2010-audit-committee-issues-conference-highlights

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AUDIT COMMITTEE INSTITUTEHighlights from the 6th Annual Audit Committee Issues ConferenceSetting the 2010 Agenda February 2010 Miami, FL Phoenix, AZKPMGAbout the Audit Committee Issues ConferenceNow in its sixth year, the Annual Audit Committee Issues Conference brings together audit committee members from around the country to discuss the challenges, practices, and priorities shaping audit committee and board agendas. Designed exclusively for audit committee members, the conference is hosted by KPMG’s Audit Committee Institute (ACI), and cosponsored by the National Association of Corporate Directors, the University of Miami School of Business Administration, and Weil Gotshal & Manges LLP. For more information about the conference, visit auditcommitteeinstitute.com, or contact KPMG’s ACI at 1-877-KPMG-ACI (576-4224).The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSSContentsAmid the Uncertainty, a Pointed Focus on Growth ............... 4Deeper Involvement in All Financial Communications .…….. 6Rethinking the Audit Committee’s Role in Risk Oversight …. 7Improving Corporate Governance ……………………………. 8Audit Committee Effectiveness – What’s the Real Test? …… 10Arthur Levitt – On the Governance Opportunity………..………………....……..… 8Donna E. Shalala – On Healthcare Reform…………….. ………………..……....……... 9Harvey L. Pitt – On Good ...

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• Publié par: Erdau
• Nombre de lectures: 19
• Langue: English

Extrait

AU D I T C O M M I T T E E I N ST I T U T E

Highlights from the 6th Annual Audit Committee Issues Conference

Setting the 2010 Agenda February 2010 Miami, FL Phoenix, AZ K P M G

About the Audit Committee Issues Conference

Now in its sixth year, the Annual Audit Committee Issues Conference brings together audit committee members from around the country to discuss the challenges, practices, and priorities shaping audit committee and board agendas. Designed exclusively for audit committee members, the conference is hosted by KPMG’s Audit Committee Institute (ACI), and cosponsored by the National Association of Corporate Directors, the University of Miami School of Business Administration, and Weil Gotshal & Manges LLP.

For more information about the conference, visit auditcommitteeinstitute.com, or contact KPMG’s ACI at 1-877-KPMG-ACI (576-4224).

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

Contents

Amid the Uncertainty, a Pointed Focus on Growth ...............

Deeper Involvement inAllFinancial Communications .……..

Rethinking the Audit Committee’s Role in Risk Oversight ….

Improving Corporate Governance …………………………….

Audit Committee Effectiveness – What’s the Real Test? ……

4

6

7

8

10

Arthur Levitt – On the Governance Opportunity………..………………....……..… 8

Donna E. Shalala –

On Healthcare Reform…………….. ………………..……....……... 9

Harvey L. Pitt –

On Good Governance—and Why It’s Good Business…..………… 10

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

th 4 6 Annual Audit Committee Issues Conference Highlights

Though the worst of the economic storm appears to be receding, it’s clear that a tenuous, difficult recovery lies ahead for most companies in 2010.

Watching for signs of sustained recovery—and searching for opportunities to grow the top line—businesses and their boards face a changed, and changing, landscape. From “growthlessness” and public policy initiatives impacting a broad cross-section of companies and industries, to trillion-dollar government deficits, sovereign risk, and the increased complexities of doing business globally, the challenges ahead are formidable.

All of this—coupled with the resulting risk and uncertainty— served as a backdrop for the 2010 Audit Committee Issues Conference, where audit committee chairs and corporate governance luminaries discussed the challenges, concerns, and priorities shaping audit committee agendas for the year ahead.

Top Concerns of Audit 1 Committees in 2010

1. Uncertainties of economic/ legislative environments

2. Risk management/oversight

3. Financial statement issues (e.g., fair value, asset impairment)

4. Financial communications/ disclosures

5. Tone at the top, culture, and compensation/incentives

6. Legal/regulatory compliance (FCPA)

7. Impact of cost reductions (talent, controls, compliance)

8. Audit committee’s effectiveness and efficiency

9. Funding pensions/benefit costs

10. CFO and internal audit resources

1 All survey results are based on responses from approximately 120 audit committee members and directors surveyed at the Annual Audit Committee Issues Conference in February 2010.

In this report from the conference,

we highlight critical areas of audit

committee focus—including the risks

inherent in the search for growth;

the increased scrutiny of all financial

communications; and improving

corporate governance generally, including

the audit committee’s effectiveness.

