Review/Issue Date: April 22, 2018
Previous Review/Issue Date: April 27, 2017
PVH Corp. (the “Company”) recognizes the importance of establishing these guidelines under which its Board of Directors will fulfill its role in overseeing the Company and management. It is intended that these guidelines promote better understanding of the Company’s policies and procedures as it relates to the role of its Board.
1. Director Qualifications
The Company’s Board of Directors will have a majority of directors who meet the criteria for independence required by the New York Stock Exchange. The Nominating, Governance & Management Development Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of any new Board members, as well as the composition of the Board as a whole. This assessment will include members’ qualification as independent, as well as consideration of diversity, age, skills and experience, in the context of the needs of the Board and its committees. Nominees for directorship will be recommended to the Board by the Committee in accordance with the standards set forth in its charter.
Directors are required to disclose to the Nominating, Governance & Management Development Committee any new relationship, or any change in an existing relationship, that is reasonably likely to affect the Board of Directors’ determination regarding their independence under the New York Stock Exchange rules.
Directors who fail to be re-elected as a result of not obtaining a majority vote of stockholders pursuant to the Company’s By-Laws must offer a letter of resignation for the Board of Directors’ consideration. The Nominating, Governance & Management Development Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The Committee in making its recommendation and the Board in making its decision each may consider any factors and other information that they consider appropriate and relevant. The director who tenders his or her resignation should not participate in the Committee’s or Board’s decision.
Non-management directors who change the primary occupation disclosed in the proxy statement relating to their most recent election to the Board of Directors must offer to resign from the Board. This may be done by delivering a letter of resignation or informing the Board, the Chairman of the Board, the presiding director (if any), the Chairman of the Nominating, Governance & Management Development Committee or the Company Secretary of such change, which will be deemed to be an offer of resignation. A non-management director should provide notice to any such person in advance of any change in occupation if circumstances permit. Notice of a pending or potential change also will be deemed to be an offer to resign from the Board. The Nominating, Governance & Management Development Committee will consider and make a recommendation to the Board as to whether the Board should accept or reject the resignation, or whether other action should be taken with respect to a change, or pending or potential change, in occupation. Notwithstanding the foregoing, the Chairman of the Board and Chairman of the Nominating, Governance & Management Development Committee may jointly decide to have the Board or Committee alone make the determination if it is not reasonably feasible to have both bodies timely consider such matter. The Board or Committee will, in its sole discretion, determine whether such change in occupation will impair the director’s ability to effectively serve on the Board, and may waive such requirement for resignation or reject such resignation where it has determined the ability of the director to serve is not impaired. The director whose occupation has changed or is or may change should not participate in the Committee’s or Board’s decision.
Management directors must offer to resign upon their resignation, removal or retirement as an officer of the Company. The Board of Directors will, in its sole discretion, determine whether or not to accept such resignation.
A director who is considering joining another company’s board (other than the board of a non-profit company) must notify the Chairman of the Board and the Chairman of the Nominating, Governance & Management Development Committee regarding such proposed board service prior to joining such board. The Nominating, Governance & Management Development Committee must
consider and make a recommendation to the Board as to whether service on such other board would conflict with a Company policy or the director’s service on the Company’s Board (whether due to the nature of the business, the timing of meetings, work demands or otherwise). Notwithstanding the foregoing, the Chairman of the Board and Chairman of the Nominating, Governance & Management Development Committee may jointly decide to have the Board or Committee alone make the determination if it is not reasonably feasible to have both bodies timely consider such matter. The director should refuse service on such other board if advised that the Board (or Committee) has determined that service on such other board would conflict with a Company policy or the director’s service on the Company’s Board. The director considering serving on another company’s board should not participate in the decision on such service, whether as a member of the Nominating, Governance & Management Development Committee or as a member of the Board. The foregoing policy applies equally to the Company’s officers and the Committee must follow this procedure when notified that an officer is considering joining another public company’s board.
In addition to the foregoing and not in limitation thereof, without first obtaining a waiver from the Board of Directors:
- the Company’s Chief Executive Officer may not serve on more than two other public company boards;
- a director of the Company (other than the Company’s Chief Executive Officer) who serves as an officer (as defined by Securities and Exchange Commission rules) of a public company for purposes of reporting beneficial ownership of the company’s stock under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or in an equivalent position at a private company is limited to board service at the company at which the director is employed and one other public company; and
- no other Company director may serve on more than three other public company boards.
