We have adopted Corporate Governance Guidelines that provide a framework for the effective governance of our company. These Guidelines build on practices we have followed for many years and underscore our continuing commitment to excellence in corporate governance. Our independent Board, with recommendations from its Governance Committee, regularly reviews corporate governance developments and adopts appropriate practices as needed.
Our Business Conduct Policy applies to all employees and directors and deals with a variety of critical corporate compliance issues, including conflicts of interest, harassment, adherence to all laws and regulations – including appropriate and lawful interactions with elected officials and governmental entities both national and foreign – confidentiality of company information, fair dealing and use of company assets. All employees and directors are required to abide at all times by our Business Conduct Policy and are required to complete training and a comprehensive questionnaire regarding their personal compliance with the Policy. They are also encouraged to report any illegal or unethical behavior of which they become aware.
Our Board has also adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, covering such topics as financial reporting, conflicts of interest and compliance with laws.
READ MORE
Key provisions of our governance best practices include:
Shareholder engagement
We believe that regular, transparent communication with our shareholders is important to our long-term success and the overall sustainability of our company. In 2019, we continued our corporate governance engagement program, reaching out to our largest shareholders representing some 60% of our outstanding shares in order to deepen relationships. Our discussions centered on the company’s ESG initiatives, including sustainability, energy management and carbon reduction, diversity and inclusion, the company’s culture, executive compensation and corporate governance. Shareholder feedback has been constructive and helpful as we strive to stay closely in tune with the points of view and any concerns of our shareholders. Feedback is shared with the Board’s Governance and Compensation Committees and with the full Board.
Director Independence
All of our directors, with the exception of the Chairman, President and CEO, are independent, as defined by the NYSE listing standards, the Board’s Director Independence Criteria, and applicable U.S. Securities and Exchange Commission rules and regulations. Our independent Board members have no material relationship with our company, either directly, or as partners, shareholders or officers of an organization that has a material relationship with our company.
Board Leadership Structure
Our Board understands the importance of evaluating and determining the optimal leadership structure to provide independent oversight of management. As there is no single, generally accepted approach to providing Board leadership and given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary from time to time. For this reason, Vulcan’s Board does not have a policy regarding separation of the offices of Chairman of the Board and Chief Executive Officer. The Board has determined that our company should have the flexibility to combine or separate these functions as circumstances deem appropriate. In considering its leadership structure, the Board has taken a number of additional factors into account, including:
- The Board’s ability to exercise a strong independent oversight function, with all Board committees other than the Executive Committee composed entirely of independent directors.
- An independent lead director, elected annually from among the independent directors of the Board. The lead director presides at all meetings or sessions of the Board at which the Chairman is not present, serves as liaison between the Chairman and the independent directors, has authority to call meetings of the independent directors, and if requested by major shareholders, is available for consultation and direct communication.
Non-Management Executive Sessions
Under Board policy relating to non-management executive sessions, the Board meets at each regularly scheduled Board meeting in an executive session in which the Chairman and CEO and other members of management are not present. During 2019, the independent directors met in executive session five times. The lead director presides over executive sessions, pursuant to our Corporate Governance Guidelines.
Committees of the Board of Directors
Our Board of Directors has established six standing committees: Audit; Compensation; Executive; Finance; Governance; and Safety, Health and Environmental Affairs. All of the committees, other than the Executive Committee, are composed entirely of independent, non-management directors. Our committees include:
- Audit Committee: Advises our Board and management with respect to internal controls, financial systems and procedures, accounting policies and other significant aspects of the company’s financial management. In addition, the Audit Committee is responsible for reviewing and discussing with management our company’s policies concerning risk assessment and risk management, and to this end is kept apprised of the ongoing work of the company’s Risk Committee. The committee has also established procedures for the receipt, retention and treatment, on a confidential basis, of complaints received by our company regarding its accounting, internal controls and auditing matters.
- Compensation Committee: Determines and oversees the execution of Vulcan’s executive compensation philosophy, and oversees the administration of executive compensation plans, including determining the amount of compensation paid to the CEO and other senior officers, interpreting and administering management incentive plans, and making recommendations to the Board concerning compensation paid to any director. Vulcan’s executive compensation program is centered on a pay-for-performance philosophy, to align executive compensation with shareholder value, including integration of Safety, Health and Environmental (SHE) objectives for executive, senior and middle management. Our three compensation principles are to:
- Link a significant portion of compensation to performance
- Maintain competitive compensation levels
- Align management’s interest with those of our shareholders
- Executive Committee: The primary function is to exercise the powers of the Board on urgent matters arising between regularly scheduled Board meetings when a quorum of the full Board is not available.
- Finance Committee: Assists the Board in its oversight of the company’s actual and projected financial performance, capital structure and capital allocation, pension plans and 401(k) plans, and other matters of financial significance, such as acquisitions. The committee also:
- Reviews year-to-date financial performance, estimated full-year performance, projected long-term performance, capital structure, liquidity, credit metrics and ratings, and capital allocation plans, among other financial matters.
- Reviews and recommends to the Board dividend policy and payments, ensures that pension plans and 401(k) plans’ assets are managed in compliance with applicable laws and regulations, and reviews the funded status of pension plans to ensure compliance with minimum funding requirements under all laws and regulations.
- Governance Committee: Responsible for reviewing and assessing our policies and practices relating to corporate governance, including our Corporate Governance Guidelines. The committee also plans for the succession of the CEO and other senior executives, serves as the nominating committee and is responsible for identifying and assessing director candidates.
- Safety, Health and Environmental Affairs Committee: Has responsibility for reviewing policies, practices and programs concerning the management of safety, health and environmental affairs and sustainability matters. It monitors compliance with safety, health and environmental laws and regulations, oversees operational risk, and engages with the company’s Risk Committee on matters regarding our safety, health, and environmental practices and initiatives and concerning the company’s sustainability actions and initiatives.
Enterprise Risk Management
The Risk Committee is led by corporate officers and draws on the subject matter expertise of senior managers from various functional departments and line operations management. The committee meets regularly to discuss and evaluate enterprise risks facing the company across a range of issues including: sustainability matters such as climate risks; human resources issues such as employee recruitment; and regulatory and political issues and considerations. It reports regularly to the Board and to its Audit and Safety, Health and Environmental Affairs Committees. The Board is kept informed of its committees’ risk oversight and other activities through committee chair reports to the Board which are presented at Board meetings. The Board also considers specific risk topics, including risks associated with the company’s strategic plan, capital structure, business development activities and other critical topics. Activities that cross committee lines such as climate change are coordinated among the committee chairs and the entire Board.
