Corporate Governance Guidelines

Jump directly to: - Introduction - Shareholders - Board Functions - Board Composition - Operations - Ethics and Conflict of Interest - Compensation of Directors - Director Education and Evaluation

Introduction

State and federal law, as well as the securities exchanges, impose numerous requirements relating to the functioning of the Board of Directors, including specifying matters as to which Board approval is required, relationships with the Company's outside auditors and federal securities law requirements. The Board intends to comply with these requirements. While the Board is familiar with them, they are imposed by law and, accordingly, the Board necessarily relies on management and counsel to identify specific requirements applicable to the Board and the decisions it is called upon to make.

In addition to these requirements, the Board has adopted the guidelines set forth below to assist it in carrying out its functions. The Board will operate within and, when applicable, apply these guidelines to particular actions or decisions in the manner it determines in good faith to be in the best interests of the Company. The Board will assess the adequacy of these guidelines not less frequently than annually following their review by the Governance Committee.

Shareholders

The Company exists to create substantial shareholder value. The Board may consider the interests of all stakeholders it determines to be relevant in its decision making.

Board Functions

The Board is elected to oversee the management of the Company. Senior management is responsible for the oversight of the day-to-day business of the Company and all other matters not required by law, stock exchange requirements or these guidelines to be determined by the Board. The Board's principal oversight functions relate to:

• The Company's fundamental business and financial strategies;
• The evaluation and compensation of the CEO, the selection, performance and compensation of other senior managers and senior management succession generally;
• Material risks the Company confronts and methods to mitigate or manage these risks; and
• The Company's procedures for compliance with legal and other requirements.

Board Composition

The Board presently has six members and it is the sense of the Board that the number of directors should be in the range of 7 to 9. We are currently recruiting a fourth independent member of the Board to ensure that a majority of the members of the Board are independent members, the Board would then consist of seven members. Shareholders may make recommendations for the election of directors as provided in the Company's by-laws; the Governance Committee will consider those recommendations as well as such other matters as it determines to be appropriate in recommending that director nominees be elected by the shareholders or that vacancies on the Board be filled.

The Board has not imposed rigid requirements applicable to its composition or as to the qualification of its members. However, the Board has adopted the following guidelines on these subjects:

• A majority of the members of the Board will be independent. For this purpose, independence will mean the standard applicable under SEC or stock exchange rules as in effect from time to time and, in addition, will mean that the Board shall have determined that a given director is free from any business, family or other relationship different from or in addition to the interests of shareholders or the other directors generally that could reasonably be expected to interfere with the director’s ability to independently make director decisions;
• The Board will be comprised of people with diverse backgrounds and experience;
• Directors who are unwilling or unable to commit sufficient time to the discharge of their duties without adequate justification will be asked to leave the Board;
• Directors should offer their resignations for consideration by the Governance Committee and thereafter by the full Board if they experience material changes in their personal circumstances, including as a result of a change in a director's principal occupation or employment;
• Directors should promptly notify the Chairperson of the Governance Committee prior to joining the Board of another public company; and
• Employee directors may not serve as Board members for other public companies without the approval of the Board.

The Board will annually assess its and its committees' composition and performance. This evaluation will determine Board tenure rather than length of service, age or other similar rigid standards.

Operations

Other than with respect to broad strategic and policy issues, the Board intends to act primarily through or based in substantial part on standing committees established in four general areas: audit, compensation, finance and governance. Those committees will have the functions set forth in their charters (as available on this website), together with prescribed functions and such other functions as a particular committee or its chair determine to be appropriate and within the committee's general purpose.

The Board and any committee may retain at the Company's expense such advisors as the Board, a committee or their respective chairs may determine to be appropriate. Management will furnish (or cause to be furnished) to the Board and each committee such information as may be customary or required for the Board or committee to act on any particular matter sufficiently in advance of each meeting (whenever practicable) to provide the directors a reasonable opportunity to obtain appropriate context as to matters to be considered. Management is instructed to be available to the Board, any committee or an individual director to the extent requested. The Board Chairman and each committee chair will establish a schedule of regular meetings for each year, as well as agendas for each meeting, in consultation with the CEO. Meetings will be conducted in accordance with the by-laws, and not less frequently than quarterly the Board will meet in executive session. Those sessions will be chaired by independent directors selected on a rotating basis.

Ethics and Conflicts of Interest

The Board expects all Company people to act in accordance with the Company's code of conduct and therefore will not waive any ethics policy for any director or executive officer.

Compensation of Directors

The Compensation Committee will recommend to the Board compensation and benefits for non-employee directors. The current arrangements for director compensation are set forth separately. Directors who are current or former employees will not receive compensation for service on the Board or any Board committee. Non-employee directors may not receive compensation from the Company or any subsidiary other than directors' fees.

Director Education and Evaluation

The outside corporate legal counsel and the Chairman of the Board will be responsible for assuring the orientation of new directors, and for periodically providing materials or briefing sessions for all directors on subjects that would assist them in discharging their duties. Periodically, the Company will provide opportunities for directors to visit Company facilities in order to provide greater understanding of the Company's business and operations. The Board, following review by the Governance Committee, will determine whether other educational measures are appropriate as part of the annual Board evaluation.