DIRECTOR QUALIFICATIONS AND OTHER MATTERS
1. Board Membership Criteria
The directors are nominated by the Corporate Governance/Nominating Committee of the Board, in accordance with the charter and principles of that committee. The Board’s objective is to maintain the appropriate composition of directors with the requisite skills and experience to represent our stockholders’ best interests in overseeing and monitoring the Company’s management and operations. The Corporate Governance/Nominating Committee is responsible for reviewing and discussing with the Board, on an annual basis, the appropriate skills and characteristics required of individual Board members and for the composition of the Board as a whole. This assessment includes considerations such as director independence, judgment, character, integrity, diversity, skills, experience in such areas as operations, technology and finance, ability to commit sufficient time to the Board and such other factors as the Corporate Governance/Nominating Committee may consider appropriate in light of the Company business and operating requirements. The Board strives to have diverse viewpoints represented among its members. In considering directors for service on the Board, the Corporate Governance/Nominating Committee and the Board consider the entirety of each director’s credentials in the context of the criteria mentioned above.
2. Majority Voting; Advance Resignation as Prerequisite to Director Nomination
In accordance with the Company’s bylaws, unless the number of director nominees exceeds the number of directors to be elected at the meeting, a nominee for director must receive more votes cast for than against his or her election or reelection in order to be elected or reelected to the Board. The Board expects a director to tender his or her resignation if he or she fails to receive the required number of votes for reelection. The Board shall nominate for election or reelection as director only candidates who agree to tender, promptly following the stockholders’ meeting at which they are elected or reelected as director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the next stockholders’ meeting at which they face reelection and (ii) Board acceptance of such resignation. In addition, the Board shall fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with this guideline.
If an incumbent director fails to receive the required vote for reelection, the Corporate Governance/Nominating Committee will act on an expedited basis to determine whether to accept or reject the director’s resignation or whether other action should be taken, and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The Corporate Governance/Nominating Committee and the Board may consider any factors they deem relevant in deciding whether to accept or reject a director's resignation or whether other appropriate action should be taken.
3. Size of the Board
The Board reviews from time to time the appropriateness of the total number of directors on the Board. The Board may consider expanding or reducing this number to a size it determines is most effective for exercising its authority and responsibilities.
4. Composition of the Board and Director Independence
The Board shall have a majority of directors who meet the criteria for independence established from time to time by The Nasdaq Stock Market (“Nasdaq”) and the rules and regulations of the Securities and Exchange Commission. The Board also believes that it is often in the best interest of the Company and its stockholders to have non-independent directors, including current and (in some cases) former members of management, serve as directors of the Company.
Under the Nasdaq listing standards, the Board is responsible for affirmatively determining, as to each independent director, that no relationships exist which, in the opinion of the Board, would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director. This determination includes evaluation of a series of objective tests specified in the listing standards, including consideration of the relationship to the Company and any business dealings with the Company. This may include any relationship the director may have with companies or entities that have business dealings with the Company. The Corporate Governance/Nominating Committee makes recommendations to the Board regarding these determinations based on the Committee’s review of information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management.
5. Extending the Invitation to a New Potential Director to Join the Board
An invitation to join the Board may be extended by the Board itself, or, with the Board's authorization, by the Chairperson of the Board, Chairperson of the Corporate Governance/Nominating Committee or the CEO.
6. Directors Who Change their Present Job Responsibilities
The Board, through the Corporate Governance/Nominating Committee, will review the appropriateness of the continued service of directors who change their status and appointments or positions with other companies during their tenure as directors on the Board.
7. Other Board Commitments
Each Board member must ensure that other existing and anticipated future commitments do not materially interfere with the members' service as a director. Without specific approval of the Board, no director shall serve on more than three (3) additional public company boards. If a director is also an active chief executive officer of a public company, the director may not serve on more than two (2) additional public company boards. In order to comply with these guidelines, directors should advise the Corporate Governance/Nominating Committee of any invitations to join the board of any other public company prior to accepting another directorship.
8. Term Limits; Age Limits
The Board believes that term limits and mandatory retirement are on balance not the best way to maximize the effectiveness of the Board. While term limits and mandatory retirement may introduce fresh perspectives and viewpoints to the Board, they may have the countervailing effect of causing the loss of the benefit gained from the contributions of directors who have developed, over time, increasing insight into the Company. Instead, the Corporate Governance/Nominating Committee will review the appropriateness of each Board member's continued service each time such director is nominated for continued service on the Board.