Corporate Governance Principles
The following principles have been approved by the Board of Directors (Board) and, along with the charters of the Board committees, provide the framework for the governance of Biogen Idec Inc. (Company). The Board will review these principles and other aspects of the Company’s governance on a regular basis.
Biogen Idec’s business is conducted by its employees, managers and officers, under the direction of the Chief Executive Officer (CEO) and the oversight of the Board, to enhance the long-term value of the Company for its stockholders. The Board is elected by the stockholders annually to oversee management and to assure that the long-term interests of stockholders are being served. Management is accountable to the Board, and the Board in turn is accountable to the stockholders. Both the Board and management recognize the long-term interests of stockholders are advanced by responsibly addressing the concerns of other stakeholders and interested parties including employees, customers, partners, suppliers, patients, the medical community, local communities, government bodies and the public at large.
The Board will generally have four scheduled meetings a year to review and discuss reports by management on the performance of the Company, its plans and prospects, as well as immediate issues facing the Company. Directors are expected to attend all scheduled Board and committee meetings and the annual meeting of stockholders. In addition to its general oversight of management, the Board and its committees also perform a number of specific functions, including:
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Reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions, and approving annual budgets;
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Reviewing the Company’s significant risk exposures and steps taken by management to monitor and mitigate such exposure;
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Ensuring processes are in place for maintaining the integrity of the Company, including with respect to its financial statements, public disclosures, compliance with law and ethics, relationships with customers, suppliers, patients, the medical community, and local communities and relationships with other stakeholders;
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Selecting, evaluating and compensating the CEO; and
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Providing counsel and oversight on the selection, evaluation, development, succession and compensation of senior management.
Directors should possess the highest personal and professional ethics and integrity, understand and be aligned with Biogen Idec’s core values, and be committed to representing the long-term interests of the stockholders. They must also be inquisitive and objective and have practical wisdom and mature judgment. We endeavor to have a Board that collectively represents diverse experience at strategic and policy-making levels in business, government, education, healthcare, science and technology, and the international arena, and collectively has knowledge and expertise in the functional areas of accounting and finance, risk management and compliance, strategic and business planning, corporate governance, human resources, marketing and commercial, and research and development. We also recognize the benefit of gender, ethnic and racial diversity to the Board.
Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serving on the Board for an extended period of time. Directors shall offer their resignation in the event of any significant change in their personal circumstances, including a significant change in their principal job responsibilities or circumstances that may adversely affect their ability to effectively carry out their duties and responsibilities as directors of the Company.
Directors should not serve on more than six boards of directors of public companies including the Biogen Idec Board. The CEO should not serve on more than two boards of directors of public companies in addition to the Biogen Idec Board. Directors must notify the Chairman of the Board and the Chair of the Corporate Governance Committee before accepting an invitation to serve on the board of another company to permit the appropriate evaluation of the relationship for actual or potential conflicts of interest and to permit the Corporate Governance Committee to confirm that the director continues to have time available to perform his or her duties to Biogen Idec.
The Board does not believe that arbitrary term limits on directors' service are appropriate, nor does it believe that directors should expect to be re-nominated. The Board self-evaluation process described below will be an important determinant for Board tenure. Directors will offer their resignation to the Board effective at the annual meeting of stockholders in the year of their 75th birthday. Directors are strongly encouraged to notify the Chairman of the Board and the Chair of the Corporate Governance Committee at least six months prior to the next annual meeting of stockholders if they do not intend to stand for reelection to the Board at the next annual meeting of stockholders.
At least 75% of the directors will be independent directors under the Nasdaq requirements.
All committee members will be independent. The Corporate Governance Committee will review annually the independence status of non-employee directors.
Except with respect to joint ventures or significant corporate collaborations, no Biogen Idec executive officer may serve on the board of directors of a company if an executive officer of that company serves on the Biogen Idec Board.
The Board believes that given the size and scope of activities of the Company, the size of the Board should be in the range of 10-15 directors. The Board shall periodically review its size and composition to ensure effective oversight of the Company’s business.
At each annual meeting of stockholders the Board proposes a slate of nominees to the stockholders for election of directors. Between annual meetings, the Board may elect directors to fill vacancies with new directors.
