18 • Anti-hedging policies that prohibit all employees, including executive officers and directors, from engaging in derivative or hedging transactions that involve any company securities, including our common stock • Pledging policy that prohibits our directors and executive officers from pledging company equity securities as collateral for margin or other loan transactions Shareholder rights include: • All of the company’s directors are elected annually by a majority vote in uncontested director elections, and by a plurality vote in contested elections • The right to call a special meeting of shareholders • A requirement that the Chair of the Board be an independent director • A proxy access right to nominate directors • Our Certificate of Incorporation and By-Laws permit shareholders to act by written consent by the minimum number of votes that would be necessary to take such action at a meeting at which all shareholders entitled to vote were present and voting Executive compensation Strong governance and oversight of executive compensation programs is essential to our long- term success . The Board’s Human Resources Committee (HRC), which oversees the company’s performance management and incentive compensation programs and approves all compensation decisions relating to the company’s executive officers, is composed of independent directors with qualifications and experience related to human capital management and risk management . The members of the HRC make market-informed decisions based on discussions throughout the year . The full Board approves the CEO’s compensation . Over the past few years, the HRC has continued to approve changes intended to strengthen the alignment between performance and compensation, and hold executives accountable for risk management failures . The HRC and our CEO use a total variable compensation model . Under this model, each named executive is provided a single total variable compensation target level, with payout based on performance assessed using our holistic performance assessment framework that considers company performance, individual performance, and risk management . The total variable earned amount is awarded partly in cash and the majority in long-term incentives that vest over, or at the end of, a three-year period and that are subject to performance-based vesting conditions . This approach helps reinforce pay for performance and makes our compensation decisions more transparent to shareholders .