Governance Principles
Role and Composition of the Board of Directors
1. The Board of Directors, which is elected by and represents the interests of the stockholders, is the ultimate decision-making body of the Company except with respect to those matters reserved to the stockholders. It selects the Chief Executive Officer (“CEO”) and approves other members of the senior management team, which is charged with the conduct of the Company's business. Having so selected and approved the senior management team, the Board acts as an advisor and counselor to senior management and ultimately monitors its performance.
2. The Board also plans for succession to the positions of Chairman of the Board (“Chairman”) and CEO, as well as certain other senior management positions. To assist the Board, the Chairman and CEO will annually provide the Board with an assessment of senior managers and of their potential to succeed the Chairman and CEO. The Chairman and CEO will also provide the Board with an assessment of persons considered potential successors to certain senior management positions.
3. The Board determines whether the positions of Chairman of the Board and CEO will be held by one individual or be separated and held by two individuals.
4. It is the policy of the Company that the Board will consist of a majority of independent directors (as defined by The NASDAQ Stock Market), and that the number of directors will not exceed a number that can function efficiently as a body. The function of the Board in monitoring the performance of the senior management of the Company is fulfilled by the presence of outside directors who have a substantive knowledge of the business. No director may serve on more than three other boards of publicly owned companies. The Nominating and Corporate Governance Committee, in consultation with the Chairman and CEO, will consider and make recommendations to the Board concerning the appropriate size and needs of the Board.
5. The Nominating and Corporate Governance Committee will consider candidates to fill new positions created by expansion and vacancies that occur by resignation, by retirement or for any other reason. The Committee works with the Board to determine the appropriate characteristics, skills and experiences for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience. Characteristics expected of all directors include independence, integrity, high personal and professional ethics, sound business judgment, and the ability and willingness to commit sufficient time to the Board. In evaluating the suitability of individual Board members, the Nominating and Corporate Governance Committee takes into account many factors, including general understanding of business development and strategy, risk management, finance, financial reporting and other disciplines relevant to the success of a publicly-traded company in today’s business environment; understanding of the Company’s business and the issues affecting that business; education and professional background; personal accomplishment; and diversity. With regard to diversity, the Company is committed to considering candidates for the Board regardless of gender, ethnicity and national origin. Final approval of a candidate will be determined by the full Board. The Board evaluates each individual in the context of the Board as a whole, with the objective of recommending a group that can best perpetuate the success of the Company’s business and represent shareholder interests through the exercise of sound judgment using its diversity of experience. The Committee evaluates each incumbent director to determine whether he or she should be nominated to stand for re-election, based on the types of criteria outlined above as well as the director’s contributions to the Board during that director’s current term. An orientation will be provided for each new director.
6. When a director's principal occupation or business association changes substantially during his or her tenure as a director, that director shall submit a letter of resignation to the Chairman of the Board and the Chairman of the Nominating and Corporate Governance Committee, and consult with them concerning the potential impact, if any, the change may have on continued Board service. The Chairman of the Board and the Chairman of the Nominating and Corporate Governance Committee shall then make a recommendation for consideration by the Board as to whether that director's resignation should be accepted.
7. The Board has fixed the retirement age for directors at 75 (determined as of the Annual Meeting following the director’s birthday). However, the Board may waive the mandatory retirement requirement under appropriate circumstances.
8. The Nominating and Corporate Governance Committee will annually review the compensation of directors. This review may consider board compensation practices of comparable public companies, contributions to Board functions, service on committees and other appropriate factors.
9. It is the general policy of the Company that the Board as a whole will consider all major decisions. As a consequence, the committee structure of the Board is limited to those committees considered to be basic to or required for the operation of a publicly owned company. Currently these committees are the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Strategic Planning Committee. The members and chairs of these committees are recommended to the Board by the Nominating and Corporate Governance Committee in consultation with the Chairman. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are made up of only independent directors. The Strategic Planning Committee is made up of a majority of independent directors.
10. The CEO is responsible for establishing effective communications with the Company's stakeholder groups, i.e., stockholders, clients, company associates, communities, suppliers, creditors, governments and corporate partners. It is the policy of the Company that management speaks for the Company.
Functioning of the Board
1. The Chairman will set the agenda for Board meetings with the understanding that certain items pertinent to the advisory and monitoring functions of the Board be brought to it periodically by the Chairman for review and/or decision. Agenda items that fall within the scope of responsibilities of a Board committee will be reviewed with the chair of that committee. Any member of the Board may request that an item be included on the agenda.
2. Board materials related to agenda items will be provided to Board members sufficiently in advance of Board meetings to allow the directors to prepare for discussion of the items at the meeting. Board members are expected to prepare for, attend and participate in meetings of the Board and the committees on which they serve, and are strongly encouraged to attend the Company’s annual meetings of shareholders.
3. At the invitation of the Board, members of senior management recommended by the Chairman and CEO will attend Board meetings or portions thereof for the purpose of participating in discussions. Generally, presentations of matters to be considered by the Board will be made by the senior manager responsible for that area of the Company's operations. In addition, Board members will have free access to all other members of management and employees of the Company and as necessary and appropriate, Board members may consult with independent legal, financial and accounting advisors to assist in their duties to the Company and its stockholders.
4. The Board will designate one of the independent directors to be the “presiding independent director.” The presiding independent director will conduct executive sessions of outside directors, without management present, following Board meetings and otherwise from time to time as required to discuss those matters that such directors consider important. The Company's independent auditors, finance staff and other employees may be invited to attend these meetings.
5. The Board will prepare an annual performance self-evaluation.
Functioning of Committees
1. The Audit, Compensation and Nominating and Corporate Governance Committees will consist of only independent directors. At least a majority of the members of the Strategic Planning Committee will be independent.
2. The chair of each committee will determine the frequency, length and agenda of meetings of such committee. Sufficient time to consider the agenda items will be provided. Materials related to agenda items will be provided to the committee members sufficiently in advance of the meeting to allow the members to prepare for discussion of the items at the meeting.
3. The Nominating and Corporate Governance Committee will review the charter and responsibilities of each committee from time to time and provide a report to the Board.
4. Each committee will prepare an annual performance self-evaluation.
Periodic Review
The Board will review these principles at least annually.
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