Corporate Governance Guidelines
I. The Role Of The Board Of Directors
A. Direct the Affairs of the Company for the Benefit of Shareholders
The Board believes that the primary responsibility of directors is to oversee the affairs of the Company for the benefit of shareholders. Day-to-day management of the Company is the responsibility of management. The role of the Board is to oversee management's performance of that function.
The 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 are entitled to rely on the honesty and integrity of the Company's senior executives and its outside advisors and auditors. 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 with due care. Directors should review in advance any information and data that are distributed in writing to the directors before meetings.
B. Strategy; Review of Performance
The Board approves the annual business plan consistent with the Company's goals and strategies at the start of the fiscal year and reviews the Company's performance periodically during the year. The Board believes it is important to establish and evaluate longer term objectives and not to overemphasize short-term performance.
C. Ethical Business Environment
The Board believes that the long-term success of the Company is dependent upon the maintenance of an ethical business environment that focuses on adherence to both the letter and the spirit of regulatory and legal mandates.
D. CEO Performance Evaluation
The Board believes that CEO performance should be evaluated annually related to his progress toward long term goals and strategies as well as current year results as a regular part of any decision with respect to the CEO's compensation. The Board has delegated responsibility to the Nominating / Corporate Governance / Compensation Committee (the "Governance Committee") to evaluate CEO performance in the course of approving CEO salary, bonus and long-term incentives such as stock and option awards.
General. The Board has delegated oversight of compensation and benefits plans to the Governance Committee. The Governance Committee establishes the compensation and benefits programs for the Company's employees and directors, subject in some cases to shareholder approval.
Directors. The Board believes that director compensation generally should be competitive with that paid to directors of other corporations of similar size and complexity.
F. Succession Planning
The Board has delegated responsibility to the Governance Committee to review and advise on management succession issues, including the recommendations to the full Board for selection of a new CEO.
II. Directors and Meetings
A. Executive Sessions of Non-Management Directors
The Board believes that the non-management directors should meet in executive session without management present in connection with each regular Board meeting. The Agenda for each Board meeting shall provide for an executive session, and the non-management directors may meet at such additional times as they determine.
The director who presides at these meetings or a method of selecting the presiding director will be determined by the non-management directors, and this determination will be disclosed in the Company's annual proxy statement. Following each executive session, the results of deliberations and any recommendations should be communicated to the full Board by a director selected by the non-management directors.
The Board also believes that it is important that all stakeholders and those who have an interest in the affairs of the corporation have a method to communicate directly with non-management directors. As such the Board has established a method for such direct communication which shall be posted on the Company's web site.
B. Access to Management
Board members have complete access to management. The Chairman of the Audit Committee has access to the Chief Financial Officer. It is assumed that Board members will use judgment to ensure that contact is not distracting to the business operations of the Company and that such contact, if in writing, be copied to the CEO and the Chairman. The Board and each committee shall have the power to hire independent legal, financial or other advisors as they may deem necessary, at the expense of the Company and without consulting or obtaining the approval of any officer of the Company in advance.
The Board believes the Chairman of the Board and the CEO (if the Chairman is not the CEO) should establish the agenda for each Board meeting, taking into account suggestions of Board members.
Board members are encouraged to suggest the inclusion of particular items on the agenda and the Chairman from time to time is expected to ask directors for their suggestions or opinions on possible agenda items.
III. Board Structure
A. Size of the Board
The Board believes that the Board should not be too large, but understands that the size of the Board will fluctuate from time to time depending on circumstances. The Board agrees, that the current optimum size for the Board is 7 to 12 directors and the Governance Committee shall review the size of the Board from time to time.
B. Director Retirement Age and Term Limits
The Board has established a retirement policy for directors pursuant to the by laws of the Company which it feels is appropriate for current circumstances. The Governance Committee periodically reviews the retirement policy to ensure that it remains appropriate in light of the Company's needs.
The Board believes that consistent quality in the directorship can be achieved effectively without term limits. Through the evaluation of the Governance Committee, incumbent directors and the strengths and weaknesses of the Board as a whole are reviewed at least annually.
