Glatfelters Board of Directors (the "Board") is charged with providing effective governance over the Companys business for the benefit of its shareholders, and has approved the following Governance Principles. The Governance Principles, which provide a framework for the Boards responsibilities, are in addition to, and are not intended to change or interpret, any Federal or state law or regulation, the New York Stock Exchange ("NYSE") listing standards, the Articles of Incorporation, or the By-Laws of the Company. The principles and guidelines herein are subject to modification from time to time by the Board.
GLATFELTERS MANAGEMENT ORGANIZATION
Glatfelters business is conducted by its officers, managers and employees, under the direction of the Chief Executive Officer ("CEO") and the oversight of the Board, which is comprised of a majority of independent directors. The Board is elected by the Companys shareholders and is responsible for the management of the business and affairs of the Company. The Board shall carry out its responsibility by establishing the strategic direction for the Companys business and by selecting, evaluating, advising and monitoring executive management, and shall ensure that the long-term interest of the Company as a whole, and its shareholders, are served by the conduct of the business operations. The Board and management recognize that, in addition to the shareholders, other stakeholders in the business include employees, retirees, contractors, customers, suppliers, government and regulatory officials, as well as the communities in which the Company operates. The Board and management believe that recognizing the interests of these stakeholders is fundamental to being able to provide value to shareholders.
2. Chairman & Chief Executive Officer
Currently, the Chief Executive Officer also serves as Chairman of the Board. As CEO, he presides at all meetings of the shareholders and is responsible to the Board for the day-to-day management of the Company. As Chairman, he proposes, with the involvement of the Board, the agenda for the meetings of the Board over which he presides.
3. Other Executive Officers
The Board annually appoints executive officers of the Company at its organizational meeting following the Annual Meeting of Shareholders and at such other times as it may deem appropriate. A listing of the Companys current officers, as well as its directors, may be found at http://www.glatfelter.com/e/invesstock.asp.
BOARD OF DIRECTORS
1. Board Functions
The Board has five regularly scheduled meetings a year at which it reviews and discusses reports by management on the performance of the Company, strategic options, and other significant issues faced by the Company. The full Board considers all major decisions affecting the Company. Directors are expected to attend all scheduled Board and meetings of committees of which they are members. In addition to its general oversight of management, the Board, either directly or through its committees, also performs a number of specific functions, including:
- selecting, evaluating and compensating the CEO, and overseeing CEO succession planning;
- selecting, evaluating and compensating the other executive officers;
- developing and approving compensation and benefit plans for senior management and other employees;
- reviewing and approving long-term strategic business plans and major corporate actions and monitoring corporate performance against those plans and actions;
- assessing the major risks faced by the Company, and reviewing options to mitigate those risks; and
- ensuring that processes are in place for maintaining the integrity of the Company, its financial statements, internal controls, reporting systems, compliance with laws, and the integrity of its relationships with its stakeholders.
In executing these functions, directors have regular interaction with management and consult with independent advisors as necessary and appropriate. Non-management directors meet in regularly scheduled executive sessions (without management) as part of the Board of Directors meetings. Currently, the Chair of the Nominating and Corporate Governance Committee presides over the executive sessions. The Board has established a method for interested parties to communicate directly with the entire Board or any non-management director by calling the Companys toll-free Helpline (800-346-1676). The entire Board conducts an annual self-evaluation to determine the effectiveness of the Board and its committees.
2. Board Members
Independent directors, as defined by the NYSE listing standards and any applicable laws or regulations, shall constitute a majority of the Board. Generally, to meet the standard for "independence," a director must not be an employee of the Company nor have any material relationship with the Company, as affirmatively determined by the Board and disclosed in the proxy statement by the Board of Directors.
The Board presently consists of eight persons, comprising two classes of directors of three directors each, and one class of two directors. At each Annual Meeting of Shareholders, the successors to those directors whose terms expire at that meeting shall be elected to hold office for a term of three years each, so that the term of office of one class of directors shall expire in each year. Candidates to the Board are based on shareholder or director recommendations or search mechanisms, and are identified, screened, and recommended to the Board by the Nominating and Corporate Governance Committee for nomination for election by the shareholders. In recommending a nominee for director, the Nominating and Corporate Governance Committee shall consider, at a minimum, the nominees independence, availability of sufficient time to serve on the Companys Board and the possession of such knowledge, experience, skills, expertise, wisdom, integrity, business acumen, understanding of the Companys business environment and diversity so as to enhance the Boards ability to manage and direct the affairs and business of the Company. When a term of a director extends beyond the date when the director reaches 72 years of age, such director shall resign from the Board effective at the next Annual Meeting of Shareholders following his or her 72nd birthday. In the case of a vacancy on the Board, the Board itself may fill that vacancy by choosing a director to serve until the next election of the class for which such director has been chosen. The replacement director shall serve until his or her successor has been selected and qualified, or until his or her earlier death, resignation, or removal.