No individual may be nominated as a director if he or she would be age 72 or older at the time of the election. The Board may waive this limitation with respect to an individual upon the recommendation of the Nominating, Governance & Management Development Committee. A waiver may be granted for any reasonable purpose, as determined by the Committee and Board, such as due to particular skills the individual brings to the Board, their performance and contributions, diversity and other changes to the composition of the Board in that year or recently. The affected individual shall not participate in any vote regarding the waiver if he or she is an incumbent director.
2. Director Responsibilities
The basic responsibility of the directors is to exercise their reasonable business judgment on behalf of the Company. In discharging that obligation, directors should be entitled to rely on the honesty and integrity of the Company’s senior executives and other employees and its outside advisors and auditor. The directors are entitled to have the Company purchase directors’ and officers’ liability insurance on their behalf, to the benefits of indemnification to the fullest extent permitted by law and to exculpation as provided by state law and the Company’s Certificate of Incorporation and By-laws at all times. The directors are obligated to comport themselves in accordance with the Company’s Code of Business Conduct and Ethics.
Information and data that are important to the Board of Directors’ understanding of the business to be conducted at a Board meeting should be distributed in writing or otherwise made available to the Board before the meeting unless circumstances dictate otherwise. Directors should review prior to the meeting any materials sent or otherwise made available to them in advance. Directors are expected to use all reasonable efforts to attend, in person or by telephonic or video conferencing facilities, all meetings of the Board and of any committees of which they are a member, as well as attend in person the annual meeting of stockholders.
The independent directors must elect a director who meets the criteria for independence under the rules of the New York Stock Exchange to serve as the presiding director for any annual period that the Chief Executive Officer serves as the Chairman of the Board of Directors. The Nominating, Governance & Management Development Committee is responsible for nominating a director to serve in such role. The duties of the presiding director include, but are not limited to (a) presiding at all meetings of the Board of Directors at which the Chairman is not present, including executive sessions of the non-management or independent directors; (b) serving as liaison between the Chairman and the non-management directors; (c) discussing with management or approving non-routine information sent to the Board; (d) approving Board meeting agendas; (e) assuring that there is sufficient time for discussion of all agenda items; (f) having the authority to call meetings of the non-management or independent directors; and (g) if reasonably requested by major stockholders, ensuring that he or she is available for consultation and direct communication.
The non-management directors should meet in executive session at least four times each year. The presiding director shall preside at such meetings if the Company has a presiding director. Otherwise, the non-management directors will either select a non-management director to preside at such meetings or establish a procedure for selecting the non-management directors who will preside at such meetings. The name of the director who presides at these meetings, or the procedure for selecting the director to preside at these meetings, as the case may be, must be disclosed in the proxy statement for the annual meeting of stockholders. In addition, if the group of non-management directors includes any directors who are not independent, at least once per year an executive session comprising only independent directors should be held.
The Board of Directors and each committee of the Board have the power to hire independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance. The Company must provide adequate funding for the foregoing.
3. Board Committees
The Board will have at all times an Audit & Risk Management Committee, a Compensation Committee, a Nominating, Governance & Management Development Committee and a Corporate Responsibility Committee. All of the members of these committees will be independent directors, and each committee will have its own charter. The charters will set forth the purposes, goals and responsibilities of the committees, as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations, and committee reporting to the Board. The charters will also provide that each committee will annually evaluate its performance. The Board, from time to time, may establish or maintain additional committees as necessary or appropriate. Notwithstanding anything herein to the contrary, the Board may provide in the charter of any committee that a non-independent, non-management director may serve on such committee if a member’s independence is not required under applicable law, rule or regulation.
4. Director Access to Officers and Employees
Directors will have full and free access to the Chief Executive Officer (principal executive officer), the Chief Operating & Financial Officer (principal financial officer) and the other officers and employees of the Company. Any meetings or contacts that a director wishes to initiate may be arranged through the Chief Executive Officer or the Secretary or directly by the director. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company and will, to the extent not inappropriate, copy the Chief Executive Officer on any written communications between a director and an officer or employee of the Company.
