CORPORATE GOVERNANCE PRACTICES AND POLICIES
The following corporate governance practices and policies (the “Practices and Policies”) have been approved by the Board of Directors (the “Board”) of Alpha Natural Resources, Inc. (the “Company”) at the recommendation of the Board’s Nominating and Corporate Governance Committee. Along with the charters of the Board committees (the “Committees”), applicable provisions of the Company’s governing instruments, and the Delaware General Corporation Law, these Practices and Policies provide the foundation for the governance of the Company. The Board may review and amend these Practices and Policies from time to time as it deems necessary.
I. ROLE OF BOARD AND MANAGEMENT.
The role of the Board is to promote the long-term value and health of the Company in the best interests of the stockholders. In this regard, the Board provides management with strategic guidance, and also ensures that management adopts and implements procedures designed to promote both legal compliance and the highest standards of honesty, integrity, and ethics throughout the organization. The Board is elected by the Company’s stockholders. The Company’s day-to-day business operations are conducted and supervised by its management and employees, under the supervision of the Chief Executive Officer (“CEO”). The CEO speaks for the Company and reports to the Board. The directors exercise their business judgment and act in what they reasonably believe is the best interests of the Company and its stockholders.
II. FUNCTIONS OF BOARD.
The Board generally has at least four scheduled meetings a year at which it reviews and discusses the Company’s plans and prospects, current issues facing the Company and management’s reports on the Company’s performance. One of these meetings will be scheduled in conjunction with the Company’s annual meeting of stockholders. Committee meetings are normally held in conjunction with Board meetings.
The Board Chairman and Committee Chairs are responsible for conducting meetings and informal consultations in a fashion that encourages informed, meaningful, and probing deliberations. Presentations at Board meetings are concise and focused, and they include adequate time for discussion and decision-making.
The Board strongly encourages directors to attend, in person, all regularly scheduled meetings of the Board and Committees on which they serve. The decisions by the Board and its Committees are recorded in the minutes of their meetings. All Board members are welcome to attend any Committee meeting.
The Board has a variety of specific powers and duties, some of which may be delegated to the Committees, including:
(i) Providing general strategic guidance and oversight to the Company’s management;
(ii) Reviewing, approving and monitoring major corporate actions and strategies;
(iii) Evaluating major risks facing the Company, overseeing that appropriate risk management and control procedures are in place, and performing a periodic review of the Company's risk management system;
(iv) Selecting and evaluating the CEO and Chairman of the Board and providing oversight to management succession planning;
(v) Providing counsel and oversight on the selection and evaluation of senior management;
(vi) Determining that procedures are in place designed to promote integrity and candor in the audit of the Company’s financial statements and operations, and in all financial reporting and disclosure;
(vii) Recommending director candidates for election by stockholders;
(viii) Determining that procedures are in place to promote compliance with laws and regulations and setting an ethical “tone at the top”; and
(ix) Designing and assessing the effectiveness of its own governance practices and procedures.
The culture of the Board is such that the Board can operate swiftly and effectively in making key decisions when facing major challenges. The Board is informed, proactive, and vigilant in its oversight of the Company and protection of stockholder assets. Board and Committee meetings are conducted in an environment of trust, open dialogue, mutual respect, and constructive commentary. Directors are expected to attend Board meetings and meetings of Committees on which they serve in person or by conference telephone. Directors are also expected to review all materials distributed prior to a meeting and to spend sufficient time preparing for each meeting in order to properly discharge their responsibilities.
III. SIZE OF BOARD AND SELECTION PROCESS.
The number of directors serving on the Board is set by a resolution of the Board and generally will be small enough to encourage personal interaction and discussion but large enough to address the significant challenges and issues facing the Company. All of our directors serve one-year terms, and all directors are elected each year by the stockholders at the annual meeting. The Board proposes a slate of nominees to the stockholders for election to the Board (using information provided by the Nominating and Corporate Governance Committee). The Board may fill vacancies or newly created directorships. Stockholders may propose nominees for election as directors by complying with the director nomination provisions of the Company’s Bylaws.
IV. BOARD MEMBERSHIP CRITERIA.
The Nominating and Corporate Governance Committee reviews the qualifications of proposed nominees for director to serve on the Board and recommends nominees to the Board.
The CEO, members of the Nominating and Corporate Governance Committee, and other members of the Board are the primary sources for the identification of prospective nominees. The Nominating and Corporate Governance Committee is also authorized to retain search firms or other consultants for this purpose. The Nominating and Corporate Governance Committee may consider proposed nominees that are identified by stockholders as described under Section III above.
While the Nominating and Corporate Governance Committee has no formal process for identifying and evaluating proposed nominees, the members of the Nominating and Corporate Governance Committee generally will review the resumé of a proposed nominee and consult the proposed nominee’s personal references. The Nominating and Corporate Governance Committee may also personally interview (and suggest that other members of the Board interview) the proposed nominee, if the Committee considers the proposed nominee sufficiently suitable.
