CORPORATE GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS
The primary purpose of the Corporate Governance Committee of the Board of Directors is to review and update the processes and structure by which the business and affairs of the Company are directed and managed, in order to enhance long-term shareholder value through enhancing corporate performance and accountability, while taking into account the interests of other stakeholders. The Corporate Governance Committee will evaluate the effectiveness of the risk management processes within the Company. Further, the Corporate Governance Committee is to serve under the guidance of the full Board, assisting the full board in decisions and policies related to corporate governance matters.
The membership shall be appointed by the Board and shall consist of no less than three (3) independent director members. Members selected shall not be employees of the company, shall meet the independence requirements of NASDAQ and the SEC, and the Chairman is to be appointed from among its members by the Board.
Any member appointed by the Board may be removed by the Board whenever, in its judgment, the best interests of the Committee and the company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights.
Members may resign from the Committee upon written resignation being duly submitted to and approved by the Board.
The Committee shall meet no less than twice per year. The Committee shall meet at least annually to review board charters, conduct board and director evaluations, to review candidates for nomination/renomination to the Board, and meet at such other times during the year as may be necessary to carry out the purposes outlined in this Charter. The Chairman may call additional meetings, if and when required. Decisions by the Committee may be made via unanimous written consent.
The Committee has the following duties, as well as any additional matters which may be referred to the Committee from time to time by the full Board of Directors or the Board Chairman or which the Committee raises on its own initiative (including the ability to designate and delegate duties to such standing and ad-hoc committees as it deems necessary):
1. Evaluate and make recommendations to the full Board of Directors concerning the Company’s infrastructure as well as the number and composition of Board Committees, Committee responsibilities and assignments, and Committee membership rotation practices. Review and approve Board and Committee charters.
2. Establish and articulate qualifications, desired background, and selection criteria for members of the Board of Directors in accordance with strategic needs of the Company, relevant law, regulations, and applicable standards. Evaluate the qualifications and performance of incumbent Directors and make recommendations to the Board of Directors concerning their re-election. (See Exhibit 1)
3. Make recommendations to the full Board of Directors concerning all new nominees for Board membership, including the re-election of existing Board members. In this connection, the Committee shall have the sole authority to hire and terminate any search firm to be used to identify director candidates, including sole authority to approve the search firm’s fees and other retention terms.
4. On an annual basis conduct a review of the effectiveness of the operation of the Board and Board Committees, including this Committee, including soliciting input from the Board of Directors and reviewing governance and operating practices and the Corporate Governance Guidelines of the Board of Directors. The Committee will make recommendations to the Board of Directors to improve the effectiveness of the Board of Directors and its Committees as appropriate.
5. Regularly review issues and developments relating to corporate governance issues and make recommendations to the Board of Directors, as appropriate.
6. Periodically review and make recommendations to the Board of Directors regarding Director orientation and continuing education.
7. Develop and recommend to the Board of Directors a Code of Ethics and shall consider any requests for waivers of any provisions of the company’s Code of Ethics. Such waivers, if any, shall be disclosed to the Securities and Exchange Commission.
8. Monitor non-Board of Directors’ services provided by Directors or their employers and/or affiliated companies to ensure appropriate levels of independence as required by law, regulations, and applicable standards.
9. The Chair of the Committee will review and approve the Chief Executive Officer’s service on any unaffiliated for-profit company Board. The Chief Executive Officer will review and approve service by other officers of the Company and its subsidiaries on any unaffiliated for-profit company Board. A report will be provided annually to the Committee on any unaffiliated for-profit company positions held by Company officers.
10. Periodically make recommendations to the Board of Directors on the Company’s Directors’ and Officers’ liability insurance program and associated procedures.
11. Periodically review and make recommendations to the Board of Directors regarding whether management reports given to the Board of Directors meet the needs of the Board of Directors to fulfill their oversight role.
12. Discuss with management the Company’s major risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
13. Discuss with the Company’s General Counsel legal matters that may have a material impact on the Company’s corporate governance policies.
