exp

ertis

e/ex

perie

nce

G

over

nmen

t, pu

blic

pol

icy

or r

egul

ator

y ex

perie

nce

E

xper

ienc

e do

ing

busi

ness

in C

hina

Out

side

boa

rd e

xper

ienc

e

Fin

anci

al a

nd a

ccou

ntin

g ex

pert

ise

Le

ader

ship

rol

es/e

xper

ienc

es

T

echn

olog

y ex

pert

ise

S

trat

egic

pla

nnin

g ex

pert

ise

M

arke

ting

expe

rtis

e

Bus

ines

s de

velo

pmen

t exp

ertis

e

Mer

gers

and

acq

uisi

tion

expe

rienc

e

Exp

erie

nce

in c

omm

unic

atio

ns te

chno

logy

and

the

com

mun

icat

ions

bu

sine

ss

In

dust

ry e

xper

tise

R

esea

rch

and

deve

lopm

ent e

xper

tise

M

anuf

actu

ring

expe

rtis

e

Ope

ratio

ns e

xper

ienc

e

Hea

lth in

dust

ry e

xper

tise

K

now

ledg

e of

com

petit

ive

stra

tegy

, tec

hnol

ogy

and

inte

rnat

iona

l co

mpe

titio

n

E

xper

ienc

e in

aca

dem

ia

No

The

Cor

pora

te G

over

nanc

e an

d N

omin

atin

g C

omm

ittee

is r

espo

nsib

le fo

r re

view

ing

and

asse

ssin

g w

ith th

e B

oard

the

appr

opria

te s

kills

, exp

erie

nce,

an

d ba

ckgr

ound

sou

ght o

f Boa

rd m

embe

rs in

the

cont

ext o

f our

bus

ines

s an

d th

e th

en-c

urre

nt m

embe

rshi

p on

the

Boa

rd. T

his

asse

ssm

ent o

f Boa

rd s

kills

, ex

perie

nce,

and

bac

kgro

und

incl

udes

num

erou

s di

vers

e fa

ctor

s, s

uch

as

inde

pend

ence

; und

erst

andi

ng o

f and

exp

erie

nce

in m

anuf

actu

ring,

te

chno

logy

, fin

ance

, and

mar

ketin

g; in

tern

atio

nal e

xper

ienc

e; a

ge; a

nd

gend

er a

nd e

thni

c di

vers

ity. T

he p

riorit

ies

and

emph

asis

of t

he c

omm

ittee

an

d of

the

Boa

rd w

ith r

egar

d to

thes

e fa

ctor

s ch

ange

from

tim

e to

tim

e to

take

in

to a

ccou

nt c

hang

es in

the

com

pany

’s b

usin

ess

and

othe

r tr

ends

, as

wel

l as

the

port

folio

of s

kills

and

exp

erie

nce

of c

urre

nt a

nd p

rosp

ectiv

e B

oard

m

embe

rs. T

he c

omm

ittee

and

the

Boa

rd r

evie

w a

nd a

sses

s th

e co

ntin

ued

rele

vanc

e of

and

em

phas

is o

n th

ese

fact

ors

as p

art o

f the

Boa

rd’s

ann

ual

self-

asse

ssm

ent p

roce

ss a

nd in

con

nect

ion

with

can

dida

te s

earc

hes

to

dete

rmin

e if

they

are

effe

ctiv

e in

hel

ping

to s

atis

fy th

e B

oard

’s g

oal o

f cr

eatin

g an

d su

stai

ning

a B

oard

that

can

app

ropr

iate

ly s

uppo

rt a

nd o

vers

ee

the

com

pany

’s a

ctiv

ities

. W

e do

not

exp

ect o

r in

tend

that

eac

h di

rect

or w

ill h

ave

the

sam

e ba

ckgr

ound

, sk

ills,

and

exp

erie

nce;

we

expe

ct th

at B

oard

mem

bers

will

hav

e a

dive

rse

port

folio

of b

ackg

roun

ds, s

kills

, and

exp

erie

nces

. One

goa

l of t

his

dive

rsity

is

to a

ssis

t the

Boa

rd a

s a

who

le in

its

over

sigh

t and

adv

ice

conc

erni

ng o

ur

busi

ness

and

ope

ratio

ns.

Le

ader

ship

rol

es/e

xper

ienc

e

Priv

ate

equi

ty m

anag

emen

t exp

erie

nce

O

utsi

de b

oard

exp

erie

nce

Gov

ernm

ent,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

T

echn

olog

y ex

perie

nce

P

hila

nthr

opic

/non

-pro

fit e

xper

ienc

e

Indu

stry

exp

erie

nce

R

esea

rch

and

deve

lopm

ent e

xper

ienc

e

Exp

erie

nce

in a

cade

mia

Ent

repr

eneu

rial e

xper

ienc

e

In

tern

atio

nal e

xper

ienc

e

Man

ufac

turin

g ex

perie

nce

No

In id

entif

ying

pot

entia

l dire

ctor

can

dida

tes,

the

Com

mitt

ee a

nd th

e B

oard

als

o fo

cus

on e

nsur

ing

that

the

Boa

rd r

efle

cts

a di

vers

ity o

f exp

erie

nces

, ba

ckgr

ound

s an

d in

divi

dual

s.

