1. Independence. A majority of the members of the Board shall be independent directors. To be considered independent: (1) a director must be independent as determined under Subsection 2(b) of Section 303A of the New York Stock Exchange Listed Company Manual, and (2) in the Board’s judgment, the director must not have a material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company).
The Board has established guidelines (the "Material Relationship Guidelines") to assist it in determining whether a director has a material relationship with the Company, which include the independence requirements of Subsection 2(b) of Section 303A of the New York Stock Exchange Listed Company Manual. Under these guidelines, a director will not be considered to have a material relationship with the Company if he or she is not:
(i) A director who is a current employee or greater than 10% equity owner, or whose immediate family member is a current executive officer or greater than 10% equity owner, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues;
(ii) A director who is (or was within the last three years) an employee, or whose immediate family member is (or was within the last three years) an executive officer, of the Company;
(iii) A director who has received, or whose immediate family member has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
(iv) (A) A director who is, or whose immediate family member is, a current partner of a firm that is the Company's internal or external auditor; (B) a director who is a current employee of a firm that is the Company's internal or external auditor; (C) a director whose immediate family member is a current employee of a firm that is the Company's internal or external auditor and personally works on the Company’s audit; or (D) a director who was, or whose immediate family member was, within the last three years (but is no longer) a partner or employee of a firm that is the Company's internal or external auditor and personally worked on the Company's audit within that time;
(v) A director who is (or was within the last three years), or whose immediate family member is (or was within the last three years), an executive officer of another company where any of the Company’s current executive officers at the same time serve or served on that company’s compensation committee;
(vi) A director who is (or was within the last three years) an executive officer or greater than 10% equity owner of another company that is indebted to the Company, or to which the Company is indebted, in an amount that exceeds one percent (1%) of the total consolidated assets of that company; and
(vii) A director who is a current executive officer of a tax exempt organization that, within the last three years, received discretionary contributions from the Company in an amount that, in any single fiscal year, exceeded the greater of $1 million, or 2% of such tax exempt organization's consolidated gross revenues. (Any automatic matching by the Company of employee charitable contributions will not be included in the amount of the Company’s contributions for this purpose.)
In addition, ownership of a significant amount of the Company’s stock, by itself, does not constitute a material relationship.
An "immediate family member" includes a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and any anyone (other than domestic employees) who shares such person's home. References to the "Company" include any subsidiary in a consolidated group with the Company.
The provisions of the foregoing Material Relationship Guidelines shall be interpreted consistent with the commentary and guidance of the New York Stock Exchange, as amended and in effect from time to time, including, without limitation, any transition period with respect thereto.
For relationships or amounts not covered by the Material Relationship Guidelines set forth above, the determination of whether a material relationship exists shall be made by the other members of the Board who are independent as defined above.
2. Other Directorships. A director shall limit the number of other public company boards on which he or she serves so that he or she is able to devote adequate time to his or her duties to the Company, including preparing for and attending meetings. Directors should advise the Chairman of the Board and the Chairman of the Nominating and Corporate Governance Committee in advance of accepting an invitation to serve on another public company board. Service on boards and/or committees of other organizations shall comply with the Company’s conflict of interest policies.
3. Tenure. The Board does not believe it should establish term limits. Term limits could result in the loss of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and an institutional memory that benefit the entire membership of the Board as well as management. As an alternative to term limits, the Nominating and Corporate Governance Committee shall review each director’s continuation on the Board annually. This will allow each director the opportunity to conveniently confirm his or her desire to continue as a member of the Board and allow the Company to conveniently replace directors who are no longer interested or effective.
4. Retirement. Any director who reaches the age of 72 while serving as a director will retire from the Board effective at the end of his or her then current term.
5. Presiding Director. The Nominating and Corporate Governance Committee shall nominate an independent director to serve as “Presiding Director,” who shall be approved by a majority of the independent directors. If the Chairman of the Board is an independent director, then he or she shall serve as Presiding Director, except as otherwise determined by the Board. The Presiding Director shall chair any meeting of the non-management directors in executive session. The name of the Presiding Director, and a means of contacting such person, shall be disclosed in the annual stockholder meeting proxy statement or on the Company’s website, in order to allow interested parties to communicate directly with independent directors.
