NASHUA CORPORATION


CORPORATE GOVERNANCE FRAMEWORK



The Board of Directors (the “Board”) of Nashua Corporation (the “Company”) has adopted the following Corporate Governance Framework (the “Framework”) to assist the Board in the exercise of its duties and responsibilities and to serve the best interests of the Company and its stockholders. The Framework should be applied in a manner consistent with all applicable laws and the Company’s charter and bylaws, each as amended and in effect from time to time. The Framework provides guidelines for the conduct of the Board’s business. The Board may modify or make exceptions to the Framework from time to time in its discretion and consistent with its duties and responsibilities to the Company and its stockholders.


A. Mission and Roles of the Board of Directors


The Board has the primary responsibility and attendant authority to increase shareholder wealth by increasing the value of the Company. Providing that corporate goals are established and met, guiding the building of the organization, overseeing the governance of the organization and exerting fiduciary responsibility, represent the four broad avenues through which the Board exercises its corporate and wealth building responsibilities.


In particular, four primary oversight responsibilities are to be exercised by the Board and its committees:


1. Provide that Corporate Goals are Established and Met. Provide that strategic plans and goals are set to optimize the Company’s potential in its chosen businesses and markets and that those goals are achieved. This includes:


Reviewing and approving the Company’s long-term strategy, objectives and goals (both financial and market) and developing sufficient understanding of the Company’s businesses to contribute to major decisions that advance strategic objectives.


Determining that strategic goals and direction are consistent with corporate resources, and that the corporate resources are used only for appropriate business purposes.


Reviewing and approving annual capital budgets and major capital expense items (including acquisitions and divestitures).


Reviewing and approving financing and dividend decisions.


Reviewing company performance against agreed-upon plans.


Reviewing current business and financial performance, the degree of achievement of approved objectives and the need to address forward-planning issues, including:


Remaining informed regarding the principal operational and financial objectives, strategies and plans of the Company.


Remaining informed regarding the results of operations and financial condition of the Company and of significant subsidiaries and business segments.


Remaining informed regarding the relative standing of the business segments within the Company and vis-à-vis competitors.


Remaining informed regarding the factors that determine the Company’s success.


Remaining informed regarding the risks and problems that affect the Company’s business and prospects.


2. Build the Organization. Provide that corporate resources are in place and utilized in a manner that will allow achievement of the company’s strategic plans and long-term goals. This includes:


Providing that the organization has an appropriate structure and appropriate capabilities and resources to meet strategic and financial requirements.


Evaluating the Company’s compensation programs on a regular basis and approving the overall management compensation program.


Reviewing appraisals and development plans for direct reports to the Chief Executive Officer.


Reviewing, approving and implementing senior management succession plans.


Approving promotions to corporate officer.


3. Oversee Governance and Management. Oversee the management of the Company and, in so doing, serve the best interests of the Company and its stockholders. Provide that the Company is well governed and well managed by qualified and high performing Directors and management. This includes:


Selecting the Chief Executive Officer, approving his/her annual leadership agenda and goals, and evaluating his/her performance on an annual basis.


Determining and approving Chief Executive Officer and senior management compensation.


Appointing and retaining Directors who bring high levels of commitment and strong qualifications to serve as resources to the Company.


Planning for the Chief Executive Officer’s succession, including developing understanding of the capabilities of his/her direct reports, reviewing their performance and confirming that appropriate development plans are in place.


Maintaining and implementing documented governance procedures that guide and synchronize the actions of the entire Board, its various committees and its individual Directors and providing advice and assistance to the Company’s senior executives.


Establishing dividend and reinvestment policies and deciding on dividends.


Authorizing the purchase, sale or leasing of property or assets in excess of $1.0 million.


Authorizing acquisitions or divestitures in excess of $1.0 million or having a significant impact on the Company’s strategic direction.


Approving entry into new businesses or new jurisdictions, regardless of capital investment.


Evaluating Board, Board committee, individual Director and senior executive performance on an annual basis and taking action, including removal, when warranted.


Reviewing and approving material transactions and commitments not entered into in the ordinary course of business.


4. Exercise Fiduciary Responsibility. Exercise judgment that advances the interests of the shareholders and of other constituents (suppliers, customers, employees, communities, financial institutions and governmental/regulatory bodies) and acting in good faith and loyalty to the Company. This includes:


Promoting the highest standards of integrity to be applied in the conduct of the Company’s business.


