1.2 Governance and Societal Responsibilities 1.2a Organizational Governance 1.2a(1) Governance System The Company is privately held and structured as a “C” corporation; the CEO is the sole director. The ET (CEO, CFO, COO, and VRO) serve as the Company Board. In lieu of an annual Board meeting, the ET signs an annual Corporate Resolution, which identifies major decisions and expenditures agreed upon by voting shareholders (ET). Given IPM’s corporate legal structure, selection and disclosure policies for board members are not relevant. The ET also approves the business strategy and meets on a weekly basis as part of a formal business review. While privately held companies are not subject to the regulations protecting investors in publicly traded firms, IPM holds the protection of our family members as a high priority. Therefore, to more formally identify the ET’s responsibilities relative to governance, the VRO outlined a Corporate Governance document, which was adopted in 2016. This document specifies corporate responsibilities by role/group, none of which are legally required, and some of which are not yet applicable, but their very existence keeps the ET focused on high standards of care. The Governance document was established with an annual review requirement, and the first review occurred at an ET meeting in the fourth quarter of 2017. All aspects of corporate governance were reviewed, and the first cycle of improvement occurred. Changes included clarifications of responsibilities and the addition of a biennial review of corporate financial statements. It was also determined that the annual examination of Corporate Governance would occur as part of the BPP cycle. All members of the ET signed off on the findings. Senior leadership is held accountable to the rest of the Company through quarterly Staff meetings, which include communication of all goals and Initiatives—and their respective justifications—as well as the progress toward achieving them. In a display of further transparency, the Company’s financial results are also shared. In the months when there is no Staff meeting, financial results and other key company highlights are disseminated via The Pulse . Company-wide feedback on the ET’s actions and decisions is received through the AP survey and independent external sources such as the Great Place to Work (GPTW) survey. The ET benefits from this feedback by reviewing ratings in such critical areas as credibility, communication, and ethical behavior. To amplify the importance management places on employee feedback, the LRG of Affinity will be tracked via scores on specific questions of the GPTW survey. Due to our privately held status, IPM is not required to submit to external audits. Nonetheless, in conjunction with our Corporate Governance review, and due to the Company’s increasing size and complexity, the criticality of ownership succession planning was highlighted. Following a formal valuation of IPM as part of considering an employee stock ownership plan (ESOP), the ET decided in 2017 to authorize a formal review of our financial statements by an external
accounting firm. The biennial reviews will commence in 2019; previously, our accounting practices have been confirmed compliant with Regulatory requirements by two IRS audits. Internal audits of financial matters are conducted, starting with clear delineation of duties and appropriate reconciliation structures. Various other processes, such as our performance management system, are audited as well. Continual vigilance of market conditions, the business development pipeline, resource capabilities and capacity, quality, service performance, and cash position enable IPM to be proactive. The Company utilizes a fiscally conservative approach by maintaining high cash reserves. This has allowed organic growth without incurring debt while protecting the interests of IPM’s stakeholders, comprised of both our ownership and employees. The Company has an ownership succession plan to ensure Company continuity, should the CEO or other ET members become incapacitated or pass away. The ownership succession plan is directed and funded through a Shareholder Agreement, and our employees are aware of its existence. 1.2a(2) Performance Evaluation Consistent with IPM’s culture, senior leadership participates in and benefits from the PS&DP process. As part of their PS&DP, senior leaders (and all of management) receive 360º feedback, incorporating feedback from their direct reports and other members of management each year, which influences the overall rating. Along with market data, tenure, and contributions to the Company, these performance evaluations are also used to determine compensation. Bonus criteria for senior leaders are currently undergoing examination, a responsibility highlighted in the Corporate Governance review. As with all employees, Character Elements, aligned with but more measurable than FV , are also discussed semi-annually as part of the scorecard/PS&DP process. A cycle of improvement occurred in 2017 with the rollout of distinct Performance Criteria for all senior leaders, along with a unique set of leadership traits that fall under the leadership competencies (1.1c(1)) . These have been incorporated into all senior leader semi-annual scorecard and annual review documents, including Development and Training Plans, providing a roadmap to drive individual improvements (5.2a(4)) . 1.2b Legal and Ethical Behavior 1.2b(1) Legal and Regulatory Compliance While many of our clients operate in highly regulated environments, the most significant legal and ethical concerns with our operations involve fulfilling contractual requirements. IPM’s proposals are written to clearly define the engagement’s objective, deliverables, assumptions, and terms and conditions. Project management processes and leadership provided by IPM’s PMCs combined with oversight by directors and support from functional groups, as required, position us to reliably meet our contractual obligations. As we are a business-to-business service and have no physical products, we do not deal with community or public concerns
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