We also share key survey findings and insights as discussed by 120 audit committee members and governance luminaries attending the forum.

Amid the Uncertainty, a Pointed Focus on Growth Business leaders express concern about the long-term health of the U.S. economy—the prospects for growth, the trillion-dollar-plus deficits, and long-term government spending proposals and commitments—as well as the govern- ment’s ability to address these issues. At the same time, they are concerned about

the impact of legislative/ regulatory reforms and the possible “overregulation” of business. A number of directors voiced these concerns:

- “On so many major public policy initiatives, the government simply doesn’t know where it wants to go. It’s difficult to commit capital in this environment.”

- “How will the level of government involvement affect the competi- tiveness of my company?”

- “Fiscal issues—the deficit, spending proposals, and the impact on future generations—pose a risk to the entire country.”

- “It’s easy to get distracted by everything that’s going on in Washington…what might happen, what might not happen. We’re trying to stay very focused on strategy and growth.”

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

While there may be reluctance to undertake new business initiatives in the midst of this uncertainty, the directors indicated that the search for growth is clearly a top—if notthetop—priority for most companies today:

- “Now that we have survived, how do we manage low-growth? What are the new drivers of growth?”

- “We’ve preserved capital and cut costs, so now, how do we grow the top line? What kind of investments should we make in people,

systems, technology? How do

we stimulate innovation?”

- “We’re looking at geographies, such as emerging markets, where there are

better growth opportunities, but that

poses its own set of risks.”

What is the role of the board in this search for growth? In the view of a number of panel members, an important role for the board is to mobilize management to rethink its strategy and risks, to stress-test the business model,

and to address, head-on, the problem of

“growthlessness.” As one director said,

“Our role is to help provide management

with context for how the business model

should evolve.”

Role of the Audit Committee As companies focus on growth, audit committees are playing a pivotal role as well. According to one panel member, the audit committee’s job “is to ignite the conversation about where the risks are, and make certain that management is addressing the risks to the satisfaction of the entire board.”

One of the critical risks that companies

face as they turn to emerging markets

as growth engines for business is

compliance risk, particularly Foreign

Corrupt Practices Act risk—which one

panel member called “a minefield.”

- “It’s critical for U.S. companies to take advantage of growth opportunities in emerging economies, but we have to be aware of the risks of the business practices there.”

- “A good tone at the top in your company doesn’t necessarily translate

into other cultures, so you need to be

especially careful.”

Given the pressures on management

to achieve top-line growth and deliver

results, one panel member emphasized

the need for audit committees to focus

on management’s critical accounting

judgments and estimates and “make

sure they’re down the middle.”

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

Setting the 2010 Agenda5

Audit Committee’s Agenda As the economy begins to stabilize/ improve, do you see your audit committee agenda returning to “normal”—i.e., more like precrisis agendas, focusing on the audit committee’s core oversight responsibilities?

52% Yes

48% No

Involvement in Strategy How would you describe your audit committee’s/board’s level of involvement in the company’s strategy? (Select one)

29% Essentially a “review and concur” role

27% Annual or semiannual strategy review sessions

44% Ongoing effort to monitor the business landscape and understand the impact on the company’s strategy and risk profile

Defining Information Needs How engaged is your audit committee in defining and obtaining the information it requires from management in order to perform the committee’s oversight responsibilities effectively?

77% Engaged

18% Somewhat engaged

5% Not engaged

th 6Annual Audit Committee Issues Conference Highlights 6

Risk Appetite What role does your board/audit committee play in the development of the company’s risk appetite?

4% Approves a formal, written statement of the company’s risk appetite

48% Approves the company’s risk appetite generally, but not a formal statement of risk appetite

25% Discusses company’s risk appetite at least annually

23% Does not discuss the company’s risk appetite

Review of Financial Communications Over the past two years, has your audit committee intensified its review of the company’s earnings releases and other financial communications to shareholders and analysts?

39% Yes, to a great extent

43% Somewhat

18% No

Oversight of Risk Over the past two years, has your board (or other board committees) assumed greater responsibility for oversight of risk, thereby narrowing the audit committee’s risk oversight responsibilities?

47% Yes

53% No

Deeper Involvement inAllFinancial Communications As a result of the economic crisis and the continuing uncertainty, most audit committee members say their committees have intensified their focus

onallfinancial communications—from

earnings guidance, to earnings press

releases, to the MD&A and

other disclosures.

