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CORPORATE GOVERNANCE
GUIDELINES
ROLE AND
FUNCTIONS OF THE BOARD OF DIRECTORS
The role of the Board of Directors (the
“Board”) is to oversee and monitor the
Company’s
management in the interest and for
the benefit of the Company’s
stockholders. To fulfill its
role the Board or a Board committee
must perform the following primary
functions:
1.
oversee the conduct of the Company’s
business to evaluate whether the
business is
being properly managed;
2.
review and, where appropriate, approve
the Company’s major financial
objectives,
plans and actions;
3.
review and, where appropriate, approve
major changes in, and determinations of
other
major issues respecting the appropriate
auditing and accounting principles and
practices to be used in the preparation
of the Company’s financial statements;
4.
assess major risk factors relating to
the Company and its performance, and
review
measures to address and mitigate such
risks;
5.
evaluate regularly the performance and
approve the compensation of the CEO and,
with the advice of the CEO, evaluate
regularly the performance of principal
senior
executives; and
6.
plan for succession of the CEO and
monitor management’s succession planning
for
other key executives.
In discharging these obligations,
directors should be entitled to rely
reasonably on the honesty
and integrity of their fellow
directors and the Company’s executives
and its outside advisors
and auditors. The directors shall
be entitled to (i) reasonable directors’
and officers’ liability
insurance on their behalf; (ii) the
benefits of indemnification to the
fullest extent permitted by
law under the Company’s charter,
bylaws and any indemnification
agreements; and (iii)
exculpation as provided by state
law and the Company’s charter.
The Board may discharge its
responsibilities either directly or by
delegating them to its
committees, except that the Board
may not delegate any of its
responsibilities which, under
applicable law or regulation or the
Company’s restated certificate of
incorporation, may not
be delegated to a committee of the
Board. The Board and each Board
committee shall have
the full power and authority to
hire, at the expense of the Company,
independent financial,
accounting, legal or other
advisors, as necessary to fulfill their
duties, without consulting or
obtaining the approval of any
officer of the Company.
The Board should promote policies within
the Company that encourage a corporate
culture of
openness, honesty, fairness and
accountability. These policies also
should apply to the Board
and to relationships among and
between the Board, stockholders and
employees. The Board
should periodically review and
amend these policies if needed.
The Board should recognize that the
actual management of the business and
affairs of the
Company should be conducted by the
CEO and other senior managers under his
or her
supervision and that, in performing
the management function, the CEO and
other senior
managers are obliged to act in a
manner that is consistent with the
oversight functions and
powers of the Board and the
standards of the Company and to execute
any specific plans,
instructions or directions of the
Board.
DIRECTOR
QUALIFICATIONS
Independence: The Board shall have a
majority of directors who meet the
independence
criteria adopted by the Board. The
independence criteria are discussed
below under “Director
Independence.”
Qualifications: A director should
possess personal and professional
integrity, have good
business judgment, relevant
experience and skills and be an
effective director in conjunction
with the full Board in collectively
serving the long-term interests of the
Company
stockholders. Directors should be
committed to devoting sufficient time
and energy to
diligently performing their duties
as directors.
Size of Board: The Board shall
determine the appropriate size of the
Board within the
requirements of the Company’s
Charter and Bylaws.
Selection Process: In accordance
with the policies and principles in its
charter, the
Nominating and Corporate Governance
Committee is responsible for identifying
and
recommending potential director
nominees to the Board for its approval
when there is a
vacancy on the Board. The
Chairperson of the Nominating and
Corporate Governance
Committee and the Chairperson of
the Board shall extend an invitation to
the potential
director nominee to join the Board.
Annual Review of Independence and
Qualifications: The Nominating and
Corporate
Governance Committee shall
distribute annually a self-evaluation to
the Board that includes
an assessment of the directors’
independence and qualifications.
Resignation from the Board: An
individual director should offer his or
her resignation in the
event the director’s principal
occupation or business association
changes substantially from
the position he or she held when
originally invited to join the Board.
