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Board Games methodology: Corporations Add to ...

9. Do independent directors meet without management? Three marks if they meet without management at every board meeting. Two marks if they meet without management at regular board meetings, but not all board meetings. One mark if they meet sometimes, but not every regular board meeting. Zero marks if there is no mention or if there are no meetings without management. Also zero marks if the company uses vague wording - for example, that "time is available for in-camera meetings" - that do not specify whether the meetings are actually held.

10. Does the company disclose the process the board uses to manage succession planning for the CEO's job? Disclosure must go beyond simply noting that the board or one of its committees is responsible for managing succession planning. There must be evidence a formal process is in place, and some detail of how the board approaches the task must be given. Two marks if yes, zero if no.

11. Does the company provide information about its director education processes for the year, and is there evidence that a formal process is in place? This could include information about educational events offered to the entire board during the year, site visits to company facilities by directors, or specifics about special briefings, courses or training offered to some or all directors. The company does not have to specify which directors received which training, but must give details about the types of educational opportunities offered or taken. One mark if yes, zero if no.

Shareholding and compensation, worth 24 marks out of 100 12. a) Are directors required to own shares or share units? (Stock options don't count.) Four marks if the requirement is equal to at least three times the retainer paid to directors - including the value of grants of shares or share units. Two marks if there is a requirement, but it is lower than three times the value of the retainer and share units. Zero marks if there is no requirement.

12. b) How many shares do directors own? Four marks maximum, but minus one mark for each director who owns less than three times the annual retainer plus the value of grants of shares, share units or options. If a director has been on the board less than one year, the ownership requirement does not apply. If a director has been on the board one to two years, the required ownership level is reduced to one times the retainer and share units.

12. c) Are all directors increasing their share ownership over time? Does the board strive for new investment by directors? This generally means there is a mandatory director share unit program, but could mean there is any other method that leads to an increase in share ownership by directors. One mark if all directors increased their number of shares or units owned compared to the prior year. Zero if not.

13. a) Is the CEO required to own shares? (Stock options don't count.) Two marks if there is a requirement to own at least three times the base salary, or if the CEO is the company's controlling shareholder. One mark if there is a requirement to own one to two times the base salary. Zero marks if there is no requirement or if the requirement is less than one times the base salary.

13. b) Does the CEO own shares? Three marks if the CEO owns shares worth at least triple his or her base salary. Two marks if the CEO owns shares worth at least double his or her base salary. One mark if the CEO owns one to two times his base salary. Zero marks if the CEO owns shares worth less than one time his or her base salary. No ownership rule for CEOs on the job for less than one year.

14. a) How well does the company disclose the compensation policies it applies when deciding CEO bonuses? Does it provide a percentage weighting of the factors that are considered in determining the CEO's bonus? One mark if yes, zero if no.

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