Corporate Governance Guidelines
Adopted by the Board of Directors February 26, 2004
In accordance with the Delaware General Corporation Law and the Company's Bylaws, the business and affairs of the Company shall be managed and all corporate powers shall be exercised by or under the ultimate direction of the Board. Day-to-day operation of the business of the Company is delegated to management of the Company.
The primary functions of the Board are to:
The Board has determined that separate individuals shall serve as the Company's Chairman of the Board and Chief Executive Officer, and that the Chairman of the Board shall be a non-employee director. The Board in its discretion may change this arrangement, as permitted by the Company’s Bylaws.
The Company's Certificate of Incorporation provide that the Board shall consist of not less than 7 nor more than 13 directors. The Board may determine its size within the prescribed range, but stockholder approval is required to change the range. The Board should be large enough to include directors with various backgrounds, areas of expertise and experience, but small enough to facilitate active discussion and participation by all directors. The Board and the Nominating/Corporate Governance Committee will review the size of the Board in the context of nominating a slate of directors for each annual meeting of stockholders. Candidates for nomination to the Board shall be identified by the Nominating/ Corporate Governance Committee and recommended to the Board for nomination at the annual meeting of stockholders. The Board shall be divided into three classes with each class consisting, as nearly as possible, of one-third of the total number of directors. Each director shall be elected by the Company’s stockholders to serve a term ending on the date of the third annual meeting of stockholders following the annual meeting at which the director was elected.
It is the policy of the Company that the Board consist of at least a majority of "independent" directors as determined in accordance with applicable New York Stock Exchange (NYSE) listing standards and any other applicable law or regulation. The Board shall affirmatively determine whether each director has any material relationship with the Company that would cause the director not to be independent. The Nominating/Corporate Governance Committee may assist in making those determinations. The Nominating/Corporate Governance Committee may recommend, and the Board may adopt, categorical standards to assist in making determinations of independence. Any additional requirements to serve on any Board Committee shall be stated in the Committee's charter.
The Board believes that experience as a Company director is a valuable asset. Directors are not subject to term limits, except as a result of reaching the Board’s retirement age. The retirement policy of the Board is that no director will stand for re-election to the Board at any meeting of the stockholders of the Company after such director attains the age of 80.
In consultation with management, the Board will determine the frequency and length of Board meetings. The Board currently holds four or five regularly scheduled meetings per year. Special meetings may be called when necessary in accordance with the Bylaws. The Chairman of the Board will establish the agenda for each Board meeting. Any director may request that particular items be included in the agenda or may raise at a meeting subjects that are not on the meeting agenda.
Directors should use their best efforts to attend all Board and Board Committee meetings. Attendance in person is preferred, but attendance by teleconference is permitted if necessary under the circumstances. The senior executive officers of the Company, as well as other officers and employees, may attend Board meetings at the invitation of the Chairman of the Board to make presentations to the Board, respond to questions, receive recognition, or for other purposes related to the business of the meeting.
Board materials related to proposed agenda items shall, to the extent reasonably feasible, be provided to directors sufficiently in advance of Board meetings when necessary to allow meaningful review and to allow directors to prepare for discussions of the items at the meeting. The Board acknowledges that certain items to be discussed at Board meetings are of an extremely sensitive or fast-breaking nature and that the distribution of materials on these matters prior to Board meetings may not be appropriate or feasible.
Each director should be familiar with the agenda for each meeting, should have carefully reviewed all materials distributed in advance of the meeting and should be prepared to participate meaningfully in the meeting and to discuss all scheduled items of business.
The proceedings and deliberations of the Board and its committees are confidential. Each director will maintain the confidentiality of information received in connection with his or her service as a director.
An executive session of the non-management directors will be held without Company management present before, during or after each meeting of the Board. The Chairman of the Board, or, if the Chairman of the Board is unable to participate, another non-management director designated by the remaining non-management directors, will preside at these executive sessions, and his or her name will be disclosed in the annual proxy statement. In order that interested parties may be able to make their concerns known to the non-employee directors, the Company shall implement and disclose a method for such parties to communicate directly with the non-management directors. The Nominating/Corporate Governance Committee may recommend such a method.
The Board currently has the following Committees: Audit, Compensation, Executive, Nominating/Corporate Governance and Stock Option and Incentive Bonus. The duties of each Committee shall be specified in the Committee's Board-approved charter; provided that the Board shall not delegate any power or authority to any Committee that is required by law, regulation or listing standard to be exercised by the Board as a whole. In its discretion, the Board may create new Committees, either permanent or temporary, disband any existing Committee, or amend the charter of any Committee, subject to limitations imposed by the Delaware General Corporation Law.
The Board may also form Subcommittees for any purpose and may delegate to such Subcommittees such power and authority as the Board deems appropriate; provided however, that a Subcommittee shall consist of at least two members and that the Board shall not delegate any power or authority required by any law, regulation or listing standard to be exercised by the Board as a whole. The Board shall determine the chairmanship of the applicable Subcommittee. The meetings and any other actions of any Subcommittee shall be governed by the Bylaws of the Company applicable to meetings and actions of the Board.
