2018 Guide to Effective Proxies

2.14 Board and director evaluation | 209 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES WELLS FARGO WEYERHAEUSER COMPANY ZOETIS, INC. Corporate Governance COMPREHENSIVE ANNUAL EVALUATION OF BOARD EFFECTIVENESS Eachyear,ourBoardconductsacomprehensiveself-evaluationinordertoassessitsowneffectiveness,reviewourgovernance practices,andidentifyareasforenhancement.OurBoard’sannualself-evaluationalsoisakeycomponentofitsdirector nominationprocessandsuccessionplanning. TheGovernanceandNominatingCommittee,inconsultationwithourindependentChair,reviewsanddeterminestheoverall process,scope,andcontentofourBoard’sannualself-evaluationprocess.Asprovidedinitscharter,eachofourBoard’s standingcommitteesalsoconductsaseparateself-evaluationprocessannuallywhichisledbythecommitteechair.OurBoard’s andeachcommittee’sself-evaluationincludesareviewoftheCorporateGovernanceGuidelinesanditscommitteecharter, respectively,toconsideranyproposedchanges. TheGNChascontinuedtoenhancetheformandscopeoftheBoard’sself-evaluationprocessbasedondirectorfeedback,best practices,experience,andregulatoryexpectations.Thefollowingaresomeoftheenhancementsmadetotheself-evaluation processoverthelastfewyears: • Implementeduseofone-on-onediscussions toobtaincandidfeedbackfromeachdirectorontheBoard • Evaluationoftheindividualcontributionsofdirectors totheBoardanditscommittees • Requesttargetedfeedbackonadditionaltopics ,suchasculture,lessonslearned,andbestpractices(includingthose observedbyourdirectorsthroughotherboardservice)–Seethechartbelowformoreinformationontopicscoveredin connectionwiththeBoard’s2017self-evaluation • AmendedtheCorporateGovernanceGuidelinesin2018 tospecify,amongotherthings,thattheself-evaluations include: O Considerationofbestpracticeswithrespecttocommitteerefreshmentandcommitteechairrotationsinconnectionwiththe GNC’sandtheBoard’sannualreviewofBoardmembercommitteeassignmentsandcommitteechairpositions O AnnualassessmentofthemosteffectiveformatfortheBoard’sandeachcommittee’sself-evaluationandthattheBoard maydeterminetoengageathirdpartytofacilitatetheevaluationperiodically –Asdiscussedbelow,theBoard engagedathird-partyduring2017tofacilitateitsself-evaluationandanticipatesdoingsoagainin2018for boththeBoardandeachcommittee’s2018self-evaluation Board Self-Evaluation Process – How Candid Feedback is Obtained ThefollowingchartreflectsthekeycomponentsoftheBoard’sannualself-evaluationprocess.Additionalinformationonthe topicscoveredinthescopeoftheevaluationisincludedbelow. Feedback is provided to management by the Chair andGNC Chair on areas for improvement and changes are implemented Feedback Communicated andActedUpon Executive Session Discussion of evaluation led by the Chair andGNC Chair in closed session and summary of assessment is provided to Board One-on-One Director Discussions Individual calls (typicallywith the Chair andGNC Chair) heldwith each director to obtain candid feedback Form is approved byGNC and sent by theGNC Chair to each director to request feedback on various topics Evaluation Survey WellsFargo&Company 2018ProxyStatement 13 Total of 02 pages in section CORPORATE GOVERNANCE AT WEYERHAEUSER Š finance & capital markets; Š other public company board experience; Š relevant industries, especially natural resource management; Š government, regulatory & legal; Š manufacturing and capital-intensive industry; Š real estate and land management; and Š international business. In addition to the targeted skill areas, the Governance and Corporate Responsibility Committee looks for a strong record of achievement in key knowledge areas that it believes are critical for directors to add value to a board, including: Š Strategy – formulation of corporate strategies, knowledge of key competitors and global markets; Š Leadership – skills in coaching senior executives and the ability to assist the CEO in his or her development; Š Diversity – diverse perspectives as informed by skills, experiences and backgrounds, including without limitation perspectives informed by diverse gender, racial, ethnic and national backgrounds; Š Organizational Issues – understanding of strategy implementation, change management processes, group effectiveness and organizational design; Š Relationships – understanding how to interact with governments, investors, financial analysts, and communities in which the company operates; Š Finance and Operations – understanding of finance matters, financial statements and auditing procedures, technical expertise, legal issues, information technology and marketing; and Š Ethics – the ability to identify and raise key ethical issues concerning the activities of the company and senior management as they affect the business community and society. The Governance and Corporate Responsibility Committee assesses the skill areas currently represented on the board and those skill areas represented by directors expected to retire or leave the board in the near future against the target skill areas, as well as recommendations of directors regarding skills that could improve the overall quality and ability of the board to carry out its function. The Governance and Corporate Responsibility Committee then establishes the specific target skill areas or experiences that are to be the focus of a director search, if necessary. Specific qualities or experiences could include matters such as experience in the company’s industry, financial or technological expertise, experience in situations comparable to the company’s (e.g., companies that have grown through acquisitions, or