Directors
are elected at each annual meeting of stockholders and hold office until their successors
are duly elected and qualified at the next annual meeting of stockholders. Our Bylaws
provide that the Board of Directors will consist of a minimum of five and a maximum of
eleven directors, with the number being designated by the Board of Directors. The current
number of authorized directors is ten. Each of the nominees for election to the Board of
Directors is currently serving as a director of our company and was previously elected to
his or her present term of office by our stockholders, except that Patricia
Negrón
was appointed by the Board of Directors to fill a vacancy in June of
2005. The Nominating and Corporate Governance Committee was looking to fill the vacancy
with an independent director, and our Chief Executive Officer recommended Ms.
Negrón
as a candidate.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH
OF THE TEN NOMINEES TO OUR
BOARD OF DIRECTORS.
Set
forth below are the name, age, and business experience of each of the ten nominees for
election as our directors, listed in alphabetical order.
D.
Allen Andersen
, 54, has served as a director of our company since May 2004.
Mr. Andersen currently is a Senior Adviser to the Sun Hung Kai Properties Direct
Investments Ltd., the private equity arm of the Sun Hung Kai Properties Group,
and has worked for Sun Hung Kai Properties since 2005. Mr. Andersen was a
Managing Director of PAMA Group (Hong Kong) Ltd., an Asia-based private equity
investment firm, from 1998 to 2005. From 1997 to 1998, Mr. Andersen was a
Managing Director of Asia Access Investment Company, and from 1996 to 1997 he
was Executive Vice President in Hong Kong for Richina Group, a Chase Capital
invested investment fund. From 1985 to 1995 Mr. Andersen served as Senior Vice
President and General Manager, Asia Industries Division – Hong Kong for the
Continental Grain Company, and he served as its Vice President and Chief
Financial Officer from 1983 to 1989. Prior to that, he served in various
financial positions for General Mills, Inc. between 1977 and 1983. He received
an M.B.A. degree from Harvard University.
Daniel
W. Campbell
, 51, has served as a director of our company since March 1997 and
currently serves as our Lead Independent Director. Mr. Campbell has been a Managing
General Partner of EsNet, Ltd., a privately held investment company, since 1994. From 1992
to 1994, Mr. Campbell was the Senior Vice President and Chief Financial Officer of
WordPerfect Corporation, a software company, and prior to that was a partner of Price
Waterhouse LLP. He currently serves as a director of The SCO Group, Inc., a provider of
software solutions for businesses. He received a B.S. degree from Brigham Young University
and is a Certified Public Accountant.
Jose
Ferreira
,
Jr
., 49, has served as a director of our company since May 2003.
Since 2005 he has been a partner of Goode Partners, LLC, a private equity firm focused on
the consumer industry. Between 2001 and 2005, Mr. Ferreira was the President and Chief
Executive Officer of the Woodclyffe Group, LLC, a management consulting and investment
firm founded by Mr. Ferreira. Between 2003 and 2005, Mr. Ferreira was the President and
Chief Executive Officer of Eos International, Inc., a holding company for consumer product
companies. Prior to founding the Woodclyffe Group, LLC, Mr. Ferreira was employed by Avon
Products, Inc., a direct seller of personal care and other products, for more than 20
years. During his tenure at Avon Products, he held various key positions, including Chief
Operating Officer International and New Business Development and a member of the Board of
Directors from December 1999 through January 2001. He received a B.S. degree from Central
Connecticut University and an M.B.A. degree in Finance and International Business from
Fordham University.
-5-
E.J.
“Jake” Garn
, 73, has served as a director of our company since
March 1997. Senator Garn served as a Managing Director of Summit Ventures, LLC,
a lobbying firm, from 2000 to 2004. From 1993 to 2000 he served as the Vice
Chairman of Huntsman Corporation, one of the largest privately held companies in
the United States at the time. He currently serves on the boards of directors of
Franklin Covey & Co., Inc., a provider of time management seminars and
products and Headwaters, Inc., a provider of products, technologies and services
to the energy, construction and home improvement industries. From 1974 to 1993,
Senator Garn was a member of the United States Senate and served on numerous
Senate Committees. He received a B.S. degree from the University of Utah.
