Board of Directors
Our board of directors oversees the management of our global business, including our commitment to sustainability.
COMPOSITION, STRUCTURE AND INDEPENDENCE
We follow New York Stock Exchange corporate governance rules and requirements. As of April 2011, 10 directors serve on our board; all except the CEO are independent directors under the standards of the New York Stock Exchange. These directors are or have recently been leaders of major companies and institutions and possess a wide range of experience and skills.
We have more independent outside directors than is required, with 9 out of 10 independents. The average number as of 2009 is 82 percent, according to a study by Spencer Stuart, a recruiting and leadership consulting firm. We have 90 percent.
The Weyerhaeuser board also has appointed an independent director to serve as chairman. The average number of boards with independent chairmen as of 2009 is 16 percent according to the same study by Spencer Stuart. The board has declined to adopt a policy that requires it to have an independent chairman at all times; however, the board has provided that during periods when it does not have an independent chairman, the independent chair of the Executive Committee will serve as Lead Director.
Three of the independent directors on our board are women, which is 30 percent compared with a national average of 17 percent, as reported by Spencer Stuart. One independent director is African-American, which 10 percent and consistent with a national average of 10 percent, as reported by Spencer Stuart.
In its assessment of corporate governance and business practices, GovernanceMetrics International® rated Weyerhaeuser in six categories, including:
- Board accountability
- Financial disclosure and internal controls
- Shareholder rights
- Executive remuneration
- Corporate behavior (management of environmental risks, labor relations, foreign sourcing practices, and significant litigation and regulatory actions)
All companies rated by GMI are scored on a scale of 1.0 (lowest) to 10.0 (highest). Weyerhaeuser received a GMI rating of 9.5 in 2009. A GMI rating of 9.0 or higher is well above average.
We have implemented a number of corporate governance "best practices" in recent years, such as:
- Majority election of directors.
- Independent Board Chairman.
- No poison pill.
- Independent board members on our compensation, audit, governance and finance committees.
KEY 2010-11 BOARD ACCOMPLISHMENTS
- Our Articles of Incorporation and Bylaws were amended to allow shareholders to call special meetings.
- We completed the board’s strategic direction to convert to a real estate investment trust.
- Our board was declassified.
- Supermajority voting requirements for shareholder actions were eliminated.
- Single triggers in our change-of-control plans and tax gross ups were eliminated.
- Short-term and long-term incentive compensation programs were revised to tie compensation strongly to performance.
- The board continued its strategic review of the company's asset portfolio and determined that our timberlands, wood products, cellulose fibers and real estate businesses would fit within a REIT structure.
- The Governance Committee changed its name to Governance and Corporate Responsibility Committee and modified its charter to have direct oversight of and engagement in our sustainability strategy.
RESPONSIBILITY FOR SUSTAINABILITY MATTERS
Our stakeholders expect us to operate in a healthy, safe, legal and environmentally responsible manner. To meet this expectation, we have developed effective systems for identifying and evaluating risks, setting standards, implementing programs, monitoring performance, and complying with the law. Our board addresses aspects of sustainability at every meeting and board committees address aspects of sustainability on a regular basis (e.g., legal compliance). Safety is addressed at every board meeting. The governance and corporate responsibility committee has responsibility for oversight of our sustainability practices and hears a full report once a year. In 2010, we adopted a formal sustainability strategy, which was approved by the governance and corporate responsibility committee. Diversity is addressed at least once a year in a report to the governance committee or in succession planning discussions by the board.
Our board, through its company direction-setting process, establishes companywide strategic direction for capital spending, and business and financial matters, as well as social and environmental issues. We employ this process in three- to five-year cycles to set overall strategic direction of the company. As part of the process, we analyze global trends that have the potential to affect our businesses over the long term, analyze the capabilities and challenges of our businesses, and integrate this information into our planning and decision-making regarding company direction.
Board committees are responsible for sustainability issues in their areas of oversight, and for ensuring that all aspects of sustainability are addressed on an ongoing basis. Our board annually, with the assistance of the governance and corporate responsibility committee, reviews its overall performance and reviews the performance of board committees. Learn more about our board committees and their charters in the investors section.
QUALIFICATIONS AND EXPERTISE
Weyerhaeuser's Corporate Governance Guidelines provide that our board should encompass a diverse range of talent, skill and expertise sufficient to give sound and prudent guidance with respect to the company's operations and interests. See our Governance Guidelines and Avoiding Conflicts of Interest.
Each director is expected to exhibit high standards of integrity, commitment and independence of thought and judgment; to use his or her skills and experience to provide independent oversight to the business of the company; to participate in a constructive and collegial manner; and to represent the long-term interests of all shareholders. Directors must be willing to devote sufficient time and effort to learn the business of the company and to carry out their duties and responsibilities effectively. As part of its periodic self-assessment process, the board determined that, as a whole, it must have the right diversity and mix of characteristics and skills for optimal oversight of the company. It should be composed of people with skills in areas such as:
- Finance
- Sales and markets
- Strategic planning
- Sustainability strategies
- Human resources and diversity
- Safety
- Relevant industry business, especially natural resource companies
- Leadership of large, complex organizations
- Legal
- Banking
- Government and governmental relationships
- International business and international cultures
- Information technology
In addition to the targeted skill areas, the governance and corporate responsibility committee identified key knowledge areas critical for directors to add value to a board, including strategy, leadership, organizational issues, relationships and ethics.
