INDUSTRIES, INC. BOARD OF DIRECTORS
of the Mohawk Board of Directors
Mohawk Board of Directors represents the stockholders’ interests in
perpetuating and increasing the value of the business enterprise, including
optimizing long-term financial returns. The Board is responsible for ensuring
that management is capably executing its duties by regularly monitoring the
effectiveness of management policies and decisions, including the execution
of the Company’s strategic plan.
fulfilling its obligation to enhance stockholder value, the Board is
permitted to consider the interests of the following constituencies important
to Mohawk’s success: Mohawk’s
customers, employees, suppliers and the communities where it operates.
fulfilling the Board’s general responsibilities described above, the Board
and its committees have complete authority to consult with outside counsel
and to engage other professional advisors with respect to any issues relating
to their activities. Any expenses
incurred by the Board or its committees in connection with any such
consultation or engagement shall be paid by Mohawk.
Unless the context otherwise requires, "Mohawk" shall include Mohawk Industries, Inc. and its subsidiaries and affiliated companies.
SELECTION OF THE BOARD
The Nominating and Corporate Governance Committee should annually review with the Board the appropriate experience, skills and characteristics desired of Board members in the context of the current membership and candidates for membership of the Board. This assessment should include, in the context of the perceived needs of the Board at that time, issues of experience, judgment and skills. The Board seeks a diverse group of the most capable directors and candidates who possess the appropriate characteristics, skills and experience to make a significant contribution to the Board, the Company and its shareholders.
The Board itself should be responsible for selecting its own nominees and recommending them for election by the stockholders. The Board delegates the screening process necessary to identify qualified candidates to the Nominating and Corporate Governance Committee, including consultation with the Chairman of the Board and the Chief Executive Officer.
New Directors are provided with a complete orientation process, which includes comprehensive information regarding the Company’s business and operations, information regarding the industry in which the Company operates and other background material, meetings with senior management and visits to Company facilities. As a part of the Company’s continuing education efforts, supplemental information is provided to Directors from time to time and meetings of the Board are held from time to time in alternate locations to provide the Directors an opportunity to become familiar with additional Company facilities.
The Board has the responsibility to fill these leadership positions as it deems best for the Company at a given point in time. The Board’s policy on whether the role of the Chairman and Chief Executive Officer should be separate is to make this determination based on serving the best interests of the Company and its stockholders at any given time.
BOARD COMPOSITION AND
TThe Company’s Restated Certificate of Incorporation, as amended, provides for between two and eleven members of the Board, with the exact number to be fixed by resolution of the Board. The Board will determine the number of
members of the Board required from time to time to ensure
that all of the core competencies required are possessed by the Board as a
A majority of the members of the Board must be independent Directors. The Board will follow the listing standards set by the NYSE for determining director independence, as those standards may be in effect at the time of the determination. In this regard, a
if the Board affirmatively determines that the Director has no material relationships with Mohawk (either directly or as a partner, shareholder, or officer of an organization that has a relationship with Mohawk); provided, however, that, a Director will not be determined to be independent if:
(i) within the last three years, either the Director is or has been an employee of Mohawk or an immediate family member is or has been an executive officer of Mohawk;
(ii) during any twelve-month period within the last three years, the Director or an immediate family member has received more than $120,000 in direct compensation from Mohawk, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
(iii) (a) the Director is a current partner or an employee of Mohawk’s internal or external audit firm;
(b) an immediate family member is a current partner of such audit firm;
(c) an immediate family member is a current employee of Mohawk’s internal or external audit firm and personally works on Mohawk’s audit; or
(d) within the last three years the Director or an immediate family member was either a partner at Mohawk’s internal or external audit firm or an employee of such firm and personally worked on Mohawk’s audit;
(iv) within the last three years either the Director or an immediate family member was an executive officer of another company where any of Mohawk’s executive officers at the same time served or serves on that company’s compensation committee; or
(v) the Director is a current employee or an immediate family member is a current executive officer of a company that had transactions with Mohawk in which the aggregate payments involved were greater than $1,000,000 or 2% of the other company’s consolidated gross revenues during any of the last three fiscal years.
For purposes hereof, the term “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in law, brothers and sisters-in-law and anyone (other than domestic employees) who shares such person’s home.
Prior to accepting an invitation to
serve on another public company board of directors, Directors should advise
the Chairman of the Board and the Chairman of the Nominating and Corporate
Governance Committee. The Board
believes that Directors should limit the number of other public company
boards on which they serve, taking into account potential board attendance,
participation and effectiveness on these boards.
Directors who change the occupation
they held when initially elected are expected to submit a letter of
resignation to the Board. The Board
does not believe that in every instance Directors who retire or change from
the position they held when they came on the Board should necessarily leave
the Board. There should, however, be
an opportunity for the Board, through the Nominating and Corporate Governance
Committee, to review the continued appropriateness of Board membership under
the changed circumstances.
The Board has determined not to
establish term limits. Although term
limits could help make fresh ideas and viewpoints available to the Board,
they also could result in the loss of the valuable contribution of Directors
who have been able to develop, over a period of time, increasing insight into
Mohawk and its operations.
As an alternative, the Nominating
and Corporate Governance Committee, in conjunction with the Chief Executive
Officer, will formally review each Director’s continuation on the Board
shortly before the end of such Director’s then-current term. This review shall be conducted in
connection with the consideration of nominations to the Board at the
stockholder meeting at which such Director’s term shall expire.
