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- Dr. Erik Brynjolfsson joined the CSC Board of Directors as a new member on December 12, 2010. Dr. Brynjolfsson is internationally recognized as a thought leader in technology strategy and productivity.
- With the support of our stockholders, we amended our Articles of Incorporation to require majority voting for the election of the Board of Directors in uncontested elections.
- In connection with the adoption of majority voting, we amended our Corporate Governance Guidelines to call for resignations of directors who fail to receive a majority vote at our annual meeting.
- We redefined our process for assessing the performance of the chief executive officer and other named executive officers.
Overview
At CSC, we are committed to maintaining the highest standards of accountability, independence and transparency, which we believe are essential for sustained success and long-term shareholder value. In light of this goal, our Board of Directors oversees, counsels and directs management in the long-term interests of the company and our stockholders, with responsibilities including:
- Oversight of the management of our business and the assessment of our business risks
- Oversight of the processes for maintaining the integrity of our financial statements and other public disclosures, and the effectiveness of our compliance and ethics program
- Review and approval of our major financial objectives, strategic and operating plans, and other significant actions
The Board has long adhered to governance principles designed to ensure excellence in the execution of its duties, and it regularly reviews the company’s governance policies and practices. These principles are outlined in CSC’s Corporate Governance Guidelines (the “Guidelines”), which, in conjunction with our Amended and Restated Articles of Incorporation, Amended and Restated Bylaws, Board committee charters, and related policies, form the framework for the effective governance of CSC.
Board of Directors
The Board is composed of nine independent directors, who, in conjunction with Chairman, President and Chief Executive Officer (CEO) Mike Laphen, discharge the Board’s responsibilities through regularly scheduled meetings as well as through three standing committees:
- The Audit Committee oversees the company’s accounting and financial reporting processes and the related internal control framework, and more generally, a broader portfolio view of risk across the entire enterprise.
- The Compensation Committee reviews and approves the corporate goals and objectives relevant to the CEO’s compensation and, together with the independent directors, determines the CEO’s compensation. The committee also approves compensation of all other senior executives.
- The Nominating/Corporate Governance Committee assists the Board in identifying and evaluating candidates for election or re-election as directors and in shaping the corporate governance of CSC.
Each of our directors has a strong reputation and experience in areas relevant to the strategy and operations of CSC’s businesses, as well as expertise in core management disciplines. These include strategic and financial planning, public company financial reporting, corporate governance, risk management, thought leadership, executive management and leadership development.
Our CR Governing Board, chaired by our vice president of CR and comprising CSC’s senior-most executives, meets quarterly to lead our CR program, including defining our strategic direction and progress. Our CR Council, chaired by the program’s director and comprising representatives from each operating unit, meets monthly to execute our strategy and report on CSC-wide stakeholder engagement and CR progress. This year we added two new committees to the CR Governing Board: one focusing on environmental sustainability and one on our community and philanthropic efforts.
Board Leadership
The Board’s leadership structure consists of a chairman and CEO, a lead independent director (the “lead director”), and strong committee chairs. The Board has determined that combining the offices of CEO and chairman and designating a lead director with broad authority and responsibility create the most effective leadership model for the company. Our lead director is responsible for presiding over executive sessions; acting as a liaison between the independent directors and the chairman; being available for consultation and communication with stockholders; and calling meetings of the independent directors (executive sessions), as appropriate.
CSC’s governance processes include executive sessions of the independent directors adjacent to board meetings, annual evaluations by the independent directors of the chairman and CEO’s performance, succession planning, annual Board and committee self-assessments and the various governance processes contained in the Guidelines and the Board committee charters.
- We commit to client satisfaction as our most important business objective.
- We recognize that CSC’s accomplishments are the work of the people who make up CSC. We will encourage initiative, recognize individual contribution, treat each person with respect and fairness and afford ample opportunity for professional growth.
- We require the highest standards of professionalism and technical competence from our people. • We will maintain the highest standards of ethics and business conduct and operate at all times within the laws of all countries in which we do business. • We will proactively pursue new business opportunities, and commit to success in each undertaking.
They guide our actions as individuals
and as one global team:
- We believe in the power of collaboration because we know that working together yields inspiring results.
- We respect diverse perspectives because varied viewpoints foster innovation and growth.
- We encourage unconventional thinking because we know our creativity and ingenuity can help us translate ambitions into reality.