The

IBM

Boa

rd is

com

pose

d of

a d

iver

se g

roup

of l

eade

rs in

thei

r re

spec

tive

field

s. M

any

of th

e cu

rren

t dire

ctor

s ha

ve le

ader

ship

exp

erie

nce

at m

ajor

do

mes

tic a

nd in

tern

atio

nal c

ompa

nies

with

ope

ratio

ns in

side

and

out

side

the

Uni

ted

Sta

tes,

as

wel

l as

expe

rienc

e on

oth

er c

ompa

nies

’ boa

rds,

whi

ch

prov

ides

an

unde

rsta

ndin

g of

diff

eren

t bus

ines

s pr

oces

ses,

cha

lleng

es a

nd

stra

tegi

es. O

ther

dire

ctor

s ha

ve e

xper

ienc

e as

pre

side

nts

of s

igni

fican

t ac

adem

ic, r

esea

rch

and

phila

nthr

opic

inst

itutio

ns, w

hich

brin

gs u

niqu

e pe

rspe

ctiv

es to

the

Boa

rd. F

urth

er, t

he C

ompa

ny’s

dire

ctor

s al

so h

ave

othe

r ex

perie

nce

that

mak

es th

em v

alua

ble

mem

bers

, suc

h as

prio

r pu

blic

pol

icy

or

regu

lato

ry e

xper

ienc

e th

at p

rovi

des

insi

ght i

nto

issu

es fa

ced

by c

ompa

nies

.

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

14 director notes board diversity and director qualifications www.conferenceboard.org

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

Lead

ersh

ip r

oles

/exp

erie

nce

E

xper

ienc

e in

aca

dem

ia

O

rgan

izat

iona

l and

ope

ratio

nal m

anag

emen

t exp

erie

nce

R

esea

rch

and

deve

lopm

ent e

xper

ienc

e

Sci

ence

indu

stry

exp

erie

nce

O

utsi

de b

oard

exp

erie

nce

H

ealth

car

e in

dust

ry e

xper

ienc

e

Bus

ines

s in

nova

tion

and

tale

nt d

evel

opm

ent e

xper

tise

In

tern

atio

nal e

xper

ienc

e

Con

sum

er p

rodu

ct e

xper

ienc

e

Fin

anci

al e

xper

tise

Le

gal e

xper

ienc

e

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

Insi

de u

nder

stan

ding

of c

ompa

ny’s

bus

ines

s

M

anuf

actu

ring

expe

rienc

e

Ent

repr

eneu

rial e

xper

ienc

e

No

The

Boa

rd h

as a

dopt

ed G

ener

al C

riter

ia fo

r N

omin

atio

n to

the

Boa

rd o

f D

irect

ors,

whi

ch .

. . d

escr

ibe

spec

ific

trai

ts, a

bilit

ies

and

expe

rienc

e th

at th

e N

omin

atin

g &

Cor

pora

te G

over

nanc

e C

omm

ittee

and

the

Boa

rd lo

ok fo

r in

de

term

inin

g ca

ndid

ates

for

elec

tion

to th

e B

oard

, inc

ludi

ng: .

. . d

iver

sity

re

flect

ing

gend

er, e

thni

c ba

ckgr

ound

and

pro

fess

iona

l exp

erie

nce.

Lead

ersh

ip r

oles

/exp

erie

nce

Fin

ance

and

acc

ount

ing

expe

rienc

e

Ris

k m

anag

emen

t exp

erie

nce

E

xecu

tive

com

pens

atio

n ex

perie

nce

In

tern

atio

nal e

xper

ienc

e

Mar

ketin

g ex

perie

nce

C

onsu

mer

pro

duct

exp

erie

nce

P

hila

nthr

opic

/non

-pro

fit e

xper

ienc

e

Tec

hnol

ogy

expe

rienc

e

Ope

ratio

ns e

xper

ienc

e

Indu

stria

l exp

erie

nce

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Inve

stm

ent m

anag

emen

t exp

erie

nce

Le

gal e

xper

tise

In

vest

men

t ban

king

exp

erie

nce

C

apita

l mar

kets

exp

erie

nce

F

inan

cial

ser

vice

s ex

perie

nce

In

side

r’s u

nder

stan

ding

of f

irm’s

bus

ines

s

Out

side

boa

rd e

xper

ienc

e

Str

ateg

ic p

lann

ing

expe

rienc

e

Ent

repr

eneu

rial e

xper

ienc

e

No

The

Boa

rd s

triv

es to

ens

ure

dive

rsity

of r

epre

sent

atio

n am

ong

its m

embe

rs.

Of t

he 1

1 di

rect

or n

omin

ees,

two

are

wom

en a

nd o

ne is

Afr

ican

-Am

eric

an.

Incr

easi

ng d

iver

sity

is a

prio

rity,

and

whe

n co

nsid

erin

g pr

ospe

cts

for

poss

ible

rec

omm

enda

tion

to th

e B

oard

, the

Gov

erna

nce

Com

mitt

ee r

evie

ws

avai

labl

e in

form

atio

n ab

out t

he p

rosp

ects

, inc

ludi

ng g

ende

r, r

ace

and

ethn

icity

, as

wel

l as

expe

rienc

e, q

ualif

icat

ions

, attr

ibut

es a

nd s

kills

. T

he d

irect

ors

brin

g br

oad

and

varie

d sk

ills

and

know

ledg

e fr

om p

ositi

ons

in

glob

al b

usin

esse

s, n

ot-f

or-p

rofit

org

aniz

atio

ns a

nd g

over

nmen

t, an

d di

vers

e pe

rspe

ctiv

es fr

om a

bro

ad s

pect

rum

of i

ndus

trie

s, c

omm

unity

act

iviti

es a

nd

othe

r fa

ctor

s.

Lead

ersh

ip r

oles

/exp

erie

nce

In

dust

ry k

now

ledg

e

Mar

ketin

g ex

perie

nce

In

tern

atio

nal e

xper

ienc

e

Ope

ratin

g ex

perie

nce

O

utsi

de b

oard

exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rienc

e

No

Whi

le th

e bo

ard

does

not

hav

e a

writ

ten

polic

y to

con

side

r di

vers

ity w

hen

iden

tifyi

ng n

omin

ees

for

dire

ctor

s, it

str

ives

to a

ssem

ble

a bo

ard

com

pose

d of

in

divi

dual

s th

at re

pres

ent a

div

ersi

ty o

f vie

ws,

bac

kgro

unds

and

pro

fess

iona

l ex

perie

nce.

