The Board met five times in 2011 and its committees met a total of 20 times. Each director attended 90% or more of the aggregate of all meetings of the Board and committees upon which he or she served during 2011. All of the directors attended the 2011 annual meeting and all directors are strongly encouraged to attend the 2012 annual meeting.
The Board maintains the following standing committees: Corporate Governance, Audit, Personnel & Compensation, and Finance. Each committee has a charter that has been approved by the Board. The complete text of each committee charter is available on the company's website located at www.kaman.com by first clicking on the "Governance" link followed by the "Board Committee Charters" link. Each committee and the Board periodically, but not less than annually, review and revise committee charters, as appropriate.
The following table describes the current members of each committee and the number of meetings held during 2011:
|Brian E. Barents||X||X|
|E. Reeves Callaway III||X||X|
|Karen M. Garrison||X||Chair|
|A. William Higgins||X||X|
|Neal J. Keating(1)|
|Eileen S. Kraus(2)||X||Chair|
|George E. Minnich||Chair||X|
|Thomas W. Rabaut||X||X|
|Richard J. Swift||X||Chair|
|Number of Meetings||7||4||4||5|
Following is a summary of the various committees' responsibilities:
Under its charter, the Corporate Governance Committee consists of the chairpersons of the standing committees and the Lead Independent Director, if the Lead Independent Director is not already a Committee chairperson. The committee assists the Board in fulfilling its corporate governance responsibilities and serves as the Board's nominating committee. These corporate governance responsibilities include board and committee organization and function, membership, compensation, and annual performance evaluation; annual goals development and evaluation for the CEO with participation by the Personnel & Compensation Committee and the Board in executive session; succession planning; development and periodic review of governance policies and principles; monitoring director compliance with stock ownership guidelines; consideration and recommendation of shareholder proposals; establishment of selection criteria for, and review and recommendation of, new Board members; and administration of the company's majority voting policy for director elections.
The committee is responsible for assisting the Board in fulfilling its responsibility to oversee the company's financial reporting and accounting policies and procedures, its system of internal accounting and financial controls, the internal audit function and the annual independent audit of the company's financial statements. The committee is also responsible for overseeing the performance, qualifications and independence of the company's independent registered public accounting firm (which reports directly to the committee) as well as the performance of the internal audit department. The committee reviews the company's business risk assessment framework and identifies principal business risks with management, the independent auditor and the internal audit director (however, this committee is not the only board committee that reviews such business risks), and pre-approves all auditing services and permitted non-audit services to be performed by its independent auditor (which approval authority has been delegated to the committee's chairman for certain immaterial items subject to ratification at the committee's next meeting).
The committee has also established a policy for the company's hiring of current or former employees of the independent auditor to ensure that the auditor's independence under applicable SEC rules and accounting standards is not impaired. The committee has also established, and monitors management's operation of, and procedures for the receipt, retention, and treatment of complaints received by the company regarding accounting, internal accounting controls, auditing, or other matters; as well as the confidential, anonymous submission by the company's employees of concerns regarding questionable accounting, auditing, or other matters. The committee meets regularly in executive session with the internal audit director and the independent auditor without management present.
A committee member may not simultaneously serve on the audit committees of more than three companies whose stock is publicly traded (including this committee) unless the Board has provided its consent. No such determination is currently required.
George E. Minnich, Eileen S. Kraus and Thomas W. Rabaut are "audit committee financial experts" within the meaning of Item 407(d)(5) of Regulation S-K.
The committee's role is to review and approve the terms of, as well as oversee, the company's executive compensation strategies (including the plans and policies to execute those strategies), administer its equity plans (including review and approval of equity grants to executive officers) and annually review and approve compensation decisions relating to executive officers, including those for the CEO and the other executive officers named in the Summary Compensation Table (collectively, the "named executive officers") at page 39. This committee considers the CEO's recommendations when determining the compensation of the other executive officers. The CEO has no role in determining his own compensation although as part of the annual CEO evaluation process, he prepares a self-assessment for review by the Corporate Governance Committee, which shares that evaluation with this committee. This committee then submits its determinations regarding proposed CEO compensation at an executive session of the Board for consideration and approval.
