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Message from the President on
Corporate Governance

At Northeast Delta Dental, we long ago committed to state of the art corporate governance, before it was the popular thing to do. In 1997, we began the concept of board evaluations and since then 37 board members have participated in the Harvard Business School course, "Making Corporate Boards More Effective." All of Northeast Delta Dental's 46 board members are outside Directors/Trustees. Potential new board members are all interviewed by the Governance Committee's External Nominating Committee (in New Hampshire) before being recommended to the full Board of Directors/Trustees.

Although Northeast Delta Dental is not technically subject to the provisions of Sarbanes-Oxley, we believe in the spirit and purpose of Sarbanes-Oxley and strive for superb corporate governance. As two examples, linked to this message are our board peer evaluation form and our board member code of conduct.

Peer evaluations of board members are done annually by board member colleagues in order to ensure optimal board performance and optimal board room dynamics. Each board member of Delta Dental Plans of Maine, New Hampshire, and Vermont receives his/her performance metrics juxtaposed to the corporate norm on several criteria taken from the Corporate Directors/Trustees Code of Conduct (e.g., preparation for board meetings is one example of a criterion). Board members are encouraged to dialogue with the Board Chair or the Chair of the Governance Committee should there be any questions on the results. All board members, new and veteran, must read and sign the Code of Conduct every year.

These peer evaluations are also used by the Governance Committees and the External Nominating Committee to determine whether a board member should serve a second or third term. Although a board member is eligible to serve three three-year terms, after serving a term, the Governance Committee/External Nominating Committee must make a recommendation on whether the member should continue to serve, based on peer evaluations and other data (e.g., the director's/trustee's self-evaluation form). This process keeps our board members active, fresh, and committed.

As another example of an appropriate check and balance, the Finance Committees of our three states have access to our independent auditors, Baker, Newman & Noyes, without management present; and Baker, Newman & Noyes can also freely contact any employee in the company to ask questions.

As a final example (and there are many more), the board does a formal evaluation of the CEO every year, and succession plans are reviewed.

This message is to give you the sense of confidence that in the same way Northeast Delta Dental's Guarantee Of Service ExcellenceSM is a world class standard, so is Northeast Delta Dental's governance practices.

Sincerely,

Thomas Raffio, President


Attachments:

Northeast Delta Dental Board Evaluation Form  

Northeast Delta Dental Corporate Directors Code of Conduct