T

he N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

eva

luat

es e

ach

indi

vidu

al in

the

cont

ext o

f the

Boa

rd a

s a

who

le, w

ith th

e ob

ject

ive

of r

ecom

men

ding

for

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

director notes board diversity and director qualifications www.conferenceboard.org 15

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

E

xper

ienc

e in

aca

dem

ia

P

rodu

ct d

evel

opm

ent e

xper

ienc

e

Res

earc

h an

d de

velo

pmen

t and

sci

entif

ic e

xper

ienc

e

Fin

ance

and

acc

ount

ing

expe

rtis

e

Phi

lant

hrop

ic/n

on-p

rofit

exp

erie

nce

T

echn

olog

y ex

perie

nce

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

E

ntre

pren

euria

l exp

erie

nce

M

anuf

actu

ring

expe

rienc

e

nom

inat

ion

a gr

oup

of in

divi

dual

s th

at c

an b

est p

erpe

tuat

e ou

r su

cces

s an

d re

pres

ent s

hare

hold

er in

tere

sts

thro

ugh

the

exer

cise

of s

ound

bus

ines

s ju

dgm

ent.

Add

ition

ally

, as

part

of t

his

eval

uatio

n an

d to

furt

her

our

com

mitm

ent t

o di

vers

ity, t

he N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

as

sess

es w

heth

er th

is g

roup

of n

omin

ees

is c

ompr

ised

of i

ndiv

idua

ls w

ith a

di

vers

ity o

f vie

ws,

bac

kgro

unds

, and

exp

erie

nces

that

wou

ld e

nhan

ce th

e B

oard

’s s

ucce

ss a

t ach

ievi

ng th

ese

goal

s.

The

boa

rd b

elie

ves

that

all

the

curr

ent n

omin

ees

are

high

ly q

ualif

ied

and

have

spe

cific

em

ploy

men

t and

lead

ersh

ip e

xper

ienc

es, k

now

ledg

e, a

nd s

kills

th

at q

ualif

y th

em fo

r bo

ard

serv

ice

and

repr

esen

t div

erse

vie

ws

and

back

grou

nds.

The

nom

inee

s’ in

divi

dual

bio

grap

hies

bel

ow c

onta

in

info

rmat

ion

rega

rdin

g ea

ch n

omin

ee’s

exp

erie

nces

, qua

lific

atio

ns, a

nd s

kills

.

S

trat

egic

pla

nnin

g ex

pert

ise

B

usin

ess

deve

lopm

ent e

xper

tise

C

orpo

rate

gov

erna

nce

expe

rtis

e

Fin

ance

and

acc

ount

ing

expe

rtis

e

Suc

cess

ion

plan

ning

exp

ertis

e

Pro

duct

dev

elop

men

t exp

ertis

e

Mar

ketin

g ex

pert

ise

C

onsu

mer

insi

ghts

exp

ertis

e

Man

ufac

turin

g, s

uppl

y ch

ain

man

agem

ent a

nd d

istr

ibut

ion

expe

rtis

e

Env

ironm

enta

l, su

stai

nabi

lity

and

soci

al r

espo

nsib

ility

exp

ertis

e

Pub

lic p

olic

y ex

pert

ise

Le

ader

ship

rol

es/e

xper

ienc

e

Ris

k as

sess

men

t exp

ertis

e

Sha

reho

lder

and

gov

ernm

ent r

elat

ions

exp

ertis

e

Phi

lant

hrop

ic/n

on-p

rofit

exp

erie

nce

In

tern

atio

nal o

pera

tions

exp

erie

nce

O

utsi

de b

oard

exp

erie

nce

E

xper

ienc

e in

sou

rcin

g an

d sa

le o

f pro

duct

pac

kagi

ng a

nd r

elat

ed

com

mod

ities

Exp

erie

nce

in a

cade

mia

No

The

Gov

erna

nce

Com

mitt

ee s

eeks

Dire

ctor

s w

ith r

ecor

ds o

f ach

ieve

men

t in

thei

r ch

osen

fiel

ds a

nd e

xper

ienc

e re

leva

nt to

the

Com

pany

’s s

cope

, str

ateg

y an

d op

erat

ions

. Dire

ctor

can

dida

tes

also

are

exp

ecte

d to

pos

sess

cer

tain

qu

aliti

es, s

uch

as in

tegr

ity, i

ndep

ende

nce

of m

ind,

ana

lytic

al s

kills

, a

com

mitm

ent t

o se

rve

the

inte

rest

s of

sha

reho

lder

s, a

nd a

will

ingn

ess

to

chal

leng

e m

anag

emen

t in

a co

nstr

uctiv

e an

d co

llegi

al e

nviro

nmen

t, as

wel

l as

an

abili

ty to

exe

rcis

e go

od ju

dgm

ent,

and

prov

ide

prac

tical

insi

ghts

and

di

vers

e pe

rspe

ctiv

es. I

n se

lect

ing

cand

idat

es, t

he G

over

nanc

e C

omm

ittee

an

d th

e B

oard

take

div

ersi

ty in

to a

ccou

nt, s

eeki

ng to

ens

ure

a re

pres

enta

tion

of v

arie

d pe

rspe

ctiv

es a

nd e

xper

ienc

e, a

lthou

gh th

e C

ompa

ny’s

nom

inat

ion

polic

y do

es n

ot p

resc

ribe

spec

ific

stan

dard

s fo

r di

vers

ity. C

andi

date

s al

so a

re e

valu

ated

in li

ght o

f Boa

rd p

olic

ies,

suc

h as

th

ose

rela

ting

to D

irect

or in

depe

nden

ce a

nd s

ervi

ce o

n ot

her

boar

ds, a

s w

ell

as c

onsi

dera

tions

rel

atin

g to

the

size

and

str

uctu

re o

f the

Boa

rd. A

s pa

rt o

f its

co

nsid

erat

ion

of D

irect

or s

ucce

ssio

n, th

e B

oard

and

the

Gov

erna

nce

Com

mitt

ee m

onito

r w

heth

er th

e D

irect

ors

as a

gro

up m

eet t

he C

ompa

ny’s

cr

iteria

for

the

com

posi

tion

of th

e B

oard

, inc

ludi

ng o

vera

ll di

vers

ity o

f pe

rspe

ctiv

e an

d ex

perie

nce.

