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A PERSPECTIVE FROM THE BOARD

Companies increasingly recognize that sustainability is a business imperative that begins in the board room and can affect almost any aspect of a company’s business performance and significantly alter their overall competitive position or financial condition. As the legal guardians of companies, boards of directors are more aware than ever of the connections between environmental, social and financial performance, also known to many as the “triple bottom line”. Companies with strong corporate governance can create significant business advantages if and when they turn this capacity towards addressing sustainable business issues.  

The regulatory and public policy environment within which we operate is a key influencer of AEP’s evolving business model. Sustainability is very important to the electric industry and to companies like ours where public policy and regulatory outcomes play a major role in determining our business model, strategies, and, ultimately, our potential for financial growth and success. Public policy around energy almost always considers a combination of environmental, social and economic issues.

AEP’s Board of Directors, and its Policy Committee, considers sustainability a business imperative. The Policy Committee is the only board committee that includes the entire board. The board’s diverse experience and knowledge give the company an edge in understanding policy issues and working with management to develop and execute its strategy.

We asked three independent AEP board members about the role of the Policy Committee, how the board evaluates policy , some of the issues we face now and in the future, and the importance of stakeholder engagement.

Please describe the role of the Policy Committee, how it interacts with management and whether it makes decisions or provides guidance.

Linda Goodspeed: The policy committee works closely with the company’s leadership to form a broader and deeper understanding of the public policy issues facing AEP, including how to address those issues in the strategic plan or in response to a particular situation if necessary. We meet with people who might have an impact on or different opinion about AEP. We do not mandate positions or make decisions for the company; we offer our advice and guidance based on our wide-ranging knowledge, experience and opinions, after extensive discussion with senior management and among ourselves. The Public Policy Committee is made up of the entire board because we feel it is important to get as many perspectives as possible in advising the company about these important issues.

Richard Sandor: I think our commitment to both good governance and sustainability is noted by the fact that the corporate accountability report must be approved by the entire board of directors. Every director not only sits on the policy committee, but also must agree on our commitments and expectations of performance for AEP’s sustainability. This makes AEP and our board a very unique organization both in terms of strong governance and our commitment to sustainability.

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Richard Sandor, who chairs the board’s Finance Committee and sits on the Executive Committee, has served on the AEP board since 2000.

Linda Goodspeed is chair of the Policy Committee and has served on AEP’s board since 2005. She also serves on the board’s Nuclear Oversite and Audit committees.

Richard Notebaert joined AEP’s board in 2011. He also serves on the Human Resources and Directors and Corporate Governance committees.