I. Board Composition
The Board of Directors (the “Board”) of DaVita Inc. (the “Company”) size is determined from time to time by resolution of the Board, with the majority of the members of the Board (the “Directors”) being independent in accordance with the listing standards of the New York Stock Exchange Corporate Governance rules. All Directors shall be elected annually by the Company’s stockholders based upon the recommendations of the Company’s Nominating and Governance Committee. Any newly created Director position or Director vacancy occurring for any reason shall be filled by a majority of the remaining members of the Board, subject to stockholder approval.
II. Board Committees
The Board shall at all times have an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Each committee shall be comprised solely of independent Directors as defined within the listing standards of the New York Stock Exchange Corporate Governance rules. In addition, at least one member of the Audit Committee shall qualify as an Audit Committee Financial Expert within the meaning of the rules and regulations of the Securities and Exchange Commission. Each committee shall adopt a written charter that outlines the purposes, goals, membership requirements, and responsibilities of the committee in accordance with the listing standards of the New York Stock Exchange Corporate Governance rules. The charter shall also provide that the committee will conduct an annual self-evaluation of its performance.
The current Board committees are the Audit Committee, Compensation Committee, Nominating and Governance Committee, Compliance Committee, Public Policy Committee and Clinical Performance Committee.
III. Board Meetings
The Board shall hold at least five regularly scheduled meetings during each fiscal year, and may hold special meetings at any time or place as necessary. An executive session without the presence of management shall be held at each regularly scheduled Board meeting.
Directors shall be expected to attend Board meetings and meetings of committees on which they serve. Directors shall also be expected to review in advance of the meeting any and all meeting materials.
IV. Director Criteria
The Nominating and Governance Committee shall assist in identifying, recruiting and recommending candidates for Board membership, proposing a slate of nominees for election at the annual meeting of stockholders, and making recommendations to the Board regarding the membership and chairs of the committees of the Board. The Nominating and Governance Committee shall also consider individuals for Board membership who are recommended by stockholders upon submission in writing to the secretary of the Company of the names and qualifications of such nominees. In conjunction with the selection and nomination process, the Nominating and Governance Committee shall consider a mix of characteristics, experiences, diverse perspectives and skills in determining the attributes it believes would be most beneficial to the Company. The Nominating and Governance Committee shall also consider continuing Director tenure and take steps as may be appropriate to ensure that the Board maintains openness to new ideas and a willingness to re-examine the status quo.
It is the general policy of the Board that a Director who has reached the age of 75 will not be nominated for reelection to the Board; provided, however, the Nominating and Governance Committee may recommend and the Board may approve the nomination for reelection of a Director at or after the age of 75, if, in light of all the circumstances, it is in the best interests of the Company and its stockholders.
No Director or nominee for Director may serve on more than four other public company boards of directors. Additionally, all Directors must comply with Section XI herein and notify the Co-Chairmen of the Board and Lead Independent Director prior to accepting an invitation to serve on the board of directors of another public company, so that the remaining members of the Board may evaluate any potential conflicts of interest.
To be eligible to be a nominee for election or reelection as a Director of the Company, a nominee must deliver to the secretary of the Company a completed written questionnaire with respect to the background and qualification of such person and any other person or entity that such person may represent (which questionnaire shall be provided by the secretary of the Company) and a written representation and agreement (in the form provided by the secretary of the Company) that such person shall (A) provide all information required by Article III Section 12(a)(2) of the Company’s Bylaws, (B) comply with the Company’s Share Ownership Policy provided in Section IX herein, (C) in such person’s individual capacity and on behalf of any person or entity for whom such person may be a representative, have complied and will comply with all applicable corporate governance, conflicts, confidentiality and stock ownership and trading policies of the Company, and (D) abide by the requirements of Article IV Section 3 of the Company’s Bylaws.
V. Board Responsibilities
Represent the collective interests of the Company’s stockholders to enhance and optimize stockholder value.
Provide expertise and advice to the Chief Executive Officer (“CEO”) and senior management.
