CORPORATE GOVERNANCE GUIDELINES
A. BOARD COMPOSITION
1. Size of the Board
The Corporation’s Certificate of Incorporation provides that the Board will have not fewer than three (3) nor more than ten (10) directors, with the actual number being set from time to time by resolution of the Board. The Board currently has five (5) members. The Board is divided into three (3) classes, each with a staggered three (3) year term of office and the classes as nearly equal in number of directors as possible.
2. Mix of Inside and Independent Directors
The Board shall at all times have a majority of Independent Directors. The Board also believes that it is useful and appropriate to have one or more members of management, in addition to the Chief Executive Officer, as directors.
Board Definition of
The Corporation defines an “Independent Director” in accordance with Section 303A.2 of the New York Stock Exchange (“NYSE”) Listed Company Manual. Because it is not possible to anticipate or explicitly provide for all potential conflicts of interest that may affect independence, the Board is also responsible for making an affirmative determination that each Independent Director has no other material relationship with the Corporation (in addition to those specified in Section 303A.2(b) of the NYSE Listed Company Manual), either directly or as a partner, shareholder or officer of an organization that has a relationship with the Corporation. The Corporation will disclose such determinations in its annual proxy statement.
4. Board Membership Criteria
The Board has adopted a policy regarding specific, minimum qualifications for potential directors. These factors, and others as considered useful by the Board and the Nominating and Governance Committee, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time.
Board members are expected to prepare for, attend, and participate in all Board and applicable Committee meetings. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as an outstanding director. These other commitments will be considered by the Nominating and Governance Committee and the Board when reviewing Board candidates and in connection with the annual evaluation of the Board.
5. Selection of New Director Candidates
The Board has adopted a policy regarding the process for identifying and evaluating director nominees, including nominees recommended by shareholders. The Nominating and Governance Committee may request that other members of the Board and members of management participate in the process as appropriate. Through this process, the Nominating and Governance Committee identifies individuals qualified to become Board members and considers, evaluates and recommends for the Board’s selection nominees to fill positions on the Board. The Board shall give due consideration to the Nominating and Governance Committee’s recommendation in selecting the slate of directors to stand for election by the Corporation’s shareholders.
6. Term Limits
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 Corporation and its operations and therefore provide an increasing contribution to the Board as a whole.
7. Board Compensation
Each director who is not also an officer or employee of the Corporation receives $50,000 per annum for his or her service on the Board, and is reimbursed for his or her reasonable expenses. Directors who are officers or employees of the Corporation are not paid for Board membership in addition to their regular employee compensation. Independent Directors may not receive consulting, advisory or other compensatory fees from the Corporation in addition to their Board compensation. In addition, the Corporation will disclose in its annual proxy statement any charitable contributions made by the Corporation to any charitable organization in which a director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues.
B. RESPONSIBILITIES OF THE BOARD OF DIRECTORS
1. Primary Responsibilities
The primary responsibilities of the Board of Directors are oversight, counseling and direction to the management of the Corporation in the interest and for the benefit of the Corporation’s shareholders.
The Board of Directors has delegated to the Chief Executive Officer, working with the other executive officers of the Corporation, the authority and responsibility for managing the business of the Corporation in a manner consistent with the standards and practices of the Corporation, and in accordance with any specific plans, instructions or directions of the Board. The Chief Executive Officer and management are responsible for seeking the advice and, in appropriate situations, the approval of the Board with respect to extraordinary actions to be undertaken by the Corporation.
2. Code of Business Conduct and Ethics
Members of the Board of Directors shall act at all times in accordance with the requirements of the Corporation’s Code of Business Conduct and Ethics, which shall be applicable to each director in connection with his or her activities relating to the Corporation. Any waiver of the requirements of the Code of Business Conduct and Ethics with respect to any individual director shall be reported to, and be subject to the approval of, the Board.
