Leggett & Platt Governance
Director Independence Standards
The New York Stock Exchange requires listed companies to have a majority of independent directors. The NYSE listing standards require that, for a director to qualify as "independent," the Board must affirmatively determine that the director has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. To assist the Board in making determinations of director independence consistent with requirements under applicable securities laws and regulations and the New York Stock Exchange listing rules, the Board has adopted the following standards.
A director who meets all of the following categorical standards shall be presumed to be "independent":
- The director is not, and has not been within the last three years, employed by the Company and has no immediate family member who is or has been an executive officer of the Company within the last three years.
- During any 12-month period within the last three years, the director has not received, nor have his or her immediate family members received, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). Compensation received by an immediate family member for service as an employee of the Company (other than as an executive officer) need not be considered in determining independence under this test.
- The director is not a current partner or employee of a firm that is the Company's internal or external auditor. If the director was within the last three years a partner or employee of such firm, the director did not personally work on the Company's audit during that time. Furthermore, the director has no immediate family member who (i) is a current partner of such firm; (ii) is a current employee of such firm and personally works on the Company's audit; or (iii) was within the last three years a partner or employee of the firm and personally worked on the Company's audit during that time.
- Neither the director nor his or her immediate family member is or has been within the last three years, employed as an executive officer by a company where a current Company executive officer at the same time serves or served on that company's compensation committee.
- The director is not a current employee, nor is his or her immediate family member a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues. The Company will also apply this standard to contributions made by the Company to tax-exempt organizations in which the director serves as an executive officer.
"Immediate family member" includes a person's spouse, parents, children, siblings, mothers and fathers-in-law, and anyone (other than domestic employees) who shares such person's home. The term does not include individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated.
Although a director who meets all of the above standards will be presumed to be independent, the Board will consider all relevant facts and circumstances which may give rise to a material relationship with the Company and, based upon such review, may determine in its discretion that a director is not independent.
In addition, in determining the independence of any director who will serve on the Board's Compensation Committee, the Board must consider all factors specifically relevant to determining whether a director has a relationship to the Company which is material to that director's ability to be independent from management in connection with the duties of a Compensation Committee member, including, but not limited to:
- the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the Company to such director; and
- whether such director is affiliated with the Company, its subsidiaries or affiliates of its subsidiaries.