It is the opinion of the Board that directors who change their principal occupation following their election to the Board should volunteer to resign from the Board upon their change of occupation. While it is not mandatory for a director to resign from the Board under such circumstances, there should be an opportunity for the Board to review the matter and make a determination concerning the appropriateness of the director remaining on the Board.
The Company does not limit the number of boards of publicly traded companies on which a director may serve. However, a director who is considering serving on the Board of Directors of another publicly traded company is expected to promptly so advise the Nominating and Corporate Governance Committee. The Committee will then consider the effect that these additional responsibilities could have on the directors performance of his/her duties as a director of the Company, and will take such action as it may deem appropriate and in the best interests of the Company. The Company does expect all directors to devote sufficient time and effort to their duties as a Glatfelter Board member. This is a factor that is considered in the annual Board self-evaluation process.
3. Board Committees
The Board shall at all times have a committee structure that is adequate for the conduct of the business of the Board of Directors and required for the operation of a publicly owned company. Currently, the Company has four standing committees, consisting of: (a) Audit, (b) Compensation, (c) Nominating and Corporate Governance and (d) Finance. The Board may, from time to time, create additional committees or terminate existing ones, if required. Committees support the role of the Board on issues that benefit from consideration by a smaller, more focused group of directors. The committees, whose chairpersons are appointed by the Board, shall have regularly scheduled meetings, and call additional meetings as appropriate. A management representative is assigned to each committee for purposes of planning meeting agendas and coordinating communications between management and the committee. The office of the Corporate Secretary is responsible for providing notice of the committee meetings and sending documents provided by the management representative(s) in advance of the meeting, as well as taking minutes of the committee meetings. The committee chairpersons routinely report on their committee activities to the Board at the next regular Board meeting following a committee meeting.
The purposes of each committee are defined in the Companys By-Laws and in their respective charters. A summary of the roles of each committee is listed below. The committee charters and more information about the current composition of each committee are accessible by following the hyperlinks provided.
A) Audit Committee (Click here for Charter)
The Audit Committee is responsible to the Board for oversight of the quality and integrity of the accounting, auditing, internal controls, reporting practices and financial statements of the Company; as well as:
- the oversight of compliance by the Company with applicable laws and regulations and its Code of Business Conduct and its Code of Business Ethics for CEO and Financial Officers;
- the review of the independent auditors qualifications and independence;
- the hiring, retention or discharge of the Companys independent auditors and the pre-approval of all audit and non-audit services performed by the independent auditor for the Company and the fees related thereto;
- the review and oversight of the Companys internal audit function including the review of its performance;
- the establishment of procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters.
In discharging this oversight role, the Audit Committee is empowered to investigate any matter brought to its attention. The Audit Committee has authority to retain outside counsel or other experts and the Company shall make funds available to the Committee for such retention.
The Audit Committee shall be comprised of at least three directors who are "independent" as that term is defined herein and by Section 301 of the Sarbanes- Oxley Act of 2002, and as required by the NYSE listing standards. Each member of the Committee must be financially literate and at least one member of the Audit Committee must qualify as an "audit committee financial expert," as that term is defined by the Securities and Exchange Commission ("SEC"), as of the effective date of said requirement pursuant to Section 407 of the Sarbanes-Oxley Act of 2002. The Audit Committee routinely holds executive sessions without management and both with and without the internal auditor and the independent auditors.
Glatfelters Audit Committee members are limited to serving on the audit committees of no more than three publicly-traded companies, inclusive of Glatfelters Audit Committee. However, if a majority of the Board determines that such simultaneous service would not impair the ability of the member to effectively serve on Glatfelters Audit Committee, it may approve the appointment of such member to the Audit Committee and shall publish such determination in the Companys annual proxy statement.
B) Compensation Committee (Click here for Charter)
The Compensation Committee is responsible to the Board for all executive compensation matters; the recommendation of incentive and equity-based compensation plans, defined benefit and contribution plans and other welfare benefit plans; as well as:
- the recommendation to the Board of an executive compensation policy that is designed to support overall business strategies and objectives; attract and retain key executives; link compensation with business objectives and organizational performance; align executive officers interests with those of the Companys shareholders and provide competitive compensation opportunities;
- the annual review and recommendation for approval to the Board of corporate goals and objectives relevant to the Chief Executive Officers ("CEO") compensation; the evaluation of the CEOs performance in light of these goals and objectives; reporting the results of this evaluation to the Board, and review and recommendation for approval to the Board of the CEOs compensation, including salary, bonus, profit sharing and other incentive and equity compensation, based on this evaluation;
- the evaluation and compensation of other executive officers; and
- the annual report to the shareholders on the compensation of the Companys CEO and other executive officers.