[T

he d

irect

ors’

exp

erie

nces

] ena

ble

our

Dire

ctor

s to

pro

vide

div

erse

pe

rspe

ctiv

es a

bout

the

com

plex

issu

es fa

cing

a g

loba

l res

taur

ant

orga

niza

tion

like

McD

onal

d’s

F

inan

ce e

xper

ienc

e

Inve

stm

ent a

nd c

omm

erci

al b

anki

ng e

xper

ienc

e

Tra

ck r

ecor

d of

ach

ieve

men

t and

sou

nd ju

dgm

ent

O

utsi

de b

oard

exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rienc

e

Sci

entif

ic a

nd m

edic

al e

xper

tise

P

harm

aceu

tical

indu

stry

exp

erie

nce

Le

ader

ship

rol

es/e

xper

ienc

e

Ope

ratio

nal e

xper

tise

In

tern

atio

nal e

xper

ienc

e

Exp

erie

nce

in a

cade

mia

No

Whi

le th

e C

omm

ittee

on

Cor

pora

te G

over

nanc

e do

es n

ot h

ave

a fo

rmal

di

vers

ity p

olic

y, d

iver

sity

is a

fact

or c

onsi

dere

d w

hen

iden

tifyi

ng p

rosp

ectiv

e N

omin

ees.

Nom

inee

s ar

e se

lect

ed s

o th

at th

e B

oard

of D

irect

ors

repr

esen

ts

a di

vers

ity o

f exp

ertis

e in

are

as n

eede

d to

fost

er M

erck

’s b

usin

ess

succ

ess,

in

clud

ing

scie

nce,

fina

nce,

ope

ratio

ns, m

anuf

actu

ring,

com

mer

cial

act

iviti

es,

mar

ketin

g, in

tern

atio

nal b

usin

ess,

and

gov

erna

nce.

In a

dditi

on, n

omin

ees

are

sele

cted

so

that

the

Boa

rd o

f Dire

ctor

s re

pres

ents

a d

iver

sity

of p

erso

nal

char

acte

ristic

s, in

clud

ing

gend

er, r

ace,

eth

nic

orig

in a

nd n

atio

nal b

ackg

roun

d.

Whe

n id

entif

ying

pot

entia

l can

dida

tes

the

Com

mitt

ee o

n C

orpo

rate

G

over

nanc

e of

Old

Mer

ck r

etai

ned

inde

pend

ent s

earc

h fir

ms

to a

ssis

t in

iden

tifyi

ng c

andi

date

s th

at r

efle

cted

thes

e di

vers

ity o

bjec

tives

and

it is

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

16 director notes board diversity and director qualifications www.conferenceboard.org

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

R

esea

rch

expe

rienc

e

Mar

ketin

g an

d co

mm

unic

atio

ns e

xper

ienc

e

Ove

rsig

ht o

f med

ical

pro

vide

rs, e

duca

tion

and

patie

nt c

are

V

entu

re c

apita

l exp

erie

nce

S

trat

egic

pla

nnin

g ex

perie

nce

expe

cted

that

the

curr

ent C

omm

ittee

on

Cor

pora

te G

over

nanc

e w

ill c

ontin

ue

this

pra

ctic

e as

nec

essa

ry.

Pr

oxy

filin

g pr

eced

ed

effe

ctiv

e da

te o

f new

SE

C d

iscl

osur

e ru

les.

Non

e N

o T

he G

over

nanc

e an

d N

omin

atin

g C

omm

ittee

wor

ks w

ith th

e B

oard

to

dete

rmin

e th

e ap

prop

riate

cha

ract

eris

tics,

ski

lls, a

nd e

xper

ienc

es fo

r th

e B

oard

as

a w

hole

and

its

indi

vidu

al m

embe

rs w

ith th

e ob

ject

ive

of h

avin

g a

Boa

rd w

ith d

iver

se b

ackg

roun

ds a

nd e

xper

ienc

e in

bus

ines

s, e

duca

tion,

and

pu

blic

ser

vice

. In

eva

luat

ing

the

suita

bilit

y of

indi

vidu

al B

oard

mem

bers

, the

Boa

rd ta

kes

into

ac

coun

t man

y fa

ctor

s, in

clud

ing

gene

ral u

nder

stan

ding

of m

arke

ting,

fina

nce,

an

d ot

her

disc

iplin

es r

elev

ant t

o th

e su

cces

s of

a la

rge

publ

icly

trad

ed

com

pany

in to

day’

s bu

sine

ss e

nviro

nmen

t; un

ders

tand

ing

of o

ur b

usin

ess

and

tech

nolo

gy; e

duca

tiona

l and

pro

fess

iona

l bac

kgro

und;

per

sona

l ac

com

plis

hmen

t; an

d ge

ogra

phic

, gen

der,

age

, and

eth

nic

dive

rsity

. The

B

oard

eva

luat

es e

ach

indi

vidu

al in

the

cont

ext o

f the

Boa

rd a

s a

who

le, w

ith

the

obje

ctiv

e of

rec

omm

endi

ng a

gro

up th

at c

an b

est p

erpe

tuat

e th

e su

cces

s of

our

bus

ines

s an

d re

pres

ent s

hare

hold

er in

tere

sts

thro

ugh

the

exer

cise

of

soun

d ju

dgm

ent u

sing

its

dive

rsity

of e

xper

ienc

e.

