Based on the observations, ARC Industries is in accordance with global corporate governance best practices with respect to 3 of the 4 items, resulting in a score of 75%.

With respect to Board independence, global best practice states that 75% of the directors should be independent. McCool observes that 2 of the 10 directors are former employees, but assuming no other conflicts, this would still result in 80% of the board being independent. Note that personal stock holdings among board members should be encouraged as it puts the board members in the same position as investors and can help align board member and investor interests.

Global corporate governance best practice supports annual elections of each board member rather than staggered elections – based on the observations, ARC is consistent with this practice.

The nominating committee should be made up entirely of independent directors. Having the company CEO on this committee means that ARC is not consistent with corporate governance best practice with respect to this item.

The audit committee should be made up entirely of independent directors and at least two members of the committee should have relevant accounting or auditing experience. It appears from the observations that ARC received a positive score for their requirements for serving on the audit committee.