Corporate Governance

Baxter is operated under the direction of the company's board of directors. Eleven independent directors and Baxter's chief executive officer (CEO) comprise the company's 12-person board. Baxter's CEO serves as the chairman of the board. The board believes this structure 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 for direct communications from interested parties.

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.

To further align the interests of directors and management with shareholders, Baxter requires directors and officers to own Baxter common stock. Baxter’s CEO is required to own common shares valued at six times his annual base salary and each of the other executive officers is required to achieve ownership of shares worth four times his or her annual base salary within five years of becoming an officer. Directors must hold Baxter common stock equal to five times their annual cash retainers within five years of commencing board service.

In selecting nominees for director, the board considers experience in business, government, education, healthcare, science, technology and other areas relevant to the company’s activities, as well as diversity of background, including diversity of gender, race, age and ethnicity or national origin. The board considers candidates recommended by shareholders, board members and management, and evaluates all candidates based on the same criteria.

Baxter's board has six committees: Audit, Compensation, Corporate Governance, Finance, Public Policy, and Science and Technology. Each committee 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 members.

Audit Committee	Focuses on integrity of Baxter's financial statements, system of internal accounting controls, internal and external audit process, and process for monitoring legal and regulatory compliance.
Compensation Committee	Exercises the authority of the board relating to employee benefit plans, and is responsible for overseeing compensation generally and for the design of Baxter's executive compensation program.
Corporate Governance Committee	Oversees director nomination process, board committee structure, annual review of corporate governance guidelines, succession planning, and evaluation of CEO and board performance.
Finance Committee	Assists board in fulfilling its responsibilities regarding Baxter's financial affairs, including overseeing significant financial proposals, capital expenditures, acquisitions and divestitures.
Public Policy Committee	Ensures Baxter policies and practices are consistent with company's responsibility to act with integrity. 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. The committee also oversees Baxter's government affairs activities, including political contributions, positions on pending legislation and political advocacy.
Science and Technology Committee	Advises board on scientific matters relating to Baxter's research and development (R&D) and technology programs and initiatives, reflecting Baxter's enhanced focus on R&D in recent years.

The board meets in executive session at each regularly scheduled meeting, and convened nine times in 2010. Board committees held a total of 35 meetings in 2010, with average attendance of 98%. View more information on the board's activities and responsibilities.

Baxter’s compensation philosophy is to recognize company and individual performance, drive strong long-term financial performance (by encouraging innovation and appropriate levels of risk-taking), and reflect the value of each officer’s position in the marketplace 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 designed to be competitive with those of other companies with which Baxter competes for talent. See Baxter’s 2011 Proxy Statement for more detail.

Demonstrating its commitment in this area, the Compensation Committee recommended to the board an executive recoupment policy, which the board adopted in February 2009. This policy allows the board to take any actions it deems appropriate regarding 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 Baxter and the officer.

Shareholders and interested parties may communicate directly with Baxter’s directors by emailing boardofdirectors@baxter.com or writing a letter to: Baxter Director c/o Corporate Secretary, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015.