The purpose of this document is to state the principles which the Board of Directors has agreed upon as guidelines in discharging its corporate governance obligations while maintaining compliance with applicable legal and regulatory requirements.
The Board of Directors acts as the steward of the Company for the benefit of the stockholders. The Board of Directors selects the senior management team, which is charged with the conduct of the Company's business. Having selected the senior management team, the Board acts as an advisor and counselor to senior management and ultimately monitors its performance.
The basic responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be the best interest of the Company and its stockholders. In discharging this obligation, directors are entitled to rely on the honesty and integrity of the Company's senior executives and its outside advisors and auditors. The Board has the following minimum responsibilities:
The principal areas in which the Board has fiduciary responsibilities, to be fulfilled directly or through its committees, include but are not limited to the following:
1. The financial integrity of the Company, including risk management and the protection of its assets, annual budgets and material capital appropriations, capital structure, and other matters relevant to the Company’s ability to finance, and means of financing, its present and projected operations.
2. Select the Company’s external auditing firm, approve the annual audit plan, review the results of the annual audit, and all proposed adjustments by the auditing firm not recorded by management, and review the adequacy of internal controls, and compliance with applicable legal requirements and the Company’s Code of Conduct.
3. The independence of the Company [and any proposed “change in control,”] including all its ramifications relative to the rights of the stockholders and other constituencies.
4. Compensation, including review and approval of annual salary, bonus, and significant perquisites for the CEO and corporate officers, administration of the Company’s stock incentive plan, oversight of the Company’s ERISA plans and trusts, and the review and approval of compensation and benefit policies and objectives generally. The Board also approves the compensation program for non-employee directors.
B. Supervisory Responsibilities
1. To select, and to elect, the Chairman of the Board and the President and Chief Executive Officer. The Board’s policy is to separate the roles of Chairman and CEO. The Chairman in this structure serves as a non-executive Chairman.
2. To review the selection of, and to elect, other corporate officers nominated by management and recommended by the Compensation and Human Resources Committee.
3. To approve and maintain a succession plan for the CEO and other senior management positions.
4. To review the performance of management and particularly of the Chairman of the Board and of the CEO at least annually and, if necessary, to remove and replace a manager that is not performing. The role of the Board is not to manage the Company but to oversee its management. An effective Board understands and observes this fundamental difference between its role and that of those who are responsible for the day-to-day management of the Company.
1. In order to perform its fiduciary and supervisory responsibilities, the Board needs a substantial information flow on relevant, material matters. The Board should not hesitate to define and request any additional information required, from its perspective, to meet its responsibilities. (In this regard the effective Board should probe, however, for quality, not quantity.)
2. Directors have full and free access to officers and employees of the Company. A director who wishes to initiate meetings or contacts should normally seek to do so through the CEO. If deemed necessary, the director may arrange such contact through the Secretary, or by contacting the employee directly. Directors will attempt to ensure that any such contact is not disruptive to the business operations of the Company and will, to the extent not inappropriate, copy the CEO on any written communications between a director and an officer or employee.
3. The Board and each committee have the power and authority to hire independent legal, financial, or other advisors as they deem necessary, without consulting or obtaining the approval of any officer of the Company in advance.
A. Board Leadership, Size and Composition. The Board should remain free to configure leadership of the Board and the Company in the way that best serves the Company’s interests at the time. The full Board determines the optimum Board size to accommodate the following objectives:
1. To provide a Board sufficiently large to allow independent directors to staff the working Board committees.
2. To enable the Board to function effectively in terms of discussion and decision making.
3. To satisfy NASDAQ and other requirements that a majority of directors be independent.
B. Candidates for Membership. The Board as a whole is responsible for selecting candidates for director. The Corporate Governance and Nominating Committee is responsible for screening and recommending candidates. In discharging this responsibility, the Corporate Governance and Nominating Committee will consider the Board’s current effectiveness and composition and other factors such as the business and professional backgrounds, age, current employment, community services, and other board service of members as well as racial, ethnic, and gender diversity.
C. Independent Directors. It is the policy of the Company that the Board consists of a majority of independent directors. The Board has established guidelines to assist it in determining director independence, which either meet or exceed the independence requirements of NASDAQ. The Board will consider all relevant facts and circumstances in making an independence determination, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. The independent directors, as a group, should bring to the Board a wealth of business experience and a track record of good business judgment in a variety of situations relevant to the Company’s operations. The totality of the experience of the Board of Directors should be designed, structured, and monitored so that the Board is fully equipped to meet its fiduciary and oversight responsibilities.
D. Board Tenure. The Board’s
criteria for membership exclude former employees and nominees past age 72. In
addition, the Board has agreed upon a term limit of 12 years for Board Members,
and that directors should not have more than five public-company directorships
(including Andrew). A new director will have up to a year to reduce other
public-company directorships to the required number.
A director must tender his or her resignation upon the occurrence of any of the following:
1. A substantive change in the director’s career or vocation;
2. The director, or any company of which he or she is (or within the two preceding years was) an executive officer, general partner or director, is the subject of a bankruptcy or insolvency proceeding;
3. The director is convicted in a criminal proceeding or is the named subject of a criminal proceeding (other than traffic violations and other minor offenses);
4. The director (a) is enjoined (and such injunction is not dissolved or the order entering it is not reversed, suspended or vacated) from engaging in any type of business practice or from engaging in any activity in connection with the purchase or sale of any security or in connection with any violation of federal or state securities laws, (b) is found by a court to have violated federal or state securities laws or (c) is a named defendant in any proceeding seeking such an injunction or alleging such a violation;
5. The director, or any company of which he or she is an executive officer or general partner, is a named plaintiff in any court proceeding brought against Andrew or any significant customer of Andrew; or
6. The director becomes an executive officer or director of a competitor, supplier or customer of Andrew.
E. Board Compensation. The Compensation and Human Resources Committee will annually review the compensation of directors.