The Board should
consider the continued
appropriateness of the director’s
membership on the Board under the
changed circumstances and then the
Board should determine whether or not to
accept the
director’s resignation. Also a
director should tender a resignation in
the event there is a
substantial conflict of interest
between the director and the Company or
the Board and such
conflict cannot be resolved to the
satisfaction of the Board.
Recusal when Conflict of Interest: Prior
to any Board discussion or decision
related to any
matter that potentially affects a
director’s personal, business or
professional interests, that
director should (i) disclose the
existence of the potential conflict of
interest to the Chairperson
of the Board and (ii) if the
Chairperson of the Board (in
consultation with legal counsel)
determines a conflict exists or the
perception of a conflict is likely to be
significant, recuse
himself or herself from any
discussion or vote related to the
matter.
Limit on Number of Board Memberships:
No director may serve on more than three
other
public company boards. A director
should advise the Chairperson of the
Board and the
Chairperson of the Nominating and
Corporate Governance Committee in
advance of
accepting an invitation to serve on
another public company board.
Term Limits: The Board does not
believe it should establish term limits.
The Company and
its stockholders both benefit from
Board continuity and stability and by
allowing directors to
focus on long-term business
strategies and results.
VOTING FOR DIRECTORS
In an uncontested election, any nominee
for director who receives a greater
number of votes
“withheld” from his or her election
than votes “for” such election (a
“Majority Withheld
Vote”) shall promptly tender his or
her resignation following certification
of the shareholder
vote.
The Nominating and Corporate Governance
Committee shall promptly consider the
resignation offer, and a range of
possible responses based on the
circumstances that led to the
Majority Withheld Vote, if known,
and make a recommendation to the Board.
The Board will
act on the Nominating and Corporate
Governance Committee’s recommendation
within 90
days following certification of the
shareholder vote.
Thereafter, the Board will promptly
disclose its decision-making process and
decision
regarding whether to accept the
director’s resignation offer (or the
reason(s) for rejecting the
resignation offer, if applicable)
in a Form 8-K furnished to the
Securities and Exchange
Commission.
Any director who tenders his or her
resignation pursuant to this provision
shall not participate
in the Nominating and Corporate
Governance Committee recommendation or
Board action
regarding whether to accept the
resignation offer.
However, if each member of the
Nominating and Corporate Governance
Committee received
a Majority Withheld Vote at the
same election, then the independent
directors who did not
receive a Majority Withheld Vote
shall appoint a committee amongst
themselves to consider
the resignation offers and
recommend to the Board whether to accept
them.
However, if the only directors who did
not receive a Majority Withheld Vote in
the same
election constitute three or fewer
directors, all directors may participate
in the action
regarding whether to accept the
resignation offers.
DIRECTOR INDEPENDENCE
A majority of the Board and all members
of the Audit, the Compensation and
Benefits, and
the Nominating and Corporate
Governance Committees shall be
independent. The Board
must make an affirmative
determination whether or not a director
is independent and disclose
this determination in the annual
proxy statement.
The term independent is defined in
accordance with the New York Stock
Exchange (“NYSE”)
independence requirements in effect
from time to time, applicable laws and
regulations,
including the Sarbanes-Oxley Act of
2002 and rules issued by the Securities
and Exchange
Commission and the Board’s business
judgment. No director shall qualify as
independent
unless the Board affirmatively
determines that the director has no
material relationship with
the Company or any of its
affiliates (either directly or as a
partner, shareholder or officer of an
organization that has a
relationship with the Company) or with
any senior management
member of the Company or any of its
affiliates. In determining the
materiality of a
relationship and the director’s
independence, the Board shall be guided
by the following
independence standards:
A director shall be deemed to have a
material relationship with the Company
and/or its
affiliates and thus shall not be
deemed independent if, within the past
three years;
The director
has received, or an immediate family
member of the director has
received, more than $120,000
per year in direct compensation from
the Company or
an affiliate, 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);
The director
is an executive officer or employee,
or whose immediate family
member is an executive officer,
of a company that makes payments to,
or receives
payments from, the Company for
property or services in an amount
which, in any
single fiscal year, exceeds the
greater of $1 million or 2% of such
other company’s
consolidated gross revenues
(such director shall not be deemed
to be independent
until three years after falling
below such threshold);
The director
or an immediate family member of the
director is a director, officer or
trustee of a charitable or
tax-exempt organization to whom the
Company, one of its
affiliates or any senior
management member of the Company or
its affiliates makes
substantial charitable
contributions.