The Board welcomes regular attendance at each Board meeting of senior officers of the Company. The Chief Executive Officer has the right to invite additional Company employees and advisors to attend Board meetings to report to the Board and the Board may request that other Company employees attend and report to the Board.
5. Director Compensation
The form and amount of director compensation will be determined by the Board on the recommendation of the Nominating, Governance & Management Development Committee in accordance with the policies and principles set forth in the Committee’s charter. In connection therewith, the Committee will consider and recommend to the Board annually the director compensation program. The Committee may periodically retain a compensation advisor for purposes of evaluating and making recommendations regarding the director compensation program, including comparisons to peer group director compensation programs. The Committee will consider that directors’ independence may be jeopardized if director compensation and perquisites exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated.
6. Director Orientation and Continuing Education
All new non-management directors must participate in an orientation program, which should be conducted in conjunction with or within a reasonable period following the annual meeting of stockholders of the Company or the first meeting of the Board of Directors at which new directors are eligible to attend. This orientation should include presentations by senior management to familiarize new directors with the Company’s strategic plans, its businesses, its financial performance and plan, its compliance program, and its key policies, including its Code of Conduct and Business Ethics, Conflict of Interest Policy and Insider Trading Policy, as well as matters of corporate governance and public company reporting. The orientation should also include a meeting with the Chair or other members of the Board committee to which the new director is assigned or management or outside advisors who regularly attend the committee’s meetings to discuss the work of the committee. The Nominating, Governance & Management Development Committee will be responsible for overseeing management’s execution of the foregoing.
The Company encourages directors to pursue educational opportunities to enable them to better perform their duties and learn about emerging issues. The Company strongly encourages directors to attend at least one external director education program per year.
7. Management Evaluation and Succession
The Board of Directors must conduct regular evaluations of the Chief Executive Officer and the Company’s other executive officers. The Board must regularly assess management’s performance in order to ensure that management is providing the best leadership for the Company in the long- and short-term.
The Board is responsible for planning for succession with respect to the position of Chief Executive Officer (principal executive officer) and monitoring management’s succession planning for other key executives. The Board is also responsible for maintaining an emergency succession plan that it reviews periodically should the Chief Executive Officer unexpectedly become unable to perform his or her duties due to death, disability or other circumstance. The Chief Executive Officer should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
The Nominating, Governance & Management Development Committee is responsible for overseeing the foregoing processes and working with management in its talent development and succession processes. The Committee will report to the Board at least annually with regard to these matters.
8. Annual Performance Evaluation
The Board of Directors must conduct an annual self-evaluation to determine whether it and its committees are functioning effectively; questions pertaining to the performance of individual directors should be included as part of this evaluation. The Nominating, Governance & Management Development Committee will oversee this process. The results of the applicable self-evaluations will be discussed with the full Board, each committee and each director. The evaluations will focus on the Board’s, committees’ and individual directors’ contributions to the Company and specifically focus on areas in which the Board or management believes that the Board, committees and individual directors could improve.
9. Stock Ownership Guidelines
The Company’s Chief Executive Officer is required to own common stock of the Company with a value equal to six times his or her annual base salary. The other named executive officers (as defined in Item 402(a)(3) of Regulation S-K promulgated under the Exchange Act) are required to hold common stock with a value equal to three times their annual base salary. All other executive officers (as defined in Rule 3b-7 under the Exchange Act) are required to hold common stock with a value equal to their annual base salary.
Directors who are not employees of the Company are required to own common stock with a value equal to five times the annual cash retainer payable to directors. This requirement will not apply to any director that is designated for election by any stockholder having director nomination rights.
Directors who are employees of the Company (other than the Chief Executive Officer) are required to own Common Stock with a value equal to three times their annual base salary.
Executive officers and directors will have five years from the date of their election as an executive officer or a director to attain the applicable ownership level. Each executive officer and director must retain 50 percent of all net shares of common stock (after payment of applicable taxes) earned from any equity award until the applicable stock ownership requirement is achieved.
These guidelines will be administered pursuant to a policy approved by the Board or Directors.
10. Periodic Review of Reports
As part of the Board of Directors’ oversight of the risks related to the operation of the Company’s business, the Board is required to receive and review an annual update on the Company’s enterprise risk management program. The Board must also receive and review a summary of the results each PVH Listens survey conducted of Company associates.