CORPORATE GOVERNANCE GUIDELINES
1. Director Qualification Standards
The Board of Directors of Haggar Corp. (the "Board") will seek to have and maintain a majority of directors who meet the criteria for independence required by the Nasdaq Stock Market, Inc. The Nominating & Governance Committee is responsible for establishing criteria for selecting new directors and actively seeking individuals to become board members for recommendation to the Board. This assessment will include consideration of skills, experience, and diversity in the context of the needs of the Board, as well as member's qualification as independent. Nominees for directorship will be selected by the Nominating & Governance Committee in accordance with the policies and principles in its charter. The invitation to join the Board should be extended by the Board itself, by the Chairman of the Nominating & Governance Committee and the Chairman of the Board.
The Board presently has six (6) members. The number of directors which shall constitute the whole board of directors shall be fixed from time to time by a majority of the directors then in office, but in any event the number of Board positions shall not be less than five (5) nor more than fifteen (15). The Nominating & Governance Committee is responsible for reviewing, on an annual basis, the advisability or need for any change in the number and composition of the Board.
No director may serve on more than two (2) other public company boards; provided, however, that the Board may waive this limitation if the Board determines that such waiver is in the best interest of the Company. Directors should advise the Chairman of the Board and the Chairman of the Nominating & Governance Committee in advance of accepting an invitation to serve on another public company board. No director may be nominated to a new term if he or she would be age 67 or older at the time of the election.
The Board does not believe it should establish term limits. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole. As an alternative to term limits, the Nominating & Governance Committee will review each director's continuation on the Board every three years. This will allow each director the opportunity to conveniently confirm his or her desire to continue as a member of the Board.
A director shall tender his or her resignation to the Board upon a change in the director's job status. Upon receipt of any such resignation, the Board shall determine whether or not to accept the resignation of the director after considering, among other things, whether the change in job status affects the director's ability to effectively continue as a director of the Company.
Each director shall beneficially own common stock of the Company while serving as a director, commencing (i) for each director on the Board as of the date of these guidelines, on or before the 30th day after the date hereof and (ii) for each director who joins the Board after the date hereof, on or before the 30th day after such director joins the Board.
The basic responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareholders. In discharging that obligation, directors should be entitled to rely on the honesty and integrity of the Company's senior executives and its outside advisors and auditors. The directors shall also be entitled to (i) have the Company purchase reasonable directors' and officers' liability insurance on their behalf, (ii) the benefits of indemnification to the fullest extent permitted by law and the Company's articles of incorporation, bylaws and any indemnification agreements, and (iii) exculpation as provided by state law and the Company's articles of incorporation.
Directors are expected to attend Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Information and data that are important to the Board's understanding of the business to be conducted at a Board or committee meeting should generally be distributed in writing to the directors before the meeting, and directors should review these materials in advance of the meeting. Attendance at Board and committee meetings shall be considered by the Nominating & Governance Committee in assessing each Board member's performance.
The Board has no policy with respect to the separation of the offices of Chairman and the Chief Executive Officer. The Board believes that this issue is part of the succession planning process and that it is in the best interests of the Company for the Board to make a determination regarding this issue each time it elects a new chief executive officer.
The Chairman will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will review the Company's long-term strategic plans and the principal issues that the Company will face in the future during at least one Board meeting each year.
The non-management directors will meet in executive session at least quarterly. The director who presides at these meetings will be chosen by the non-management directors, and the name of the presiding director and the process by which the presiding director is chosen will be disclosed in the annual proxy statement.
The Board believes that the management speaks for the Company. Individual Board members may, from time to time, meet or otherwise communicate with various external constituencies that are involved with the Company. It is expected, however, that Board members would do this with the knowledge of the management and, absent highly unusual circumstances (e.g., communications in response to allegations of criminal or fraudulent management acts) or except as contemplated by the committee charters, only at the request of management.
The Board will have at all times an Audit Committee, a Compensation Committee and a Nominating & Governance Committee. All of the members of these committees will be independent directors under the criteria established by the Nasdaq Stock Market, Inc. Committee members will be appointed by the Board upon recommendation of the Nominating & Governance Committee, in accordance with all other such criteria as may be established by the Nasdaq Stock Market, Inc. from time to time, with consideration given to the desires of individual directors.
Each committee will have its own charter. The charters will set forth the purposes, goals and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board. The charters will also provide that each committee will annually evaluate its performance.
The Chairman of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee's charter. The Chairman of each committee, in consultation with the appropriate members of the committee and management, will develop the committee's agenda. The schedule for each committee will be furnished to all directors.
The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.
The Board and each committee have the power to hire independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance, to approve the fees and expenses of those advisors, and to cause the Company to pay the fees and expenses of those advisors.
Directors have full and free access to officers and employees of the Company. Any meetings or contacts that a director wishes to initiate may be arranged through the CEO or the Secretary or directly by the director. The directors will use their judgment 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 of the Company.
The Board welcomes regular attendance at each Board meeting of senior officers of the Company. If the CEO wishes to have additional Company personnel attendees on a regular basis, this suggestion should be brought to the Board for approval.
The Compensation Committee will make a recommendation to the Board regarding the form and amount of director compensation in accordance with the policies and principles set forth in its charter, and the Compensation Committee will conduct an annual review of director compensation. The Compensation Committee will consider that directors' independence may be jeopardized if director compensation and perquisites exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated.
All new directors must participate in the Company's Orientation Program, which should be conducted within two months of the annual meeting at which new directors are elected. This orientation will include presentations by senior management to familiarize new directors with the Company's strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Business Ethics Policy and Corporate Compliance Program, its principal officers, and its internal and independent auditors. In addition, the Orientation Program will include visits to Company headquarters and, to the extent practical, certain of the Company's significant facilities. All other directors are also invited to attend the Orientation Program.
The Nominating & Governance Committee is responsible for identifying suitable director education programs that seek to foster improved corporate governance practices. All directors are encouraged to annually attend at least one education program identified or otherwise approved by the Nominating & Governance Committee.
The Compensation Committee will annually review and approve corporate goals and objectives relevant to the compensation of the CEO, evaluate the performance of the CEO in light of those goals and objectives and set the compensation of the CEO based on this evaluation.
At least annually, the Board shall review and approve the CEO succession plan prepared by the Nominating & Governance Committee and review the advisability or need for any changes thereto. The Nominating & Governance Committee should make an annual report to the Board on succession planning. The entire Board will work with the Nominating & Governance Committee to evaluate potential successors to the CEO. The CEO should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
The Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Nominating & Governance Committee will receive comments from all directors and report annually to the Board with an assessment of the Board's performance. This will be discussed with the full Board following the end of each fiscal year. The assessment will focus on the Board's contribution to the Company and specifically focus on areas in which the Board or management believes that the Board could improve.