Director Access to Officers, Employees and Independent Advisors
Director Orientation and Continuing Education
CEO Evaluation and Management Succession
Code of Business Conduct and Ethics and Whistle Blower Policy
Annual Performance Evaluation
Disclosure of Guidelines
A majority of the members of the Board of Directors must meet the criteria for independence required by the NASDAQ Stock Market and the Securities and Exchange Commission. The Board is responsible for reviewing, on an annual basis, the requisite skills and characteristics required for new Board members as well as the composition of the Board as a whole. This assessment will include a review of (1) members’ qualification as independent, as well as consideration of a potential candidate’s experience, areas of expertise and other factors relative to the overall composition of the Board and (2) the continued appropriateness of Board membership due to a change in the responsibility individual directors held when they were elected to the Board or for other reasons. Nominees for directors will be selected by independent members of the Board.
It is the sense of the Board that its size is appropriate at this time. However, the Board would be willing to increase its membership to a limited extent in order to accommodate the availability of an outstanding candidate.
Directors should advise the Chairman of the Board in advance of accepting an invitation to serve on another public company board.
The Board does not believe it should establish term limits. While term limits might assure that there are fresh ideas and viewpoints available to the Board, term limits involve the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations.
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 shareholders. In discharging this obligation, directors should be entitled to rely on the honesty and integrity of the Company’s senior executives and its outside advisors and auditors. The directors will also be entitled to be covered by reasonable directors’ and officers’ liability insurance purchased by the Company on their behalf; to the benefits of indemnification to the fullest extent permitted by law and by the Company’s articles of incorporation, bylaws, and any indemnification agreements; and to exculpation as provided by state law and the Company’s articles of incorporation.
Directors are expected to attend Board meetings and meetings of Board committees on which they serve, to spend the time needed to discharge their Board duties in a reasonable manner, and to meet as frequently as necessary to properly discharge their responsibilities. Information and data that are important to the Board’s understanding of the business to be conducted at a Board or committee meeting should generally be distributed in writing to the directors before the meeting, and directors should review these materials in advance of the meeting.
The Board has no policy with respect to the separation of the offices of Chairman and the Chief Executive Officer. The Board believes that this issue is part of the succession planning process and that it is in the best interests of the Company for the Board to make a determination when it elects a chief executive officer.
The Chairman should establish the agenda for each Board meeting. Each Board member may suggest the inclusion of items on the agenda. Each Board member also may raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will review the Company’s long-term strategic plans, five-year financial plans, annual budgets and other principal issues that the Company will face in the future during at least one Board meeting each year.
Independent directors shall meet in regularly convened executive sessions without management directors or management participation. The Company shall also disclose the procedure by which interested parties may communicate directly and confidentially with the presiding director or independent directors as a group.
The Board believes that the management speaks for the Company. Individual Board members, from time to time, may meet or otherwise communicate with various constituencies that are involved with the Company. It is expected, however, that Board members would do this with the knowledge of the management and, absent unusual circumstances or as contemplated by the committee charters, only at the request of management.
The Board at all times will have an Audit Committee and a Compensation Committee. All of the members of these committees will be independent directors under the criteria established by the NASDAQ Stock Market and under the Securities and Exchange Commission. Committee members will be appointed by the Board with consideration of the desires of individual directors. It is the sense of the Board that consideration should be given to rotating committee members periodically, but the Board does not believe that rotation should be mandated as a policy.
Each committee will have its own charter. The charter for each committee will set forth the purposes and responsibilities of the committee as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board.
The Chairperson of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s charter. The Chairperson of each committee, in consultation with the members of the committee and management, will develop the committee’s agenda. The schedule for each committee will be furnished to all directors.
The Board and each committee have the power to hire independent legal, financial, or other advisors as they may deem necessary, without consulting with or obtaining the approval of any officer of the Company in advance.
The Board, from time to time, may establish or maintain additional committees as necessary or appropriate.
Directors have full and free access to officers and employees of the Company. Any meetings or contacts that a director wishes to initiate may be arranged through the CEO or the Secretary or directly by the director. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company and will, to the extent not inappropriate, copy the CEO on any written communications between a director and an officer or employee of the Company.
The Board, as appropriate in its judgment, will invite senior officers of the Company to attend Board meetings. If the CEO wishes to have Company personnel attend meetings on a regular basis or periodic basis, this suggestion should be brought to the Board for approval. The main responsibility for providing assistance to the Board rests with the Company. The Board and its committees may seek legal or other expert advice from a source independent of management and shall be provided with resources for such purposes. Generally, this would be with the knowledge of the CEO, but this is not a condition to retaining such advisors.
The form and amount of director compensation will be determined by the Compensation Committee in accordance with the policies and principles set forth in its charter, and the Compensation Committee will conduct an annual review of director compensation. The Compensation Committee will consider that directors’ independence may be jeopardized if director compensation and perquisites exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated.
At such time as a director joins the Board, the Board and the CEO will provide appropriate orientation for the director, including arrangement of meetings with management. The Board considers it desirable that directors participate in continuing education opportunities and will reimburse directors for reasonable expenses as appropriate.
The Compensation Committee will conduct an annual review of the CEO’s performance, as set forth in its charter. The Board of Directors will review the Compensation Committee’s report in order to ensure that the CEO is providing the best leadership for the Company in the long- and short-term.
As appropriate, the entire Board will work to nominate and evaluate potential successors to the CEO. The CEO should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
The Company has a Code of Business Conduct and Ethics. The rules set forth in the Code are applicable to all employees and directors. The Code addresses several areas, including compliance with law, conflicts of interest, confidentiality of information, protection and proper use of company assets and the reporting of any illegal or unethical behavior (which is also addressed by the Company’s Whistleblower Policy). Each director is expected to be familiar with and follow the Code and its Whistleblower Policy.
The Board of Directors will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The results of the self-evaluation will be discussed with the full Board following the end of each fiscal year. The assessment will focus on the Board’s contribution to the Company and on areas in which the Board or management believes that the Board could improve.
These Guidelines will be made available in accordance with applicable rules and regulations. Adopted by Resolution of the Board of Directors March 5, 2004