The committee also monitors management's compliance with stock ownership guidelines adopted from time to time by the Board; reviews and approves employment, severance, change in control ("change in control" or "Change in Control"), and termination arrangements for all executive officers and periodically reviews the company's policies and procedures for management development.
During each of the last eight years, the committee has directly engaged Geoffrey A. Wiegman, founder and president of Wiegman Associates LLC, an independent compensation consulting firm, to assist the committee in fulfilling its responsibilities (Mr. Wiegman is sometimes referred to in this proxy statement as the "independent consultant"). This independent consultant attends each committee meeting, including executive sessions. Mr. Wiegman advises the committee on marketplace trends in executive compensation, evaluates proposals for compensation programs and executive officer compensation decisions and has also provided services to the Corporate Governance Committee in connection with its evaluation of director compensation. He may interact with company management in his capacity as an advisor to the committee. He is retained directly by the committee and his invoices are submitted to the Committee chairman for approval and payment by the company. The committee determines Mr. Wiegman's assignments and provides the instructions for completing those assignments. The independent consultant may from time to time also provide services at the request of the company's management that are not related to his work for the committee, however any work for management must be approved by the committee. The independent consultant did provide company management with competitive data for non-executive positions during 2011. Except for these services, he did not provide any services to the Board or the company beyond those related to executive or director compensation.
The committee regularly meets in executive session with its independent consultant without any participation by management. The committee's Chairman regularly reports the committee's recommendations on executive compensation to the Board of Directors. The committee is supported in its work by the company's human resources, legal and financial management personnel and its charter has provided for the retention of independent third-party consultants and experts at the company's expense for several years.
This committee assists the board in fulfilling its responsibilities concerning matters of a material financial nature, including the company's strategies, policies and financial condition, insurance-related risk management programs, financing agreements, dividend policy, significant derivative instrument or foreign currency positions, and administration of tax-qualified defined contribution and defined benefit plans. The committee's responsibilities also include review of the company's annual business plan and long range planning strategies; all forms of major debt issuances; the financial aspects of proposed acquisitions or divestitures that exceed transaction levels for which the Board has delegated authority to management; material capital expenditures; methods of financing; and the company's relationship with its lenders.
The Board is responsible for selecting its own members and in recommending them for election by the shareholders. The Board delegates the screening process involved to the Corporate Governance Committee, which consults with the Chairman and CEO and a third-party consultant, after which it provides recommendations to the Board. While the Corporate Governance Committee does not have specific minimum qualifications for potential directors, its policy is that all candidates, including those recommended by shareholders, will be evaluated on the same basis. The committee utilizes a nationally recognized third-party consultant to assist in identifying potential candidates; the consultant is provided with the Committee's assessment of the skill sets and experience required in the context of current board composition and will identify potential candidates for introduction to the Committee; thereafter, consideration of any such individuals is the responsibility of the Committee in consultation with the CEO. No searches were conducted during 2011.
Under our Bylaws, only individuals nominated in accordance with certain procedures are eligible for election as directors of the company (except for the rights of preferred stock holders, of which there are none). Generally, nominations are made by the Board of Directors or any shareholder (i) who is a shareholder of record on the date of the giving of written notice in respect of the nomination for director and on the record date for the determination of stockholders entitled to notice of and to vote at a meeting where directors are to be elected, and (ii) who provides advance written notice, all of the foregoing in accordance with the Bylaws. A shareholder's written notice of a proposed nomination must describe (i) the name, age, business address and residence address of the nominee, (ii) the principal occupation or employment of the nominee, (iii) the class or series and number of shares of capital stock of the corporation which are owned beneficially or of record by the person, if any, and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934 ("Exchange Act"), and its rules and regulations. The shareholder making the proposal must also provide (i) its name and record address, (ii) the class or series and number of shares of capital stock of the corporation which are owned beneficially or of record by the shareholder, (iii) a description of all arrangements or understandings between the shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (iv) a representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the persons identified in its notice, and (v) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and its rules and regulations. The written notice must be accompanied by a written consent of each proposed nominee to being named or referred to as a nominee and to serve as a director if elected. The Board may require any proposed nominee to furnish such other information (which may include meetings to discuss the furnished information) as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director.