Earnings Guidance and Press Releases Because the economic crisis has severely impacted the reliability of earnings forecasts, many companies have either discontinued earnings guidance or have reconsidered the

types of earnings guidance they provide.

As one panel member said, “If your company hasn’t stopped issuing earnings guidance as a result of the economic crisis, you’ve missed an opportunity.”

In the view of another panel member, the earnings press release is the most important communication to investors: “It’s where the company can talk about what’s going on in the business… it’s where the action is.” But earnings releases often pose more issues than the 10-Q, because they contain important business information—which often does not come from the financial reporting

system, is not audited, and is not subject

to internal controls.

- “The audit committee and the financial talent in the company need to be

focused on the earnings release.”

- “Non-GAAP information should be at the top of the audit committee’s

agenda, and internal audit needs to be

focused on it.”

- “The audit committee should have a good dialogue with management and

the external auditor about the process by which management developed the non-GAAP data, as well as the real state of the business—performance and results.”

A number of audit committee members

said they make a point of listening in on

analyst calls, and some indicated that

they review scripts for the calls.

MD&A and Other Disclosures The SEC has repeatedly stressed the importance of the MD&A, and an attorney at the conference identified key disclosure areas the SEC will be focusing on in 2010, including “early warning” of potential material risks, risk factors, and “trends and uncertainties.”

Other “hot button” risks include the impact of economic conditions on the company, financial and liquidity risks,

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

- “I don’t get into strategy during an audit committee meeting. That’s a board-level issue…you need to keep these issues where your expertise lies.”

- “For a while now we’ve been reacting to outside forces. We need to shift to offense, to determine what kinds of risk the company needs to take based on its strategic direction.”

the audit committee.

- “The audit committee exists to deal with one very significant enterprise- wide risk, and that’s the risk of either fraudulent or erroneous financial reporting. That’s plenty.”

Setting the 2010 Agenda7

Some directors see an expansive role

and litigation, climate change, and

for the audit committee involving both the oversight of the company’s risk management processes as well as key substantive areas of risk, such as financial, operational, and regulatory/ compliance risks. Others said the expertise of other board members must

14% No, but we are considering individual director evaluations

Given the continuing weak economic conditions, several panel members emphasized that audit committees need to stay focused on a number of financial reporting issues that became particularly acute during the financial crisis, including fair value estimates and disclosures, goodwill and intangible impairments, pension assets and obligations, and tax valuation allowances.“Take a close look at management’s assumptions

on Financial Statements

7% None/other

Evaluating Individual Directors Does your board evaluate the performance and effectiveness of individual directors?

the role of the audit committee.

company, there was no consensus on

oversee the strategic risks facing the

current economic conditions.”

43% Yes

43% No, and we are not considering individual director evaluations

7% Leadership

Panelists also highlighted tax-compliance risk—including transfer pricing—as a key area of focus, and expressed particular concern about the Internal Revenue Service’s recent proposal that companies disclose in their tax returns information about uncertain tax positions.“Stay focused on tax risk — it should be a major item on the agenda.”

Considering Lessons Learned from the Financial Crisis One panel member suggested that audit committees take the time to look back over the past 18–24 months and understand how the financial reporting system held up under the stress of the crisis. Did whistleblower mechanisms work? Did the internal controls system do what it was supposed to? Were there gaps? Are there areas that need to be strengthened?“Be sure to talk to the finance team and to the auditors, and get their views.”

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

Improving Governance Generally, in which area are today’s boards “falling short” and in most need of improvement? (Select one)

64% Somewhat

27% It is a priority

Encouraging Contrarian Views To what extent do the dynamics of your board/committee encourage contrarian views and discourage “groupthink”?

Rethinking the Audit Committee’s Role in Risk Oversight The tremendous focus on risk today, including the SEC’s new disclosure rules regarding the board’s role in risk oversight, is an opportunity for audit committees to reassess what their role— versus the role of the board and other standing committees—should be in the oversight of risk. While there was general agreement that the full board should

9% Not at all

8% Willingness to address board performance

11% Commitment/engagement of individual directors

19% Board composition and skill sets

48% Ability/willingness to challenge management

just about “playing defense.”

emphasizing that risk management is not

worst-case scenarios—“thinking the

At the board level, while it’s clear that

the risk discussion, directors are also

unthinkable”—are more often part of

compensation, leadership, and other

must make about how they address risk,

Impact of Economic Conditions

aspects of corporate governance.

compensation risks. The attorney also

broaden the disclosures a company

emphasized the SEC’s new rules, which

be leveraged in these areas, and had a

much more restrictive view of the role of

underlying all critical accounting

estimates, and consider whether these

assumptions are reasonable in light of

th 8 6 Annual Audit Committee Issues Conference Highlights

Arthur Levitt

On the Governance Opportunity

An excerpt from keynote remarks by former SEC Chairman Arthur Levitt

“Let’s talk about steps that need to be taken by corporate boards, on their own, first. In general, I favor elements that improve transparency and accountability. Basic improvements, like giving investors access to the proxy, would push boards to be more proactive, and more sensitive to investor concerns.

