I. Board Composition and Structure
A. Size of Board. The Board periodically reviews its size to determine the size that is appropriate for its effective operation. In general, and as provided in the Company's By-Laws, the Board shall be comprised of between three and nine members, recognizing that retirements, resignations, and recruiting delays may result, periodically, in the Board consisting, for some transitional period, of a slightly greater or lesser number of directors than the Board may have targeted.
B. Mix of Directors; "Independent" Directors. No relationship between any nonemployee director and the Company should be of a nature that could compromise the independence or judgment of any Board member in governing the affairs of the Company. The determination of what constitutes independence for a non-employee director in any individual situation shall be made by the Board in light of the totality of the facts and circumstances relating to such situation and in compliance with the requirements of NASDAQ’s applicable listing standards and other applicable rules and regulations.
C. Selection of Directors. In accordance with the policies and principles in its charter, the Corporate Governance and Nominating Committee (the "Governance Committee") is responsible for identifying and recommending suitable candidates for nomination to the Board (including candidates to fill any vacancies that may occur). In recommending nominees, the Governance Committee shall consider nominees recommended by the Company’s stockholders provided any such stockholder follows the procedures set forth in the Company’s By-Laws from time to time.
D. Board Membership Criteria. The Governance Committee construes the concept of diversity broadly. This concept includes a wide range of individual characteristics, including, without limitation, race, gender, professional experience, age, ethnicity, education, skills, societal and cultural background, as well as other characteristics that could provide a wider range of viewpoints to the Board. The Governance Committee shall base its recommendations for nomination on criteria that will provide a broad perspective and depth of experience in the Board. In general, when considering independent directors, the Governance Committee should consider the candidate's experience in areas central to the Company, such as business, finance and legal and regulatory compliance, as well as considering the candidate's personal qualities and accomplishments and their ability to devote sufficient time and effort to their duties as directors. Important areas of experience and expertise include manufacturing, international operations, finance and the capital markets, accounting and experience as a director of other public companies. The Governance Committee does not have a formal diversity policy but considers diversity as one criteria evaluated as a part of the total package of attributes and qualifications a particular candidate possesses. The Governance Committee shall construe the notion of diversity broadly, considering differences in viewpoint, professional experience, education, skills and other individual qualities, in addition to race, gender, age, ethnicity and cultural background as elements that contribute to a diverse Board.
E. Board Leadership. The roles of Chairman of the Board and Chief Executive Officer shall be split into two positions, held by separate individuals. The position of Chairman of the Board shall be held by an independent director. The Board believes that the separation of these roles (i) provides a leadership model that clearly distinguishes the roles of the Board and management; (ii) allows the Company's Chief Executive Officer to direct his or her energy toward operational and strategic issues while the non-executive Chairman focuses on governance and stockholders; (iii) enhances the independence of the Board; (iv) provides independent business counsel for the Company's Chief Executive Officer; and (v) facilitates improved communications between Company management and Board members
F. Term Limits; Resignation.
- Term Limits. The Board does not believe that it should establish term limits. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, they have the disadvantage of causing the loss of continuity and stability and make it difficult for directors to focus on long-term business strategies and results.
- Change in Job Responsibility. When a director's principal occupation or business association changes from his or her present employment, the director shall inform the Chairman of the Governance Committee. The Governance Committee shall review the director's continuation on the Board and recommend to the Board whether, in light of all the circumstances, the Board should request that the director tender his or her resignation from the Board. If the Board so requests, the director shall then tender his or her resignation.
G. Retirement Age. No director may be nominated to a new term if he or she would attain the age of 72 on or before the annual meeting of shareholders. However, should the full Board so determine, an exception may be made to extend the retirement age for a particular director or director nominee.
H. Additional Directorships. Directors are encouraged to limit the number of other public company boards of directors on which they serve to two. In addition, it is generally advisable for members of the Audit Committee to limit the number of audit committees on which they serve to three, and under no circumstances may an Audit Committee member serve on audit committees of more than two other public companies. The Chief Executive Officer must obtain the approval of the Governance Committee before accepting an invitation to serve on the board of directors of a public or private company. A director should advise the Chairman of the Board and the chairman of the Governance Committee in advance of accepting an invitation to serve on another public company board. The Governance Committee and the full Board will take into account the nature of and the time involved in a director’s service on other boards of directors in evaluating the suitability of individual director candidates.
I. Compensation of Non-Employee Directors. Non-employee directors shall receive fees as their only compensation for Board and/or Board committee service. Directors' fees shall be in the form of cash, company stock, including options and restricted stock, or some combination thereof, as well as any additional benefits regularly given to all directors. The exact amount and form of director compensation shall be determined and reviewed annually by the Compensation Committee upon the direction of the Board, in accordance with the policies and principles set forth in its charter.
J. Majority Vote Policy. In any non-contested election of directors, any director nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall immediately tender his or her resignation, and the Board will decide, through a process managed by the Governance Committee and excluding the nominee in question, whether to accept the resignation at its next regularly scheduled Board meeting. Absent a compelling reason for the director to remain on the Board, the Board shall accept the resignation. The Board’s explanation of its decision shall be promptly disclosed on Form 8-K filed with the Securities and Exchange Commission. For purposes of this policy, a “compelling reason” could include, without limitation, a situation in which a director nominee was the target of a “vote no” campaign on an illegitimate basis, such as racial discrimination, or on the basis of misinformation, or a situation where the resignation would cause the Company to be in violation of its constituent documents or regulatory requirements.