Establishing a corporate environment that promotes timely and effective disclosure (including robust disclosure controls, procedures and incentives), fiscal accountability, high ethical standards and compliance with all applicable laws and regulations.


Promoting timely and accurate internal accounting systems/standards and external financial reporting.


Promoting employment practices that are professional, responsible and ethical/legal and benefit and reward programs that are commensurate with performance and contributions to the shareholders.


Promoting adequate compliance programs to protect people and assets from safety or legal risks.


Promote effective systems for periodic and timely reporting on:


Future business prospects and forecasts, including actions, facilities, personnel and financial resources required to achieve forecasted results.


Financial statements, with appropriate segment or divisional breakdowns.


Material litigation and governmental and regulatory matters.


Monitoring and, where appropriate, responding to communications from stockholders.


Compliance programs to assure the Company’s compliance with law and corporate policies.


Directors should also periodically review the integrity of the Company’s internal control and management information systems.


In fulfilling these responsibilities, Directors perform several functions. These include:


An approval function by taking actions that are reserved for it, as specified above.


An advise and counsel function by providing management with access to a broad range of expertise and judgment and as a sounding board for major decisions and by providing advice and assistance to the Company’s senior executives.


An ambassadorial function by helping management to anticipate how the external world may react to corporate decisions and events.



A motivational function by fostering a climate that encourages the Company’s leadership to excel.


A discipline function by encouraging management to think and plan carefully before advancing proposals and by holding management accountable for the consequences of its decisions and actions.


In discharging their fiduciary duties of care, loyalty and candor, Directors are expected to exercise their business judgment to act in what they reasonably believe to be the best interests of the Company and its stockholders.


5. Reliance on Management and Advisors; Indemnification. The directors are entitled to rely on the Company’s senior executives and its outside advisors, auditors and legal counsel, except to the extent that any such person’s integrity, honesty or competence is in doubt. The directors are also entitled to Company-provided indemnification, statutory exculpation and directors’ and officers’ liability insurance.


B. Composition and Qualifications of the Board


1. Size of the Board. The Board currently has seven members. The Board believes this is an appropriate size given the Company’s present circumstances, but that a smaller or larger Board may be appropriate at any given time, depending on circumstances and changes in the Company’s business. The Board believes that its size should allow an appropriate breadth of experience while still allowing full involvement of all Directors and free exchange of ideas.


2. Independence. Except as may otherwise be permitted by NASDAQ rules, a majority of the members of the Board shall be independent directors. To be considered independent: (1) a director must be independent as determined under Rule 4200(a)(15) of the rules of the NASDAQ Stock Market and (2) in the Board’s judgment, the director must not have a relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.


3. Chairman of the Board. The Board will be led by a Chairman who may or may not be the Chief Executive Officer. If the Chairman is the Chief Executive Officer, there will be a Lead Director who will chair regular executive sessions of independent Directors, chair the Governance and Nominating Committee and spearhead all activities related to Chief Executive Officer performance evaluation and succession. The Board does not have a policy on whether the offices of Chairman of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from among the independent directors or should be an employee of the Company.



4. Inside or Management Directors. The Chief Executive Officer and, if applicable, the executive chairperson of the Board, will be the only management Directors except during Chief Executive Officer transition periods.


5. Former Chief Executive Officers. A former Chief Executive Officer may continue to serve as a Director, but shall not serve as Chairman of the Board unless so requested by the Board, upon recommendation of the Governance and Nominating Committee. The Board believes that the continuation of a former Chief Executive Officer of the Company on the Board is a matter to be decided in each individual instance by the Board, upon recommendation of the Governance and Nominating Committee. Accordingly, when the Chief Executive Officer ceases to serve in that position, he or she will be expected to resign from the Board if so requested by the Board, upon recommendation of the Governance and Nominating Committee.


6. Retirement. It will be expected that a Director shall not hold office beyond the next succeeding annual meeting after attaining the age of 75, unless the Board requests that such director continue to serve on the Board, upon recommendation of the Governance and Nominating Committee.


7. Director Qualifications. Individual Directors will be selected for their broad qualifications and specific areas of expertise to help Management in carrying out the above-stated functions. These qualifications will include:


Reputation for integrity, honesty and adherence to high ethical standards.