But being more accountable is a lot easier when you have the right expertise. Right now, independent board members often don’t have the base of knowledge they need. When someone working every day inside a corporation is presenting information and analysis to the board, there will always be a gap between what they know and what the board knows.This gap is inevitable, but it need not be permanent.

Board members have an obligation to ask every possible question, push in every possible way, to understand the financial and operational position of the company they are pledged to help lead.

Yet in many cases, board members simply lack the expertise to do this job well. And this lack of expertise is particularly notable when companies begin to engage in financially complex transactions. These transactions can be a significant source of hidden risk, and as we have seen, that risk can reveal itself in ways few anticipated.

That is why I would strongly favor that boards of directors include individuals with financial market experience, and especially expertise in understanding, pricing, and managing risk.

With even one such member regularly raising challenging questions and issues, boards would be able to press management to think far more creatively about issues such as counterparty risk, operational risk, and so on.

Corporate boards should disclose to shareholders their ability to handle such matters, by referencing their past work in those areas. Large institutional investors should insist on such board expertise, and provide it themselves if necessary. Otherwise, they have no cause for complaint when the companies they own stumble.”

- “Risk management systems and processes have not kept up with the change and the complexities of the

business world.”

- “We’re spending much more time thinking the unthinkable.”

Improving Corporate Governance On the criticism of U.S. corporate

boards in the aftermath of the financial

crisis, more than half of the conference

attendees said the criticism is justified.

What steps should be taken by boards to improve board performance? Five areas generated significant discussion: director expertise, information flow, consideration of strategy, ability and willingness to challenge management, and the commitment and engagement of individual directors.

Director Expertise “Being accountable is a lot easier when youhavetherightexpertise,”noted former SEC Chairman Arthur Levitt in his conference keynote. “Right now,

independent board members often don’t

have the base of knowledge they need.”

Conference attendees ranked “board composition and skill sets” second highest among the areas in which today’s boards are “falling short”—and the commentary from panelists amplified that concern:

- “To be frank, we (directors) simply don’t know enough about what’s going on in the company.”

- “Independent thinking is essential, but [a director’s] independence from the company often equates to a lack of direct knowledge about the business and the industry.”

- “Boards are clearly in need of stronger talent and focused skill sets.”

- “The audit committee at one of my companies [based in Europe] utilizes an expert who is retained to support the board and each committee. Their job is to review management’s reports analytically and assist the board and

committees with their work.”

Information Flow The quality, flow, and usefulness of the information—the “backbone of decision making”—that the board receives from management is more critical than ever, particularly given the complexity, uncertainty, and speed of change today. And according to conference participants, boards and audit committees need to be

engaged in defining the information they

require from management.

- “The information flow from management is much closer to real time. We’re getting updates on a more frequent basis—in between audit committee meetings—which helps avoid information dumps and data dumps.”

- “Our [Web-based] board portal gives us access to information and updates on a real-time basis.”

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

Consideration of Strategy

While more than half of conference

attendees said their board’s level of

involvement in the company’s strategy

consists of a “review and concur” role

or an annual or semiannual review, 44 percent said the board’s role is an “ongoing effort to monitor the business landscape and understand the impact on the company’s strategy and risk profile” (see survey result, page 5). Several panelists noted practices their boards are using to gain a better understanding of strategy and related risks:

- “Every year, we invite our major shareholders—and not just activist shareholders, but everyday shareholders—to come in and talk with the board about the business. It’s a very useful dialogue, and I’ve seen my board’s views change markedly as a result.”

- “To get our board members more engaged in strategy, we divide them

into different working units and assign

them to study a particular aspect of the company’s strategy alongside someone from management. They gain a better understanding of strategic issues, and at the same time, they bring insight to the process.”

- “Designating directors to argue one side or the other can help generate

robust, point-counterpoint discussions

about strategy.”

