To promote the best corporate governance practices, John Wiley & Sons, Inc. adheres to the Corporate Governance Principles ("Principles"), many of which have been in effect for more than a decade. The Board of Directors (the "Board") and management believe that these Principles, which are consistent with the requirements of the Securities and Exchange Commission and the New York Stock Exchange, are in the best interests of the Company, its shareholders and other stakeholders, including employees, authors, customers and suppliers. The Board is responsible for ensuring that the Company has a management team capable of representing these interests and of achieving superior business performance.
I. PRIMARY DUTIES
The Board, which is elected annually by the shareholders, exercises oversight and has final authority and responsibility with respect to the Company's affairs, except with respect to those matters reserved to shareholders. All major decisions are considered by the Board as a whole.
The Board elects the Chief Executive Officer ("CEO") and other corporate officers, acts as an advisor to and resource for management, and monitors management's performance.
The Board plans for the succession of the CEO. The Compensation Committee annually evaluates the CEO's performance, approves the CEO's compensation, and informs the Board of its decision. The Board also oversees the succession process for certain other management positions, and the CEO reviews with the Board annually his assessment of key management incumbents and their professional growth and development plans. The Board also:
reviews the Company's business and strategic plans and actual operating performance;
reviews and approves the Company's financial objectives, investment plans and programs; and
provides oversight of internal and external audit processes and financial reporting.
II. DIRECTOR INDEPENDENCE
The Board has long held that it is in the best interests of the Company for the Board to consist of a substantial majority of independent Directors. The Board determines that a Director is independent if he or she has no material relationship, either directly or indirectly, with the Company, defined as follows:
is not and has not been within the three years immediately prior to the annual meeting at which the nominees of the Board will be voted upon employed by the Company or its subsidiaries in an executive capacity;
is not an executive officer, an employee, and does not have an immediate family member who is an executive officer or employee, of an organization that makes payments to, or receives payments from, the Company in an amount which, in any single fiscal year, exceeds 2% of such other organization's consolidated gross revenues;
is not a significant advisor or consultant to the Company (including its subsidiaries), does not have direct, sole responsibility for business between the Company and a material supplier or customer, and does not have a significant personal services contract with the Company;
is not, and has not been in the past three years, employed by or affiliated with a firm that provided independent audit services to the Company within the past five years;
is not, and has not been in the past three years, part of an interlocking directorship involving compensation committees;
is not a member of the immediate family of Peter Booth Wiley, Bradford Wiley II and Deborah E. Wiley, or management, as listed in the Company's proxy statement.
When determining the independence of a Director, the ownership of, or beneficial interest in, a significant amount of stock, by itself, is not considered a factor.
III. COMPOSITION OF THE BOARD
Under the Company's By-Laws, the Board has the authority to determine the appropriate number of directors to be elected so as to enable it to function effectively and efficiently. Currently, a ten-member Board is considered to be appropriate, though size may vary. The Governance Committee makes recommendations to the Board concerning the appropriate size of the Board, as well as selection criteria for candidates. Each candidate is selected based on background, experience, expertise, and other relevant criteria, including other public and private company boards on which the candidate serves. In addition to the individual candidate's background, experience and expertise, the manner in which each board member's qualities complement those of others and contributes to the functioning of the Board as a whole are also taken into account. The Governance Committee nominates a candidate, and the Board votes on his or her candidacy. The shareholders vote annually for the entire slate of Directors.
IV. DIRECTOR ELIGIBILITY
Directors shall limit the number of other board memberships (excluding non-profits) in order to insure adequate attention to Wiley business. Directors shall advise the Chairman of the Board and the Chairman of the Governance Committee in advance of accepting an invitation to serve on a new board. Whenever there is a substantial change in the Director's principal occupation, a Director shall tender his or her resignation and shall immediately inform the Board of any potential conflict of interest. The Governance Committee will recommend to the Board the action, if any, to be taken with respect to the resignation or the potential conflict of interest.
The Board has established a retirement age of 70 for its Directors. The Board may in its discretion nominate for election a person who has attained age 70 if it believes that under the circumstances it is in the Company's best interests.
V. BOARD AND MANAGEMENT COMMUNICATION
The Board has access to all members of management and external advisors. As appropriate, the Board may retain independent advisors.
The CEO shall establish and maintain effective communications with the Company's stakeholder groups. The Board schedules regular executive sessions at the end of each meeting. Non-management directors meet at regularly scheduled sessions without management. The Chairman of the Board presides at these sessions. In addition, the independent directors meet at least once each year in an executive session presided over by the Chairman of the Governance Committee.
Employees and other interested parties may contact the non-management directors via email at: non-managementdirectors@ wiley.com or by mail addressed to: Non-Management Directors, John Wiley & Sons, Inc., Mail Stop 7-02, 111 River Street, Hoboken, NJ 07030-5774.
VI. BOARD ORIENTATION AND EVALUATION
The Board annually conducts a self-evaluation to determine whether the Board as a whole and its individual members, including the Chairman, are performing effectively.
The Board sponsors an orientation process for new Directors, which includes background materials on governance, law, board principles, financial and business history and meetings with members of management. The Board also encourages all of its Directors to take advantage of educational programs to improve their effectiveness.
VII. DIRECTOR COMPENSATION
The Governance Committee periodically reviews and recommends to the Board its members' annual retainer, which is composed of cash and stock options or restricted grants for all non-management Directors. In determining the appropriate amount and form of director compensation, the Board regularly evaluates current trends and compensation surveys, as well as the amount of time devoted to Board and committee meetings. As a long-standing Board principle, non-management Directors receive no compensation from the Company other than for their service as Board members and reimbursement for expenses incurred in connection with attendance at meetings.
Share ownership by each Director is encouraged. To this end, each Director is expected to own, at a date no later than three years after election to the Board, shares of common stock valued at not less than three times that Director's annual cash compensation to which the Director is entitled for Board service.
VIII. BOARD PRACTICES AND PROCEDURES
The Chairman of the Board and the CEO jointly set the agenda for each Board meeting. Agenda items that fall within the scope and responsibilities of Board committees are reviewed with the chairs of the committees. Any Board member may request that an item be added to the agenda.
Board materials are provided to Board members sufficiently in advance of meetings to allow Directors to prepare for discussion at the meeting.
Various managers regularly attend portions of Board and committee meetings in order to participate in and contribute to relevant discussions.
IX. BOARD COMMITTEES
The Board has established four standing committees: Executive, Audit, Compensation, and Governance.
The Audit Committee and the Compensation Committee are composed of independent Directors only.
The Audit Committee has the sole responsibility for retention and dismissal of the
Company's independent auditors. The Governance Committee is composed of independent
directors and a member of the Wiley family, as permitted under the New York Stock Exchange's
rules applicable to "controlled companies." The Board believes that the family's
participation in the Committee will result in a collaborative process to promote the highest
standards in the recruitment of new directors and governance generally.
The Governance Committee recommends to the Board the members and chairs for each of the committees. The chair and membership assignments for all committees are reviewed regularly and rotated as appropriate. The chairs of the committees determine the frequency, length and agenda of meetings for each committee meeting. As in the case of the Board, materials are provided in advance of meetings to allow members to prepare for discussion at the meeting.
The scope and responsibilities of each committee are detailed in the committee charters, which are approved by the Board. Each committee annually reviews its charter, and the Governance Committee and the Board review all charters from time to time.
With the permission of the chairman of the committee, any Board member may attend a meeting of any committee.
X. PERIODIC REVIEW
The Governance Committee and the Board review these Principles annually.
ADOPTED BY THE BOARD OF DIRECTORS John Wiley & Sons, Inc.