Although the role and responsibilities of our Lead Director were already established, the Board recently adopted a number of updates to the Company’s Corporate Governance Guidelines, including amendments expanding upon, and more concretely defining, the role of the Lead Director. The Lead Director has the following duties and responsibilities:
presiding at all meetings of the Board at which the Board Chairperson is not present, including executive sessions of independent directors;
meeting with the CEO following each executive session of independent directors to discuss matters arising during that executive session;
calling special meetings of the Board or of the independent directors;
participating in the formation of, and approving, the agenda, schedule, and materials for each Board meeting;
serving as liaison between the Board Chairperson and the independent directors;
ensuring that he or she is available for consultation and direct communication with stockholders and other key constituents, as appropriate;
participating, in consultation with the Compensation and Personnel Committee, in CEO succession planning;
guiding the annual review by the Board of the performance of the CEO; and
performing such other duties as the Board, from management. time to time, may delegate.
The Board also notes with concernis responsible for establishing and maintaining an effective leadership structure for the potential for significant confusion and disruption that may result from permitting stockholder action by written consent, due to the possibility of multiple — and even conflicting — written consents being solicited by multiple stockholder groups. Responding to such proposals has the potential to impose significant administrative and financial burdens on the Company.
The stockholder who submitted this Proposal cited the example of three companies in different industries and with different market capitalizations and stockholder populations but provided no evidence as to why their example should influence the Company’s governance policies. Because of the deficiencies and potential adverse consequences identified above with the proposal, in light of the Company’s existing policies and ownership concentration, the Board believes that the written consent processcurrent most effective leadership structure for the Company is not an appropriate governance model forachieved through the combination of the extensive knowledge and experience of Mr. Guzzi; the active, independent leadership role played by Mr. McEvoy; and the authority provided to the independent Lead Director in our Company.Corporate Governance Guidelines.
Our current policies, including the rightleadership structure provides strong, independent Board oversight of stockholdersmanagement, and EMCOR’s robust corporate governance practices and mechanisms seek to call special meetings, already ensure Board accountability.
The Board also believes that this ProposalProposal’s prescriptive approach is unnecessary becausenot necessary for effective oversight of our existing policiesmanagement and procedures, built on sound principles of corporate governance, transparency, collaboration and, above all, the best interests of ouraccountability to stockholders. Our By-Laws empower stockholders holding 25% of our outstanding shares to call a special meeting of the stockholders and do not impose any material restrictions on this stockholder right. This right to call special meetings allows stockholders to propose actions without waiting for our next Annual Meeting, while still affording all stockholders the right to receive advance notice of proposals on which they are entitled to vote and to participate in, and discuss the merits of, a proposed action. A special meeting also allows the Board to make a considered recommendation about the action. As a result, stockholder ability to call a special meeting is better suited to a culture of transparency and good corporate governance, and makes the proposed written consent procedure unnecessary.
While the stockholder that submitted this Proposal cites the 25% threshold to call a special meeting of the stockholders as a negative, this threshold carefully balances stockholder empowerment and protection and demonstrates our commitment to high standards of corporate governance. Among Russell 3000 companies, almost 75% either require a threshold of 25% or higher to call a special meeting or do not provide stockholders any right to call special meetings. Indeed, at our 2018 Annual Meeting of Stockholders, more than 60% of our stockholders voting “FOR” or “AGAINST” rejected, as the Board recommended, a stockholder proposal to lower this threshold to 10%. The Board believes that given the stock ownership concentrationCompany’s overall corporate governance framework already satisfies the Proposal’s stated objectives. Existing corporate governance practices and mechanisms include:
A diverse and experienced board of our outstanding Common Stock (twodirectors elected annually by stockholders.
With the exception of Mr. Guzzi, the Board is composed entirely of independent directors within the meaning of NYSE rules, resulting in 90% of the Board being independent.
Each of the three standing Board Committees - the Audit Committee, the Compensation and Personnel Committee, and the Nominating and Corporate Governance Committee - are composed solely of, and chaired by, independent directors. The Company’s Corporate Governance Guidelines mandate this composition in order to seek to ensure that independent directors provide oversight of the key matters outlined in the committee charters.
Each member of the Board is elected annually in a single class.
The Board meets in executive session at regularly scheduled meetings without the presence of the CEO or other members of management. Independent directors exercise complete autonomy over the matters discussed during these executive sessions.
The Board conducts an annual assessment of the Board’s leadership structure.
The independent directors annually elect the Lead Director, and the Board conducts an annual review of the performance of the Lead Director.
Under the guidance of the Lead Director, the Board conducts an annual performance review of the CEO.