Corporate Governance

Shearman & Sterling 40 | Board Refreshment BOARD REFRESHMENT In today's constantly evolving and complex global business environment, board composition is increasingly in the spotlight. "Board refreshment" includes issues facing nominating and governance committees related to director tenure, experience, diversity and performance, all of which contribute to board effectiveness. While director continuity provides many benefits, nominating and governance committees are tasked with the responsibility of balancing those benefits with the need for fresh perspectives, diverse views, specialized experience and independence. The average board tenure at the Top 100 Companies is 8.31 years. NON-INDEPENDENT DIRECTORS Top 100 Companies have boards composed of 75% or more independent directors. 93 Top 100 Companies have the CEO as the only non-independent director. 59 Top 100 Companies have non-management directors who are not independent. 38 60 28 2 4 6 1 non-independent director 2 non-independent directors 3 non-independent directors 4 non-independent directors 5 non-independent directors AVERAGE TENURE OF DIRECTORS Less than 6 years of service 6 years of service 7 years of service 8 years of service 9 years of service 10 years of service 11-15 years of service More than 15 years of service 5 9 18 29 7 15 12 5 DIRECTOR INDEPENDENCE Independent directors constituted 75% or more of the directors on the boards of most of the Top 100 Companies. Over the last 10 years, the number of companies at which the CEO is the only non- independent director has increased significantly. COOs served on the boards of four companies and a CFO served on the board of two companies. Note: At one company with one non-independent director, that director is not the CEO, and at one company with two non-independent directors, both such directors are co-CEOs.

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