C. Director Qualifications
The Company does not set specific criteria for directors but believes that candidates should show evidence of leadership in their particular field, have broad experience and the ability to exercise sound business judgment, possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the Company's shareholders. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the board for an extended period of time. In selecting directors, the Board generally seeks a combination of active or former senior officers of businesses, academics and entrepreneurs whose backgrounds are relevant to the Company's mission, strategy, operations and perceived needs.
D. Director Independence
A majority of the directors will be independent directors under the New York Stock Exchange (the "NYSE") corporate governance listing standards, as in effect from time to time. The Board believes that directors who do not meet the NYSE's independence standards also make valuable contributions to the board and to the company by reason of their experience and wisdom. To be considered independent under the proposed NYSE rules, the director must be determined, by resolution of the Board as a whole, after due deliberation, to have no material relationship with the Company other than as a director. The board has established the following categorical independence standards to assist it in determining director independence.
1. In no event will a director be considered "independent" if, within the preceding three years:
- the director was employed by the Company or any of its direct or indirect subsidiaries,
- an immediate family member of the director was employed by the Company or any of its direct or indirect subsidiaries as an executive officer,
- the director or any immediate family member received more than $100,000 per year in direct compensation from the Company or any of its direct or indirect subsidiaries, other than director and committee fees and pension or other forms of deferred compensation for prior service (as long as such compensation is not contingent in any way on continued service),
- the director was employed by or affiliated with the Company's present or former independent auditor or internal auditor,
- an immediate family member of the director was employed in a professional capacity by the Company's present or former independent auditor or internal auditor,
- an executive officer of the Company was on the compensation committee of the board of directors of a company that employed either the director or an immediate family member of the director as an executive officer, or
- the director was an executive officer or an employee, or an immediate family member of the director was an executive officer, of a company that made payments to, or received payments from, the Company for property or services in an amount which, in any single fiscal year, exceeded the greater of $1 million, or 2% of the other company's consolidated gross revenues.
2. The following relationships will not be considered to be material relationships that would impair a director's independence:
- if a director is an executive officer of another company which is indebted to the Company, or to which the Company is indebted, and the total amount of the indebtedness is less than one percent of the total consolidated assets of the indebted company, and
- if a director serves as an executive officer, director or trustee, or an immediate family member of the director serves as an executive officer, of a charitable organization and the Company's charitable contributions to the organization in any of the last three fiscal years, in the aggregate, are less than (1) one percent of that organization's latest publicly available consolidated gross revenues (or annual charitable receipts, if revenue information is not available) or (2) $50,000, whichever is greater.
The Company will not make any personal loans or extensions of credit to directors or executive officers. No director or family member may provide personal services for compensation to the company.
E. Director Orientation and Continuing Education
In order to promote director effectiveness management is responsible for an orientation process for new directors to include written materials concerning the Company, its operation and the policies and procedures of the Board, meeting with key members of management, and visits to Company offices and facilities.
All directors must participate in the Company's continuing director education program.
F. Director, Board and Committee Evaluations
The Board believes that the Governance Committee should review the performance of incumbent directors prior to their re-election. The Board expects the Governance Committee to recommend appropriate action to effect changes in incumbent directors if, in the opinion of the Governance Committee after discussion with the Chairman of the Board and CEO (if the Chairman is not the CEO), any director is not contributing to the work of the Board.
The Board also believes that the Governance Committee should periodically review the Board's performance and effectiveness as a body, including its corporate governance policies and practices, and that a similar review should be undertaken with respect to each of the Board's committees. The Governance Committee will coordinate these assessments, which may consist of surveys and self-evaluations, and report to the Board the results of its analysis and any recommendations following each such review. The Governance Committee shall coordinate such reviews at least annually.
IV. Periodic Review of Guidelines
These Corporate Governance Guidelines will be reviewed by the Governance Committee on at least an annual basis. The Governance Committee will propose any suggested changes to the full Board for its consideration.