In identifying candidates for membership on the Board, each of the Nominating and Corporate Governance Committee and the Board shall take into account all factors it considers appropriate to assure a strong Board, which may include (a) Board qualifications of creating a Board composed of individuals with various and relevant career experience, who are (i) respected within the industry and the Company’s markets, (ii) proven leaders in the communities in which the Company does business, (iii) experienced managers, (iv) visionaries for the future of the Company’s business, (v) willing to act on and be accountable for Board decisions, (vi) able to provide wise, informed, and thoughtful counsel to top management on a range of issues, (vii) loyal, (viii) able to effectively handle crises and minimize risk, (ix) dedicated to sound corporate governance, (x) diverse in geographic origin, gender, ethnic background, and professional experience, and (xi) collegial, and (b) individual qualifications of strength of character, maturity of judgment, independence of thought, an ability to take tough positions while at the same time working as a team player, accounting and finance knowledge (including expertise that could qualify at least one director as an “audit committee financial expert” as that term is defined by the rules of the Securities and Exchange Commission (the “SEC”)), technical expertise, familiarity with the Company’s business, industry, and competition, general business acumen, critical thinking, local or community ties, consideration of any actual or potential conflicts of interest posed by the proposed nominee’s election as a director, and the proposed nominee’s time available to devote to Board and Committee activities and to enhance his or her knowledge of the Company’s business. The Nominating and Corporate Governance Committee and Board also may consider the extent to which the candidate would fill a present need on the Board.
Each director will disclose any potential or perceived conflict of interest they may have to the Chair of the Nominating and Corporate Governance Committee as well as on any issue considered by the Board or the Committee on which they serve. If a director has a conflict of interest, he or she will not vote on the related matter and will not attempt to influence other directors on their votes on the matter.
Invitations to director nominees for a position on the Board will be extended by the Chair of the Nominating and Governance Committee after discussion with the Chairman, CEO, and agreement by the Board.
V. INDEPENDENCE OF DIRECTORS.
The Company’s Board and Committee composition is subject to the rules of the New York Stock Exchange (the “NYSE”) and other regulatory requirements, which require a majority of the directors serving on the Board to be independent and require that the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee be comprised entirely of independent directors.
Each director will promptly inform the Chair of the Nominating and Corporate Governance Committee or the Chairman of the Board of any change in his or her circumstances which might compromise such director’s independence or impact his or her ability to perform Board and Committee duties effectively. The Board encourages each director to frequently assess when such changed circumstances might compromise independence.
VI. DIRECTOR SERVICE AND RESIGNATION.
Management directors will offer to resign from the Board upon their resignation, removal or retirement as an officer of the Company. The Board will, in its sole discretion, determine whether to accept such resignation.
Non-management directors must inform the Chair of the Nominating and Corporate Governance Committee and the CEO of any principal occupation or business association change, including retirement, and offer their resignation to the Chair of the Nominating and Corporate Governance Committee and the CEO. The Chair of the Nominating and Corporate Governance Committee and/or the CEO, in turn, will advise the Nominating and Corporate Governance Committee of the change of status so that the Committee, with the aid of such person(s), may make a recommendation to the Board of whether to accept or reject the offer of resignation. The Board shall review the recommendation of the Nominating and Corporate Governance Committee and shall determine whether to accept or reject the offer of resignation.
VII. SERVICE ON BOARDS AND OTHER COMMITMENTS.
The Nominating and Corporate Governance Committee will carefully review the prior commitments of each director candidate before recommending his/her appointment or nomination to join the Board. Directors should advise the Chair of the Nominating and Corporate Governance Committee and the CEO prior to accepting an invitation to serve on any corporate board of directors, or with any government group and should keep them fully apprised of the committees of other public company boards on which they serve.
It is the Board's policy that any individual director should not serve on more than three public company boards (inclusive of the Company's Board), if the director is employed, or five public company boards (inclusive of the Company's Board), if the director is retired and no longer employed, unless otherwise expressly approved by the Board. Except in special circumstances and only after the Board has determined that such simultaneous service would not impair the ability to serve effectively on the Company's Audit Committee, no member of the Audit Committee shall serve on the audit committees of more than three public companies (inclusive of the Company's Audit Committee). For purposes of this policy and as provided under the NYSE rules, (i) service on the boards of multiple funds within a single family of funds shall be deemed service on one public company board, and (ii) service on multiple audit committees within a single family of funds shall be deemed as service on one public company audit committee.