In the following
circumstances, the material relationships
shall be deemed immaterial and
thus the director shall, in the absence
of other material relationships, be deemed
to be
independent:
For any relationships not covered above, the
determination of whether these relationships
are
material or not and whether the
director would be independent or not, shall
be made by the
directors who satisfy the
independence standards set forth in this
section. In making these
determinations, the Board shall
examine all factors that may appear to
affect independence,
including commercial, industrial,
financial, banking, legal, accounting,
charitable, familial
relationships and long-standing
friendships.
The Company and its affiliates shall not
make any personal loans or extensions of
credit to
directors or executive officers.
All directors shall only receive
directors’ fees as their
compensation for Board and/or Board
committee service. The payment of
consulting,
advisory or other compensatory fees
to a director from the Company or one of
its affiliates is
prohibited and shall negate the
director’s independence, except for
compensation received by
a director for former service as an
interim Chairperson or CEO, which shall not
be considered
in determining independence.
Each director has an affirmative
obligation to inform the Board of any
material changes in his
or her circumstances or
relationships that may impact his or her
designation by the Board as
“independent.”
In addition to the foregoing provisions,
members of the Audit Committee must
satisfy
additional requirements to be
considered independent as provided for
by the SEC and NYSE
rules.
For the purposes of these independence
standards guidelines, the terms:
“Affiliate” means any corporation or
other entity that controls, is
controlled by or is
under common control with the
Company, as evidenced by the power
to elect a
majority of the Board or
comparable governing body of such
entity; and
“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 anyone (other than
employees) who shares such person’s
home.
Under Section 162(m) of the Internal
Revenue Code of 1986, as amended, a
director is an
outside director if the
director
BOARD MEETINGS
The Board expects to have five regularly
scheduled meetings each year. Upon
adequate
notice, unscheduled meetings may be
called throughout the year as the need
arises. The
Chairperson of the Board shall
consult with the Lead Director and other
Board members in
determining the times and duration
of the Board meetings.
Meeting Attendance: Directors are
expected to attend (either in person or
telephonically)
meetings of the Board and of the
committees on which they serve.
Directors also are
expected to devote an adequate
amount of time and effort to discharge
properly their
responsibilities.
Board Materials: Information and data
that are important to the Board’s
understanding of the
business to be conducted at a Board
or committee meeting should be
distributed to the
directors sufficiently in advance
of the meeting to permit their review.
Directors are expected
to review these materials in advance
of the meeting. A director may request
that the CEO or
appropriate member of senior
management present to the Board specific
information as it
relates to the Company and its
operations.
Board Meeting Agenda: The Chairperson of
the Board in consultation with the Lead
Director
shall establish the agenda for each
Board meeting. Each director shall be
furnished with a
copy of the agenda in advance of
the Board meeting if possible, and if
advance distribution is
not possible, then the agenda shall
be distributed at the Board meeting.
Each director may
suggest the inclusion of agenda
items. Each director can bring up, at
any Board meeting,
subjects that are not on the agenda
for that meeting.
Non-Management Executive Session of
Directors: The non-management directors
shall have
the opportunity to meet in
executive session after each regularly
scheduled Board meeting or
more frequently, if necessary. The
Lead Director shall preside at these
non-management
executive sessions. The name of the
Lead Director shall be disclosed in the
annual proxy
statement, together with a system
for interested parties to communicate
directly with the Lead
Director.
