CHARTER OF THE
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
OF ARROW INTERNATIONAL, INC.
The primary purpose of the Corporate Governance and Nominating Committee (the “Committee) of Arrow International, Inc. (the “Company”) is to (a) oversee the Company’s corporate governance and make recommendations to the Company’s Board of Directors (the “Board”) regarding the organization and procedures of the Board, including the size and composition of the Board and the structure and makeup of its committees; (b) evaluate Board operations and performance and oversee the annual evaluations of its committees; (c) devise, monitor and recommend to the Board modifications or additions to a set of Corporate Governance Principles of the Company; (d) review and recommend to the Board the compensation for the Company’s directors; and (e) identify individuals qualified to become members of the Board, establish criteria for Board membership, and approve and recommend to the Board candidates for election or re-election to the Board.
The Committee shall be comprised of not less than four directors appointed by the Board, none of whom shall be an employee of the Company. In addition, at least three members of the Committee, including its Chair, must satisfy the independence requirements contained in the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and The Nasdaq Stock Market, and must be free of any relationship that, in the opinion of the Board, would interfere with their exercise of independent judgment as a Committee member. The Board shall appoint one person to act as Chair of the Committee. The members of the Committee shall serve for a term of one year.
The Committee shall meet at least two times per year and as many other times as it deems necessary to fulfill its duties and responsibilities set forth in this Charter. A majority of the members of the Committee shall constitute a quorum for the transaction of business. The vote of a majority of the members present at any meeting at which a quorum is present shall be the act of the Committee.
The Committee shall have the authority, to the extent it deems necessary or appropriate, to retain special legal, accounting or other consultants or advisors to advise the Committee. The Company shall provide funding, as determined by the Committee, for payment of compensation to any consultants or advisors retained by the Committee. The Committee may form and delegate authority to subcommittees, comprised of one or more members of the Committee, as it deems necessary or appropriate, and shall form from its ranks a new subcommittee designated as the Nominating Subcommittee of this Committee (the “Nominating Subcommittee”) comprised of the Chair of the Committee and the other two members of the Committee who are independent within the meaning of applicable rules and regulations of the SEC and Nasdaq. The Nominating Subcommittee shall have the duties and responsibilities delegated to it as provided below.
The Committee shall have the following duties and responsibilities:
1. Annually review the size, composition and needs of the Board and, in accordance with the recommendation of the Nominating Subcommittee, recommend to the Board each year the director nominees for election at the Company’s next annual meeting of shareholders.
2. Annually review the purpose and responsibilities of each committee of the Board, and recommend to the Board (a) any changes deemed necessary or desirable to such purposes and responsibilities, (b) whether any committees of the Board should be created or discontinued, and (c) the directors and chairperson to be appointed to each committee.
3. Develop and recommend to the Board a set of Corporate Governance Principles for the Company, review these principles on an annual basis, and recommend to the Board any modifications or additions to these principles deemed necessary or desirable.
4. Develop and recommend to the Board a process for the annual evaluation of the Board’s operations and performance, and oversee the process which each other committee of the Board uses to conduct its annual performance evaluation under its charter.
5. Review and recommend to the Board compensation (including stock option or restricted stock award grants and other equity-based compensation) for the Company’s directors and, in connection therewith, identify corporate goals and objectives relevant to director compensation, and recommend to the Board director compensation based on such factors as the value of similar long-term incentive awards to directors at comparable companies and such other factors as the Committee deems appropriate and in the best interests of the Company.
6. Consider questions of possible conflicts of interest of the Board members and the Company’s senior executive officers, as such questions arise.
7. Review at least annually with the Company’s Chairman/Chief Executive Officer (“CEO”) the succession plans relating to the positions of Chairman/CEO and/or other key executive officers of the Company, as applicable, and make recommendations to the Board with respect to the selection of individuals to hold the positions of Chairman/CEO and/or other key executive officers of the Company, as applicable.
8. Review and recommend, as appropriate, director orientation and continuing orientation programs for members of the Board.
9. Develop and recommend to the Board policies and procedures for retirement of directors.
10. Advise the Board and the Chairman/CEO on major issues relating to the organizational structure of the Company.
11. Perform such other duties and responsibilities pertaining to the Company’s corporate governance as may be assigned to the Committee by the Board and/or the Chairman of the Board.
Nominating Subcommittee Responsibilities
The Nominating Subcommittee shall have the following responsibilities:
1. Establish the criteria for Board membership, which should include, among other things, diversity, experience, skill set and the ability to act on behalf of the Company’s shareholders.
2. Identify, consider, recommend and recruit individuals qualified for membership on the Board, based on the criteria for Board membership established by this subcommittee.
3. Review director candidates recommended by the Company’s shareholders.
4. Conduct appropriate and necessary inquiries into the backgrounds and qualifications of possible director candidates.
5. Approve and submit to the Committee for recommendation to the Board for its approval all nominees for election or re-election to the Board.
6. Perform such other duties and responsibilities pertaining to the selection, review and recommendation of candidates for Board membership as may be assigned to the Nominating Subcommittee by the Committee, the Board and/or the Chairman of the Board.
The Committee shall keep minutes of its proceedings that shall be signed by the person whom the Chairperson designates to act as secretary of the meeting. The minutes of the meeting shall be approved by the Committee at its next meeting, shall be available for review by the entire Board, and shall be filed as permanent records with the Secretary of the Company.
The Committee shall conduct an annual evaluation of its performance in fulfilling its duties and responsibilities. The adequacy of this Charter shall be reviewed by the Committee on an annual basis. The Committee will recommend to the Board any modifications to this Charter, which the Committee deems appropriate, for approval by the Board.
This Charter may be amended from time to time with the approval of a majority of the Board.
Last Revised: April 14, 2004