The Board has the responsibility to determine chairmanships and the assignment of directors to Committees and Subcommittees. The Audit Committee, the Compensation Committee, the Nominating/Corporate Governance Committee and the Stock Option and Incentive Bonus Committee shall be composed exclusively of independent directors. The Chairman of the Board will be the Chair of the Executive Committee and will recommend Committee Chairs to the Board for approval. Prior to each annual organizational meeting of the Board, the Chairman of the Board, in consultation with the respective Committee Chairs, will develop a proposed slate of Committee assignments for consideration and approval by the Board. Committee assignments and chairmanships may be rotated to give directors opportunities to serve on various Committees, but the Board currently does not believe that rotation is appropriate.
Subject to provisions of the Committee's charter, the Chair of each Committee, in consultation with Committee members and management of the Company, will determine the frequency and length of Committee meetings and establish the agenda for each meeting. Any Committee member may request the inclusion of items on the agenda or raise subjects not on the meeting agenda. The Board Committees shall report their actions to the Board at a subsequent Board meeting.
The senior executive officers of the Company, as well as other officers and employees, may also attend Board Committee meetings at the invitation of the Chair of the respective Committee to make presentations to the Committee, respond to questions, receive recognition, or for other purposes related to the business of the meeting.
Directors shall have complete access to the Company's management and may meet individually with members of management at any reasonable time. Management will provide information requested by directors. Directors will use discretion to avoid any undue burden on management or distraction from their essential duties. As necessary and appropriate, the Board and Board Committees may retain, at the Company's expense, such independent accountants, legal counsel or financial or other advisors as they deem necessary.
The Board, acting on the recommendation of the Nominating/Corporate Governance Committee, will nominate a slate of director candidates for election at each annual meeting of stockholders and will elect directors to fill vacancies, including vacancies created as result of any increase in the size of the Board, between annual meetings. The Board will take into account members’ qualifications, including personal characteristics, experience in corporate governance of publicly held companies as an officer or director, and experience related to the Company’s industry and business.
The Nominating/Corporate Governance Committee and the Board will 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 recommendations to Company stockholders. Service on boards of other organizations should be consistent with the Company's conflict of interest policies.
In the event that a non-employee director changes his or her employment status, or retires from employment, the Nominating/Corporate Governance Committee shall review whether this change of status has an impact on the continued appropriateness of the director to serve as a member of the Board and make a recommendation to the Board.
The Board and the Company shall provide an orientation for new directors that includes background materials, information about Company policies, meetings with senior management, and visits to the Company facilities, as appropriate. The Board and Company shall, from time to time as appropriate, provide continuing education for directors through presentations at Board meetings, discussions at in-depth strategic review meetings, additional reading materials, and other means.
The Board has the responsibility to determine the compensation and benefits for directors, subject to stockholder approval when required. The Compensation Committee may make appropriate recommendations for consideration and action by the Board. Management of the Company will report periodically to the Compensation Committee or the Board on the status of the Company's Board compensation in relation to other reasonably comparable publicly held United States corporations.
It is the policy of the Board that non-employee directors should be compensated at an aggregate level consistent with total compensation at other reasonably comparable corporations. Compensation may include a fixed annual retainer, equity compensation, meeting fees and such other elements as the Board may determine.
The Compensation Committee annually will evaluate the performance of the Chief Executive Officer and the other executive officers in accordance with its charter and upon the basis of such criteria as the Committee deems appropriate, including performance of the business and achievement of strategic objectives. The Chief Executive Officer will provide to the Committee his or her assessment of the performance of the executive officers of the Company. The Committee will report on its actions to the Board at a subsequent Board meeting.
The Board periodically will review executive succession planning and management development. The Compensation Committee will take the lead in developing a report for consideration by and discussion among the Board members. The Chief Executive Officer will ensure that the Board has opportunities to become acquainted with the senior officers of the Company and others who may have the potential to handle significant management positions.
Generally, management should speak on behalf of the Company with institutional investors, individual stockholders, customers, media representatives, regulators and other constituencies. Directors may meet or communicate with such parties as they see fit, but should bear in mind that securities laws prohibit selective disclosure of material information about the Company. To prevent disclosure problems, such contacts should be coordinated with the Chairman of the Board whenever possible.
The Board and Committees shall be responsible for annually conducting a self-evaluation to determine whether the Board and Committees are functioning effectively. The Committees shall deliver to the Board reports setting forth the results of any evaluation. Any director is free at any time to comment on the Board's or any Committee's performance. The Nominating/Corporate Governance Committee will oversee this process.
Management and the Nominating/Corporate Governance Committee shall jointly develop a code of business conduct and ethics for directors, officers and employees and recommend the code for adoption by the Board. The code shall be disclosed to stockholders. The code shall require any waiver of the code for directors or executive officers to be made by the Board or a Committee and disclosed to stockholders. The code shall address, among other things, conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, compliance with laws, rules and regulations (including insider trading laws) and encouraging the reporting of any illegal or unethical behavior.
The Company maintains a policy regarding transactions in the Company’s securities by its directors and officers. All transactions in the Company’s securities by directors shall be conducted in accordance with such policy.
The Company shall provide reasonable directors’ and officers’ liability insurance for the directors and shall indemnify the directors to the fullest extent permitted by law and the Company’s Certificate of Incorporation and Bylaws.
The Board will review and revise these Corporate Governance Guidelines as appropriate from time to time based on the recommendations of the Nominating/Corporate Governance Committee.