Lead

ersh

ip r

oles

and

exp

erie

nces

Mar

ketin

g ex

perie

nce

S

trat

egic

pla

nnin

g ex

perie

nce

O

pera

tions

exp

erie

nce

B

usin

ess

deve

lopm

ent e

xper

ienc

e

Fin

anci

al s

ervi

ces

expe

rienc

e

Exp

erie

nce

in a

cade

mia

Gov

ernm

enta

l, pu

blic

pol

icy

or r

egul

ator

y ex

perie

nce

In

tern

atio

nal e

xper

ienc

e

Fin

ance

and

acc

ount

ing

expe

rienc

e

Ris

k m

anag

emen

t exp

erie

nce

C

omm

erci

al a

nd in

tern

atio

nal b

anki

ng e

xper

ienc

e

Ban

k re

gula

tory

exp

erie

nce

In

side

und

erst

andi

ng o

f com

pany

’s b

usin

ess

E

cono

mic

s ex

perie

nce

O

utsi

de b

oard

exp

erie

nce

P

hila

nthr

opic

/non

-pro

fit e

xper

ienc

e

No

Whi

le th

e B

oard

has

not

ado

pted

a p

olic

y re

gard

ing

dive

rsity

, the

Cor

pora

te

Gov

erna

nce

Pol

icie

s pr

ovid

e th

at th

e B

oard

will

take

into

acc

ount

div

ersi

ty o

f a

dire

ctor

can

dida

te’s

per

spec

tives

, bac

kgro

und

and

othe

r re

leva

nt

dem

ogra

phic

s. T

he N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

and

Boa

rd m

ay

also

det

erm

ine

spec

ific

skill

s an

d ex

perie

nce

they

are

see

king

in d

irect

or

cand

idat

es b

ased

on

the

need

s of

the

Com

pany

at a

spe

cific

tim

e. In

co

nsid

erin

g ca

ndid

ates

for

the

Boa

rd, t

he N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

con

side

rs th

e en

tiret

y of

eac

h ca

ndid

ate’

s cr

eden

tials

in th

e co

ntex

t of t

hese

crit

eria

. T

he C

ompa

ny b

elie

ves

that

an

effe

ctiv

e bo

ard

cons

ists

of a

div

erse

gro

up o

f in

divi

dual

s w

ho b

ring

a va

riety

of c

ompl

emen

tary

ski

lls th

at th

e N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

and

Boa

rd c

onsi

der

in th

e br

oade

r co

ntex

t of t

he

Boa

rd’s

ove

rall

com

posi

tion,

with

a v

iew

tow

ard

cons

titut

ing

a bo

ard

that

has

th

e be

st s

kill

set a

nd e

xper

ienc

e to

ove

rsee

the

Com

pany

’s b

usin

ess.

Med

ical

trai

ning

and

exp

erie

nce

R

esea

rch

and

deve

lopm

ent e

xper

ienc

e

Lead

ersh

ip r

oles

/exp

erie

nce

F

inan

ce a

nd a

ccou

ntin

g ex

perie

nce

O

utsi

de b

oard

ser

vice

No

Can

dida

tes

are

sele

cted

for,

am

ong

othe

r th

ings

, the

ir in

tegr

ity,

inde

pend

ence

, div

ersi

ty o

f exp

erie

nce,

lead

ersh

ip a

nd th

eir

abili

ty to

ex

erci

se s

ound

judg

men

t. T

he g

oal o

f the

Com

mitt

ee is

to a

chie

ve a

Boa

rd th

at, a

s a

who

le, p

rovi

des

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

director notes board diversity and director qualifications www.conferenceboard.org 17

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

P

harm

aceu

tical

indu

stry

exp

erie

nce

S

trat

egic

pla

nnin

g ex

perie

nce

E

xecu

tive

com

pens

atio

n ex

perie

nce

O

pera

tiona

l exp

erie

nce

E

ntre

pren

euria

l exp

erie

nce

In

tern

atio

nal e

xper

ienc

e

Cap

ital m

arke

ts e

xper

ienc

e

Exp

erie

nce

in a

cade

mia

Phi

lant

hrop

ic/n

on-p

rofit

exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rienc

e

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

Eco

nom

ic e

xper

tise

S

ocia

l sci

ence

exp

ertis

e

Con

sum

er b

usin

ess

expe

rtis

e

Cos

t-cu

tting

and

res

ourc

e al

loca

tion

expe

rtis

e

Insu

ranc

e in

dust

ry e

xper

tise

In

side

rs u

nder

stan

ding

of c

ompa

ny

M

anuf

actu

ring

expe

rienc

e

Mar

ketin

g ex

perie

nce

Le

gal e

xper

ienc

e

Inve

stm

ent b

anki

ng e

xper

ienc

e

Acq

uisi

tion

expe

rienc

e

effe

ctiv

e ov

ersi

ght o

f the

man

agem

ent a

nd b

usin

ess

of o

ur C

ompa

ny,

thro

ugh

the

appr

opria

te d

iver

sity

of e

xper

ienc

e, e

xper

tise,

ski

lls, s

peci

aliz

ed

know

ledg

e an

d ot

her

qual

ifica

tions

and

attr

ibut

es o

f the

indi

vidu

al D

irect

ors.

Im

port

ant c

riter

ia fo

r B

oard

mem

bers

hip

incl

ude

the

follo

win

g . .

.:

Mem

bers

of t

he B

oard

sho

uld

have

dem

onst

rate

d le

ader

ship

ab

ility

, with

bro

ad e

xper

ienc

e, d

iver

se p

ersp

ectiv

es, a

nd th

e ab

ility

to

exe

rcis

e so

und

busi

ness

judg

men

t . .

.

The

com

posi

tion

of th

e B

oard

sho

uld

refle

ct th

e be

nefit

s of

di

vers

ity a

s to

gen

der,

eth

nic

back

grou

nd a

nd e

xper

ienc

e.

The

Cor

pora

te G

over

nanc

e C

omm

ittee

ann

ually

rev

iew

s th

e co

mpo

sitio

n of

th

e B

oard

as

a w

hole

and

mak

es r

ecom

men

datio

ns, i

f dee

med

nec

essa

ry, t

o en

hanc

e th

e B

oard

in o

rder

to a

chie

ve w

hat i

t bel

ieve

s is

the

optim

al m

ix o

f ex

perie

nce,

exp

ertis

e, s

kills

, spe

cial

ized

kno

wle

dge,

div

ersi

ty a

nd o

ther

cr

iteria

.

