Learn about the fidicuiary duties of the Blue KC Board of Directors.
The Powers and Fidicuiary Duties of the Board of Directors
The Board of Directors of the Blue Cross and Blue Shield of Kansas City (Blue KC) has at least five primary functions. It shall:
- Select the CEO and determine his or her compensation, and oversee the selection of other management and determination of its compensation;
- Review and approve business objectives, major strategies and policies, and plans for Blue KC;
- Provide advice and counsel to top management;
- Select and recommend candidates for the Board of Directors as necessary and evaluate Board processes and performance; and
- Review the adequacy of internal controls to comply with all applicable laws and regulations and monitor indicia of compliance therewith.
1. The Board will perform its duties with the knowledge that its conduct serves as the exemplar for the ethical tone of Blue KC and its officers, employees and agents.
2. The Board, when making a business decision, must act in accordance with its fiduciary obligations and on an informed basis. Accordingly, members of the Board will not use their corporate positions for personal profit, gain or other personal advantage, and upon the request of the Board Chair after full disclosure of the circumstances giving rise to the potential conflict, must recuse themselves from voting or participating in deliberations on matters in which a potential conflict of interest may arise. In order to effect full disclosure of all potential or actual conflicts of interest, members of the Board shall complete on a yearly basis a conflict of interest questionnaire. All questions must be answered fully and accurately, and members of the Board must certify as to the accuracy of the information given.
3. The Board recognizes and accepts its fiduciary obligation to fully inform itself of all relevant facts and information on a particular matter prior to making a decision as a Board. The Board is entitled to rely on information, opinions, reports or statements, and other data, prepared or presented by legal counsel, officers or employees of Blue KC, public accountants, or other persons who are reasonably believed to be competent to prepare or present those matters to the Board.
4. The Board will review with management and specifically approve, on a periodic basis, business goals, objectives, and strategies for Blue KC and regularly monitor the business performance of the plan against those goals, strategies and objectives.
5. The Board will create committees for the purposes of performing oversight functions. Each committee will report its recommendations, activities, and work product to the full Board on a regular and continuing basis. The committees will include: (i) an audit committee (the "Audit Committee") to implement and support the oversight function of the Board by reviewing the plan's process for producing financial data, its internal controls, and the independence of Blue KC’s external auditor and to implement and support the oversight function of the Board by monitoring indicia of Blue KC 's compliance with all applicable laws and regulations as well as the plan’s standards of business conduct and ethics business conduct and ethics ("Compliance Program"); (ii) a committee responsible for recommending candidates for all directorships and Board appointed officer positions (the "Governance Committee"); and (iii) a committee responsible for implementing and supporting the Board in its review of executive compensation packages (the "Personnel Committee"). The Audit Committee functions shall be performed exclusively by independent directors. The Audit, Governance, and Personnel Committee functions shall be performed exclusively by independent directors.
6. The Board, through recommendations of the committee with responsibility for compensation matters, will develop and institute policies to review senior officer compensation packages and will set compensation packages at levels sufficient to attract and retain valuable officers, taking into account competitive market conditions.
7. The Board will develop and institute policies for the implementation of management controls and the duties, obligations and management functions of the officers which are consistent with the authority contained in the Blue KC bylaws, and which are in accordance with the business conduct and ethical standards of these policies.
8. The Board will review recommendations from the Audit Committee and will ensure that the Audit Committee retains authority to engage an independent auditor for Blue KC.
9. The Board, acting through the Audit Committee, will monitor adherence to the Blue KC Compliance Program by:
a. Approving a Code of Business Conduct for distribution to employees, officers and directors which explains the plan's expectations regarding the business conduct of Blue KC personnel and the contents and goals of the business conduct standards contained in the Code of Business Conduct;
b. Ensuring that the Compliance Program includes ongoing training programs intended to provide each director, officer, and employee of the plan with (i) an understanding of the content and goals of the Code of Business Conduct; (ii) an awareness of the procedures for reporting violations; (iii) an understanding of applicable laws, rules and regulations; and (iv) an understanding the importance of prompt disclosure so that potential violations may be promptly reported to appropriate authorities;
c. Making recommendations where appropriate to: (i) provide policies and procedures for fair and expeditious investigation of any reported compliance violation or of any reported violation of federal/state laws, rules or regulations; (ii) establish procedures for receiving, hearing, and resolving violations; (iii) establish procedures to receive suggestions from directors, officers, and employees for updating the Code of Business Conduct and the Compliance Program to ensure that they are efficient and effective; and
d. Working with Blue KC 's auditors and legal counsel to assist management in ensuring that the plan complies with these policies and the Compliance Program.