companies that have restructured their asset portfolios successfully), leadership experience, relevant geographical experience, and diversity in personal experience and worldview arising from differences of culture and circumstance. Board Self-Assessment The board is committed to assessing its own performance as a board in order to identify its strengths as well as areas in which it may improve its performance. The self-evaluation process, which is established by the Governance and Corporate Responsibility Committee, involves the completion of annual written evaluations of the board and its committees, review and discussion of the results of the evaluations by both the committee and full board, and consideration of action plans to address any issues. The evaluation also includes a review of year- over-year evaluation results to identify any trends. As part of its self-assessment process, the board annually determines the diversity of specific skills and characteristics necessary for the optimal functioning of the board in its oversight of the company over both the short- and long-term. Identifying and Evaluating Nominees for Directors The Governance and Corporate Responsibility Committee uses a variety of methods for identifying and evaluating nominees for director. In the event vacancies are anticipated, or arise, the Governance and Corporate Responsibility Committee considers various potential candidates for director, considering the skill areas and characteristics discussed above and qualifications of the individual candidate. Candidates may come to the attention of the committee through current board members, professional search firms, shareholders or other persons. The committee or a subcommittee may interview potential candidates to further assess the qualifications possessed by the candidates and their ability to serve as a director. The committee then determines the best qualified candidates based on the established criteria and recommends those candidates to the board for election at the next annual meeting of shareholders. 2018ANNUALMEETING&PROXYSTATEMENT 11 CORPORATEGOVERNANCEATZOETIS anddevelopmentandinnovationinitiatives.EachcommitteeoftheBoardprovidesperiodicreportstothefullBoard regardingtheirareasofresponsibilityandoversight.WebelievethatourBoard’sactiveroleinriskoversightsupports oureffortstomanageareasofmaterialrisktothecompany. BOARD’SROLEINCEOANDMANAGEMENTSUCCESSION OurBoardisresponsibleforplanningforsuccessiontothepositionofCEOaswellasotherseniormanagement positions.OurBoardworkstogetherwiththeCEOtoreviewannualassessmentsofseniormanagementandother personsconsideredpotentialsuccessorstocertainseniormanagementpositions. MAJORITYVOTINGSTANDARDFORDIRECTORELECTIONS OurBy-lawscontainamajorityvotingstandardforalluncontesteddirectorelections.Underthisstandard,adirectoris electedonlyifthevotescast“for”hisorherelectionexceedthevotescast“against”hisorherelection.OurCorporate GovernancePrinciplesprovidethateverynomineefordirectorisrequiredtoagreetotenderhisorherresignationifhe orshefailstoreceivetherequiredmajorityvoteinanuncontesteddirectorelection.OurCorporateGovernance Committeewillrecommend,andourBoardofDirectorswilldetermine,whetherornottoacceptsuchresignation.The Boardwillthenpubliclydiscloseitsdecision-makingprocessandthereasonsforitsdecision. Intheeventofacontestedelection,thedirectornomineeswillbeelectedbytheaffirmativevoteofapluralityofthe votescast.Underthisstandard,inacontestedelectionthedirectorsreceivingthehighestnumberofvotesinfavorof theirelectionwillbeelectedasdirectors. BOARDEVALUATION OurBoardconductsanannualself-evaluationofitselfanditscommitteestoassessitseffectivenessandtoidentify opportunitiesforimprovement. Directorsprovide written responses to theboardand committeeevaluation, assessingperformance and identifyingareas for improvement. TheCorporate Governance Committee analyzes evaluation responses and reportson the results to the full Board. TheBoardandeach Committeediscuss the evaluation responses, decideonanyaction itemsand formulate plans toaddress them. Eachyear the CorporateGovernance Committee reviews andupdates theboard andcommittee evaluation questionnaire for the followingyear. DIRECTORNOMINATIONS TheCorporateGovernanceCommitteeconsidersandrecommendstheannualslateofdirectornomineesforapproval bythefullBoard.Whenevaluatingdirectorcandidates,theCorporateGovernanceCommitteeconsiders,amongother factors:thecandidate’sintegrity;independence;leadershipandabilitytoexercisesoundjudgment;animalhealthor veterinaryexpertise;priorpubliccompanyexecutiveexperience;significantoperations,manufacturingorresearchand developmentexperience;aswellasotherareasrelevanttothecompany’sglobalbusiness.TheCorporateGovernance CommitteeisresponsibleforconsideringtheappropriatesizeandneedsoftheBoard,andmaydevelopand recommendtotheBoardadditionalcriteriaforBoardmembership.Diversityofexperience,backgroundandthought amongBoardmembersisanimportantfactorintheselectionofdirectors. TheCorporateGovernanceCommitteewillconsiderdirectorcandidatesrecommendedbyshareholders. RecommendationsshouldbesenttotheChairoftheCorporateGovernanceCommittee(inthemannerdescribed below)byNovember19,2018,tobeconsideredforthe2019annualmeeting.TheCorporateGovernanceCommittee evaluatescandidatesrecommendedbyshareholdersunderthesamecriteriaitusesforotherdirectorcandidates. Shareholdersmayalsosubmitnomineesforelectionatanannualorspecialmeetingofshareholdersbyfollowingthe proceduressetforthinourBy-laws,whicharesummarizedonpage66. 16 ZOETIS2018PROXYSTATEMENT Total of 02 pages in section