Pr

oxy

filin

g pr

eced

ed

effe

ctiv

e da

te o

f new

SE

C d

iscl

osur

e ru

les.

Non

e N

o N

one

G

over

nmen

tal,

publ

ic p

olic

y or

reg

ulat

ory

expe

rienc

e

Lega

l exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rienc

e

Lead

ersh

ip r

oles

/exp

erie

nce

F

inan

ce a

nd a

ccou

ntin

g ex

perie

nce

M

anag

emen

t exp

ertis

e

Str

ateg

ic p

lann

ing

expe

rienc

e

Insu

ranc

e in

dust

ry e

xper

tise

C

orpo

rate

fina

nce

expe

rienc

e

Mer

gers

& a

cqui

sitio

ns e

xper

ienc

e

Priv

ate

equi

ty e

xper

ienc

e

Inve

stm

ent m

anag

emen

t exp

erie

nce

T

echn

olog

y ex

perie

nce

V

entu

re c

apita

l exp

erie

nce

E

xper

ienc

e in

the

deve

lopm

ent o

f em

ergi

ng b

usin

esse

s

Ope

ratio

ns e

xper

ienc

e

Inte

rnat

iona

l exp

erie

nce

No

[T]h

e B

oard

, bas

ed o

n th

e N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

’s

reco

mm

enda

tion,

sel

ects

nom

inee

s af

ter

cons

ider

ing

the

follo

win

g cr

iteria

. . .

di

vers

ity o

f vie

wpo

ints

, bac

kgro

und,

exp

erie

nce

and

othe

r de

mog

raph

ics.

A

s m

entio

ned

abov

e, th

e N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

and

the

Boa

rd in

clud

e di

vers

ity o

f “vi

ewpo

ints

, bac

kgro

und,

exp

erie

nce

and

othe

r de

mog

raph

ics”

as

one

of s

ever

al c

riter

ia th

at th

ey c

onsi

der

in c

onne

ctio

n w

ith

sele

ctin

g ca

ndid

ates

for

the

Boa

rd. W

hile

nei

ther

the

Boa

rd n

or th

e N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

has

a fo

rmal

div

ersi

ty p

olic

y, o

ne o

f m

any

fact

ors

that

the

Boa

rd a

nd th

e N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

ca

refu

lly c

onsi

ders

is th

e im

port

ance

to th

e C

ompa

ny o

f rac

ial a

nd g

ende

r di

vers

ity in

boa

rd c

ompo

sitio

n. M

oreo

ver,

whe

n co

nsid

erin

g di

rect

or

cand

idat

es, t

he N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

and

the

Boa

rd s

eek

indi

vidu

als

with

bac

kgro

unds

and

qua

litie

s th

at, w

hen

com

bine

d w

ith th

ose

of

our

incu

mbe

nt d

irect

ors,

enh

ance

the

Boa

rd’s

effe

ctiv

enes

s an

d, a

s re

quire

d by

the

Gov

erna

nce

Gui

delin

es, r

esul

t in

the

Boa

rd h

avin

g “a

bro

ad r

ange

of

skill

s, e

xper

tise,

indu

stry

kno

wle

dge,

div

ersi

ty o

f opi

nion

and

con

tact

s re

leva

nt to

the

Com

pany

’s b

usin

ess”

. As

part

of i

ts a

nnua

l sel

f-ev

alua

tion,

the

Boa

rd a

sses

ses

and

conf

irms

com

plia

nce

with

this

Gov

erna

nce

Gui

delin

e.

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

18 director notes board diversity and director qualifications www.conferenceboard.org

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

Prox

y fil

ing

prec

eded

ef

fect

ive

date

of n

ew

SEC

dis

clos

ure

rule

s

Le

ader

ship

rol

es/s

kills

Ope

ratin

g ex

perie

nce

In

tern

atio

nal e

xper

ienc

e

Aer

ospa

ce e

xper

ienc

e

Env

ironm

enta

l/sus

tain

abili

ty e

xper

ienc

e

Exe

cutiv

e co

mpe

nsat

ion

expe

rienc

e

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

Lega

l exp

erie

nce

F

inan

cial

and

acc

ount

ing

expe

rtis

e

Tec

hnol

ogy

expe

rienc

e

Out

side

boa

rd s

ervi

ce

C

orpo

rate

gov

erna

nce

expe

rienc

e

Ris

k m

anag

emen

t exp

erie

nce

C

onst

ruct

ion

expe

rienc

e

In

tegr

atio

n ex

perie

nce

Mili

tary

and

glo

bal s

ecur

ity e

xper

ienc

e

Exp

erie

nce

in a

cade

mia

Fin

anci

al m

arke

ts e

xper

ienc

e

No

The

Com

mitt

ee o

n N

omin

atio

ns a

nd G

over

nanc

e ha

s de

term

ined

that

ca

ndid

ates

for

the

Boa

rd s

houl

d ha

ve th

e fo

llow

ing

qual

ifica

tions

. . .