VIII. LEAD DIRECTOR.
The Committee Chairs will alternate as Lead Director for each regularly scheduled meeting of the Board, based upon the alphabetical order of the Committee on which such person chairs, such that at the first regularly scheduled meeting of the Board after the adoption of these Practices and Policies, the Audit Committee Chair will serve as Lead Director, at the second regularly scheduled meeting of the Board, the Compensation Committee Chair will serve as Lead Director, and so forth.
When a Committee Chair is to serve as Lead Director at the next regularly scheduled meeting of the Board, during the period prior to and including such meeting, such director will have the following specific duties and responsibilities:
(i) Serving as the principal liaison between the Board and the Chairman of the Board and between the Board and the Company’s stockholders;
(ii) Presiding over the Board meeting(s) if the Chairman is not present, including executive sessions and meetings of non-management and/or independent directors;
(iii) Approving with the Chairman of the Board the schedule and agenda for the applicable Board meeting(s), reviewing with the Chairman whether there are major risks which the Board should focus upon at the meeting(s), and facilitating communication among the independent directors (with the Chairman);
(iv) Authority to direct the CEO or Secretary to call a special meeting of the Board;
(v) Authority to consult directly with major stockholders, when requested and appropriate to do so; and
(vi) Performing such other duties as may from time to time be delegated to the Lead Director by the Board.
IX. CODE OF BUSINESS ETHICS.
The Company is committed to conducting business in accordance with the highest standards of ethics, integrity, and quality and has adopted a Code of Business Ethics (the “Code”) to promote ethical standards and deter wrongdoing. The Code addresses matters including: (i) conflicts of interest, (ii) corporate opportunities, (iii) confidentiality, (iv) fair dealing, (v) protection and proper use of Company assets, (vi) compliance with laws, rules, and regulations, and (vii) such other matters as the Board deems appropriate. The Code applies to all directors, officers and employees of the Company. The Code requires all covered persons to avoid conflicts of interest that may be to the detriment of the Company. No waiver of the Code will be granted except by a vote of the Board or the Audit Committee, which will determine whether a waiver is appropriate and ensure that the waiver is accompanied by appropriate controls designed to protect the Company.
X. COMMUNICATION WITH DIRECTORS.
Interested parties may contact an individual director, the Board or a Committee, by sending an email to firstname.lastname@example.org or by writing to the following address:
Board of Directors
Alpha Natural Resources, Inc.
One Alpha Place, P.O. Box 2345
Abingdon, VA 24212
Attention: Vaughn R. Groves, General Counsel
Communications should specify the addressee(s) and the general topic of the communication. The Company will review and sort communications before forwarding them.
At times employees or stockholders may feel it is necessary to report a matter on a confidential basis. Any concerns about accounting or auditing matters or possible violations of the Code should be reported pursuant to the procedures outlined in the Code and the Company's Procedures for Submission of Concerns Regarding Accounting or Auditing Matters, which are each available on the Company’s website www.alphanr.com.
XI. ACCESS TO EMPLOYEES AND INDEPENDENT ADVISORS.
Directors have full access to the Company’s management and other employees. Directors may initiate any required meetings or contacts directly or through the Company’s CEO or Secretary. At the invitation of the Board or a Committee, members of management may attend Board or Committee meetings and make presentations. The Board and Committees have access to the Company’s officers and employees and may retain independent legal, accounting or other consultants for advice without obtaining the approval of the Company in advance. The Company will pay the fees and expenses of such consultants.
XII. BOARD COMMITTEES.
The Board has established the following four standing Committees to assist the Board in discharging its responsibilities: (i) the Audit Committee; (ii) the Compensation Committee; (iii) the Nominating and Corporate Governance Committee; and (iv) the Safety, Health, Environmental and Sustainability Committee. Each Committee has a written charter which is approved by the Board and describes the Committee’s authority and responsibilities, qualifications for membership, procedures for appointment and removal and Committee operations and structure. Assignments to, and Chairs of, the Audit, Compensation, and Safety, Health, Environmental and Sustainability Committees are recommended by the Nominating and Corporate Governance Committee and selected by the Board. The independent directors as a group elect the members and the Chair of the Nominating and Corporate Governance Committee. All Committees report on their activities to the Board. Subject to applicable law and NYSE rules, the Board may add new committees or eliminate existing Committees as it deems advisable. Additionally, each Committee may invite to its meetings any director, member of management of the Company and such other persons as it deems appropriate in order to carry out its responsibilities. Each Committee may also exclude from its meetings any persons it deems appropriate in order to carry out its responsibilities.
The NYSE rules require the Company to have an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The main function of each Committee is as follows:
Audit Committee. The Audit Committee monitors the quality, reliability and integrity of the Company’s accounting policies and financial statements, oversees the Company’s compliance with legal and regulatory requirements and reviews the independence, qualifications and performance of the Company’s internal and independent auditors.
