Board of Directors Corporate Governance Guidelines
Qualification of Directors:
The Company's Board of Directors must posses certain basic personal and professional qualities in order to properly discharge their fiduciary duties to stockholders, provide effective oversight of the management of the Company and monitor the Company's adherence to principles of sound corporate governance. It is therefore the policy of the Board that all persons nominated to serve as a director of the Company should possess the minimum qualifications described in this policy. These are only threshold criteria, however, and the Board will also consider the contributions that a candidate can be expected to make to the collective functioning of the Board based upon the totality of the candidate's credentials, experience and expertise, the composition of the board at the time, and other relevant circumstances.
- Integrity. All candidates must be individuals of personal integrity and ethical character, and who value and appreciate these qualities in others.
- Absence of Conflicts of Interest. Candidates should not have any interests that would materially impair their ability to (i) exercise independent judgment, or (ii) otherwise discharge the fiduciary duties owed as directors to the Company and its stockholders.
- Fair and Equal Representation. Candidates must be able to represent fairly and equally all stockholders of the Company without favoring or advancing any particular stockholder or other constituency of the Company.
- Achievement. Candidates must have demonstrated achievement in one or more fields of business, professional, governmental, communal, scientific or educational endeavor.
- Oversight. Candidates are expected to have sound judgment, borne of management or policy-making experience (which may be as an advisor or consultant), that demonstrates an ability to function effectively in an oversight role.
- Business Understanding. Candidates must have a general appreciation regarding major issues facing public companies of a size and operational scope similar to the Company. These include:
- contemporary governance concerns;
- regulatory obligations of a public issuer;
- strategic business planning;
- competition in a global economy; and
- basic concepts of corporate finance.
- Available Time. Candidates must have, and be prepared to devote, adequate time to the Board and its committees. It is expected that candidates will be available to attend substantially all meetings of the Board and any committees on which candidates will serve, as well as the Company's annual meeting of stockholders, after taking into consideration their other business and professional commitments, including service on the boards of other companies.
- Limited Exceptions. Under exceptional and limited circumstances, the Board may approve the candidacy of a nominee who does not satisfy all of these requirements if it believes the service of such nominee is in the best interests of the Company and its stockholders.
- Additional Qualifications. In approving candidates for election as director, the Board will also assure that:
- at least a majority of the directors serving at any time on the Board are independent, as defined under the rules of the NASDAQ or the principal stock market on which the Company's common shares are then listed for trading;
- at least three of the directors satisfy the financial literacy requirements required for service on the audit committee under the rules of the NASDAQ or the principal stock market on which the Company's common shares are then listed for trading;
- at least one of the directors qualifies as an audit committee financial expert under the rules of the Securities and Exchange Commission (“SEC”);
- at least some of the independent directors have experience as senior executives of a public or substantial private company; and
- at least some of the independent directors have general familiarity with an industry or industries in which the Company conducts a substantial portion of its business or in related industries.
Compensation of Directors:
Directors who are also employees of the Company or any of its subsidiaries, or, who are not Independent Directors for any reason, will not receive additional compensation for Director services.
The form and amount of director compensation will be determined by the Nominating/Governance Committee and confirmed by the Board, in accordance with its charter and the Nominating/Governance Committee will conduct an annual review of director compensation. In particular, no member of the Audit Committee may receive, directly or indirectly, any compensation from the Company other than (a) fees paid to directors for service on the Board, (b) fees paid to directors for service on a committee of the Board (including the Audit Committee), and (c) to the extent permitted by applicable law or regulations, a pension or other deferred compensation for prior service that is not contingent on future service on the Board.
Directors shall also be reimbursed for reasonable out-of-pocket expenses incurred in attending Board and committee meeting.
Role of the Board and Responsibilities:
The day-to-day management of the Company, including the preparation of financial statements and short and long-term strategic planning, is the responsibility of the Company’s management, The primary responsibilities of the Board are to select, compensate and evaluate the performance of the Chief Executive Officer, review management’s performance, and engage in the strategic planning.
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 stockholders. 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, nevertheless the Board must recognize that it has an active, not passive responsibility. The directors shall also be entitled to have the Company purchase reasonable directors’ and officers’ liability insurance on their behalf, and to be indemnified by the company to the maximum extent permitted by law, the Bylaws and any indemnification agreements.
Directors are expected to attend, and prepare for, Board meetings and meetings of committees on which they serve, to review relevant materials, and to spend the necessary time to properly discharge their duties diligently and responsibly.
Candor and Avoidance of Conflicts:
The directors realize that candor and the avoidance of conflicts are hallmarks of the accountability owned to the Company’s stockholders. Directors have a personal obligation to disclose a potential conflict of interest to the Chairman of the Board before any decision related to the matter and, if the Chairman in consultation with legal counsel determines a conflict exists or the perception of a conflict is likely to be significant, to recuse themselves from any discussion or vote related to the matter.
Board Size:
The Board presently has Nine (9) members.
The Board does not believe it should establish term limits. Each Board member must be reelected each year at the annual meeting of shareholders in order to continue to serve.
The Chairman of the Board shall be selected by the Board from among its members.
Retention and Compensation of Outside Advisors:
The Board has the authority to engage independent legal, financial or other advisors as it may deem advisable in fulfilling its obligations and responsibilities, without consulting or obtaining the approval of, any officer of the Company, and the Company shall cause sufficient funds to be available to compensate such advisors as is determined by the Board. Each committee of the Board shall also have such power, unless otherwise provided in its charter.
Director Access to Officers and Employees:
Directors shall have access to officers and employees of the Company as necessary to carry out their duties. It is expected that directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company and that, to the extent appropriate, the CEO is given advance courtesy notice of any such contact. The Chairman of the Audit Committee need not advise the CEO of his or her contact with the Company’s internal audit department, if one exists.
Succession Planning:
The Nominating/Governance Committee shall review corporate succession planning with the CEO on a periodic basis, with respect to emergency situations in which the CEO becomes unavailable to serve, a retirement of the CEO and the identification, cultivation and promotion of talented individuals within the senior levels of the organization as part of the normal succession process. The CEO shall at least annually provide to the Nominating/Governance Committee his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
Director Orientation and Continuing Education:
All new directors must participate in an orientation. This program will include background materials and presentations by senior management to familiarize new directors with the Company’s strategic plans, ifs significant financial, accounting and risk management issues, its compliance programs, its Code of Conduct, these Guidelines, its principal officers, and its internal and independent auditors. In additional, thee orientation may include visits to the Company’s headquarters and, to the extent practical, certain of the company’s significant facilities. All directors are expected to participate in any additional continuing education offered by the Company to help directors maintain the level of knowledge and expertise necessary to perform their duties as directors of a public company.
Annual Performance Evaluation of the Board:
The Nominating/Governance Committee shall develop, recomment to the Board and coordinate annual evaluation of the Board and its committees, as required by applicable law, the NASDAQ, and/or any other applicable rules or regulations, to determine whether they are functioning effectively and meeting their objectives and goals. They shall prepare a report to the Board containing an assessment of the Board’s organization, policies, performance, effectiveness and contribution to the Company and indicating specific areas in which the Board could improve. This report shall be reviewed and discussed with the full Board following the end of each fiscal year.
