GOVERNANCE BANNER

Adhering to Strong Corporate Governance Principles

CORPORATE GOVERNANCE GUIDELINES

BOARD OF DIRECTORS

  • Diversity – Our Board seeks members representing a broad array of experience, backgrounds and expertise
    • Gender diversity – three of our 11 (27 percent) Board members are female. Women chair two of the three (67 percent) standing Board committees, and every standing Board committee has a female member
    • Age diversification – Our Board members range in age from 50 – 74 (at the time of the last change to Board membership – 11/4/17)
  • Independence – Our Board has a strong preference for independent directors
    • Ten of our 11 (91%) Board members are independent from management under the terms of the NYSE, Section 162(m) of the Internal Revenue Code and Section 16 of the Securities Exchange Act of 1934; our CEO is the only non-independent director
    • Our standing Nominating and Corporate Governance Committee, Audit and Compensation committees are comprised solely of independent directors
  • Leadership Structure
    • We have a separate CEO and independent, non-executive chairman
    • Our chairman also serves as the independent presiding director
    • In May 2017, our Board transitioned to a new chairman
  • Tenure and Refreshment
    • Average tenure (at the time of the last change to Board membership –11/4/17):
      • 7.2 years, including the CEO
      • 7.9 years, excluding the CEO
    • Median tenure (at the time of the last change to Board membership – 11/4/17):
      • 4 years, including the CEO
      • 6 years, excluding the CEO
    • Five new directors have been added to the Board since the beginning of 2014; these members comprise 45 percent of the current Board
    • We have a Director Retirement Policy in effect to refresh the Board
  • Election – We voluntarily adopted a "majority voting" standard for election of directors: a majority of votes properly cast by our shareholders "for" a director must exceed the number of votes cast "against" that director for election; directors that are not re-elected must submit their resignation to the Board for its consideration
  • Eligibility Criteria
    • Directorships – Limits to Board Service
      • Non-CEO directors are limited to three other public company boards; no director is a member of more than two other public company boards
      • External CEO directors are limited to two other public company boards
  • Executive Sessions are part of regularly scheduled Board and committee meetings

EXECUTIVE COMPENSATION

  • Our Compensation Committee is comprised solely of independent directors
  • An Independent Compensation Consultant is retained directly by the Compensation Committee
  • Pay for performance alignment – a substantial percentage of compensation paid to an executive officer is directly tied to stock performance and the attainment of financial and performance measures
  • Annual Say-on-Pay proposal has been adopted by shareholders at over 95 percent approval rate every year since it was first on the annual meeting ballot in 2011
  • We maintain a Clawback policy
  • There is a double trigger for change-in-control benefits
  • We have a prohibition on pledging/hedging Company stock
  • We limit the perquisites available to executives
  • There are no dividend equivalent rights in RSUs or options
  • We have never re-priced stock options
  • There are no "280G tax gross ups" for new participants in the Employment Continuity Plan


ACCOUNTING

  • Our Audit committee is comprised solely of independent directors and includes two "financial experts"
  • The Board has adopted limits on the number of other audit committees an Audit committee member may serve on
  • Our General Auditor and an independent, registered public accounting firm each report directly to the Audit Committee
  • We have an Audit committee pre-approval process for audit fees for the company's independent, registered public accounting firm
  • There is a rotation in place for our lead audit partner at the company's independent, registered public accounting firm, and the last change to the lead audit partner was made in 2016
  • The ratification of our independent, registered public accounting firm has received overwhelming support from our shareholders and is presented each year for consideration at the annual meeting
  • We have an alert line maintained by an independent, third-party service for communicating anonymously and confidentially with the Board, the Audit Committee, our general auditor and our General Counsel.

OWNERSHIP / SHAREHOLDER RIGHTS

  • Common stock is the only class of stock outstanding, and each share is entitled to one vote
  • We maintain significant stock ownership requirements for senior officers and directors
  • Our officers and directors as a group beneficially own approximately 1 percent of outstanding THG common stock. This includes options exercisable within 60 days
  • Long-term investor stability – THG's three largest shareholders have been greater than 5 percent shareholders for each of the last four years
  • We do not have a Rights Plan, sometimes called a "poison pill"
  • Shareholders have a right to call a special meeting, subject to a voting threshold