: th

e ab

ility

to c

ontr

ibut

e to

the

dive

rsity

of p

ersp

ectiv

es p

rese

nt in

boa

rd

delib

erat

ions

. W

hen

a B

oard

vac

ancy

aris

es, t

he C

omm

ittee

see

ks to

iden

tify

the

mos

t ca

pabl

e ca

ndid

ates

ava

ilabl

e w

ho m

eet t

he B

oard

’s c

riter

ia fo

r no

min

atio

n an

d w

ho w

ill b

e ab

le to

ser

ve th

e be

st in

tere

sts

of a

ll sh

areo

wne

rs. I

n vi

ew o

f th

e ge

ogra

phic

div

ersi

ty o

f UT

C’s

ope

ratio

ns a

nd it

s gl

obal

pro

file,

it is

cl

early

ben

efic

ial f

or th

e B

oard

to s

eek

cand

idat

es w

ho, i

n ad

ditio

n to

re

pres

entin

g th

e in

tere

sts

of s

hare

owne

rs in

gen

eral

, will

als

o co

ntrib

ute

to

the

dive

rsity

of p

ersp

ectiv

es p

rese

nt in

Boa

rd d

elib

erat

ions

. The

Com

mitt

ee

asse

sses

the

effe

ctiv

enes

s of

UT

C’s

nom

inat

ion

polic

ies

on a

n an

nual

bas

is,

as p

art o

f the

Boa

rd’s

eva

luat

ion

of it

s ef

fect

iven

ess

as a

gro

up. I

n th

e co

urse

of

this

per

form

ance

eva

luat

ion,

the

Boa

rd c

onsi

ders

whe

ther

the

Boa

rd’s

co

mpo

sitio

n re

flect

s an

app

ropr

iate

mix

of s

kills

, exp

erie

nce

and

dive

rsity

, in

rela

tion

to th

e ne

eds

of th

e C

ompa

ny.

Lead

ersh

ip r

oles

/exp

erie

nce

G

over

nmen

t and

pub

lic p

olic

y ex

perie

nce

P

rofe

ssio

nal s

ervi

ces

expe

rienc

e

Pub

lic in

tere

st e

xper

ienc

e

Fin

anci

al s

ervi

ces

expe

rienc

e

Man

ufac

turin

g ex

perie

nce

H

ospi

talit

y ex

perie

nce

H

ealth

car

e ex

perie

nce

T

elec

omm

unic

atio

ns e

xper

ienc

e

Tra

nspo

rtat

ion

and

logi

stic

s ex

perie

nce

C

onsu

mer

goo

ds e

xper

ienc

e

Inte

rnat

iona

l exp

erie

nce

S

trat

egic

pla

nnin

g ex

perie

nce

F

inan

ce a

nd a

ccou

ntin

g ex

perie

nce

O

pera

tions

exp

erie

nce

C

orpo

rate

gov

erna

nce

expe

rienc

e

Ris

k m

anag

emen

t exp

erie

nce

O

utsi

de b

oard

exp

erie

nce

T

echn

olog

y ex

perie

nce

No

In e

valu

atin

g ca

ndid

ates

, the

Cor

pora

te G

over

nanc

e an

d P

olic

y C

omm

ittee

co

nsid

ers

a w

ide

varie

ty o

f qua

lific

atio

ns, a

ttrib

utes

and

oth

er fa

ctor

s an

d re

cogn

izes

that

a d

iver

sity

of v

iew

poin

ts a

nd p

ract

ical

exp

erie

nces

can

en

hanc

e th

e ef

fect

iven

ess

of th

e B

oard

. Acc

ordi

ngly

, as

part

of i

ts e

valu

atio

n of

eac

h ca

ndid

ate,

the

Com

mitt

ee ta

kes

into

acc

ount

how

that

can

dida

te’s

ba

ckgr

ound

, exp

erie

nce,

qua

lific

atio

ns, a

ttrib

utes

and

ski

lls m

ay c

ompl

emen

t, su

pple

men

t or

dupl

icat

e th

ose

of o

ther

pro

spec

tive

cand

idat

es.

In a

sses

sing

the

appr

opria

te c

ompo

sitio

n of

the

Boa

rd, t

he C

orpo

rate

G

over

nanc

e an

d P

olic

y C

omm

ittee

als

o co

nsid

ers

othe

r fa

ctor

s th

at a

re

rele

vant

to th

e cu

rren

t nee

ds o

f the

Cor

pora

tion,

incl

udin

g th

ose

that

pro

mot

e di

vers

ity.

Gov

ernm

ent a

nd/o

r pu

blic

pol

icy

expe

rienc

e

Inve

stm

ent b

anki

ng e

xper

tise

Le

ader

ship

rol

es/e

xper

ienc

e

Ent

repr

eneu

rial e

xper

ienc

e

Tec

hnol

ogy

expe

rtis

e

Str

ateg

ic p

lann

ing

expe

rienc

e

Out

side

boa

rd s

ervi

ce

No

As

set f

orth

in o

ur c

ompa

ny’s

Cor

pora

te G

over

nanc

e G

uide

lines

, the

Boa

rd is

co

mm

itted

to a

div

erse

mem

bers

hip.

In s

elec

ting

nom

inee

s, th

e B

oard

doe

s no

t dis

crim

inat

e on

the

basi

s of

rac

e, c

olor

, nat

iona

l orig

in, g

ende

r, r

elig

ion,

di

sabi

lity,

or

sexu

al o

rient

atio

n.

As

prov

ided

in o

ur c

ompa

ny’s

Cor

pora

te G

over

nanc

e G

uide

lines

, the

Boa

rd

is c

omm

itted

to d

iver

sifie

d m

embe

rshi

p. T

he B

oard

will

not

dis

crim

inat

e on

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

director notes board diversity and director qualifications www.conferenceboard.org 19

* Doe

s no

t inc

lude

add

ition

al s

kills

, qua

lific

atio

ns o

r exp

erie

nces

that

may

be

expl

icit

or in

ferre

d ba

sed

on d

iscl

osur

e of

the

boar

d’s

qual

ifica

tions

as

a w

hole

, the

dire

ctor

s’ b

iogr

aphi

cal i

nfor

mat

ion

or o

ther

di

sclo

sure

. O

mis

sion

of a

ski

ll, q

ualif

icat

ion

or e

xper

ienc

e do

es n

ot m

ean

that

a c

ompa

ny’s

boa

rd m

embe

rs d

o no

t hav

e su

ch a

ttrib

utes

or t

hat t

he b

oard

did

not

con

side

r the

m.