Annual Executive Session for Independent
Directors: If the non-management
directors of the
Company do not all qualify as
independent under the standards set
forth in these Guidelines,
the directors who are independent
under such standards shall meet in
executive session
without the other non-management
directors at least once annually.
BOARD COMMITTEES
The Board shall have at all times an
Audit Committee, a Compensation and
Benefits
Committee and a Nominating and
Corporate Governance Committee. All
members of these
Committees shall be independent
directors as determined by the Board in
accordance with the
aforementioned independence
criteria. Committee members shall be
appointed by the Board
upon recommendation (after
consultation with the Chairman and Lead
Director) of the
Nominating and Corporate Governance
Committee. In making any committee
appointments,
consideration should be given to
the periodic rotation of a committee
member; however, such
rotation is within the Board’s
discretion.
The Audit Committee, Compensation and
Benefits Committee and the Nominating
and
Corporate Governance Committee each
shall have a written charter that sets
forth the
committee’s structure, membership
qualifications, purposes,
responsibilities, and procedures
for appointing and removing
committee members. The charters also
shall provide that each
committee annually evaluates its
performance. The charters for those
committees shall be
posted on the Company’s website.
Each committee chairperson, in
consultation with the committee members,
shall determine the
frequency and length of the
committee meetings consistent with any
requirements set forth in
the committee’s charter. Each
committee chairman, in consultation with
the appropriate
members of the committee and
management, shall develop the
committee’s agenda. Each
committee shall report to the Board
its activities, findings and
recommendations after each
committee meeting.
The Board may, from time to time,
establish or maintain additional
committees of the Board,
including an Executive Committee,
if an Executive Committee is
established, it will have the
powers and authority as specified
in the Company’s Bylaws.
Each committee shall have the full power
and authority to hire independent legal,
financial or
other advisors as it may deem
necessary, at the Company’s expense,
without consulting with
or obtaining the pre-approval of
any Company officer or the Board.
Any director may attend any committee
meetings, whether or not he or she is a
member of
that committee, providing that he
or she has obtained pre-approval to
attend from the
committee chair or a majority of
the committee.
CHAIRPERSON OF THE
BOARD
The Board will appoint the Chairperson
of the Board who can be an employee of
the
Company. The Chairperson will chair
all regular sessions of the Board and
(with input from
the CEO to the extent not
inappropriate) set the agenda for Board
meetings, subject to the
right of the Lead Director and each
Board member to suggest the inclusion of
item(s) on any
agenda.
LEAD DIRECTOR
The Lead Director shall be selected every year within 30 days of the annual meeting of
shareholders by the majority vote of all of the independent, non-management directors of the
Board. The Nominating and Corporate Governance Committee shall be responsible for
initiating and managing the process for election of the Lead director and conducting the
election by secret ballot.
The Lead Director shall preside at all meetings of the Board of Directors at which the
Chairperson is not present, including executive sessions of the non-management directors and
executive sessions of the independent directors, and apprise the Board of the issues
considered. To this end, the Lead Director will meet and confer regularly with the CEO in
order to stay informed on matters of significance to the Board of Directors. The Lead
Director may also make recommendations to the Chairperson regarding the agenda, structure,
schedule and appropriate length of Board meetings, as well as determine appropriate material
to be provided to the directors in collaboration with the Chairperson.
The Lead Director also serves as a liaison between the Chairperson and the independent
directors. The Lead Director will maintain close contact with the Chairperson of each
committee and, in consultation with the Chairperson, assign tasks to the appropriate
committees if necessary. The Lead Director should make recommendations to the
Nominating and Corporate Governance Committee with regard to committee assignments.
When necessary, the Lead Director may call meetings of the independent directors. The Lead
Director shall participate in and help facilitate the annual review of the CEO’s performance
and together with the Chairperson of the Compensation and Benefits Committee present the
review to the CEO.
The Lead Director shall also serve as an independent point of contact for shareholders
wishing to communicate with the Board. Shareholder communications directed to the Lead
Director can be sent care of the Company’s Corporate Secretary at the Company’s main
office.
