The Board determines the appropriate size of the Board within the requirements of the Charter Documents. The Board believes that five to seven members is an appropriate size based upon the Company's present circumstances, although the Charter Documents currently specify a size of three to nine members. The Board shall periodically evaluate whether a larger or smaller slate of Directors would be preferable.
Director Selection Process
Board members will be elected annually by the Shareholders, except as noted below with respect to vacancies and contractual obligations. Each year prior to the Company’s annual meeting of the Shareholders, the full Board by a majority vote shall recommend a slate of Directors for election by the Shareholders at that meeting. The Board’s recommendations will be based on its determination (using advice and information supplied by the Nominations And Qualifications Committee) as to the suitability of each individual, and the slate as a whole, to serve as Directors, after taking into account the membership criteria discussed below.
The Board shall fill any vacancies in existing or new Director positions in accordance with the terms of the Charter Documents based upon the recommendations of the Nominations And Qualifications Committee. Any Directors appointed by the Board shall serve only until the next election of Directors unless elected by the Shareholders to a further term at that time. In the event the Company is legally required by contract or otherwise to provide third parties with the ability to nominate and/or appoint Directors, the selection and nomination of each such Director shall not be subject to the process discussed above.
Board Membership Criteria
The Nominations And Qualifications Committee shall work with the Board on an annual basis to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members. The Nominations And Qualifications Committee and the Board will evaluate each individual in the context of the Board as a whole, with the objective of recommending a group that can best perpetuate the success of the business and represent shareholder interests through the exercise of sound judgment, using its diversity of experience.
In evaluating the suitability of individual Board members, the Nominations And Qualifications Committee and the Board shall consider, among other factors, the individual's: (1) personal and professional integrity; (2) business judgment; (3) general understanding of marketing, finance and other disciplines relevant to the success of a development-stage publicly-traded company in today’s business environment; (4) general understanding of the Company's business on a technical level; (5) educational and professional background, (6) overall ability to effectively work with the other members of the Board to collectively serve the long-term interests of the Shareholders; and (7) commitment and ability to devote sufficient time and energy to diligently his or her duties. In determining whether to recommend a Director for re-election, the Nominations And Qualifications Committee and the Board shall consider the Director’s past attendance at meetings and participation in and contributions to the activities of the Board.
Board Composition - Mix of Management and Independant Directors
The Board believes that, except during periods of temporary vacancies, a majority of the Directors serving on the Board should be Independent Directors. The term "Independent Director" shall have the same meeting as that used by the American Stock Exchange ("AMEX"). 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 an Independent Director.
Procedures with Respect to Director Candidates Recommended by Shareholders When evaluating nominees for election as Directors at any annual or special meeting of the Company's Shareholders at which Directors are to be elected, the Nominations And Qualifications Committee shall, in making its recommendation to the full Board, give due consideration to any candidate recommended by any Shareholder in accordance with the criteria and qualifications established above in these Guidelines so long as such recommendation is properly and timely tendered to the committee or the Company in accordance with the Charter Documents. As currently set forth in the Charter Documents, any Shareholder recommendation relating to the nomination of a Director-candidate must:
- be directed to and received by the Nominations And Qualifications Committee or the Company's corporate secretary at the Company's executive offices not fewer than 120 days in advance of the day specified as the mailing date in the Company's proxy statement for the prior year's annual meeting of Shareowners; and
- contain the following information: (1) the candidate's name, age, business address and, if known, residence address; (2) the candidate's principal occupation or employment; and (3) the number of shares of each class of Company stock which the candidate beneficially owns.
Waiver of Independance Requirements and other Qualifications
It is recognized that the Company's ability to identify and engage Directors with the requisite independence and other qualifications to serve on the Board (or on any committee of the Board with more stringent independence qualifications, including the Audit Committee and Compensation, Conflicts And Business Ethics Committee as more particularly described below in these Guidelines), may be limited if not impossible due to the Company's limited business operations, prospects and financial and human resources to date; limited ability to compensate Directors for their time and efforts and the legal risks entailed by serving on the Board; and overall inability due to these and other factors to procure Director's and officer's insurance in any minimum amount or at all on financial and other terms acceptable to the Board. Accordingly, it is understood that while the Board and the Nominations And Qualifications Committee shall use reasonable efforts based upon their business judgment and available resources to identify and engage qualified individuals to serve on the Board and its committees, the Company and the Directors shall be under no liability should they be unable to do so.
Term Limits
The Board believes that Directors who have served on the Board for an extended period of time are able to provide valuable insight into the operations and future of the Company based on their experience with and understanding of the Company’s history, policies and objectives. Accordingly, the Board does not believe it should limit the number of terms for which an individual may serve as a Director. The Board believes that, as an alternative to term limits, it can ensure that the Board continues to evolve and adopt new viewpoints through the evaluation and nomination process described in these Guidelines.
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 will consider the continued appropriateness of the Director's membership on the Board under the changed circumstances and 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.
Retirement Policy
The Board does not believe it should establish any age limit for serving on the Board so long as the Director is physically and mentally capable of fully performing his or her duties as a Director.
Recusal when Conflicts 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 disclose the existence of the potential conflict of interest to the Board which shall, in turn, refer the matter to the Compensation, Conflicts And Business Ethics Committee meeting in executive session. Should the Compensation, Conflicts And Business Ethics Committee determine that a conflict exists or the perception of a conflict is likely to be significant, the Director will recuse himself or herself from any discussion or vote related to the matter.
Members on other Boards
The Board does not believe that its members should be prohibited from serving on boards and/or committees of other companies or organizations, and the Board has not adopted any guidelines limiting such activities. The Nominations And Qualifications Committee and the Board will take nevertheless take into account the nature of and time involved in a Director’s service on other boards or committees in evaluating the suitability of that individual Director and making its recommendations to the Shareholders. Service on boards and/or committees of other companies and organizations should be consistent with the Company’s conflict of interest policies. A Director should advise the Chairman of the Board (the "Chairman") and the chairman of the Nominations And Qualifications Committee in advance of accepting an invitation to serve on another public company board.
