Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines to help fulfill its responsibilities to shareholders in overseeing the work of management and the Company’s business. These Guidelines are intended to ensure that the Board of Directors has the necessary authority and practices in place to review and evaluate the Company’s business operations and, when appropriate, to make decisions that are independent of management. In addition, the Guidelines are intended to align the interests of Directors and management with those of our shareholders as well as with those of our employees, customers, suppliers, and the local communities in which we operate. The Nominating and Corporate Governance Committee is responsible for overseeing and reviewing the Guidelines and recommending any changes to the Board of Directors. The Board may amend, waive, suspend, or repeal any of the Guidelines at any time, with or without public notice, as it determines necessary or appropriate in the exercise of its judgment or fiduciary duties.
The Corporate Governance Guidelines set forth the practices the Board of Directors follows with respect to Board and Committee composition, selection, meetings, and evaluation; CEO performance evaluation and succession planning; and continuing education. Among other matters, the Guidelines also include the following:
Access to Management and Outside Experts
Our Corporate Governance Guidelines provide that non-employee Directors have access to our records and files and to individual members of management or to other employees on a confidential basis. Directors are also authorized to conduct independent investigations and to hire, at our expense, such independent legal, financial, and other advisors as they deem necessary or appropriate.
Attendance at Annual Meetings
Under our Corporate Governance Guidelines, all members of the Board of Directors are encouraged (but not required) to attend our annual meetings of shareholders. Each member of the Board of Directors attended the 2009 Annual Meeting of Shareholders in person or by teleconference.
Attendance at Board and Committee Meetings
Consistent with our Corporate Governance Guidelines, each Director is expected to attend a minimum of 75% of all meetings of the Board and the Committees on which the Director serves. During 2009, each Director attended, in person or by teleconference, at least 75% of the aggregate number of meetings of the Board of Directors and all Committees of the Board of Directors on which he served.
Independent Director Requirements and Limits on Employee Directors
Our Corporate Governance Guidelines require that a majority of our Board of Directors, and all members of our Audit, Compensation, and Nominating and Governance Committees, meet the criteria for independence under the rules of Nasdaq. In addition, no more than two employees are permitted to serve on the Board of Directors. Currently John C. East, our President and CEO, is the only employee serving on our Board of Directors.
Lead Independent Director
Under our Corporate Governance Guidelines, if the Chairman of the Board is an independent Director, the Chairman of the Board also serves as the Lead Independent Director. If the Chairman of the Board is not an independent Director, one of the independent Directors is elected by a majority of the independent Directors to be the Lead Independent Director. The responsibilities of the Lead Independent Director include presiding at all meetings at which the Chairman is not present, including executive sessions of the independent Directors; calling meetings of the non-employee Directors when necessary and appropriate; and performing such other duties as the Board of Directors may from time to time delegate. Robert G. Spencer has served as our Lead Independent Director since July 2007.
Limits on Additional Board Service
Under our Corporate Governance Guidelines, a Director may not serve on more than five public company boards (including the Company’s Board of Directors) absent an affirmative finding by the Nominating and Governance Committee that the Director (or candidate for Director) would still be able to fulfill his or her responsibilities to the Company. Currently, none of our Directors serves on more than five public company boards. In addition, under our Corporate Governance Guidelines, no executive officer may sit on the board of another public company without the approval of the Nominating and Governance Committee, and no executive officer may sit on the board of more than two public companies (including the Company’s Board).
Private and Executive Sessions
As reflected in our Corporate Governance Guidelines, our Directors meet regularly (typically after each regularly-scheduled Board meeting) in private session without other members of management present, and our non-
employee Directors meet regularly (also typically after each regularly-scheduled Board meeting) in executive session without our Chief Executive Officer and other members of management present. In addition, any Director may request additional private or executive sessions to discuss any matter.
Stock Ownership Guidelines
In conjunction with the preparation of this proxy statement, our Nominating and Corporate Governance Committee recommended, and our Board of Directors adopted, share ownership guidelines for our executive officers and non-employee Directors. We believe that share ownership links the interests of our Board of Directors and management with our shareholders. The ownership guidelines specify that executive officers are expected to own at least 1,000 shares of the Company’s stock and non-employee Directors are expected to own shares of the Company’s stock with a value equal to at least the amount of the annual cash retainer (currently $35,000). Executive officers and non-employee Directors are encouraged to reach this goal within five years and to hold at least the minimum number of shares for as long as he or she is an executive officer or non-employee Director. Our Nominating and Corporate Governance Committee will review these guidelines at least annually for appropriateness and compliance.