Governance

Profile Disclosure and Description

Information Location

2009 Sustainability Report Overview > Corporate Governance, p. 6

GRI Disclosure Information:

Our Board of Directors has eight members, including three members, Messrs. Krautter, Berlik and Bolton, who qualify as “independent” under NYSE and SEC rules. The Chairman of the Board of Directors is not an executive officer. Our Board of Directors is divided into three classes, each of whose members serve for a staggered three-year term. Upon the expiration of the term of a class of directors, directors in the class will be up for election for three-year terms.

Committees of the Board of Directors

We have four standing committees: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Executive Committee. 

Audit Committee
Our Audit Committee consists of Messrs. Krautter, Berlik and Bolton, with Mr. Krautter as chairperson. The Audit Committee is responsible for, among other things:

• selecting, hiring and compensating our independent registered public accounting firm, and pre-approving the audit and non-audit services to be performed by our independent registered public accounting firm;
• reviewing the independent public accounting firm’s qualifications, independence and performance;
• reviewing the performance of the internal audit services function;
• discussing the scope and results of the audit with the independent registered public accounting firm and reviewing with management and the independent registered public accounting firm our interim and year-end operating results;
• reviewing the adequacy and effectiveness of our internal control policies and procedures;
• preparing the Audit Committee report monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements;
• setting policies regarding the hiring of current and former employees of the independent registered public accounting firm;
• discussing types of information to be disclosed and provided to analysts and rating agencies;
• establishing procedures for receipt, retention and treatment of complaints received by the Company regarding accounting or internal controls and the submission of anonymous employee concerns regarding accounting;
• reviewing and discussing any reports concerning material violations submitted to it by our attorneys or outside counsel;
• discussing with our general counsel legal matters having an impact on financial statements; and reviewing the policy with respect to related party transactions and approving or rejecting proposed related party transactions.

Compensation Committee
Our Compensation Committee consists of Messrs. Berlik, Johnsson, Tigay and Verhaar, with Mr. Tigay as chairperson. The Compensation Committee is responsible for, among other things:

• reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer and making recommendations to the board with respect to the compensation of other members of management;
• recommending, when appropriate, changes to our compensation philosophy and principles;
• evaluating overall compensation and benefits programs;
• overseeing regulatory compliance with respect to compensation matters;
• recommending to our board any changes in our incentive compensation and equity-based plans that are subject to board approval and overseeing the activities of individuals and committees responsible for administering these plans;
• overseeing our management development and succession planning programs and making recommendations to the board with respect to any aspects of such programs that are subject to board approval.
  

Corporate Governance and Nominating Committee
Our Corporate Governance and Nominating Committee consists of Messrs. Bolton, Marterer and Verhaar with Mr. Verhaar as chairperson. The Corporate Governance and Nominating Committee is responsible for, among other things:

• assisting our board of directors in identifying prospective director nominees, and recommending nominees to the board of directors;
• reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our board of directors;
• reviewing our code of business conduct and ethics, recommending any appropriate changes to the code to the board and reviewing requests for waivers from the code;
• overseeing the evaluation of our board of directors and management; and
• recommending members for each board committee of our board of directors.
  

Executive Committee
Our Executive Committee consists of Messrs. Johnsson, Tigay and Verhaar, with Mr. Verhaar as chairperson. The purpose of the committee is to act, between meetings of the board, with the authority of the board on matters set forth in the committee’s charter.

4.2
Indicate whether the Chair of the highest governance body is also an executive officer.

4.3
For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

4.4
Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

Mechanisms for stakeholders and employees to provide recommendations or direction to the highest governance bodies currently include an informal open door policy at all levels of the organization, formal representation bodies through work councils and unions, and site procedures that require management members to report upwards. Arizona's senior management team meets monthly to ensure that issues that have been raised are addressed. We have identified this as an area for improvement, and are exploring options.

The various elements of compensation for named executive officers and other senior managers are interlinked and decisions made with respect to the objectives of each form of compensation change year to year, depending upon the market conditions and our business goals and other key initiatives. Compensation is linked to the organizations performance, and to individual and company goals, including financial, social and environmental goals.

Our annual performance management and employee development system, which we refer to as “Waypoint”, is designed to maintain a consistent link between our goals and individual objectives, as well as sustain our pay-for-performance culture. Each year, employees at all levels, including our named executive officers, develop formal objectives and later participate in a mid-year review with their immediate manager and receive an annual performance evaluation that takes into account their view of their own performance, their manager’s assessment and the assessment of other managers who work closely with them.

The compensation program for our executive officers is designed to attract, retain and provide base compensation and meaningful performance-based incentives for our management. We sustain a “pay for performance” culture for all our salaried employees around the world. We reward strong performance through awards that are directly linked to the achievement of clear and measurable business objectives. We also believe in encouraging ownership and entrepreneurialism among our senior management team.  

Members of our Board of Directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following elements: (i) a duty to act in good faith in the best interests of the company; (ii) a duty not to make a personal profit from opportunities that arise from the office of a director; (iii) a duty to avoid conflicts of interest; and (iv) a duty to exercise powers for the purpose for which such powers were intended. A duty also exists to: (i) act honestly and in good faith with a view to the best interests of the company; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

4.7
Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization's strategy on economic, environmental, and social topics.

4.8
Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

4.9
Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.

2009 Sustainability Report Overview > Corporate Governance, p. 6

GRI Disclosure Information:

Our senior management team meets monthly, and performance on company goals and Key Performance Indicators are one area of focus. Other topics covered in these meetings include analysis of risks and opportunities; social, economic and environmental performance, financial and EHS audit results. We also maintain a formal policy for notification of senior management officials regarding environmental, safety or heath incidents. Our global business platform facilitates a greater clarity of data and enables more robust decision making.

4.10
Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.

4.11
Explanation of whether and how the precautionary approach or principle is addressed by the organization.

See Table Below

See Table Below

At Arizona Chemical, we have numerous categories of stakeholders that we engage. The diagram below provides an overview of our stakeholders by category, and the methods we use to engage with each

See also 2009 Sustainability Report Overview > Community Relations, p. 23

4.15
Basis for identification and selection of stakeholders with whom to engage.

2009 Sustainability Report Overview > Community Relations, p. 23

GRI Disclosure Information:

At Arizona Chemical, we have numerous categories of stakeholders that we engage. We engage with those stakeholders that reach out to us, and others we choose to engage, such as government entities, our communities, and our employees.

4.16
Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

2009 Sustainability Report Overview > Community Relations, p. 23

GRI Disclosure Information:

Varied, depending upon stakeholder group. See Table above. Communication frequency with Communities, Customers, Employees, Governments, Industry Organizations, Suppliers and Investors occur at least every quarter. In many cases the contact is daily or more frequent.

Key topics that have been raised vary by stakeholder group. Our local communities are interested in odor and noise controls, traffic management, emergency response capabilities and job creation. Continuing capital investments and employee training have been used to address these concerns. Our customers have expressed interest in pricing, timely delivery of shipments, and labeling. These items are subject to negotiation and largely part of constantly evolving relationships. Labeling is handled through our Regulatory Compliance systems. Employees are interested in our economic performance, and employment topics such as job security, pay and benefits. In addition to written corporate and verbal site communications, these items are handled through our Human Resource systems. Government entities are concerned primarily with regulatory compliance, and NGOs are interested in our ability and willingness to engage in activities of interest to them. We have developed systems that are integrated throughout the organization to ensure compliance and engage with external organizations on an ad-hoc basis according to our adapting strategies.