In 2019, our Board of Directors updated our Principles of Corporate Governance and Code of Ethics for Directors, and it annually reviews and updates its standing committee charters. These documents guide Board composition, procedures, responsibilities, and evidence a commitment to acting in the best interest of our shareholders. The Board reviews governance policies periodically and amends them as necessary to achieve our objectives.
Regular outreach and conversations with our stockholders are a core component of strong corporate governance here. These engagements generate feedback about our stockholders’ perception and understanding of our markets, business, and industry. They also influence our communications, including how we publish key elements of our corporate strategy and long-term goals and articulate our capital allocation priorities.
We have separate Executive Chairman and CEO positions. The Board of Directors comprises ten members, including eight independent directors, and it regularly meets without management present to further its independence. All standing Board committees are formed solely by independent directors. While updating our Principles of Corporate Governance in 2020, we implemented a new, stricter limit on the number of other public company boards on which our employee and non-employee directors can serve. Through our commitment to Board refreshment and diversity, we also reduced the average tenure of non-employee directors from 12.1 to 9.7 years from end of fiscal 2016 to end of fiscal 2020.
The ‘proxy access’ provision in our bylaws allows eligible shareholders to nominate director candidates for inclusion in our proxy statement and proxy card. The Board believes this provision reflects a balanced approach to proxy access that provides a meaningful proxy access right, mitigates the risk of abuse, and protects the interests of all of our shareholders. In the case of an uncontested election, our bylaws and Principles of Corporate Governance require that each director be elected by a majority of the votes cast by holders of shares present in person or represented by proxy at the Annual Meeting.
See our 2020 Proxy Statement to read more about our Board composition and structure.
Our Stock Ownership Guidelines are designed to align our Board of Directors’ and executive officers’ interests with those of our shareholders, and to promote our commitment to sound corporate governance. In 2018, we substantially increased the minimum ownership requirements for directors and officers, including 5x base salary for the CEO and 5x cash retainer for non-employee directors. We added a holding requirement for our executives until the relevant minimum ownership level is achieved.
Diverse backgrounds, perspectives, and relationships improve Board decision making and effectiveness. As stated in our Principles of Corporate Governance, our directors should have complementary and diverse skill sets, experiences, and backgrounds, including diversity with respect to gender, ethnicity, race, nationality, and age. The Governance and Nominations Committee annually reviews our Board composition, diversity, structure, and other characteristics of Board effectiveness and reports its findings to the Board.
The Board and its committees have oversight responsibility for our long-term strategic plan and annual operating plan, and our Governance and Nominations Committee oversees our approach to managing Environmental, Social, and Governance (ESG) matters. Recognizing that employee engagement, development, and retention are critical elements of our strategy and success, the Board annually reviews our People Strategy and people management practices, including compensation and benefits, employee wellbeing initiatives, training and development, diversity and inclusion, employee engagement, and corporate culture. Read more in our Culture, and Diversity, Inclusion, and Belonging sections.
Risk management
Risk management is an important part of establishing, updating, and executing our business strategy. The Board annually reviews our enterprise risk management program, and each of its standing committees oversees the management of risks under its purview. Members of our senior management team are responsible for providing regular reports on strategic, operational, financial, legal, compliance, and regulatory risks as well as on cyber- and information security. Read more about our Board committee charters and our 2020 Proxy Statement to learn about our Board oversight of risk and each committee’s responsibilities.
We are taking extensive measures to ensure the safety and wellbeing of our employees, customers, and partners around the world during the COVID-19 pandemic. Throughout 2020, our Board of Directors has actively overseen this response and our management of the unpredictable challenges brought by this global crisis. Our directors regularly receive updates about our employees’ health and wellbeing, community and charitable initiatives, operations and business continuity, and financial position. Read more about how we are supporting our employees and communities in COVID-19 Response.
The three committees of our Board of Directors include:
Compensation Committee—Has authority and oversight relating to the development of Ciena’s overall compensation strategy and compensation programs. The committee engages with the following responsibilities, among others:
Governance and Nominations Committee—Reviews, develops and makes recommendations regarding various governance matters related to the Board of Directors, including its size, composition, standing committees, and practices. The committee engages with the following responsibilities, among others:
Audit Committee—Appoints and establishes the compensation for Ciena’s independent registered public accounting firm. The committee engages with the following responsibilities, among others:
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