Paula
F. Hawkins
, 79, has served as a director of our company since March 1997. Senator
Hawkins has been the President of Paula Hawkins & Associates, Inc., a management
consulting company, since 1988. From 1980 to 1987, Senator Hawkins was a member of the
United States Senate and served on numerous Senate Committees. Prior to her election in
the Senate, Ms. Hawkins served on the Board of the Rural Electric Administration, the
Federal Energy Administration (founding member), and as Vice Chairman of the Republican
National Committee. She also served as Chairman of the Florida Public Service Commission.
Senator Hawkins attended Utah State University and holds honorary degrees from Utah State
University, Rollins College, Nova University and Bethune Cookman College.
M.
Truman Hunt
, 47, has served as our President since January 2003 and our
Chief Executive Officer since May 2003. He has also served as a director of our
company since May 2003. Mr. Hunt joined Nu Skin International, Inc.
(“NSI”) (which we acquired in 1998) in 1994 and has served in various
positions with NSI and our company, including Vice President and General Counsel
from May 1998 to January 2003 and Executive Vice President from January 2001
until January 2003. Prior to 1994, Mr. Hunt served as President and Chief
Executive Officer of Better Living Products, Inc., an NSI affiliate involved in
the manufacture and distribution of houseware products sold through traditional
retail channels and he was a securities and business attorney in private
practice. He received a B.S. degree from Brigham Young University and a J.D.
degree from the University of Utah.
Andrew
D. Lipman
, 54, has served as a director of our company since May 1999. Since 1988, Mr.
Lipman has been a partner and head of the Telecommunications, Media and Technology Group
of the Washington, D.C. law firm of Swidler Berlin, LLP. Swidler Berlin recently merged
with Bingham McCutchen LLP, an international law firm, and Mr. Lipman continues his
position with Bingham McCutchen. From 1987 to 1997, Mr. Lipman also served as Senior Vice
President for Legal and Regulatory Affairs for MFS Communications, Co., a competitive
telecommunications provider. He also currently serves as a member of the boards of
directors of MPower Telecom, a provider of local and long distance telecommunications
services, Sutron Corporation, a provider of hydrological and meteorological monitoring
products and The Management Network Group, Inc., a telecommunications-related consulting
firm. He received a B.A. degree from the University of Rochester and a J.D. degree from
Stanford University. Mr. Lipman’s law firm provides legal services to us from time to
time.
Patricia
Negrón
, 39, has served as a director of our company since June 2005. Ms.
Negrón
is currently an independent business consultant, author and advisor
to Goode Partners, LLC. In 1999, Ms. Negrón launched the financial advisory group
at Breakaway Solutions, an internet consulting firm, which she managed until 2001. From
1996 to 1999, Ms. Negrón was a research analyst at the investment banking firm of
Adams Harkness & Hill. She began her career in 1992 as an equity analyst in the asset
management division of the United States Trust Company of Boston. She received a B.S.
degree from Armstrong Atlantic State University and a Certificate of Special Studies in
Administration and Management from Harvard University Extension School.
Blake
M. Roney
, 48, has served as Chairman of the Board since our inception in 1996. Mr.
Roney was a founder of NSI in 1984 and served as its Chief Executive Officer and President
until our acquisition
-6-
of NSI in March 1998. Since our acquisition of NSI, Mr. Roney has
retained his position as Chairman of the Board of our company. He received a B.S. degree
from Brigham Young University.
Sandra
N. Tillotson
, 49, has served as a director of our company since its inception in 1996
and as Senior Vice President since May 1998. Ms. Tillotson was a founding shareholder of
NSI and served as a Vice President of NSI from its formation until our acquisition of NSI
in 1998. She earned a B.S. degree from Brigham Young University.
We
are not aware of any family relationships among any of our directors or executive
officers. Our Certificate of Incorporation contains provisions eliminating or limiting the
personal liability of directors for violations of a director’s fiduciary duty to the
extent permitted by the Delaware General Corporation Law.
Affirmative
Determinations Regarding Director Independence
The
Board of Directors has determined each of the following directors to be an
“independent director” under the listing standards of the New York Stock
Exchange:
D. Allen Andersen
Daniel W. Campbell
E.J. “Jake”
Garn
Paula F. Hawkins
Andrew D. Lipman
Patricia Negrón
In
assessing the independence of the directors, the Board of Directors determines whether or
not any director has a material relationship with us (either directly or as a partner,
shareholder or officer of an organization that has a relationship with us). The Board of
Directors considers all relevant facts and circumstances in making independence
determinations, including the existence and scope of any commercial, industrial, banking,
consulting, legal, accounting, charitable and familial relationships.