PROVIDING RECOMMENDATIONS
Any shareholder can communicate directly with our board, the independent directors, and any individual director or the chair of any committee via our corporate secretary. The processes for communicating with the board, recommending nominees for the board, or submitting shareholder proposals are outlined in the Notice of 2011 Annual Meeting of Shareholders and Proxy Statement.
Our board also requests regular reports about interests and concerns of shareholders and communication with shareholders.
As part of its periodic self-assessment process, our board annually determines the diversity of specific skills and characteristics necessary for optimal functioning in its oversight of the company over both the short and longer term. The governance and corporate responsibility committee has adopted a policy regarding the director selection process that requires the committee to assess the skill areas currently represented on our board and those skill areas represented by directors expected to retire or leave in the near future, against the target skill areas established annually by our board, as well as recommendations of directors regarding skills that could improve the overall quality and ability of our board to carry out its function.
The governance and corporate responsibility committee then establishes the specific target skill areas or experiences that are to be the focus of a director search, if necessary. The effectiveness of our board’s diverse mix of skills and experiences is considered as part of each board self-assessment.
Candidates recommended for consideration as nominees for director are evaluated against the targeted skill and knowledge areas. Based on these analyses, the committee determines the best qualified candidates and recommends those candidates to the board for election at the next shareholders' meeting. The governance and corporate responsibility committee carefully reviews shareholder proposals submitted for consideration at the next annual meeting, develops a suggested response, then presents these recommendations to the full board. The board may engage outside advisers to provide support of its consideration of some proposals. The full board approves the suggested responses to any shareholder proposals that will be included in the proxy statement for the annual shareholders' meeting.
Examples of recent topics considered in shareholder proposals include:
- Governance (shareholder right to call special meetings, majority vote, director election by majority, executive compensation, appointment of auditors, independent chairman)
- Forestry practices (certification, wood supply)
- Social issues (aboriginal peoples relations)
DIRECTOR’S COMPENSATION TIED TO COMPANY PERFORMANCE
Weyerhaeuser has a robust compensation structure that ties compensation to performance against goals, including social and environmental goals.
Our board believes the interests and focus of directors must be closely tied to the long-term interests of shareholders. As a result, our board has a long-standing compensation program for directors, which effectively requires them to own company shares and to hold those shares through retirement. 2010 compensation for nonemployee directors consisted of an annual retainer fee, half of which was automatically deferred into the common stock equivalent account in the deferred compensation plan for directors. These amounts will be paid to the director in cash only after the director retires from the board, based on the value of the company stock at that time. The directors may also defer the remaining fees paid to them, and most of the directors have chosen to defer some or all of these fees into the common stock equivalent account as well. Chairs of board committees receive an additional fee, which also may be deferred or paid in cash.
In addition, directors are reimbursed for expenses incurred in board travel and may receive additional compensation if asked to travel for extended periods on behalf of the board. Nonemployee director compensation is based on board and committee responsibilities and is competitive with comparable companies.
In 2010, nonemployee directors received retainer fees consisting of:
- A base annual retainer fee of $140,000, $70,000 of which was automatically deferred into common stock equivalent unit awards
- An additional cash annual retainer fee of $10,000 for each committee chair
Our board has established an annual retainer fee of $300,000 for the independent chairman, half of which is automatically deferred into the common stock equivalent account in the deferred compensation plan for directors. These amounts will be paid to the director in cash only after the director retires from the board, based on the value of the company stock at that time. The independent chairman may also defer the remaining fees paid to him and he has chosen to defer these fees into the common stock equivalent account as well.
For more information about our compensation programs, including departure arrangements, see the Notice of 2011 Annual Meeting of Shareholders and Proxy Statement.
AVOIDING CONFLICTS OF INTEREST
Our board of directors is bound by our business ethics core policy and code of ethics, as are our officers and employees. The code explicitly addresses conflicts of interest and the consequences of noncompliance. The board also has adopted a policy regarding related party transactions, which defines specific areas that could result in conflicts of interest and procedures for reviewing these transactions.
In addition, the board of directors has documented its governance practices in the Corporate Governance Guidelines. The guidelines cover board functions and operation, company operations, board organization and composition, and board conduct—including ethics and conflicts of interest. View governance policies and guidelines in the investors section.
The governance and corporate responsibility committee takes a leadership role in shaping the governance of the company and provides oversight and direction regarding the operation of the board of directors. The committee regularly reviews recommended corporate governance practices and advises the board to adopt practices the committee considers to be best practices. As a result, our bylaws clarify that a director must stand for election at the next annual shareholders' meeting if the director was appointed to fill a vacancy on the board. We also recently amended our board charter to require a director to submit a letter of resignation for consideration by the governance committee if the director changes his or her principal occupation.