Sound business judgment based on broad experience relevant to the significant issues facing the Company (such as finance, marketing and technology). Experience in driving top-line sales growth will be viewed as value added.


Breadth and depth of relevant experience, including the ability to bring insights to the strategic issues facing Management.


Understanding of the legal framework governing corporations, sensitive to the public responsibilities of corporations, and alert to changing business conditions, technologies, markets, trends and opportunities.


Ability to evaluate the Company’s financial and operating reports and to analyze the Company’s financial position.


Independence of judgment and willingness to express questions and concerns.


No existing working relationships with competitors, suppliers or vendors of the Company that would impair the ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director or other conflicts of interest.


Willingness to dedicate the required time (including attendance at Board and committee meetings) to gain a firm understanding of the business and to be able to make educated judgments about its affairs. Willingness and ability to respond to requests from Management outside of Board meetings for advice and support relative to contacts, knowledge or experience of potential benefit to the Company.


Ability to work with fellow Directors in a constructive manner that demonstrates respect, trust and a commitment to building shared solutions.


To the degree possible, the value of diversity in experience base and expertise will be sought. Nominees for Director shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law. The backgrounds and qualifications of the Directors considered as a group should provide a significant breadth of experience, knowledge and abilities that shall assist the Board in fulfilling its responsibilities.


8. At least half of the Directors will manage or have had experience managing publicly traded businesses and organizations of comparable or larger size and scope of the Company.


9. Legal considerations affect Board membership in the following ways:


Prohibit a Director from serving as a director, manager or consultant to a direct competitor.


Require disclosure of potential conflicts of interest if a Director is presently associated with a vendor or customer of the Company, and require consideration of whether that relationship may compromise the individual’s objectivity.


Require each Director or Director candidate to complete an annual questionnaire regarding bankruptcy, criminal proceedings, court proceedings involving SEC matters, and so on.


10. The renomination of existing Directors should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above. In addition, the Governance and Nominating Committee shall consider the existing Directors’ performance on the Board and any committee, which shall include consideration of any continuing director education undertaken by the Directors.


11. Other Directorships. The Board does not believe that its members should be prohibited from serving on boards of other organizations, and the Board has not adopted any guidelines limiting such activities, except that no member of the Audit/Finance and Investment Committee may serve on the audit committee of more than two other public companies unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Audit/Finance and Investment Committee. However, the Governance and Nominating Committee shall take into account the nature of and time involved in a director’s service on other boards in evaluating the suitability of individual directors and making its recommendations to the Board. Service on boards and/or committees of other organizations shall comply with the Company’s conflict of interest policies.


12. Tenure. The Board does not believe it should establish term limits. Term limits could result in the loss of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and an institutional memory that benefit the entire membership of the Board as well as management. As an alternative to term limits, the Governance and Nominating Committee shall review each Director’s continuation on the Board each year. This will allow each Director the opportunity to conveniently confirm his or her desire to continue as a member of the Board and allow the Company to conveniently replace directors who are no longer interested or effective.


13. Selection of New Director Candidates. Except where the Company is legally required by contract, bylaw or otherwise to provide third parties with the right to nominate directors, the Governance and Nominating Committee shall be responsible for (i) identifying individuals qualified to become Board members consistent with criteria approved by the Board and (ii) recommending to the Board the persons to be nominated by the Board for election as directors at the annual meeting or a special meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board. Director nominees shall be considered for recommendation by the Governance and Nominating Committee in accordance with this Framework, the policies and principles in its charter and the criteria set forth in paragraph 7 above. It is expected that the Governance and Nominating Committee will have direct input from the Chairman of the Board, the Chief Executive Officer and, if one is appointed, the Lead Director. The Governance and Nominating Committee shall be responsible for reviewing with the Board, on an annual basis, the requisite skills and criteria for new Board members as well as the composition of the Board as a whole. This review shall include consideration of diversity, age, skills and experience in the context of the needs of the Board. The Governance and Nominating Committee may adopt, and periodically review and revise as it deems appropriate, procedures regarding director candidates proposed by stockholders.


14. Extending the Invitation to a New Director Candidate to Join the Board. The invitation to join the Board should be extended by the Chairman of the Governance and Nominating Committee, on behalf of such Committee, with the assent of the Chairman of the Board, on behalf of the Board. Unauthorized approaches to prospective directors can be premature, embarrassing and harmful.


