N ORTH AMERICAN ELECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, 116-390 Village Boulevard, Princeton, New Jersey 08540-5731 Corporate Governance and Human Resources Committee May 1, 2006 Washington, D.C. Minutes Chairman John Anderson called a duly noticed meeting of the Corporate Governance and Human Resources Committee to order on May 1, 2006 at 12:05 p.m. A copy of the meeting agenda is attached as Exhibit A. Present at the meeting were: Committee members: John Anderson, chairman; Paul Barber; Tom Berry; Sharon Nelson; and Ken Peterson. Others: Richard Drouin; Rick Sergel; Joe Conner; David Cook; Fred Gorbet; Julie Morgan; and Karen Spolar. Antitrust Compliance Guidelines Chairman Anderson acknowledged the Antitrust Compliance Guidelines. February 6, 2006 Meeting Minutes The committee approved the February 6, 2006 Corporate Governance and Human Resources Committee meeting minutes as submitted (Exhibit B). Report by Human Resources Manager Julie Morgan, manager of human resources, gave a report on new hires, performance appraisal policy and procedures, job flexibility, and revisions to the employee handbook. The chairman asked the committee to give Julie input on these issues. 2nd Quarter Mandate Items Chairman Anderson reviewed the committee s 2 nd quarter mandate items (Exhibit C). Mandate item 6(v) (review and approve, as appropriate, an employee manual, including an employee code of conduct) was previously discussed by Julie Morgan in her presentation. She will make the appropriate changes to the handbook and bring it to the committee for approval. Joe Conner presented a proposal and justification for providing dental insurance to employees (mandate item 6(q) review all significant benefit plans, including retirement plans, and make appropriate recommendations). On motion by Ken Peterson, the committee approved providing A New Jersey Nonprofit Corporation Phone 609-452-8060 Fax 609-452-9550 URL www.nerc.com
the employees dental insurance, with the understanding that the employees would pay a portion of the cost, as done with health care benefits. The committee also examined the compensation plan for the members of the board (mandate item 6(e)). Chairman Anderson directed David Cook and Joe Conner to get comparable board compensation numbers from other nonprofit organizations and report their findings to the committee as soon as possible. The committee reviewed the corporate policies and procedures and determined there were no changes to be made at this time. Other Business The chairman informed the committee that Mercadien, P.C. raised questions regarding senior executive compensation (having formal employment agreements, policies regarding loans, and termination benefits). The auditors suggested that there be more formality with respect to executive pay. Chairman Anderson indicated that the issues would be taken up in the Finance and Audit Committee meeting. Executive Session Chairman Anderson called an executive session at 12:40 p.m. The committee approved a senior management compensation matter and reviewed travel allowance policies. They also discussed the severance program that the committee previously approved and confirmed that it was appropriate and the CEO retains the discretion to apply it in individual cases. Adjournment There being no further business Chairman Anderson adjourned the meeting at 1:10 p.m. Submitted by, David N. Cook Secretary Corporate Governance and Human Resources Committee 2 Minutes May 1, 2006
Exhibit A N ORTH AMERICAN ELECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, 116-390 Village Boulevard, Princeton, New Jersey 08540-5731 Corporate Governance and Human Resources Committee May 1, 2006 12 1 p.m. Hilton Crystal City at Ronald Reagan National Airport 2399 Jefferson Davis Highway Arlington, Virginia 703-418-6800 Agenda Introductions and Announcements John Q. Anderson, Chairman Antitrust Compliance Guidelines 1. Minutes from February 6, 2006 Meeting Approve 2. Items From the CGHRC Annual Calendar for the Second Quarter a. Review and approve, as appropriate, an employee manual, including an employee code of conduct. (See item 3.) b. Review all significant benefit plans, including retirement plans, and make appropriate recommendations. i. Dental insurance for employees Joe Conner will present a proposal and justification for providing dental insurance to employees. (attached) ii. Commuting expenses Rick Sergel will present the issue to be resolved. c. Review compensation plan for members of the board and make recommendations, as appropriate. i. Current compensation plan. (attached) d. Review and approve a corporate policies and procedures manual. New and revised corporate policies are posted to the Corporate Policies page of the NERC website [http://www.nerc.com/~filez/corporatepolicies.html] at the time they are adopted. 3. Report by Human Resources Manager 4. Other Business 5. Executive Session A New Jersey Nonprofit Corporation Phone 609-452-8060 Fax 609-452-9550 URL www.nerc.com