- We stand on our integrity because we acknowledge that trust and respect enable us to go beyond expectations.
- We embrace responsibility because we have a profound sense of commitment to our clients, colleagues and the world around us.
- We commit to client partnerships because we are passionate about building strong connections that fuel our shared success.
- We take pride in our people because CSC employees are the core of our success.
Oversight of Risk Management
With specific regard to risk oversight, CSC management and our directors together provide assurance and independent reassurance that our risks are understood and our mitigations are on target. Management assurances are delivered periodically to the Audit Committee, which independently oversees the adequacy of our risk management framework, personnel and assessments.
Management
For several years we have been maturing our process for enterprise risk management (ERM). We have adopted a uniform framework with executive ownership for risk areas, and a management committee (ERM Committee) with responsibility to direct program activities. The framework organizes CSC’s risks into four discrete domains that together form an enterprise, or portfolio, view of risk. These risk domains include strategy, operations, compliance and ethics, and reporting.
The ERM Committee, which is chaired by our CEO and comprises all who report directly to him, is required by its charter to periodically direct risk identification, assessment and reporting activity in each risk domain. Risks are identified and assessed at a gross level before any attempt is made by management to mitigate them.
These gross assessments yield risk profiles that consider both financial and nonfinancial impacts of exposure. Gross assessments are wide ranging, and may include an assessment of how a risk presents to the company globally, within a particular region or within specific programs or facilities. With gross assessments in hand, management next assesses the effectiveness of its efforts to control and mitigate risk. Effective mitigation will reduce residual exposure; ineffective mitigation will not. The ERM Committee closely tracks and reports material net residual exposure.
Typically the ERM Committee directs enhanced or new mitigation strategies for residual exposures that it deems unacceptably high. When residual exposures are assessed as low, typically the committee will seek independent reassurance — from internal audit, contract control, and quality and other assurance organizations — that management’s assessment can be relied upon.
Board and Board Committees
The ERM Committee is required to report periodically to the Board’s Audit Committee and provide (1) an assessment of the details of priority risks across the CSC portfolio and (2) the ERM Committee’s direction regarding specific mitigation actions, whether planned or under way.
The Audit Committee reports ERM updates to the full Board of Directors, which, in its oversight role, delegates specific risk management responsibilities to its committees:
- The Audit Committee oversees risks related to accounting, financial reporting processes and internal controls of the company. It also reviews the company’s policies and practices with respect to risk assessment and risk management.
- The Compensation Committee monitors the risks associated with succession planning and leadership development, as well as compensation plans, including evaluating the effect of the company’s compensation plans on decision making.
- The Nominating/Corporate Governance Committee monitors the risks related to the company’s governance structure and process.
Compensation
We are committed to attracting and retaining highly qualified executives, motivating these executives to achieve our business objectives, rewarding strong performance and aligning the interests of our executives with those of our stockholders.
During 2010 – 2011, CSC management reviewed its executive and nonexecutive (non-sales) compensation programs and also undertook a comprehensive global review of its sales force compensation programs. The Board determined that none of the company’s compensation programs encourage or create unnecessary risk taking, and that none are reasonably likely to have a material adverse effect on the company.
Global Records and Information Management
The CSC Global Records and Information Management Program is foundational to sound corporate governance. As a global leader in IT services, we require a sustainable approach to the governance of records and information management that keeps pace with our business needs, the clients we serve and our corporate responsibility principles. As proliferating technologies, rapid growth and increasing regulatory mandates create a clear need for a consistent approach across our worldwide locations, we are taking steps to fully globalize our Records and Information Management Program.
Additional Information
You can find more information about our governance policies at csc.com under Corporate Governance, including full text of the Guidelines; the charters for each Board committee; the Code of Ethics and Standards of Conduct; the Code of Ethics for the CEO, CFO and CAO; the Equity Grant Policy; the Related Party Transactions Policy; and the Executive Compensation Clawback Policy.
These materials are also available in print, without charge. To request a copy, call +1.800.542.3070 or write to:
Investor Relations, CSC 3170 Fairview Park Drive Falls Church, Virginia 22042
Effective Stewardship
CSC’s continuing focus on governance starts with our Board of Directors and extends throughout our EMPLOYEES-strong global team. We each invest in ensuring disciplined, forward-thinking stewardship, for the benefit of our shareholders, clients and company.