C. Responsibilities of Individual Directors


Individual Directors have a responsibility to:


Attend and actively participate in meetings of the Board and the Board committees on which they serve and to ensure proper representation at stockholders meetings.


Spend sufficient time to gain a firm understanding of the business, familiarity with key members of Management and an informed foundation for making required decisions.


Comply with the continuing education policies and guidelines adopted by the Governance and Nominating Committee.


Serve actively on committees as assigned.


Express their views on the quality, quantity and timeliness of the information that they receive from Management and to seek additional information as they believe is required.


Review and understand the information provided by Management, including review of board meeting materials in advance of the meetings for which such materials were prepared.


Exercise independent judgment in performing their duties and actively challenge Management on issues where they believe additional consideration to be required.


Offer ad hoc advice and counsel as requested.


Treat information as confidential and not share it with anyone outside the Board except as required by law (corporate employees, outside professional service providers, members of governmental agencies, representatives of the press and so on) without express authorization and approval from the Chairman and CEO.


Interact constructively in managing differences with other Directors, demonstrating respect and consideration for their views and assuming the highest integrity in their actions and motivations.


Directors shall be afforded full and free access to management and, as necessary and appropriate, independent advisors. Any meetings or contacts that a director wishes to initiate may be arranged through the Chief Executive Officer or the Secretary or directly by the director. The directors shall use their judgment to ensure that any such contact is not disruptive to the business operations of the Company and shall, to the extent appropriate, copy the Chief Executive Officer on any written communications between a director and an officer or employee of the Company.


The Board and each committee shall have the power to hire and consult with independent legal, financial or other advisors for the benefit of the Board or such committee, as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance. Such independent advisors may be the regular advisors to the Company. The Board or any such committee is empowered, without further action by the Company, to cause the Company to pay the compensation of such advisors as established by the Board or any such committee.


Although the Directors are expected to utilize the advice and counsel of professionals or experts, no individual Director is authorized to incur professional service expenses on behalf of the Company or the Board without the express authorization of the Chief Executive Officer or Board Chairman.


D. Role of the Chairman and Lead Director


The Chairman is responsible to facilitate the constructive interaction between the Board and Management of the Company. The Chairman should be fully informed about both the condition of the Company and the concerns and recommendations of the Directors. The Chairman should provide an opportunity for the full and open participation of each Director at Board meetings and work to develop consensus at those meetings. This responsibility will include managing the contributions and behavior of individual Directors as necessary to sustain productive dialogue.


Specific duties and responsibilities of the Chairman include:


Presiding at all meetings of the stockholders and Directors. Conducting those meetings so that the work of the Board is done in the most constructive and efficient manner possible with an atmosphere of openness and consideration.


Serving as the spokesperson for the Board of Directors in communications between the Company and its stockholders.


Preparing agendas for meetings of the Board of Directors, utilizing input from other Directors.


Overseeing the provision of timely and adequate information to the Directors so that they can properly discharge their duties.


Scheduling meetings of the Board and working with committee chairmen to coordinate the schedule of meetings for committees and the integration of committee decisions and other outputs with the work of the entire Board.


Implementing parliamentary procedure so that there is high clarity when a vote is being taken, what the outcome was, and how the result will be recorded in the minutes of the meeting.


Implementing Board decisions and policies with the judgment and flexibility that adapts to the conditions and information he/she finds in between Board meetings, with appropriate explanation to the Board on a timely basis.


Providing that complete minutes are kept documenting topics reviewed and decisions made; such minutes shall be reviewed at the subsequent Board meeting so that any discrepancies can be identified and corrected on a timely basis.


Exemplifying the highest ethical standards.


If the Chairman is the Chief Executive Officer, there will be a Lead Director. The Lead Director shall be an “independent” Director, as defined by the applicable rules of NASDAQ and his or her name shall be disclosed in the annual meeting proxy statement. The Lead Director shall have the following duties and responsibilities:


Chair regular (at least twice a year) executive sessions of the independent directors to discuss, among other matters, the performance of the Chief Executive Officer. The independent directors will meet in executive session at other times and at the request of any independent director. Absent unusual circumstances, these sessions shall be held in conjunction with regular Board meetings. The director who presides at these meetings shall be the Lead Director if there is one, and if not, shall be chosen by the independent directors, and his or her name shall be disclosed in the annual meeting proxy statement.