Ability and Willingness to

Challenge Management

Directors are also focusing on the

culture in the boardroom—challenging

management, playing devil’s advocate,

and engaging in rigorous discussions. Nearly one-third of conference attendees said “encouraging contrarian views and discouraging groupthink” is a priority (see survey result, page 7).

- “We need to be able to slow things down and take time to carefully consider the scenarios and the options that are being considered.”

- “Challenging management is a nonissue for us…our discussions are

passionate, intellectually honest, and

frank and open—sometimes it’s a

free-for-all.”

- “Collegiality can be a dangerous thing in the boardroom. Accountability is a much better word.“

- “It can get uncomfortable in the boardroom, but then we’re not paid to be comfortable.”

Commitment and

Engagement of Directors

Another key theme throughout the conference dialogue was the issue of director commitment and engagement in carrying out their oversight—which, as numerous panelists emphasized, is growing more demanding, time-consuming, and challenging as business complexities and risks expand. “I spend a lot of my time visiting the company’s locations and talking to employees and local regulators around theworld,”saidonepanelist.While suggesting that such extensive travel and firsthand oversight may not be standard practice for most boards and directors, he said “it helps me get a real understanding of what’s going on in the business, and it lets people know that I, as a director, care about the work they’re doing.”

Panelists also stressed the importance of board evaluations—including assessments of individual directors— as critical to ensuring the board comprises directors who have the time, commitment, and skill sets necessary to be effective in their role.

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

Setting the 2010 Agenda9

Donna E. Shalala

On Healthcare Reform

Selected comments on healthcare reform by University of Miami President and former Secretary of Health and Human Services Donna E. Shalala

“Let me talk about what I think is going to happen without healthcare reform, because I actually think the healthcare system is going to change with or without reform. I made a list for myself, because for all of us on corporate boards, it's important to recognize that healthcare reform will affect risk assessment, benefit costs, taxes, and personnel management.

First, we can keep insurance costs down by increasing patient safety and reducing risk. Second, we need to eliminate the fee-for-service payment system—in which you simply get paid more for doing more to a patient.

Third, I think doctors increasingly are going to become employees of healthcare systems. They want stability in their income, which will allow the hospitals and the healthcare systems to achieve a more integrated care system. So expect some payment reform to happen, with the insurance companies trying to figure out a way to get around some of these costs because employers are pressing them to slow the growth of healthcare costs.

Fourth, I think there’s going to be a lot of focus on fraud, where there’s billions to be recaptured. There are a lot of areas where the government could recapture significant money by reducing fraud and I think with today’s more-sophisticated computer systems there’s going to be bipartisan consensus to go after fraud, big time.”

th 10 6 Annual Audit Committee Issues Conference Highlights

Harvey L. Pitt

On Good Governance — and Why It’s Good Business

An excerpt from keynote remarks by former SEC Chairman Harvey L. Pitt

“I start from a very simple proposition: Good governance and uncompromising ethical standards are good business. They’re not tangential to, or a drag on, corporate profitability and success. Conversely, a failure to achieve or maintain state-of-the-art governance and high ethical standards will prevent success, even if cutting corners creates deceptively positive short-term results.

In the anticipated environment of enhanced scrutiny and reduced tolerance, companies and their managers must understand it’s in their own self-interest to look beyond specific governmental mandates and toward practicing real compliance and transparency and insisting on ethical corporate behavior as an organic part of their businesses. Good governance is self-perpetuating and self-reinforcing. In a company where governance, responsibility, transparency, and compliance are the norms, and where ethical behavior is the expectation, acting consistently with these standards becomes and remains the rule.

A company with a strong ethical culture and good governance will find it easier to attract and retain directors and senior managers who support that culture and to cultivate a workforce that thrives in that milieu as well. This begs the question of what actually is good corporate governance. To me, it connotes commitment to excellence and an avoidance of cutting corners. It reflects a commitment to complete transparency, realized by formulating and implementing proper policies and procedures and utilizing effective measures to assure consistent compliance with them.

And although collegiality is a trait to be practiced by everyone in the boardroom, it doesn’t mean that boardrooms should be devoid of intellectual tension. Outside directors, working collaboratively with management, need to formulate their own agendas, develop their own lines of inquiry, and solicit the views of that great body of contrarian thought that this country so ably ferments.”

Audit Committee Effectiveness – What’s the Real Test? Conference panelists discussed a

number of indicators of “audit committee

effectiveness,”but“transparency”—both

internal and external transparency—was

perhaps the key area of focus.