Work with the CEO to provide strategic planning, operational performance goals, management development, succession planning and strategies to enhance stockholder value.
Evaluate and select the CEO and establish the CEO’s annual performance goals and objectives.
Evaluate the overall effectiveness of the Board and its committees.
Perform the duties of a Director with the highest degree of integrity, exercising independence and objectivity in the pursuit of maximizing the success of the Company.
Hold regularly scheduled Board and executive sessions without the presence of management.
Review operational plans and budgets and other strategic initiatives.
Oversee internal controls over financial reporting.
Review and approve the filing of external reports with regulatory agencies.
VI. Director Access to Management
All Directors shall have access to senior management and other employees as necessary to fulfill their duties. The Board and the CEO shall encourage senior management’s participation at Board meetings to provide valuable insight and expertise on relevant matters being discussed.
VII. Board Access to Outside Advisors
The Board shall have the power to hire independent legal, financial or other advisors as it may deem necessary, without first consulting or obtaining the approval of any officer of the Company.
VIII. Director Compensation
All non-employee Directors shall receive reasonable compensation for their services, which shall include a retainer fee in the form of cash and stock awards and additional compensation for attendance at Board meetings in the form of cash. Directors who serve on the Committees of the Board shall receive additional compensation for attending the meetings of these committees. Audit Committee members shall not receive any consulting, advisory or other compensatory fees from the Company other than the fees they receive in their capacity as Directors. Directors who are employees or officers of the Company shall not receive any additional compensation for serving as Directors.
IX. Share Ownership Policy
Pursuant to the Company’s share ownership policy, all non-employee Directors shall own a specified number of shares of the Company’s common stock. All shares owned directly or shares underlying vested but unexercised stock options, stock appreciation rights and other equity awards are counted in determining compliance with the policy. The total net realizable share value retained shall have a current market value of not less than the lower of:
X. Director Education and Orientation
New Directors shall participate in the Company’s new Director orientation program in order to become educated about the Company. The Company shall also encourage Directors to enhance their overall business management skills and to continue to educate themselves on certain matters such as accounting, finance, marketing and industry requirements and practices.
XI. Change in Status; Acceptance of Other Directorships
The Board believes that when a director retires from their principal job, changes their principal job responsibility or experiences a significant event that could negatively affect their service to the Board (each a “change in status”), the Board should have an opportunity to evaluate the appropriateness of the director’s continued service on the Board in light of such change in status. Accordingly, in the event any director has a change in status, such director shall promptly submit his or her resignation to the Co-Chairmen of the Board and the Lead Independent Director. The members of the Board, excluding the affected director, shall determine whether the affected director’s continued service on the Board is in the best interests of the Company’s stockholders and shall decide whether or not to accept the resignation of the director. Also, the Board may determine, in its sole discretion, that a change in status has occurred and shall decide whether or not to request the resignation of the director. In addition, prior to accepting an invitation to serve on the board of directors of another public company, a director must advise the Co-Chairmen of the Board and Lead Independent Director so that the remaining members of the Board may evaluate any potential conflicts of interest. In all cases described in this paragraph, the affected director shall act in accordance with the recommendation of the remaining members of the Board following such review.
XII. Management Succession Planning
The Board shall maintain a management continuity succession plan relating to the executive officers, which shall include a CEO succession plan in case of an unexpected event. The Board shall work with the CEO to develop a list of potential candidates to act as successors for the CEO and all other executive officer positions. The Board shall review and evaluate the succession plan, and shall be prepared at all times to take action if and when needed regarding a successor to the CEO or any other executive officer position.
The independent members of the Board shall perform an annual evaluation of the CEO based upon specific performance goals and objectives established for the fiscal year as well as long-term objectives of the Company.
XIII. Annual Performance Evaluation of the Board
The Nominating and Governance Committee shall perform an annual evaluation of the Board and its committees to assess overall effectiveness and to monitor adherence to corporate governance principles and policies. In addition, the Board shall conduct an annual self-evaluation to determine whether it and its committees are functioning effectively.
Approved by the Board of Directors on November 17, 2017.
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