Making committee assignments that tap individual Directors’ strengths while rotating them in the interests of broadening their understanding of the Company and its issues.


Chairing the Governance and Nominating Committee and overseeing the performance of its responsibilities, including evaluation of Chief Executive Officer, Board and individual Director performance.


Spearheading the work of the Board in executive session when Chief Executive Officer performance evaluation, compensation and succession issues are being discussed.


Meet with any director who is not adequately performing his or her duties as a member of the Board or any committee.


Facilitate communications between other members of the Board and the Chairman of the Board and/or the Chief Executive Officer; however, each director is free to communicate directly with the Chairman of the Board and with the Chief Executive Officer.


Work with the Chairman of the Board in the preparation of the agenda for each Board meeting and in determining the need for special meetings of the Board.


Otherwise consult with the Chairman of the Board and/or the Chief Executive Officer on matters relating to corporate governance and Board performance.


If the Chairman is not the Chief Executive Officer, the duties and responsibilities of the Lead Director set forth above shall be held and performed by the Chairman.



E. Meetings of the Board of Directors


The Chairman of the Board shall approve the agenda for each Board meeting. Each Board member is free to suggest the inclusion of agenda items and is free to raise at any Board meeting subjects that are not on the agenda for that meeting.


The entire Board of Directors will meet at least four times per year. The Chairman, in consultation with the Lead Director and with the members of the Board, shall determine the frequency and length of the Board meetings. Special meetings may be called from time to time as determined by the needs of the business.


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. The Board acknowledges that certain items to be discussed at a Board or committee meeting may be of an extremely confidential or time-sensitive nature and that the distribution of materials on these matters prior to meetings may not be appropriate or practicable. Presentations made at Board meetings should do more than summarize previously distributed Board meeting materials.


The Board encourages the senior executives of the Company to, from time to time, bring Company personnel into Board meetings who (i) can provide additional insight into the items being discussed because of personal involvement in these areas or (ii) appear to be persons with future potential who should be given exposure to the Board.


F. Board Committees


1. Key Committees. A committee structure will be required to carry out more detailed activity than can be accomplished during regular scheduled Board meetings. The Board will conduct its business through full Board sessions and through the following standing committees:


Audit/Finance and Investment Committee

Governance and Nominating Committee

Leadership and Compensation Committee


The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.


2. Committee Charters. Each standing committee of the Board shall have a charter that has been approved by the Board. In accordance with the applicable rules of the NASDAQ, the charters of the Audit/Finance and Investment Committee, the Leadership and Compensation Committee and the Governance and Nominating Committee shall 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 Board shall, from time to time as it deems appropriate, review and reassess the adequacy of each charter and make appropriate changes. The charters for each of these committees are attached to this Framework.


3. Assignment and Rotation of Committee Members. The Governance and Nominating Committee shall be responsible for recommending to the Board the directors to be appointed to each committee of the Board. Except as otherwise permitted by the applicable rules of NASDAQ, each member of the Audit/Finance and Investment Committee, the Leadership and Compensation Committee and the Governance and Nominating Committee shall be “independent” as defined by such rules.


4. Reports to Board. The chairman of such standing committee shall make an oral report at each full Board meeting to highlight activities and decisions or recommendations since the last Board meeting.


5. Selection of Agenda Items. The chairman of each committee, in consultation with the committee members, shall develop the committee’s agenda. At the beginning of the year, each committee shall establish a schedule of subjects to be discussed during the year (to the extent practicable). The schedule for each committee meeting shall be furnished to all directors.


6. Frequency and Length of Committee Meetings. The chairman of each committee, in consultation with the committee members, shall determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s charter. Special meetings may be called from time to time as determined by the needs of the business and the responsibilities of the committees.


G. Director Compensation


1. Role of Board and Governance and Nominating Committee. The form and amount of Director compensation shall be determined by the Board in accordance with the policies and principles set forth below. The Governance and Nominating Committee shall conduct a periodic review of the compensation of the Company's Directors. The Governance and Nominating Committee shall consider that questions as to directors’ independence may be raised 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 or business arrangements with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated.


2. Form of Compensation. The Board believes that Directors should be incentivized to focus on long-term stockholder value. Including equity as part of Director compensation helps align the interest of Directors with those of the Company’s stockholders.