As former SEC Chairman Levitt noted, “For all the headlines on compensation, the real problem is with a fundamental lack of disclosure and meaningful transparency.” Levitt emphasized the importance of transparency around “what is now considered nonmaterial events and issues”—including “how companies manage risk in their

operations, use leverage, and monitor

performance” and key performance

metrics such as “plant utilization, store sales per square foot, and revenue generated from new products and per employee.”

Good external transparency—i.e., from the investor’s viewpoint—hinges on achieving internal transparency, including information quality and flow, and communications between the board and management, auditors, and other key players in the organization.

- “Our rule is no PowerPoint. We read management’s reports in advance, then management comes in and talks about their business unit.”

- “You need transparency in order to get comfortable with management, and that takes a lot of informal communi- cation and interaction. This applies to auditors, too.”

- “Here’s the biggest red flag for me: If you’re not getting the exact same numbers that management uses to run the business, there’s something wrong.”

Preparing for the Challenges Ahead:

Key Questions for the

Audit Committee

For audit committees, 2010 will be a

period of tremendous challenge as they help guide the company toward growth, while managing through the risks and uncertainties ahead.

A number of panelists emphasized the critical importance of focusing on the culture of the organization—particularly during a period of economic uncertainty and high expectations for results. As one panel member said, “If something is going to go wrong, more than likely it will be because of a problem in the tone at the top, culture, or incentive structure.”

Given these challenges, panel members

posed a number of questions for audit committees to consider as they monitor their committee’s effectiveness in the year ahead:

•

•

•

•

•

•

Dowehavetherightpeopleon the committee—directors who understand the business and are willing and able to ask the right questions?

Iseachmemberofthecommittee capable of understanding the financial reporting issues and complexities arising from the company’s business activities?

Dowetakeanactiverolein determining the committee’s agenda and defining its information requirements?

Dowehavetherightrelationship

with management? Is it clear who

works for whom?

Dowespeakourmind?Dowe

listen? Do we build consensus?

Dowetakeahardlookatour committee’s performance, and assess the performance of individual committee members?

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

Conference Speakers, Panelists, and Thought Leaders

Ray Bingham Director Dice Holdings, Flextronics International, Oracle, STMicroelectronics

Kathleen Connell Chair Corporate Governance Center, Berkeley Haas Graduate School of Business

J. Michael Cook Director Comcast, International Flavors and Fragrances

Kenneth Daly President and CEO National Association of Corporate Directors

Charles M. Elson Weinberg Center for Corporate Governance Director, HealthSouth

Holly J. Gregory

Partner, Corporate Governance

Weil, Gotshal & Manges LLP

Mary R. (Nina) Henderson Director AXA Financial, Del Monte Foods, Pactiv

Michele J. Hooper Director AstraZeneca, PPG Industries, UnitedHealth Group, Warner Music

Teresa E. Iannaconi Partner, National Office, KPMG LLP, and former Deputy Chief Accountant, Division of Corporation Finance, SEC

Laban P. Jackson Director JPMorgan Chase

Henry R. Keizer Global Head of Audit, KPMG International Cooperative, and U.S. Vice Chair – Audit, KPMG LLP

Reatha Clark King Director ExxonMobil

Gad Levanon Associate Director of Macroeconomic Research The Conference Board

Arthur Levitt Former Chairman of the SEC and Senior Advisor, The Carlyle Group

Richard K. Lochridge Director Dover Corporation, Lowe’s, PetSmart

Christopher S. Lynch Director AIG, Freddie Mac

Alex J. Mandl Director Dell, Hewitt Associates, Horizon Lines, Visteon, and Chairman of the Board, Gemalto

Mary Pat McCarthy U.S. Vice Chair, KPMG LLP, and Executive Director, KPMG’s Audit Committee Institute

The information contained herein is of a general nature and is not intended to address the specific circumstances of any individual or entity. 21817NSS

William E. McCracken CEO and Chairman of the Board CA, Inc.

Charles H. Noski Director Air Products & Chemicals, ADP, Microsoft, Morgan Stanley,

Ellen J. Odoner Head of Public Company Advisory Group Weil, Gotshal & Manges LLP

Bruce J. Piller Western Regional Managing Partner KPMG LLP

Harvey L. Pitt Former Chairman of the SEC, and CEO, Kalorama Partners LLC

Donna E. Shalala President, University of Miami, and former U.S. Secretary of Health and Human Services

Bart van Ark

Senior Vice President and Chief Economist

The Conference Board

Karen Hastie Williams Director Chubb, Continental Airlines, Gannett, SunTrust Bank, Washington Gas