C. BOARD MEETINGS AND MATERIALS
1. Scheduling and Selection of Agenda Items for Board Meetings
Board meetings are typically scheduled in advance. In addition to scheduled meetings, additional Board meetings may be called upon appropriate notice at any time to address specific needs of the Corporation. The Board may also take action from time to time by unanimous written consent.
2. Access to Officers and Employees
Each member of the Board shall have complete access to contact and meet with any officer or employee of the Corporation.
3. Executive Sessions of Independent Directors
The Board’s policy is to have separate, regularly-scheduled executive sessions for non-management directors, without the presence of management, at least twice a year in conjunction with regularly-scheduled Board meetings. The Corporation will disclose in its annual proxy the name of any director chosen to preside at the executive sessions or, alternatively, the procedure by which a presiding director is selected for each executive session. In addition, the Corporation will disclose a method for interested parties to communicate directly with any such presiding director or with the non-management directors as a group.
4. Director Orientation and Continuing Education
The Corporation will such coordinate orientation and continuing education programs for directors as the Board deems appropriate.
D. BOARD COMMITTEES
1. Number of Committees
The Board of Directors, by resolution adopted by a majority of the entire Board, may designate committees consisting of one of more directors. To date, the Board has established three committees: the Audit and Finance Committee, the Nominating and Governance Committee, and the Stock Option and Compensation Committee. There may, from time 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 and Finance Committee, the Nominating and Governance Committee and the Stock Option and Compensation Committee shall be comprised entirely of Independent Directors.
The Audit and Finance Committee, the Nominating and Governance Committee and the Stock Option and Compensation Committee will have written charters, approved by the Board, each of which will describe the Committee’s general authority and responsibilities.
Each Committee will annually review its own performance, and will report to the Board concerning the Committee’s activities.
The Audit and Finance Committee assists the Board in its oversight of (i) the integrity of the Corporation’s financial statements, (ii) the Corporation’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the Corporation’s outside auditor, and (iv) the performance of the Corporation’s internal audit function and outside auditor. In addition, the Audit and Finance Committee is directly responsible for the appointment, retention, compensation and oversight of the Corporation’s outside auditor.
The Nominating and Governance Committee identifies individuals qualified to become Board members, and evaluates and recommends for the Board’s selection nominees to fill positions on the Board. The Nominating and Governance Committee also oversees the periodic evaluation of the Board, and is responsible for developing, and recommending to the Board for its approval, these Corporate Governance Guidelines and any revisions hereto.
The Stock Option and Compensation Committee evaluates the performance of the Corporation’s Chief Executive Officer, determines and approves the Chief Executive Officer’s compensation based on such evaluation, reviews and approves arrangements relating to the compensation of other executive officers of the Corporation, and administers and makes individual grants of stock options under the Corporation’s 1992 Long-Term Incentive Plan.
2. Assignment and Term of Service of Committee Members
The Board is responsible for the appointment of Committee members and Committee chairs. Committee assignments are reviewed periodically.
E. MANAGEMENT AND BOARD REVIEW AND RESPONSIBILITY
1. Formal Evaluation of Chief Executive Officer
From time to time, the Stock Option and Compensation Committee will review and approve corporate factors relevant to the compensation of the Corporation’s Chief Executive Officer. The Stock Option and Compensation Committee will, on an annual basis, evaluate the performance of the Chief Executive Officer in light of such factors, and will report the results of its evaluation to the full Board. The Committee will determine and approve the compensation of the Chief Executive Officer based on such evaluation.
2. Succession Planning and Management Development
The Board of Directors will, at such times as it deems appropriate, discuss succession planning for the Chief Executive Officer. The Chief Executive Officer shall, upon the request of the Board, recommend and evaluate potential successors to the position. In addition, the Chief Executive Officer shall, upon the request of the Board, present to the Board succession plans for other key executive officers of the Corporation.
3. Formal Evaluation of the Board
The Nominating and Governance Committee shall oversee the Board’s periodic performance self-evaluation. The Nominating and Governance Committee will discuss the results of the self-evaluation with the full Board.