Stockholders may propose nominees for consideration by the Corporate Governance Committee by submitting the names and supporting information to: Corporate Secretary, Biogen Idec Inc., 133 Boston Post Road, Weston, MA 02493. Director nominations will be recommended by the Corporate Governance Committee and approved by the Board.
The Board has established the following standing committees to assist the Board in discharging its responsibilities: Finance and Audit; Compensation and Management Development; Corporate Governance; and Science and Technology. The charters of these committees are published on the Biogen Idec website, and will be mailed to stockholders on written request. The committee Chairs shall periodically report the actions, recommendations and important findings of the committees to the Board. The Board may establish other committees from time to time to assist the Board in discharging its responsibilities.
Committee membership and the position of the committee Chair shall be reviewed by the Board, upon recommendation of the Corporate Governance Committee, annually in conjunction with the annual meeting of stockholders or at other times. The Board shall consider whether periodic rotation of Committee members or Chairs is likely to be beneficial to committee performance, but the Board does not believe that such rotation should be mandatory.
The Board and its committees shall be responsible for their respective meeting agendas. Prior to each Board meeting, the CEO will discuss the specific agenda items for the meeting with the Chairman of the Board or the Lead Director if the Chairman of the Board is an employee director. Prior to each committee meeting, the appropriate members of management will discuss the specific agenda items for the meeting with the committee Chair. The CEO, Chairman of the Board, Lead Director or committee Chair, as appropriate, shall determine the nature and extent of information that shall be provided regularly to the directors before each scheduled Board or committee meeting. Directors are urged to make suggestions for agenda items, or additional pre-meeting materials, to the CEO, Chairman of the Board, Lead Director or appropriate committee Chair at any time
Board and committee materials related to agenda items should be provided to Board members sufficiently in advance of meetings to allow the directors to prepare for discussion of the items at the meeting.
The Board shall periodically review its leadership structure to ensure effective oversight and objectivity regarding management’s performance. The Board has determined that, in the absence of a non-employee Chairman of the Board, the Chair of the Corporate Governance Committee will serve as the Lead Director.
The non-employee Chairman or Lead Director shall have the following responsibilities:
• Presides at meetings of the Board, meetings of the non-employee directors, and annual meetings of stockholders;
• Reviews the agenda and schedule for meetings of the Board and assesses the Board’s information needs in collaboration with the CEO;
• Ensures that non-employee directors have adequate opportunities to meet and discuss issues in meetings without management present, and communicates to management, as appropriate, the results of such meetings;
• Advises the committee Chairs in fulfilling their responsibilities to the Board;
• Recommends to the Board the retention of any advisors who report directly to the Board;
• Serves as a liaison for stockholder communications with the Board; and
• Discharges such other responsibilities as the Board may assign from time to time.
The non-employee directors will meet as a group at least four times each year without management present, and may meet without management present at such other times as determined by the non-employee Chairman of the Board or Lead Director or if requested by at least two other directors.
Each of the Board and its standing committees will perform an evaluation of itself on a regular basis and as may be required by applicable laws, regulations and rules. The results of each evaluation will be presented to the Board.
The Board expects Biogen Idec directors, as well as officers and employees, to act ethically at all times and to acknowledge their adherence to the policies comprising Biogen Idec’s Code of
Business Conduct. Any waivers of the Code of Business Conduct or other ethics policy for Directors or executive officers must be approved by the Board. All waivers will be promptly disclosed as required by law or stock exchange regulation.
Anyone who has a concern about Biogen Idec's conduct or compliance with the law, or about the Company's accounting, internal accounting controls or other financial or auditing matters, may communicate that concern to the Chair of the Finance and Audit Committee, to the Chairman of the Board, the Lead Director (if there is one then serving), or to any or all of the non-employee directors in addition to the internal reporting channels available to employees. Such communications may be confidential or anonymous, and may be submitted in writing or by e-mail to addresses that are published on the Company's website. Concerns relating to accounting, internal controls, auditing or financial matters shall be sent immediately to the Chair of the Finance and Audit Committee. All other concerns addressed to directors will be forwarded to the appropriate directors for their review. All concerns raised will be processed and handled by the Company’s legal and finance staffs, under the oversight of the Company’s internal corporate compliance committee, unless the Finance and Audit Committee, the Chair of the Finance and Audit Committee, the Chairman of the Board or the Lead Director (if there is one then serving) directs the Company to retain outside counsel or other outside advisors. The role of the corporate compliance committee is described in the Company’s Code of Business Conduct available on the Company’s website. The Company's Code of Business Conduct prohibits any employee from retaliating or taking any adverse action against anyone for raising or helping to resolve an integrity concern. The Finance and Audit Committee will review the status of compliance activities and investigations at such frequency as the Committee deems appropriate.