Andrew D.
Lipman is a partner in the law firm Bingham McCutchen LLP. Mr. Lipman was
previously a partner in the law firm of Swidler Berlin, LLP until its merger
with Bingham McCutchen in 2005. Bingham McCutchen provides legal services to us
primarily in connection with contractual and regulatory issues associated with
the telecommunications and enhanced data and voice communications of our Big
Planet business. The Board has determined that Mr. Lipman’s
relationship with us is not material based on all relevant facts and
circumstances, including the following: (i) the fees we paid to Bingham
McCutchen and/or Swidler Berlin during 2005 were less than 1% of Bingham
McCutchen’s consolidated gross revenues, (ii) the fees we paid for
these services were not paid directly to Mr. Lipman, rather they were paid
to the law firm at which Mr. Lipman is a partner, (iii) substantially
all of the legal services provided to us by Bingham McCutchen or Swidler Berlin
were provided by attorneys other than Mr. Lipman, and (iv) these legal
services relate primarily to our telecommunications business activities, which
do not represent a material part of our business.
Board of Directors
Meetings and Committees
The
Board of Directors held eight meetings during the fiscal year ended December 31, 2005.
Each incumbent director attended at least 75% of the total number of meetings of the Board
of Directors and the total number of meetings of all committees of the Board of Directors
on which that director served. Although we encourage board members to attend our annual
meetings of stockholders, we do not
-7-
have a formal policy regarding director attendance at
annual stockholder meetings. Five of the then nine directors attended our 2005 annual
meeting of stockholders.
The
non-management directors meet regularly in executive sessions, as needed, without the
management directors or other members of management. Daniel W. Campbell, the Lead
Independent Director, presides at such executive sessions.
We
have standing Audit, Compensation and Nominating and Corporate Governance Committees
(collectively, the “Committees”). Each member of the Committees is independent
within the meaning of the listing standards of the New York Stock Exchange.
The
following table identifies the current membership of the Committees and states the number
of committee meetings held during 2005.
Director
Audit
Compensation
Nominating
and
Corporate
Governance
D. Allen Andersen
X
X
Daniel W. Campbell
X*
X
E.J. "Jake" Garn
X
X*
Paula F. Hawkins
X
X
Andrew D. Lipman
X
X*
Patricia Negron
X
X
Number of Meetings in 2005
15
11
8
* Committee Chair
The
Board of Directors has adopted a written charter for each of the Committees, which are
available at our website at <http://www.nuskinenterprises.com>. In addition,
stockholders may obtain a print copy of any of these charters by making a written request
to Scott Pond, Investor Relations Manager, Nu Skin Enterprises, Inc., 75 West Center
Street, Provo, Utah 84601.
The
Board of Directors has determined that Daniel W. Campbell is an audit committee
financial expert as such term is defined in Item 401(h) of Regulation S-K
promulgated by the Securities and Exchange Commission. The Audit Committee’s
responsibilities include, among other things:
•
selecting
our independent registered public accounting firm;
•
reviewing
the activities and the reports of the independent registered public accounting firm;
•
reviewing
our quarterly and annual financial statements and our significant accounting policies,
practices and procedures;
•
approving
in advance the audit and non-audit services provided by the independent registered public
accounting firm; and
•
reviewing
the adequacy of our internal controls and internal auditing methods and procedures.
-8-
The
Compensation Committee’s responsibilities include, among other things:
•
establishing
the salaries, bonuses, and other compensation to be paid to our chief executive officer
as well as approving the compensation for the other executive
officers; and
•
administering
our incentive plans.
The Nominating
and Corporate Governance Committee’s responsibilities include, among other things:
•
making
recommendations to the Board of Directors about the size and membership criteria of the
Board of Directors or any committee thereof;
•
identifying
and recommending candidates for the Board of Directors and committee membership,
including evaluating director nominations received from
stockholders;
•
determining
the compensation and benefits for services as a director;
•
developing
and recommending to the Board of Directors corporate governance principles applicable to
us; and
•
leading
the process of identifying and screening candidates for a new chief executive officer
when necessary, and evaluating the performance of the chief executive officer.
