Selection of Chairman and CEO
The Board does not have a policy on whether
or not the roles of Chief Executive Officer and Chairman should be separate
and, if they are to be separate, whether the Chairman should be selected
from the non-employee Directors or be an employee.
The Board believes that it should be free to
make this choice from time to time in any manner that is in the best
interests of the Company and its shareholders.
Size of the Board
The Board currently has eight (8) members,
and periodically reviews the appropriate size of the Board. The Company
By-Laws provide for a maximum of eleven (11) Board members.
Mix of Inside and Outside Directors
The Board believes that there should be a
majority of independent Directors on the Board. However, the Board believes
it may be desirable, at times, to have limited members of Management, in
addition to the Chief Executive Officer, as Directors.
Board Definition of What Constitutes Independence for Outside
The Company complies with the Nasdaq National Stock Market Issuer requirements for
independent directors (Nasdaq Stock Market Rule
The Board's Chairman is the independent
director designated as the Lead Independent Director, who is responsible to
coordinate the activities of the other independent directors and to perform
various other duties.
Board Membership Criteria
The Nominating/Corporate Governance
Committee is responsible for reviewing with the Board from time to time the
appropriate skills and characteristics required of Board members in the
context of the current make-up of the Board. This assessment includes
considering skills such as understanding of manufacturing, technology, finance
and marketing, in addition to current members' desire to remain on the
Board, all in the context of an assessment of the perceived needs of the
Board at that point in time. Board members are expected to rigorously
prepare for, attend, and participate in all Board and applicable Committee
meetings. Each Board member is expected and required to ensure that other
personal commitments do not materially interfere with the member's service
as an outstanding director.
Selection of New Director Candidates
The Board is responsible for selecting its
own members. The Board delegates the screening process involved to the
Nominating/Corporate Governance Committee.
Directors Who Change Their Present Job Responsibility
The Board does not believe that directors
who retire or change from the position they held when they came on the
Board should necessarily leave the Board. There should, however, be an
opportunity for the Board, via the Nominating/Corporate Governance
Committee, to review the continued appropriateness of Board membership
under these circumstances.
The Board does not believe it should
establish term limits. While term limits could help insure that there are
fresh ideas and viewpoints available to the Board, they hold the
disadvantage of losing the contribution of directors who over time have
developed increasing insight into the Company and its operations and
therefore provide an increasing contribution to the Board as a whole.
The Board has not adopted a retirement
policy for officers and directors.
Board Compensation Review
It is appropriate for the staff of the
Company to report from time to time to the Compensation Committee on the
status of Board compensation in relation to other comparable U.S.
Changes in Board compensation, if any,
should come at the suggestion of the Compensation Committee, but with full
discussion and concurrence by the Board.
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Scheduling and Selection of Agenda Items for Board Meetings
Regular Board meetings are scheduled in
advance typically six (6) times per year. Generally, the meetings are held
in Fairview, Pennsylvania, which is the Company's headquarters, but
occasionally a meeting is held at another location.
The Chairman of the Board and the Secretary
of the Company, with the assistance of the Chief Executive Officer, draft
the agenda for each Board meeting and distribute it in advance to the
Each Board member is free to suggest the
inclusion of items on the agenda.
Board Material Distributed in Advance
Information and data that is important to
the Board's understanding of the business are distributed in writing to the
Board before the Board meets.
As a general rule, materials on specific
subjects are sent to Board members in advance so that members have
sufficient time to review the material in advance and Board meeting time is
then focused on questions that the Board has about the material. Sensitive
subject matters may be discussed at the meeting without written materials
being distributed in advance or at the meeting.
Board Presentations and Access to Employees
The Board has complete access to any
Spectrum Control employee.
The Board encourages Management to schedule
managers to present at Board Meetings who: (a) can provide additional
insight into the items being discussed because of personal involvement in
these areas, or (b) have future potential that Management believes should
be given exposure to the Board.
Outside Directors' Discussion
The Board's policy is to have a separate
meeting time for the outside directors at each regularly scheduled Board
meeting. The Lead Independent Director will assume the responsibility of
chairing the regularly scheduled meetings of outside directors and shall
bear such further responsibilities which the outside directors as a whole
might designate from time to time.
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Number of Committees
The Board currently maintains three (3)
Committees: Audit; Compensation; and Nominating/Corporate Governance. There
will, from to time, be occasions on which the Board may want to form a new
committee or disband a current committee depending upon the circumstances.
The Audit Committee has sole authority to
engage the Company's independent auditors, and monitors the effectiveness
of the audit effort, the Company's internal financial and accounting
organization, controls and financial reporting.
The Compensation Committee reviews and makes
recommendations to the Board on salary, incentive compensation practices
and benefit programs for the compensation of the Chief Executive Officer
and other key executives; recommends to the Board the amount and method of
compensation of Board members; and reviews annually the operation and
performance of incentive compensation plans that apply to the Chief
Executive Officer and other key executives of the Company.
The Nominating/Corporate Governance
Committee makes recommendations to the Board regarding the size and
composition of the Board, establishes procedures for the nomination process
and recommends candidates for election to the Board. The Committee has the
responsibility for providing the evaluation of director performance, and
recommending to the Board a successor to the Chief Executive Officer when a
vacancy occurs through retirement or otherwise. This Committee also reviews
and reports to the Board on matters of corporate governance (that is, the
relationships of the Board, the Stockholders and Management in determining
the direction and performance of the Company) and reviews and addresses
these Guidelines and recommends revisions as appropriate.
Assignment and Term of Service of Committee Members
The Board is responsible for the appointment
of Committee Members and Committee Chairpersons. It is generally expected
that each Committee Chairperson will have had previous service on the
applicable Committee. Committee members' terms of service are determined by
the full Board.
Frequency and Length of Committee Meetings and Committee
The Committee Chairperson in consultation
with Committee members, and appropriate members of Management, determine
the frequency and length of the Committee meetings and develop the
Committee's agenda. The agendas and meeting minutes of the Committees are
available to the full Board, and other Board members are welcome to attend
all Committee meetings.
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REVIEW AND RESPONSIBILITY
Formal Evaluation of Officers
The Compensation Committee conducts an
evaluation annually in connection with the determination of the salary and
incentive compensation of all officers, including the Chief Executive
Succession Planning and Management Development
The Chief Executive Officer reviews
succession planning and management development with the Board on an annual
Board Interaction with Institutional Investors, Press,
The Board believes that Management speaks
for the Company. Individual Board members may, from time to time, meet or
otherwise communicate with various constituencies that are involved with
the Company, but it is expected that Board members would do this with the
knowledge of Management and, in most instances, at the request of
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Code of Conduct
Insider Trading Policy
Nominating/Corporate Governance Committee of the Board of Directors shall
review this statement of policy on at least an annual basis and report to
the Board with any recommendations it may have in connection therewith, and
such review shall be referred to in the Company's Proxy Statements.
Date: September 22, 2003