3. Amount of Consideration. The Company seeks to attract exceptional talent to its Board. Therefore, the Company’s policy is to compensate Directors at least competitively relative to comparable companies. The Company’s management shall, from time to time, present a comparison report to the Board, comparing the Company’s director compensation with that of comparable companies. The Board believes that it is appropriate for the Chairman of the Board and the chairmen and members of the committees to receive additional compensation for their services in those positions.


4. Director Stock Ownership. The Board believes that each Director should acquire and hold shares or options to purchase shares of Company stock in an amount that is meaningful and appropriate to such Director. Therefore, the Board shall establish a compensation structure for Directors that provides a significant financial stake in future corporate performance.


5. Employee Directors. Directors who are also employees of the Company shall receive no additional compensation for Board or committee service.



H. Director Orientation and Continuing Education


1. Director Orientation. The Board and the Company’s management shall conduct an orientation program for new Directors. The orientation program shall include presentations by management to familiarize new Directors with the Company’s strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its code of business conduct and ethics, its principal officers, its internal and independent auditors and its legal advisors. In addition, the orientation program shall include a review of the Company’s expectations of its Directors in terms of time and effort, a review of the Directors’ fiduciary duties and 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.


2. Continuing Education. Each Director is encouraged to be involved in continuing director education on an ongoing basis to enable him or her to better perform his or her duties and to recognize and deal appropriately with issues that arise. The Company shall pay all reasonable expenses related to continuing director education.



I. Management Evaluation and Succession


1. Selection of Chief Executive Officer. The Board shall select the Company’s Chief Executive Officer in the manner that it determines to be in the best interests of the Company’s stockholders.


2. Evaluation of Senior Executives. The Governance and Nominating Committee shall be responsible for overseeing the evaluation of the Company’s senior executives. In conjunction with the Audit/Finance and Investment Committee, in the case of the evaluation of the senior financial executives, the Governance and Nominating Committee shall determine the nature and frequency of the evaluation and the persons subject to the evaluation, supervise the conduct of the evaluation and prepare assessments of the performance of the Company’s senior executives, to be discussed with the Board periodically. The Board shall review the assessments to confirm that the senior executives are providing the best leadership for the Company over both the long- and short-term.


3. Succession of Senior Executives. The Governance and Nominating Committee shall present an annual report to the Board on succession planning, which shall include transitional Board leadership in the event of an unplanned vacancy. The entire Board shall assist the Governance and Nominating Committee in finding and evaluating potential successors to the Chief Executive Officer. The Chief Executive Officer 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 shall identify, and periodically review and reassess, the qualities and characteristics necessary for an effective Chief Executive Officer. With these principles in mind, the Board should periodically monitor and review the development and progression of potential internal candidates against these standards.



J. Annual Performance Evaluation of the Board


The Governance and Nominating Committee shall oversee an annual self-evaluation of the Board to determine whether it and its committees are functioning effectively. The Governance and Nominating Committee shall determine the nature of the evaluation, supervise the conduct of the evaluation and prepare an assessment of the Board’s performance, to be discussed with the Board. To assist in its self-assessment, the Board shall, at the beginning of each year, consider establishing an agreed-upon list of Board objectives and performance goals for the year, which shall be used as benchmarks in evaluating its performance at year end. The purpose of this process is to improve the effectiveness of the Board and its committees and not to target individual Board members.



K. Board Interaction with Stockholders, Institutional Investors, the Press, Customers, Etc.


The Board believes that the Chief Executive Officer and his or her designees speak for the Company. Individual Board members may, from time to time, meet or otherwise communicate with various constituencies that are involved with the Company. It is, however, expected that Board members would do so with the knowledge of and, absent unusual circumstances or as contemplated by the committee charters, only at the request of the Company’s senior executives.


The Board will give appropriate attention to written communications that are submitted by stockholders and other interested parties, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by the committee charters, the Chairman of the Board (if an independent director), or the Lead Director (if one is appointed), or otherwise the Chairman of the Governance and Nominating Committee shall, subject to advice and assistance from legal counsel, (1) be primarily responsible for monitoring communications from shareholders and other interested parties, and (2) provide copies or summaries of such communications to the other directors as he or she considers appropriate.



L. Periodic Review of Governance Framework


The Governance and Nominating Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of this Framework and recommend any proposed changes to the Board for approval.