DIRECTOR ACCESS TO
OFFICERS, EMPLOYEES AND INDEPENDENT ADVISERS
Directors are encouraged to keep themselves informed with regard to the Company and its
operations. Directors shall have full and free access to Company officers and employees.
Any meetings or contacts that a director wishes to initiate may be arranged through the CEO,
the Corporate Secretary or directly by the director. Directors shall use their judgment to
ensure that any such contact is not disruptive to the Company’s business operations and shall,
to the extent that it is not inappropriate, copy the CEO on any written communications
between a director and a Company officer or employee.
The Board shall approve any director’s request to have senior Company officers and other
personnel regularly attend the Board meetings. Directors will also have access to the
Company’s independent advisors following consultation with the CEO to the extent not
inappropriate.
DIRECTOR COMPENSATION
All directors shall receive directors’ 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 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 and Benefits Committee in
accordance with the policies and principles set forth in its charter.
DIRECTOR ORIENTATION
AND CONTINUING EDUCATION
All new directors shall receive an orientation package. The package will include a copy of the
Company’s bylaws and charter, the Code of Business Conduct and Ethics, the Corporate
Governance Guidelines, all SEC filings for the current year and last preceding calendar year,
press releases issued during the current calendar year and any other pertinent information.
The new director will attend a meeting with the CEO and CFO to be briefed on the
Company’s strategic plans, its significant financial, accounting and risk management issues
and current significant exploration and development projects.
All directors must receive annual director education in subjects relevant to the duties of a
director, including the study of corporate governance best practices or ethics. This education
may be as a result of a program planned by the Company or by the director attending a pre-
approved seminar, with all expenses paid by the Company.
CEO EVALUATION AND
MANAGEMENT SUCCESSION
The Compensation and Benefits Committee shall conduct an annual review of the CEO’s
performance and compensation, as set forth in its charter. The non-management directors
meeting in executive session shall review the Compensation and Benefits Committee’s report
in order to ensure that the CEO is providing the best long and short-term leadership for the
Company. The Nominating and Corporate Governance Committee shall make an annual
report to the Board on emergency as well as expected CEO succession planning. The entire
Board shall work with the Nominating and Corporate Governance Committee to nominate
and evaluate potential successors to the CEO. The CEO shall provide the Committee with his
or her recommendations and evaluations of potential successors, along with a review of any
development plans recommended for such individuals.
ANNUAL SELF-EVALUATIONS
The Nominating and Corporate Governance Committee shall have responsibility for
conducting and overseeing the annual self-evaluations for the Board and reporting the results
to the Board following the end of each fiscal year. The evaluations will be based on such
objective and subjective criteria, as the Board or the Nominating and Corporate Governance
Committee deems appropriate.
CODE OF BUSINESS
CONDUCT AND ETHICS
The Board shall adopt and maintain the Code of Business Conduct and Ethics (the “Code”)
for the directors, officers and employees of the Company in compliance with the proposed
NYSE requirements. The Code shall be posted on the Company’s website. The purpose of
the Code shall be to focus the directors, officers and employees on areas of ethical risk,
provide guidance in recognizing and dealing with ethical issues, provide mechanisms to report
unethical conduct, and help foster a culture of honesty and accountability.
Each director and officer shall act at all times in accordance with the requirements of the
Code. Waivers of the Code for any officer or director may only be made by the Board of the
Company or by a Board committee composed of independent directors. Any waiver for an
officer or director must be posted on the Company website and otherwise disclosed as
required by law.
REPORTS OF
IRREGULARITIES
Any reports of concerns regarding accounting, internal auditing controls, or other
irregularities or concerns whether financial or otherwise shall be brought to the attention of
the Chairperson of the Audit Committee. These reports are confidential and may be
anonymous if made using the Anonymous Reporting Hotline maintained by the Audit
Committee. The Board shall be notified of these reports at every quarterly Board meeting or
sooner, if necessary.
Rev. 5-21-10
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