Quest Diagnostics 2004 Annual Report Download - page 11

connection with such evaluation; and (v) evaluate and recommend changes to the Board and
administering the corporate governance guidelines of the Company.
The current members of the Quality, Safety & Compliance Committee are Mr. Buehler, Ms.
Haggerty, Mr. Ziegler and Dr. Wilensky. The primary responsibilities of the Quality, Safety &
Compliance Committee are to provide general oversight of the Company’s compliance with all laws
and regulations applicable to its business and the implementation of the Company’s legal
compliance program, which is administered by Quest Diagnostics’ Compliance Team and the Legal
and Compliance Department.
The current members of the Executive Committee are Mr. Flaherty, Mr. Freeman and
Dr. Stanzione. The Executive Committee has and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of Quest Diagnostics except with
respect to certain major corporate matters, such as mergers, election of directors, amendment of
Quest Diagnostics’ Restated Certificate of Incorporation and By-laws, incurring indebtedness in
excess of $20 million and such matters as are delegated to other committees of the Board of
Directors.
During 2003, there were 10 meetings of the Board of Directors, 12 meetings of the Audit and
Finance Committee, 13 meetings of the Compensation Committee, three meetings of the
Governance Committee, four meetings of the Quality, Safety & Compliance Committee and two
meetings of the Executive Committee. Several actions were taken by unanimous written consent of
the Executive Committee. During the year, each director attended at least 75% of the meetings
held by the Board of Directors and the committees of which he or she was a member except for
Dr. Mohapatra. Dr. Mohapatra attended all seven meetings of the Board of Directors to which he
was invited. He did not attend one meeting of the Board of Directors called for the purpose of
reviewing Mr. Freeman’s proposed employment agreement and two meetings of the Board of
Directors called for the purpose of reviewing Dr. Mohapatra’s proposed employment agreement.
The Company’s non-management directors meet without the presence of management
directors at all regularly scheduled meetings of the Board and at such other times as such
directors believe appropriate. Non-management directors who are not independent may participate
in these sessions, but the independent directors meet separately in executive session at least once a
year.
We encourage the Company’s directors to attend each annual meeting of stockholders. Our
policy is, where practical, to schedule the annual meeting of stockholders on a day on which we
also schedule a regular meeting of the Board of Directors. All of our directors attended the 2003
annual meeting of stockholders.
Directors’ Compensation
Directors who are also employees of the Company receive no compensation for serving as
directors of the Company. Each non-employee director receives a retainer fee in an annual sum of
$35,000 payable in quarterly installments of $8,750. In addition, each non-employee director
receives meeting fees of $1,500 per Board or Committee meeting attended at which a majority of
directors attend in person and $750 per meeting attended at which a majority of directors attend
telephonically. Each director who serves as chair of a Committee receives an additional $6,000
annual retainer fee, except the chair of the Audit and Finance Committee and (effective on
April 1, 2004) the Chair of the Governance Committee who each receive an additional $30,000
annual retainer fee. In addition, each non-employee director also participates in Quest Diagnostics’
stock option plan for non-employee directors. The option plan currently authorizes (on the date
of the annual meeting of stockholders) the grant of non-qualified stock options to acquire 10,000
shares of common stock of Quest Diagnostics to each non-employee director. The option plan, as
approved by stockholders in 1998, had authorized the issuance of 18,000 options as adjusted for
the stock split in May 2001, to each non-employee director. However, the Board of Directors
subsequently amended the option plan to reduce the number of options issued in connection with
the annual meeting of stockholders. In the event that a person is elected as a director of Quest
Diagnostics other than on the date of the annual meeting of stockholders, the Board of Directors
Quest Diagnostics Incorporated ?2004 Proxy Statement ?9