Exhibit B N ORTH A MERICAN ELECTRIC RELIABILITY COUNCIL Princeton Forrestal Village, 116-390 Village Boulevard, Princeton, New Jersey 08540-5731 Corporate Governance and Human Resources Committee Meeting February 6, 2006 Scottsdale, Arizona Minutes Chairman John Q. Anderson called a duly noticed meeting of the Corporate Governance and Human Resources Committee to order on February 6, 2006 at 8 a.m. A copy of the meeting agenda is attached as Exhibit A. Present at the meeting were: Committee members: John Q. Anderson, chairman; Paul Barber; Thomas Berry; and Sharon Nelson. Others: Richard Drouin; James Goodrich; Frederick Gorbet; Donald Hodel; Kenneth Peterson; Bruce Scherr; Rick Sergel; Joseph Conner; David Cook; and Julie Morgan. Antitrust Compliance Guidelines Chairman Anderson acknowledged the Antitrust Compliance Guidelines. Executive Session The committee convened an executive session to review proposed organizational structure changes. Regular Session The committee reconvened in regular session at 9:15 a.m. with the following present: John Q. Anderson, chairman; Paul Barber; Thomas Berry; Richard Drouin; Frederick Gorbet; Kenneth Peterson; Rick Sergel; Joseph Conner; David Cook; and Julie Morgan. October 31, 2005 Meeting Minutes The committee approved the October 31, 2005 Corporate Governance and Human Resources Committee meeting minutes as submitted (Exhibit B). A New Jersey Nonprofit Corporation Phone 609-452-8060 Fax 609-452-9550 URL www.nerc.com
Committee Memberships for 2006 On motion by Sharon Nelson, the committee approved recommending to the board the following 2006 board committee memberships: Finance and Audit Bruce Scherr, chairman; John Q. Anderson; James Goodrich; Frederick Gorbet; Donald Hodel; and Sharon Nelson. William Reinke will represent the Regional Managers and Joseph Conner will be the staff coordinator. Compliance James Goodrich, chairman; Paul Barber; Thomas Berry; Frederick Gorbet; Kenneth Peterson; and Bruce Scherr. David Hilt will be the staff coordinator. Corporate Governance and Human Resources John Q. Anderson, chairman; Paul Barber; Thomas Berry; Donald Hodel; Sharon Nelson; and Kenneth Peterson. David Cook will be the staff coordinator. Nominating Donald Hodel, chairman; Paul Barber; James Goodrich; Frederick Gorbet; Kenneth Peterson; Bruce Scherr; and three Stakeholder Committee representatives to be determined. David Cook will be the staff coordinator. Committee Mandates Chairman Anderson had asked the committee to review the board committee mandates prior to the meeting to determine if any changes were required. The committee agreed that the current mandates were satisfactory. Board Self-assessment The committee expressed its satisfaction with the results of the board and committee self-assessments. Trustee Conflicts of Interest David Cook reported that he reviewed the trustees conflicts of interest questionnaires and that no conflicts were identified. Revision to Employee Manual Joseph Conner reported that the proposed changes to the NERC Employee Manual clarified language related to time off due to illness. The committee approved that section as revised (Exhibit C). Executive Session At 9:25 a.m., Chairman Anderson convened an executive session of the committee to discuss senior management review and compensation; CEO review and compensation; and the survey of board members regarding the board chairman s performance. Chairman Anderson adjourned the meeting at 10 a.m. David N. Cook Secretary Corporate Governance and Human Resources Committee Meeting Draft Minutes February 6, 2006 2
Exhibit C ANNUAL CALENDAR OF ACTIVITIES FOR CORPORATE GOVERNANCE AND HUMAN RESOURCES COMMITTEE 2nd Quarter Review and approve, as appropriate, an employee manual, including an employee code of conduct. Review all significant benefit plans, including retirement plans, and make appropriate recommendations. Review compensation plan for members of the Board and make recommendations, as appropriate. Review and approve a corporate policies and procedures manual. COMMITTEE MEETING Adopt recommendations on benefits plans and board compensation BOARD OF TRUSTEES MEETING