The Board of Directors (the “Board”) of Doofus Corporation, a Delaware corporation (the “Corporation”), has adopted the following Corporate Governance Guidelines (these “Guidelines”) to assist the Board in the exercise of its responsibilities. These Guidelines are intended to serve as a flexible framework within which the Board may conduct its business and are subject to modification from time to time by the Board.
The Board’s Objectives.
The Board’s objectives are to build long-term value for the Corporation’s stockholders and to assure the vitality of the Corporation for its customers, employees and the other individuals and organizations that depend on the Corporation. The Board understands that the stockholders rely upon the Board to act in the best interest of the Corporation in making decisions or taking actions not requiring stockholders’ approval and shall at all times act accordingly.
The Board’s Responsibilities.
The business and affairs of the Corporation shall be managed by or under the direction of the Board. A director is expected to spend the time and effort necessary to properly discharge such director’s responsibilities. Accordingly, a director is expected to regularly attend meetings of the Board and committees of which such director is a member of, and to review prior to meetings material distributed in advance for such meetings. A director is also expected to attend the Corporation’s annual meeting of stockholders. A director who is unable to attend any meeting (which it is understood shall occur on occasion) is expected to notify the Chairperson of the Board or the Chairperson of the appropriate committee in advance of such meeting. In addition, directors are expected to act in the best interests of the Corporation, maintain independence and integrity, develop and maintain a sound understanding of the Corporation’s businesses, industries and strategies, review management development and succession planning, endeavor to be available on reasonable notice, attend and prepare for meetings, and provide active, objective and constructive participation at meetings of the Board and its committees.
The Board’s responsibilities include, but are not limited to the following:
Selection of New Directors.
The Board shall be responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of stockholders based on the recommendations of the Nominating and Corporate Governance Committee. The Board shall identify and review possible candidates for Board membership consistent with criteria approved by the Board, and annually recommend qualified candidates to be proposed for election to the Board at the annual meeting of the Corporation’s stockholders. The Board shall consider the appropriate size of the Board with a view to facilitating effective decision making. In the event of a vacancy on the Board between annual meetings of the Corporation’s stockholders, the Board may identify, review and recommend qualified candidates for Board membership for Board consideration to fill such vacancies, if the Board determines that such vacancies shall be filled.
When formulating these recommendations, the Board shall seek and consider advice and recommendations from management, and may seek or consider advice and recommendations from accountants, auditors, consultants, outside counsel or other advisors as it or the Board may deem appropriate.
Board Membership Criteria.
The Board is responsible for periodically determining the appropriate skills, perspectives, experiences, and characteristics required of Board candidates, taking into account the Corporation’s needs and current composition of the Board. This assessment should include appropriate knowledge, experience, and skills in areas deemed critical to understanding the Corporation and its businesses; personal characteristics, such as integrity and judgment; and candidates’ commitments to the boards of other companies. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the board member’s service as a director and that he or she devotes the time necessary to discharge his or her duties as a director.
The Board is responsible for periodically reviewing and suggesting appropriate modifications to these qualification guidelines. The Board believes the qualification guidelines provided in section 5 below are currently appropriate, but it may change these qualification guidelines as the Corporation’s and Board’s needs warrant.
The Corporation does not have a policy limiting the number of other company boards upon which a director may serve. The Board, however, shall consider the number of other public company boards and other boards (or comparable governing bodies) on which an individual is a board member in making a determination of whether to recommend such individual to the Board as a candidate for a Board position. Board members are expected to promptly notify the other board members of any changes in status on other boards and their committees.
Independence of the Board.
The Board shall identify each director who qualifies as an independent director (collectively, “Independent Directors”) under the requirements of any securities exchange on which the Corporation’s securities are listed or quoted for trading. The Board shall review annually the relationships that each director has with the Corporation (either directly or as a partner, stockholder, officer or representative of an organization that has a relationship with the Corporation). Following such annual review, only those directors who the Board affirmatively determines have no material relationship with the Corporation (either directly or as a partner, stockholder, officer or representative of an organization that has a relationship with the Corporation) shall be considered Independent Directors, subject to any additional requirements prescribed by applicable law. The Board may adopt and disclose categorical standards to assist it in determining director independence.