Subject to agreements that provide
rights to designate directors, the Board believes that it is in the best
interests of Mohawk that Directors offer to resign as of the end of the
three-year term such Director is serving on their 75th
birthday. Upon receipt of any such
offer to resign, the Nominating and Corporate Governance Committee shall
evaluate whether to accept such offer at its next regularly-scheduled meeting
and provide its recommendation to the full Board, together with its
recommendation for a potential replacement, if appropriate.
Periodically, management shall report to the Compensation Committee
the status of Mohawk Board compensation in relation to other comparable
U.S. companies. In order to create a direct linkage
with corporate performance, the Board believes that a meaningful portion of a Director’s compensation should be provided in
Mohawk common stock to further the direct correlation of director and stockholder interests.
Changes in the compensation of
Directors, if any, should come at the suggestion of the Compensation
Committee, but with full discussion and approval by the Board.
All Directors who are not members of
Mohawk’s management team (or who are independent director)
shall meet in executive session outside the presence of the
Chief Executive Officer and other Company personnel during a
portion of each of the Board’s in-person meetings.
In addition, any non-management Director may call an executive
session of non-management Directors at any time.
The executive sessions shall be chaired on a rotating basis
by the Chairmen of each of the Company’s standing committees
in the following order: Audit Committee,
Nominating and Corporate Governance Committee, and Compensation Committee.
All independent Directors shall meet in executive session
outside the presence of Mohawk’s management team and other
Directors at least once on an annual basis.
The Board believes that management
speaks for Mohawk. From time to time,
it may be desirable for individual Board members, at the request of
management, to meet or otherwise communicate with various constituencies that
are involved with Mohawk. If comments
from the Board are appropriate, they should, in most circumstances, come from
Following the end of each fiscal
year and at the same time as the report on Board membership criteria, the
Nominating and Corporate Governance Committee shall report to the Board an assessment
of the Board’s performance for consideration in its evaluation of itself and its
This assessment should review
the Board’s contribution as a whole and areas in which the Board and/or
management believes a better contribution is possible. Its purpose is to assess and, where possible,
increase the effectiveness of the Board and its committees.
BOARD RELATIONSHIP TO
Board members have complete access
to Mohawk’s management. Board members should use judgment to be sure that any
contacts are not distracting to the business operation of the Company. Furthermore, the Board encourages senior
management, from time to time, to bring managers into Board meetings who:
(a) can provide additional insight
into the items being discussed because of personal involvement in these
areas, and/or (b) represent managers with future potential that the senior
management believes should be given exposure to the Board.
The Chief Executive Officer will establish
the agenda for each Board meeting. The
Chairman of the Board and/or the Chairman of the Nominating and Corporate
Governance Committee will act as the Board’s liaison with the Chief Executive
Officer in the development of the agendas.
Each Board member is free to suggest the inclusion of item(s) on the
agenda. Each Director is free to
raiseat any Board meeting subjects that are not
on the agenda for that meeting.
Each Director is expected to attend
all meetings of the Board and Committees on which the Director serves. In advance of each Board or Committee
meeting, a proposed agenda and, to the extent feasible or appropriate,
information and data that is important to an understanding of the business to
be discussed, will be distributed. The
management will make every attempt to see that this material is as brief as
possible while still providing the desired information. When appropriate, the information distributed
will include summaries or outlines of presentations to be given at the meeting.
In this way, meeting time may be conserved
and discussion time focused on questions that the Board has about the material.
Currently, Mohawk has three standing
Committees, which are Audit, Compensation and Nominating and Corporate
Governance. All members of these three
standing committees shall be “independent” Directors within the meaning of
Section 6 of these corporate governance guidelines.
The Nominating and Corporate
Governance Committee shall, after consultation with the Chief Executive
Officer and the Chairman of the Board, and with consideration of the desires
of individual Board members, recommend to the full Board the assignment of
Board members to the Committees.
Committee Chairmen, in consultation
with Committee members, will determine the frequency and length of Committee
meetings. Each Committee shall meet at
least as frequently as is required by the terms of such Committee’s charter.
Committee Chairmen, in consultation
with the appropriate members of senior management and staff, will develop the
Each year, the Compensation
Committee shall evaluate the performance of the Chief Executive Officer. In evaluating the Chief Executive Officer,
such Committee shall take into consideration the executive’s performance in
both qualitative and quantitative areas, such as: leadership and vision; integrity; keeping
the Board informed on matters affecting Mohawk and its affiliated
subsidiaries; performance of the business (including such measurements as
total stockholder return and achievement of financial objectives and goals);
development and implementation of initiatives to provide long-term economic
benefit to Mohawk, including acquisitions; accomplishment of strategic
objectives and development of management.
The evaluation will be communicated
to the Chief Executive Officer by the Chairman of the Compensation Committee
and used by the Compensation Committee in the course of its deliberations
when considering the compensation of the Chief Executive Officer for the
There should be an annual
report by the Chief Executive Officer to the Board on succession
planning. The Chief Executive
Officer’s recommendation for his or her successor (as the result of an
unexpected event) should be communicated to the Chairman of the Nominating
and Corporate Governance Committee.
The Chief Executive Officer should update the recommendation