Baxter is operated under the direction of the company's board of directors. In 2011, 11 independent directors and Baxter's chief executive officer (CEO) comprised the company's 12-person board.
Baxter's CEO also serves as the chairman of the board. The board believes this provides a single vision for the company and results in an efficient and effective organizational structure.
The board also annually appoints an independent lead director, who presides at executive sessions of the board and serves as a liaison between the other independent directors and the chairman. The lead director also reviews meeting agendas, works with the chairman to facilitate timely and appropriate information flow to the board, and serves as the contact person for interested parties to communicate directly with the independent members of the board.
Baxter has long adhered to principles designed to ensure effective corporate governance. Since 1995, the board has had in place corporate governance guidelines that address the operation of the board and its committees, strategic and succession planning, and director qualifications, independence and compensation.
Baxter's board has six committees: Audit, Compensation, Corporate Governance, Finance, Public Policy, and Science and Technology. Each is made up of independent directors and has the authority to obtain advice or assistance from outside experts, as the committee deems appropriate. The roles of these committees are described in the following table. Click on each link to view more detail, including a list of current members.
|Audit Committee||Focuses on the integrity of Baxter's financial statements, system of internal accounting controls, the internal and external audit process, and the process for monitoring compliance with laws and regulations.|
|Compensation Committee||Exercises the authority of the board relating to employee benefit and equity-based plans and the compensation of the company’s officers.|
|Corporate Governance Committee||Assists and advises the board on director nominations, corporate governance, and general board organization and planning matters.|
|Finance Committee||Assists the board in fulfilling its responsibilities in connection with the company’s financial affairs, including overseeing financial proposals, capital expenditures, acquisitions, divestitures, dividend proposals, share repurchases, management of pension assets, financial policies and other financial actions.|
|Public Policy Committee||Assists the board in fulfilling its oversight responsibilities with respect to legal, regulatory and other compliance matters, and advises the board with respect to Baxter’s responsibilities as a global corporate citizen, including the range of topics discussed in this report. The committee annually reviews the company's sustainability initiatives, including with respect to the spectrum of topics discussed in this report, and reports on these activities to the full board.|
|Science and Technology Committee||Reviews and assists in the oversight of Baxter’s long-term research and development (“R&D”) strategies and objectives, R&D pipeline and significant technology platforms; evaluates emerging issues and trends in science and technology that may affect the company’s overall business strategy.|
The board meets in executive session at each regularly scheduled meeting, and convened eight times in 2011. Board committees held a total of 34 meetings in 2011. Average attendance was approximately 95% across all board and board committee meetings. View more information on the board's activities and responsibilities.
The board considers candidates for director recommended by shareholders, board members, management and an independent search firm retained by the board to help identify and evaluate potential director nominees. The board evaluates all candidates in the same manner regardless of the source of recommendation. Directors are selected on the basis of talent and experience. The selection process takes into account diversity of background, including gender, race, ethnic or geographic origin, age and experience (in fields such as business, government and education as well as healthcare, science and technology). A nominee’s ability to meet the independence criteria established by the New York Stock Exchange is also a factor in the selection process.
Baxter’s executive compensation program is designed to recognize company and individual performance, drive the long-term financial performance of the company (and in doing so, encourage innovation and appropriate levels of risk-taking), and reflect the value of each officer’s position in the market and within the company. Baxter’s executive officers are compensated in a manner that is consistent with these principles, aligns the interests of management and shareholders, and drives sustained and superior performance relative to the company’s peers. The program is also designed to be competitive with companies with which Baxter competes for executive talent in order to attract, retain and motivate high-performing executives. See Baxter’s 2012 Proxy Statement for more detail.
Demonstrating its commitment in this area, the board adopted an executive compensation recoupment policy in February 2009. This policy allows the board to take any actions it deems appropriate with respect to executive incentive compensation following any restatement of the company’s financial results that requires an amendment to previously filed results, or if an officer violates a restrictive covenant in any agreement between the company and the officer.
Stock Ownership Guidelines for Executive Officers and Board Members
To further align the interests of directors and management with shareholders, Baxter requires its executive officers and directors to own Baxter stock. Baxter’s CEO is required to achieve ownership of Baxter common stock valued at six times annual base salary. Each of the other executive officers is required to achieve ownership of Baxter common stock valued at four times annual base salary within five years of becoming an executive officer. Each director is to hold Baxter common stock equal to five times annual cash retainer after five years of board service.
Communicating with the Board of Directors
Shareholders and other interested parties may communicate directly with any of Baxter’s directors by emailing email@example.com or writing a letter to Baxter Director c/o Corporate Secretary, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015. Baxter’s Corporate Secretary will forward communications directly to the lead director, unless a different director is specified.