A director who is also an officer of the Corporation shall not receive additional compensation for such service as a director. The Corporation believes that compensation for non-employee directors should be competitive and may from time to time encourage ownership of the Corporation’s common stock through the payment of a portion of director compensation in Corporation stock, options to purchase Corporation stock, stock appreciation rights or similar compensation whose value is based on the Corporation’s stock. The Compensation Committee shall periodically review the level and form of the Corporation’s director compensation, including how such compensation compares to director compensation of companies of comparable size, industry and complexity. Such review shall also include a review of both direct and indirect forms of compensation to the Corporation’s directors, including, if applicable, any charitable contributions by the Corporation to organizations in which a director is affiliated and consulting or other similar arrangements between the Corporation and a director. Proposed changes to director compensation shall be submitted to the Board for approval.
Members of the Audit Committee may not, other than in their capacity as a member of the Audit Committee, the Board, or any other board committee accept directly or indirectly any consulting, advisory, or other compensatory fees from the Corporation or any of its subsidiaries; provided that, unless the rules of any securities exchange on which the Corporation’s securities are listed or quoted for trading require otherwise, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Corporation (provided that such compensation is not contingent in any way on continued service).
Any employees or other interested parties desiring to voice their complaints or concerns regarding the Corporation with the independent directors of the Corporation may do so by the method set forth in the Corporation’s Code of Ethics and Business Conduct, a copy of which shall be maintained on the Corporation’s website.
Self-Evaluation by the Board.
The Board shall conduct an annual self-assessment of its performance as well as the performance of each committee of the Board, the results of which shall be discussed with the Board and each committee. The assessment should include a review of any areas in which the Board or management believes the Board can make a greater contribution to the Corporation. In conducting such self-assessment, the Board shall seek input from management and may seek input from such other parties as it may deem appropriate.
Board Access to Management and Outside Advisors.
Board members shall have access to the Corporation’s management. Board members shall also have access to the Corporation’s outside advisors and shall coordinate such access through the Chief Executive Officer.
Attendance of Management Personnel at Board Meetings.
Typically, it is management’s responsibility to formalize, propose and implement strategic choices and the Board’s role to approve strategic direction and evaluate strategic results. As a practical matter, however, the Board and management shall be better able to carry out their respective strategic responsibilities if there is an ongoing dialogue among the Chief Executive Officer, other members of senior management and Board members. To facilitate such discussions, members of senior management who are not directors may be permitted to participate in Board meetings when appropriate.
The Board also encourages the Chief Executive Officer to bring members of management from various functional areas into board meetings from time to time to provide management insight into items being discussed by the Board that fall within the manager’s scope of responsibility and to make presentations to the Board on matters that fall within the manager’s scope of responsibility.
The Board is authorized to appoint one or more advisory directors to the Board. Such advisory directors shall be notified of and entitled to attend and participate in all board meetings. Each such advisory director shall be notified of and entitled to attend and participate in all committee meetings for committees to which he or she is appointed an advisory director to the committee, subject to any legal requirements or the requirements of any securities exchange on which the Corporation’s securities are listed or quoted for trading. Each such advisory director shall be entitled to treatment by management, the Board and its committees as any other director but, as an appointed position, shall not have voting power as a director.
Board Materials Distributed in Advance.
Information and materials that are important to the Board’s understanding of the agenda items and other topics to be considered at a board meeting should, to the extent practicable, be distributed sufficiently in advance of the meeting to permit prior review by the directors. In the event of a pressing need for the Board to meet on short notice or if such materials would otherwise contain highly confidential or sensitive information, it is recognized that written materials may not be available in advance of the meeting.
Board Interaction with Third Parties.
The Board believes that only authorized directors, officers and advisors should speak for the Corporation. Each director shall refer all inquiries from institutional investors, analysts, the press or customers, as well as all inquiries regarding potential mergers and acquisitions, to the Chief Executive Officer. Any proposed exceptions to this policy must first be discussed with and agreed to by the Chief Executive Officer prior to contact with such third parties.
Board Orientation and Continuing Education.
The Corporation shall provide new directors with orientation to familiarize such directors with, among other things, the Corporation’s businesses, strategic plans, significant financial, accounting and risk management issues, compliance programs, conflicts policies, code of ethics and business conduct, corporate governance guidelines, principal officers, internal auditors and independent auditors. Each director is expected to participate in continuing education to maintain expertise to perform his or her responsibilities as a director.
Frequency of Meetings.