If an actual or potential conflict of interest arises for a director (including a material change in the therapeutic area of interest or focus of another company with which the director is affiliated), the director shall promptly inform the CEO, the Chairman of the Board and the Chair of the Corporate Governance Committee. If a significant conflict exists and cannot be resolved, the director should resign. All directors will recuse themselves from any discussion or decision affecting their personal, business or professional interests. The Finance and Audit Committee shall resolve all conflicts involving related party transactions and the Corporate Governance Committee, in consultation, where appropriate, with the Science and Technology Committee, shall resolve any other conflicts involving a director or executive officer.
Stock ownership by our directors and executive officers helps to further align their interests with the long-term interests of stockholders. Accordingly, the Board has adopted the following stock ownership guidelines:
| Position | Stock Ownership Requirements |
|---|---|
| CEO | 75,000 shares |
| Executive Vice Presidents | 10,000 shares |
| Chief Accounting Officer | 4,500 shares |
| Non-employee Chairman | 10,000 shares |
| Non-employee Director | 5,000 shares |
Shares owned outright and, for executive officers, unvested time-vested restricted stock units are credited toward the stock ownership requirement, which must be satisfied within five years following the individual’s initial election to the applicable position.
The Compensation and Management Development Committee, in consultation with the Corporate Governance Committee, shall have the responsibility for recommending to the Board compensation and benefits for non-employee directors. In discharging this duty, the Compensation and Management Development Committee shall be guided by the following goals: compensation should fairly pay directors for work required in a company of Biogen Idec's size and scope; and compensation should align directors' interests with the interests of stockholders. The Board believes these goals will be served by providing a significant portion of the compensation in equity with ownership requirements during the term of Board service. Compensation in the form of retainers and meeting fees will be paid periodically in cash and equity awards. Committee Chairs may receive higher retainers and meeting fees due to the workload and leadership responsibilities of these roles. The Compensation and Management Development Committee shall review non-employee director compensation and benefits on a regular basis.
The Compensation and Management Development Committee, with the input of the Board, shall annually approve the goals and objectives for compensating the CEO and shall evaluate the performance of the officer in light of these goals. The Compensation and Management Development Committee recommends the salary, bonus and other incentive and equity compensation for the CEO for approval by the Board. The Board shall take such action at a session of the non-employee directors of the Board. The Compensation and Management Development Committee shall annually approve the compensation for the Company's other executive officers, and shall evaluate their performance before approving their salary, bonus and other incentive and equity compensation.
The Compensation and Management Development Committee, with the input of the Board, shall undertake a formal evaluation of the CEO on an annual basis. The evaluation shall be based upon objective criteria, including performance of the business and achievement of specific goals and long-term strategic objectives, as well as judgment on the officer’s leadership performance and enhancement of long-term stockholder value and the officer’s contribution to the Company’s commitment to corporate responsibility including the officer’s success in creating a culture of unyielding integrity and compliance with applicable laws and the Company’s Code of Business Conduct. The evaluations shall be communicated to the CEO by the Chair of the Compensation and Management Development Committee.
The Board shall be provided with an annual report on the Company’s planning for executive succession and program for management development. The Board shall approve and maintain a succession plan for the CEO and senior executives.
Non-employee directors may interact directly with management of the Company at the officer level or below as and when the directors deem appropriate.
The Board and its committees shall have the right at any time to retain independent outside financial, legal or other advisors.
In general, directors receiving inquiries from investors or the press should refer them to the CEO or other appropriate officer of the Company.
The general counsel and the chief financial officer shall be responsible for providing an orientation for new directors, and for periodically providing materials or briefing sessions for all directors on subjects that would assist them in discharging their duties. Each new director shall, within six months of election to the Board, spend a day at corporate headquarters for personal briefing by senior management on the Company's strategic plans, its financial statements, and its key policies and practices. The Company will make director education program information available to directors on a regular basis and will encourage directors to attend director education programs and reimburse the costs of attending such programs.
Effective Date 10/9/12