6. Separation of the Offices of Chairman and Chief Executive Officer. The Board believes that the offices of Chairman of the Board and Chief Executive Officer should be separate.
7. Selection of New Director Candidates. The Nominating and Corporate Governance Committee shall be responsible for (i) identifying individuals qualified to become Board members and (ii) recommending to the Board the persons to be nominated by the Board for election as directors at the annual meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board. The Nominating and Corporate Governance Committee will consider stockholder recommendations for nominees sent to the Committee to the attention of the Secretary of the Company at the principal executive office of the Company. Director nominees shall be selected by the Nominating and Corporate Governance Committee in accordance with these Guidelines, the policies and principles in its charter and the criteria set forth in Attachment Ato these Guidelines. It is expected that the Nominating and Corporate Governance Committee will have input from the Chairman of the Board and the Chief Executive Officer. The Nominating and Corporate Governance Committee shall be responsible for reviewing, from time to time as it deems appropriate, the requisite skills and criteria for new Board members as well as the composition of the Board as a whole. This review shall include consideration of diversity, age, skills and experience in the context of the needs of the Board.
8. Change of Responsibility of Director. The Board believes that the continuation on the Board of any director who retires from his or her principal current employment, or who materially changes his or her current position, including the Chief Executive Officer of the Company, is a matter to be decided in each individual instance by the Board, upon recommendation of the Nominating and Corporate Governance Committee. Accordingly, a director in such a situation will be expected to resign from the Board if so requested by the Board, upon recommendation of the Nominating and Corporate Governance Committee. Additionally, any director whose job responsibilities in his or her current position materially increase, shall notify the Board of such material increase in responsibilities, and the Board shall decide in each individual instance, upon recommendation of the Nominating and Corporate Governance Committee, if the director should be requested to resign from the Board.
9. Effect of Majority Withheld Votes on an Uncontested Election. In an uncontested election of directors (i.e., an election where the only nominees are those recommended by the Board), any nominee for director who receives more votes "against" his or her election than votes "for" his or her election will promptly offer his or her resignation to the Chairman of the Board following certification of the shareholder vote.
The Nominating and Corporate Governance Committee will promptly consider the offer to resign submitted by that director and will recommend to the Board whether or not to accept the offered resignation. In considering whether or not to accept the offered resignation, the Nominating and Corporate Governance Committee will consider all factors deemed relevant by the members of the Committee, which may include, for example, any stated reasons that shareholders voted “against” the election for that director, any alternatives for curing the underlying cause of the against votes, the director's length of service, qualifications, and contributions to the Company, the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet any applicable Securities and Exchange Commission or New York Stock Exchange requirements, and these Corporate Governance Guidelines.
The Board will act on the Nominating and Corporate Governance Committee's recommendation no later than 90 days following the date of the shareholders' meeting during which the election occurred. In considering the Committee's recommendation, the Board will consider the factors considered by the Committee and any additional factors the Board believes to be relevant. The Company expects that the directors intend to comply with the Board’s request to resign if made (absent a compelling fiduciary concern). Following the Board's decision, the Company will promptly publicly disclose the Board's decision whether to accept the offered resignation, including an explanation of how the decision was reached and, if applicable, the reasons an offer to resign was not accepted, in a Form 8-K to be filed with the Securities and Exchange Commission.
To the extent that one or more directors' resignations are accepted by the Board, the Nominating and Corporate Governance Committee will recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the Board.
Any director who offers his or her resignation pursuant to this provision will not participate in the Committee recommendation or Board consideration of whether or not to accept the offered resignation. If a majority of the members of the Nominating and Corporate Governance Committee received more votes "against" their election than votes "for” their election at the same election, then the independent directors on the Board who did not receive more votes "against" their election than votes "for” their election will appoint a Board committee solely for the purpose of considering the offered resignations and will recommend to the Board whether or not to accept them, which committee may, but need not, consist of all such independent Directors.