The Compensation Committee is comprised entirely of "independent" directors as that term is defined herein and as required by the NYSE listing standards. When selecting members of the Compensation Committee, the Board considers, among other factors, prior service on the committee, or a compensation committee of another public company, or service with a public company that involved executive compensation matters. The Compensation Committee has the authority to retain the services of an independent consultant for advice regarding the discharge of its functions. Executive sessions without management are to be routinely held by the Compensation Committee.
C) Nominating and Corporate Governance Committee (Click here for Charter)
The Nominating and Corporate Governance Committee is responsible to the Board for all corporate governance matters; the review and recommendation to the Board of the Companys Code of Business Conduct and the Code of Business Ethics for CEO and Senior Financial Officers of Glatfelter; the nominations of the directors and officers of the Company, as well as:
- recommendations to the Board regarding the Boards size and composition, the tenure and retirement age of directors;
- the review of the qualifications and the recommendation to the directors of nominees for election to the Board at each Annual Meeting of Shareholders;
- the nomination of persons to fill vacancies on the Board;
- the nomination of directors for committee membership; and
- the review and approval of all corporate contributions to affiliated persons or entities and all contributions in excess of $25,000 to any other person or entity.
The Committee periodically reviews and oversees orientation programs for newly elected directors and continuing director education programs for incumbent directors. The Committee also reviews shareholder proposals for inclusion in the proxy statement for the Annual Meeting of Shareholders and proposed responses by the Board and makes recommendations to the Board concerning any other aspect of the procedures of the Board that the Committee considers warranted. The Committee shall conduct an annual assessment of the Committees performance and shall cause the Board to conduct an annual assessment of Board performance.
The Nominating and Corporate Governance Committee is further charged with developing and recommending the Corporate Governance Principles to the Board and reviewing the same annually to assure that they are appropriate for the Company and comply with the requirements of the SEC and NYSE. Additionally, the Nominating and Corporate Governance Committee reviews the senior management organization, assuring that the Company has a senior management succession plan, makes nominations to the Board for election of officers, and recommends to the Board the individual who should assume the position of Chief Executive Officer if he or she becomes unable to serve due to an unforeseen event.
The Board will not permit any waiver of its Code of Business Ethics for any director or executive officer. The Nominating and Corporate Governance Committee shall examine any exceptional situation that might constitute an infraction of the Companys Code of Business Conduct and coordinate the prompt disclosure of any material departures from its Code of Business Conduct.
The Nominating and Corporate Governance Committee is comprised entirely of "independent" directors as that term is defined herein and as required by the NYSE listing standards.
D) Finance Committee (Click here for Charter)
The Finance Committee shall provide oversight regarding matters of financial significance to the Company, particularly those of a long-term nature, and recommend appropriate action by the Board. The Committee is specifically responsible for, among other tasks:
- the review and recommendation for approval by the Board of the Company's annual operating and capital budgets; and
- overseeing the management and investment performance of the Company's pension, 401(k) savings and profit sharing plans.
4. Compensation of Directors
The Companys annual proxy statement contains complete information about director compensation, which may vary based on factors such as committee service and number of meetings attended. To align directors interests with those of the Shareholders, each director is encouraged to own stock in the Company. Thus, the Company pays two-thirds (2/3) of the directors annual retainer in stock in lieu of cash.
5. Conduct and Ethics Standards for Directors
Directors are subject to the applicable provisions set forth in the Companys publication, Integrity - Our Code of Business Conduct.Directors fulfill their duties in a manner that avoids actual, potential or perceived conflicts of interest and that protects the Companys reputation for honesty and integrity. Except as authorized by the Board, no non-management director shall have a direct economic relationship with the Company other than ownership of shares of the Companys Common Stock or options to purchase such shares. Both Company loans to the directors or their family members, and guarantees of obligations of the directors or their family members are prohibited.
Directors owe a duty to advance the Companys interests and are, therefore, prohibited from taking a business opportunity that is discovered through the use of Company property, information, or position, for their personal benefit. Directors shall meet at least annually with the Companys Legal Counsel or Director of Compliance in order to review compliance standards that apply to the Company generally and to themselves specifically as directors. Any reports of violations of the Companys Code of Business Conduct may be reported through the Integrity Helpline (800-346-1676), to the Vice President, General Counsel and Secretary, the Director of Compliance, or to the Audit Committee Chairperson. Retaliation is prohibited for complaints made or concerns raised through these channels.
Originally Approved by the Board of Directors: December 17, 2003
Affirmed by the Board of Directors: December 15, 2004
Amended by the Board of Directors: December 14, 2005; March 8, 2006