Sum

mar

y of

Spe

cific

Exp

erie

nce,

Qua

lific

atio

ns, A

ttrib

utes

or S

kills

Cite

d as

C

onsi

dera

tion

in D

eter

min

ing

that

Per

son

Shou

ld S

erve

as

Dire

ctor

*

Doe

s C

ompa

ny

Dis

clos

e th

at it

has

a

Div

ersi

ty “

Polic

y”?

(Yes

/No)

D

iscl

osur

e R

egar

ding

Con

side

ratio

n of

Boa

rd D

iver

sity

co

ntin

ued

F

inan

cial

and

acc

ount

ing

expe

rienc

e

Ope

ratio

nal e

xper

ienc

e

Cor

pora

te fi

nanc

e ex

pert

ise

R

etai

l ind

ustr

y ex

pert

ise

In

tern

atio

nal e

xper

ienc

e

Mar

ketin

g an

d br

and

man

agem

ent e

xper

tise

C

orpo

rate

gov

erna

nce

expe

rtis

e

Inve

stm

ent e

xper

tise

Le

gal e

xper

ienc

e

Insi

de k

now

ledg

e of

com

pany

Non

-pro

fit e

xper

tise

the

basi

s of

rac

e, c

olor

, nat

iona

l orig

in, g

ende

r, s

exua

l orie

ntat

ion,

rel

igio

n, o

r di

sabi

lity

in s

elec

ting

nom

inee

s. D

iver

sity

and

incl

usio

n ar

e va

lues

em

bedd

ed in

to W

alm

art’s

cul

ture

and

fund

amen

tal t

o its

bus

ines

s. In

kee

ping

w

ith th

ose

valu

es, w

hen

asse

ssin

g a

cand

idat

e, th

e C

ompe

nsat

ion,

N

omin

atin

g an

d G

over

nanc

e C

omm

ittee

of t

he B

oard

con

side

rs th

e di

ffere

nt

view

poin

ts a

nd e

xper

ienc

es th

at a

can

dida

te c

ould

brin

g to

the

Boa

rd a

nd

how

thos

e vi

ewpo

ints

and

exp

erie

nces

cou

ld e

nhan

ce th

e B

oard

’s e

xecu

tion

of it

s re

spon

sibi

litie

s.

Pr

oxy

filin

g pr

eced

ed

effe

ctiv

e da

te o

f new

SE

C d

iscl

osur

e ru

les.

Non

e N

o T

he G

over

nanc

e an

d N

omin

atin

g C

omm

ittee

. . .

eva

luat

es p

rosp

ectiv

e [B

oard

] nom

inee

[s] a

gain

st th

e sp

ecifi

c cr

iteria

that

it h

as e

stab

lishe

d fo

r th

e po

sitio

n, a

s w

ell a

s th

e st

anda

rds

and

qual

ifica

tions

set

out

in th

e C

ompa

ny’s

C

orpo

rate

Gov

erna

nce

Gui

delin

es, i

nclu

ding

. . .

the

exte

nt to

whi

ch th

e pr

ospe

ctiv

e no

min

ee h

elps

the

Boa

rd r

efle

ct th

e di

vers

ity o

f the

Com

pany

’s

shar

ehol

ders

, em

ploy

ees,

cus

tom

ers

and

gues

ts a

nd th

e co

mm

uniti

es in

w

hich

it o

pera

tes.

Appe

ndix

1 c

ontin

ued

Surv

ey o

f Enh

ance

d D

irec

tor

and

Nom

inee

Dis

clos

ure

Copyright © 2010 by The Conference Board, Inc. All rights reserved. The Conference Board®, and the torch logo are registered trademarks of The Conference Board, Inc.

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About the AuthorsLouis L. Goldberg is a member of Davis Polk’s corporatedepartment, practicing in the mergers and acquisitionsgroup. His practice focuses on public and private mergersand acquisitions, private equity transactions, board andcorporate governance advice, joint ventures, spinoffs anddefensive assignments. Mr. Goldberg is recognized as aleading lawyer in several legal industry publications,including Chambers Global: The World’s Leading Lawyersfor Business. He is a magna cum laude graduate of theUniversity of Cape Town Faculty of Law and earned a LL.M.degree from the University of Cambridge.

Janice Brunner is an associate in Davis Polk’s capitalmarkets group. For the firm, she has published a number ofarticles on issues of corporate governance and securitiesregulation. Ms. Brunner is a graduate of the University ofPennsylvania Law School, where she served as editor ofthe Journal of International Economic Law.

About the Series DirectorMatteo Tonello is director, corporate governance research, atThe Conference Board in New York. For The Conference Board,Tonello has conducted governance and risk managementanalyses and research in collaboration with leading corporations,institutional investors, and professional firms. Also, he hasparticipated as a speaker and moderator in educational programson governance best practices. Recently, Tonello served asthe co-chair of The Conference Board’s Expert Committee onShareholder Activism and as a member of the Technical Ad-visory Group to The Conference Board Task Force on ExecutiveCompensation. Before joining The Conference Board, hepracticed corporate law at Davis Polk. Tonello is a graduateof Harvard Law School and the University of Bologna.

About Director NotesDirector Notes is a series of online publications in which The Conference Board engages experts from several disciplines of business leadership, including corporategovernance, risk oversight, and sustainability, in an opendialogue about topical issues of concern to membercompanies. The opinions expressed in this report arethose of the author(s) only and do not necessarily reflectthe views of The Conference Board. The Conference Boardmakes no representation as to the accuracy and com-pleteness of the content. This report is not intended toprovide legal advice with respect to any particular situation,and no legal or business decision should be based solelyon its content.

About The Conference BoardThe Conference Board is the world’s preeminent businessmembership and research organization. Best known forthe Consumer Confidence Index and the Leading EconomicIndicators, The Conference Board has, for over 90 years,equipped the world’s leading corporations with practicalknowledge through issues-oriented research and seniorexecutive peer-to-peer meetings.

20 director notes board diversity and director qualifications www.conferenceboard.org