14. Review and recommend for approval by the Board of Directors any and all policies or amendments to current policies relating to regulatory compliance activities, including, but not limited to, the Bank Secrecy Act, the Anti-Money Laundering Act, the Community Reinvestment Act, and the USA Patriot Act, and review and monitor compliance with all such policies.
The Corporate Governance Committee shall perform any other activities consistent with this Charter, the company’s Bylaws, and governing law, as the Corporate Governance Committee or the Board of Directors deems necessary or appropriate.
The Corporate Governance Committee shall maintain minutes of its meetings and make its minutes available to the full Board of Directors.
The Corporate Governance Committee shall periodically report to the Board of Directors on significant results of the foregoing activities.
All matters requiring approval of the company’s Board of Directors must be made by the full Board, based upon the recommendation of the Corporate Governance Committee.
The Corporate Governance Committee shall review and assess the adequacy of this Charter at least annually. The Corporate Governance Committee Charter shall be submitted to the Board of Directors for approval annually.
With respect to each person proposed to be nominated, the Committee shall be provided with the following information: (i) the name, address (business and residence), date of birth, principal occupation or employment of such person (present and for the past five (5) years); (ii) the number of shares of the Corporation such person beneficially owns (as such term is defined by Section 13(d) of the Securities Exchange Act of 1934, as amended [the "Exchange Act"]); and (iii) any other information relating to such person that would be required to be disclosed in a definitive proxy statement to shareholders prepared in connection with an election of directors pursuant to Section 14(a) of the Exchange Act. The Corporation may require any proposed nominee to furnish additional information as may be reasonably required to determine the qualifications of such person to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in the Bylaws.
Minimally, these criteria should address the level of director attendance, preparedness, participation, and candor.
With each director nomination recommendation, the Committee should consider the mix of director characteristics, experiences, diverse perspectives, and skills that is most appropriate for the company.
The board maintains an openness to new ideas and a willingness to critically re-examine the status quo.
Minimally, the core competencies should address: accounting or finance experience, market familiarity, business or management experience, industry knowledge, customer-base experience or perspective, crisis response, leadership, and/or strategic planning.
Nominees should possess the following characteristics:
¨ Personal integrity — a pledge based on one’s own personal integrity that represents the organization’s commitment to dealing with others in a fair and truthful manner.
¨ Professional excellence — characteristics and behavior, such as respect for others, fair evaluation, and positive regard, that constitute professional excellence as a model for board, executives, and associates to follow.
¨ Accountability and responsibilities — an emphasis on good stewardship, the organization’s responsibilities to its constituents, and their responsibilities to the organization.
¨ Equal opportunity and diversity — establish the organization’s commitments in hiring and other personnel practices.
¨ Conflict of interest, personal gain, and expense reporting — all decisions will be in the best interests of the organization. It is a helpful reminder that individuals should evaluate their conduct and their decisions in light of their impact on the organization vis-a-vis the public and, more precisely, in light of how they might reasonably be perceived by others. These standards are the essence of any code of ethics, and they constitute core values helping to underscore that the public can place its faith in the organization’s basic integrity.
¨ Fresh intellectual perspectives and ideas
¨ Knowledge of the banking and finance industry, competitors, and future trends
1. It is the current feeling of the Board that its membership should be maintained at 10-12 persons with the flexibility to expand, if required, to support acquisitions or mergers.
2. Geographic diversity is desirable and, therefore, membership should consider, in as practical a manor as possible, the markets the corporation serves.
3. Industry representation is desirable and, therefore, a mix and balance of manufacturing, service, public, and private companies should be present.
4. Expertise in multi-disciplines is desirable. Therefore, financial/accounting expertise, sales/marketing expertise, mergers and acquisition expertise, regulatory, manufacturing, and production expertise, educational institutions, and public service expertise are all desirable.
5. The Board should consider diversifying its membership racially, ethnically, and through gender representation.
6. A majority of the members of the Board of Directors shall meet the independence requirements of the SEC and NASDAQ.