Compensation Committee. The Compensation Committee is responsible for reviewing and approving the compensation, including salary, bonuses and benefits, of the Company’s executive officers (and, in the case of the CEO, reviewing, approving and recommending that the independent members of the Company’s Board approve such compensation) and producing a compensation committee report on executive compensation as required by the SEC to be included in the Company’s annual proxy statement or annual report on Form 10-K filed with the SEC.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will assist the Board in identifying individuals qualified to become Board members and executive officers and selecting, or recommending that the Board select, director nominees for election to the Board and its Committees. The Nominating and Corporate Governance Committee is also responsible for monitoring compliance in areas of corporate governance.
XIII. MEETINGS OF NON-MANAGEMENT AND INDEPENDENT DIRECTORS.
The non-management members of the Board will have regularly scheduled executive sessions during the year without management present. The Chairman acts as the Chairperson to preside at such meetings. During these sessions, the non-management directors will, among other things, review CEO succession, performance, and compensation; compensation of other key executive officers; strategic issues for Board consideration; future Board agendas and the flow of information to directors; management progression and succession; and the Board’s corporate governance matters.
The independent directors will meet, when deemed necessary and appropriate, and the Lead Director will act as Chairperson and preside at such meetings.
XIV. BOARD AND COMMITTEE AGENDAS.
The Board and each Committee is responsible for setting the agenda for meetings held during the year. The agendas and information relevant to the agenda of each meeting will be distributed to the directors or Committee members in writing or electronically in advance of the meeting. The CEO, or, in the case of Committees, the Committee Chairperson, will determine the nature and extent of information that will be provided regularly to the directors or the Committee members. Directors and Committee members are entitled to make suggestions for agenda items, or additional pre-meeting materials, to the CEO or appropriate Committee Chairperson at any time.
XV. BOARD COMPENSATION.
The Compensation Committee has responsibility for recommending to the Board compensation and benefits for the Chairman and non-employee directors of the Board, if any, including cash, equity-based awards and other compensation. In determining the Chairman and non-employee director compensation and benefits, if any, the Compensation Committee may seek advice from outside consultants and will consider (i) the amount that is adequate to compensate directors for the time and effort attending to their obligations on the Company’s Board and Committees and (ii) the compensation and benefits offered by comparable public companies to such directors. The Compensation Committee will also consider issues raised with respect to a director’s independence if compensation exceeds what is customary.
XVI. DIRECTOR ORIENTATION AND CONTINUING EDUCATION.
The Company’s Chief Financial Officer and the General Counsel will be responsible for providing an orientation for new directors. This orientation will include familiarizing the directors with their responsibilities under applicable law and the rules of the NYSE and briefing the directors on the Company’s key policies and practices, strategic plans, financial performance and compliance programs. Members of senior management will also periodically provide directors with materials and update directors on subjects that would assist them in discharging their duties including new legal and regulatory developments relating to directors. Directors are encouraged to visit the Company’s principal office in Abingdon, Virginia and one or more of the Company’s operations. The Company also encourages directors to participate in continuing director education seminars, and the Company will pay a director’s reasonable fees and expenses to participate in one such seminar annually.
XVII. ANNUAL MEETING.
The Board expects directors to attend the annual meetings of the Company’s stockholders.
XVIII. CEO AND SENIOR MANAGEMENT PERFORMANCE REVIEW.
The Compensation Committee and its authorized subcommittees will review the performance of the CEO and senior management at least annually. The review will examine each individual’s performance in light of the Company’s goals and objectives and determine compensation based on such review.
XIX. SUCCESSION PLAN.
The Board is responsible for assuring that the Company has key management talent to pursue the Company’s business plans and strategies. The Board will consider a succession plan for the CEO and other key executives, based upon recommendations from the Nominating and Corporate Governance Committee. The succession plan will include advance planning for emergencies and contingencies such as the departure, death or disability of the CEO and other senior members of management.
XX. ANNUAL PERFORMANCE EVALUATION.
The Board will conduct an annual self-evaluation to determine whether the Board and its Committees are functioning effectively. Directors will provide comments regarding such self-evaluation directly to the Nominating and Corporate Governance Committee and such Committee will report annually to the Board with an assessment of the Board’s and the Committees’ performance. The report will assess the Board’s and the Committees’ contributions to the Company and focus on areas in which the Board or management believes that the Board and the Committees could improve. The Board, with the assistance of the Nominating and Corporate Governance Committee, will also review these Practices and Policies from time to time as necessary to determine whether any amendments are appropriate.
XXI. STOCK OWNERSHIP.
The Board believes that directors and executive officers should be stockholders and have a financial stake in the Company. In furtherance of this belief, the Board has established stock ownership guidelines applicable to the Company’s directors and executive officers.
Adopted July 31, 2009
As amended: August 12, 2010