F. Code of Conduct. Directors are subject to the Company’s Code of Conduct and are required to complete annual surveys relating to their knowledge of any violation of legal requirements or the Code of Conduct.
G. Ownership Requirements. All non-employee directors are required to hold at least 7,500 shares of Andrew stock while serving as a director of the Company. New directors will have 5 years to attain this ownership threshold.
H. Committees and
Assignments. The Board as a whole determines the types and functions of
Board committees, and their respective charters. Each committee also reviews
its charter annually, and recommends changes to the Board. The Corporate
Governance and Nominating Committee working with the Chairman, the CEO, and the
Lead Director considers the qualifications for membership on each Board
committee and, following the Annual Meeting of Stockholders, recommends
committee assignments, including chairmanships, to the Board for the ensuing
year. The Company complies with NASDAQ and other regulatory requirements
concerning committee memberships, including those relating to independence.
Periodic rotation of committee assignments is an objective, with chairmanships
generally being rotated at 4-year intervals. Committee membership assignments
take into account various factors such as continuity and expertise.
The Board currently has the 3 committees described below. Each committee has a charter which describes its make-up, responsibilities, and operations.
1. Corporate Governance and Nominating Committee
2. Audit Committee
3. Compensation and Human Resources Committee
Beyond the pre-approved retainers and Board and Committee fees, the Company does not normally provide any additional compensation to a director, including, for example, special compensation for consulting services. Any such additional compensation requires prior approval of the Compensation and Human Resources Committee.
A. Board Meeting Agendas
and Practices. The Chairman of the Board establishes the agenda for each
Board meeting. In addition, Board members may suggest topics for the agenda and
may raise subjects at Board meetings that are outside the agenda.
Board meetings focus on strategic, operational, and reporting matters. Management should strive to provide the Board with candid and timely information, and continuous access regarding strategic and other significant issues.
There are 5 scheduled Board meetings each year. Special Board meetings are called as needed.
The Board of Directors of the Company will hold executive sessions at each Board meeting. The executive sessions will include only independent directors and will be presided over by the Lead Director.
B. Committee Meetings. Frequency of
meetings and agendas for meetings are established by the Chairman of each
Committee. Committees normally have scheduled meetings the day prior to each of
the 5 regularly-scheduled Board meetings. At each Board meeting, all directors
receive a schedule of Committee and Board meetings planned for the next 12
New directors should seek to attend the first two series of Committee meetings after the director’s election to the Board. This attendance is for orientation purposes, and should be limited to observing rather than participating. Other than for orientation purposes, Committee meetings should be limited to Committee members, except that the Chairman and the CEO will attend Committee meetings when the Committee is not in executive session.
C. Board Information, Presentations and Attendance. At least 7 days prior to each Board meeting, directors are provided with a “Board Book” that includes the agenda for the meeting and additional information relevant to the items to be discussed. At a typical meeting, the Board Book will include summaries of Board presentations, proposed resolutions, operating results, reports on major projects, and materials being considered by committees which are scheduled to report at the Board meeting.
D. Other Attendees. The General Counsel normally attends all Board meetings. Members of management frequently attend parts of Board meetings and make presentations, thereby affording the Board the opportunity for acquaintance with and evaluation of management.
E. Director Orientation and Continuing Education. The Board of Directors or the Company will establish, or identify and provide access to, appropriate orientation programs, sessions or materials for newly elected directors of the Company for their benefit either prior to or within a reasonable period of time after their nomination or election as a director. Directors are encouraged to periodically pursue or obtain appropriate programs, sessions or materials regarding the responsibilities of directors of publicly-traded companies.
F. Annual Performance Evaluation of the Board. The Board of Directors will conduct a self-evaluation annually to determine whether it and its committees are functioning effectively. The full Board of Directors will discuss the evaluation report to determine what, if any, action could improve Board and Board committee performance.
The Company has a Stockholder Rights Plan or “poison pill” which will expire in December 2006. The term poison pill refers to a type of a shareholder rights plan that some companies adopt to make hostile takeover of the Company more difficult.
The Board adopted a statement of policy that it shall seek and obtain shareholder approval before adopting a poison pill; provided, however, that the Board may determine to act on its own to adopt a poison pill, if, under the circumstances, the Board, including the majority of the independent directors, in its exercise of its fiduciary responsibilities, deems it to be in the best interest of the Company’s shareholders to adopt a poison pill before obtaining shareholder approval.
If the Board were ever to adopt a poison pill without prior shareholder approval, the Board would either submit the poison pill to shareholders for ratification, or would cause the poison pill to expire within one year.
The Corporate Governance and Nominating Committee will review this policy statement on an annual basis and report to the Board any recommendations it may have concerning the policy.
The Board recognizes its operations and these principles to be an evolving process and, therefore, subject to periodic review and revision. The Board of Directors, with the assistance of the Corporate Governance and Nominating Committee, shall review these Governance Principles on an annual basis to determine whether any changes are appropriate. These principles are not intended to cover all issues which may arise, but rather to provide a general framework of reference to assist the Board in performance of its duties.