There shall be at least four regularly scheduled meetings of the Board each year. At least one regularly scheduled meeting of the Board shall be held each quarter. Additional meetings may be held as needed.
Selection of Agenda Items for Board Meetings.
The Chief Executive Officer, in consultation with the Chairperson of the Board if there is a non-management Chairperson of the Board, shall prepare an agenda for each meeting of the Board. Each Board member shall be permitted to suggest inclusion of items on an agenda as well as allowed to raise at any board meetings subjects that are not specifically on the agenda for that meeting.
Number and Names of Board Committees.
The Corporation shall have a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. The Board also has the authority to appoint other committees from time to time. The purpose and responsibility for each such committee shall be outlined in a committee charter adopted by the Board. Such charters shall be compliant with all applicable laws, rules and regulations. Such charters shall set forth the duties and responsibilities of the committees, qualifications for committee membership, guidelines covering committee member appointment and removal, committee authority and obligations to report to the Board. The Chairperson of each committee, in consultation with committee members, shall determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s respective charter. Nothing in these Guidelines or any committee charter is intended to limit the ability of members of management, other members of the Board, accountants, auditors, consultants, outside counsel or other advisors to attend meetings of the committee so long as, in each instance, the committee is afforded the opportunity to deliberate and vote in executive session.
The Board shall have the power to appoint and dismiss independent legal, financial or other advisors to the Board, as it may deem necessary. In general, it is assumed that the proposed hiring of any such advisors shall be discussed in advance with the Chief Executive Officer of the Corporation. The Corporation shall provide adequate funding for any such advisors.
Independence of Board Committees.
The Audit Committee shall be composed of qualified, independent directors to the extent necessary to satisfy legal, any securities exchange and other requirements applicable to such committee and, if applicable, any other committee of the Board in existence from time to time.
Assignment of Committee Members.
The Board shall be responsible, after consultation with the Chief Executive Officer and the Chairperson of the Board if there is a non-management Chairperson of the Board, for making recommendations with respect to the assignment of Board members to the various committees of the Board, and for annually reviewing committee assignments made by the Board. The Board shall be responsible for appointing the chairpersons and members to the committees on an annual basis.
Each committee shall maintain minutes of its meetings in sufficient detail to reflect the material issues considered at the meeting. Such minutes shall be distributed to the entire Board and filed with the corporate records of the Corporation. Best efforts shall be used to circulate minutes to the Board prior to the committee making its report to the Board.
Leadership, Development and Succession.
Selection of the Chief Executive Officer.
When necessary, the Board shall be responsible for identifying potential candidates for, and selecting, the Corporation’s Chief Executive Officer. In identifying potential candidates for, and selecting, the Corporation’s Chief Executive Officer, the Board shall consider, among other things, a candidate’s industry experience, understanding of the Corporation business environment, leadership qualities, knowledge, skills, expertise, integrity, and reputation in the business community.
Evaluation of Chief Executive Officer.
The Board shall provide the Chief Executive Officer with an annual performance review for the prior year before March 1 of each fiscal year. The Chairperson of the Board, if not also a member of management, shall provide the performance review of the Chief Executive Officer after consultation with the other members of the Board in separate session. The compensation of the Chief Executive Officer shall be set by the Board by ratification and approval.
The Board shall plan for the succession to the position of Chief Executive Officer.
The Board shall appoint a Chairperson of the Board. Both independent and management directors, including the Chief Executive Officer, are eligible for appointment as the Chairperson.
Lead Independent Director.
If the Chairperson of the Board is not an independent director, the Board shall appoint an independent director to serve in a lead capacity to coordinate the activities of the other independent directors and to perform such other duties and responsibilities as the Board may determine. The Lead Independent Director shall be elected by a majority of the independent directors of the Board for a renewable one-year term. Such term shall generally commence at the first board meeting after the annual meeting of stockholders and end immediately prior to the next annual meeting of stockholders. The Corporation shall appropriately disclose the name of the Lead Independent Director and the method by which all interested parties may contact the independent directors. A copy of the Corporation’s Lead Independent Director Policy is maintained on the Corporation’s website.
Director Qualification Guidelines.
The Board, in considering qualifications of directors standing for re-election and candidates for Board membership, shall consider the following factors, in addition to those other factors it may deem relevant:
Adopted as of January 1, 2020