Our Director Nominations
Process
As
indicated above, the Nominating and Corporate Governance Committee of the Board of
Directors oversees the director nomination process. This committee is responsible for
identifying and evaluating candidates for membership on the Board of Directors and
recommending to the Board of Directors nominees to stand for election.
Minimum
Criteria for Members of the Board of Directors
. Each candidate to serve on the Board
of Directors must possess the highest personal and professional ethics, integrity and
values, and be committed to serving the long-term interests of our stockholders. Other
than the foregoing, there are no stated minimum criteria for director nominees, although
the Nominating and Corporate Governance Committee may consider such other factors as it
may deem appropriate, which may include, without limitation, professional experience,
diversity of backgrounds, skills and experience at policy-making levels in business,
government, financial, and in other areas relevant to our global operations, experience
and history with our company, and stock ownership.
Process
for Identifying, Evaluating and Recommending Candidates
. The Nominating and Corporate
Governance Committee will consider director candidates recommended by stockholders if
properly submitted to the committee. Stockholders wishing to recommend candidates should
do so in writing to the Nominating and Corporate Governance Committee, c/o D. Matthew
Dorny, Corporate Secretary, Nu Skin Enterprises, Inc., 75 West Center Street, Provo, Utah
84601. Recommendations must include the proposed candidate’s name, detailed
biographical data, work history, qualifications and corporate and charitable affiliations.
The committee may also consider candidates proposed by current directors, management,
employees and others. The committee evaluates and screens all potential candidates in the
same manner regardless of the source of recommendation. All such candidates who, after
evaluation, are then recommended by the Nominating and Corporate Governance Committee and
-9-
approved by the Board of Directors, will be included in our recommended slate of director
nominees in our proxy statement.
Procedures
for Stockholders to Nominate Director Candidates at our Annual Meetings
. Stockholders
of record may also nominate director candidates at our annual meetings of stockholders by
following the procedures set forth in our Bylaws. Please refer to the section below
entitled “Stockholder Proposals for 2007 Annual Meeting” for further
information.
Additional Corporate
Governance Information
We
have also adopted the following:
Codes
of Ethics and Business Conduct
. These codes apply to all of our employees, officers
and directors, including our subsidiaries.
Code
of Ethics for Financial Professionals
. This code applies to our Chief Executive
Officer, Chief Financial Officer and other financial professionals we employ. As noted
below, this code is available on our website. In addition, any substantive amendments we
make to this code, and any material waivers we grant (including implicit waivers) to our
principal executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions will be disclosed on our website.
Corporate
Governance Guidelines
. These guidelines govern our company and our Board of Directors
on matters of corporate governance, including responsibilities, committees of the Board of
Directors and their charters, director independence, director qualifications, director
compensation and evaluations, director orientation and education, director access to
management, director access to outside financial, business and legal advisors and
management development and succession planning.
Stock
Ownership Guidelines
. In January 2005, we established equity ownership guidelines
applicable to our directors and executive officers. These guidelines provide that
executive officers and directors must retain 50% of the net shares (after payment of the
exercise price and related taxes) with respect to any equity award unless the individual
holds a number of shares equal to the recommended levels set forth in the guidelines as
such recommended levels are phased in over a five-year period. Outstanding options are not
counted in determining whether a director or officer holds shares equal to or greater than
the recommended level. At the end of the five-year phase-in period, the recommended
ownership levels are set at 100,000 shares for our Chief Executive Officer, 5,000 shares
for directors, 20,000 shares for members of our executive management committee, and 10,000
shares for our other executive officers.
Each
of the above is available on our website at <http://www.nuskinenterprises.com>. In
addition, stockholders may obtain a print copy of any of the above, free of charge, by
making a written request to Scott Pond, Investor Relations Manager, Nu Skin Enterprises,
Inc., 75 West Center Street, Provo, Utah 84601.
Communications with
Directors
Stockholders
or other interested parties wishing to communicate with the Board of Directors, the
non-management directors as a group, or any individual director may do so in writing by
addressing the correspondence to that individual or group, c/o D. Matthew Dorny,
Corporate Secretary, Nu Skin Enterprises, Inc., 75 West Center Street, Provo, Utah 84601.
All such communications will be initially received and processed by the office of our
Chief Legal Officer. Accounting, audit, internal accounting
-10-
controls and other financial
matters will be referred to our Audit Committee chairperson. Other matters will be
referred to the Board of Directors, the non-management directors, or individual directors
as appropriate.
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