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Corporate Governance Guidelines of the Board of Directors

A. Mission of the Board

The Board of Directors (the “Board”) of StockerYale, Inc. (the “Company”) has the ultimate responsibility for the well being of the enterprise on behalf of the Company’s shareholders by monitoring and supporting management in increasing the value for the Company’s shareholders while balancing the interests of other parties who are essential to the Company’s long-term success, all in an ethically and socially responsible manner. To this end, the Company has adopted the following Amended and Restated Corporate Governance Guidelines (the “Guidelines”) to assist the Board in the exercise of its duties and responsibilities. These Guidelines shall be applied in a manner consistent with all applicable laws, rules and regulations of any governmental or regulatory authority to which the Company is subject as well as the Company’s Restated Articles of Organization, as amended and in effect from time to time (the “Articles”) and the Company’s Amended and Restated By-Laws in effect from time to time (the “By-Laws”).

B. Director Responsibilities

1. Oversight of the Company. The principal responsibility of the directors is to oversee the management of the Company and, in so doing, to serve the best interests of the Company and its shareholders. In furtherance thereof, the duties of the directors include:

2. Exercise Business Judgment. In discharging their duties of care, loyalty and candor, directors are expected to exercise their business judgment to act in what they reasonably believe to be the best interests of the Company and its shareholders.

3. Understand the Company and its Business. Directors have an obligation to become and remain informed about the Company and its business, including the following:

4. Establish Effective Systems. Directors are responsible for determining that effective systems are in place for the periodic and timely reporting to the Board on important matters concerning the Company, including:

Directors should also periodically review the integrity of the Company’s internal control and management information systems.

5. Attendance at Meetings. Directors are expected to attend and participate in all Board meetings and meetings of any committees on which they serve. In addition, directors are expected to devote the time needed, and to meet as frequently as necessary, to discharge their responsibilities properly. All directors and nominees for election as director are strongly encouraged to attend the Company’s Annual Meeting of Shareholders, or any Special Meeting in Lieu of Annual Meeting of Shareholders, in person.

6. Reliance on Management and Advisors; Indemnification. The directors are entitled to rely on the Company’s senior executives and its outside advisors, auditors and legal counsel, except to the extent that any such person’s integrity, honesty or competence is in doubt. The directors are also entitled to Company-provided indemnification, statutory exculpation and directors’ and officers’ liability insurance.

C. Director Qualification Standards

1. Size of the Board. The Board currently has seven members. Depending on circumstances and changes in the Company’s business, the Board shall, from time to time, in accordance with the By-Laws, determine whether the number of directors constituting the Board should be enlarged.

2. Independence. At least a majority of the directors in office shall (i) satisfy the independence requirements promulgated by the SEC, the Nasdaq Stock Market Inc. or any other exchange upon which the Company’s securities are traded (collectively with the Nasdaq Stock Market, Inc., “Nasdaq”) and any other governmental or regulatory authority to which the Company is subject (collectively, the “Independence Requirements”) and (ii) be free from any relationship that might interfere with the exercise of independent judgment in the performance of director responsibilities (the directors satisfying such criteria being referred to herein collectively as the “Independent Directors” and individually as an “Independent Director”).

3. Tenure. The Board does not believe it should establish term limits for directors. Term limits could result in the loss of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and an institutional memory. As an alternative to term limits, the Governance, Nominating and Compensation Committee (the “GNC Committee”) shall review each director’s continuation on the Board annually prior to the Annual Meeting of Shareholders or any Special Meeting in Lieu of Annual Meeting of Shareholders.

4. Retirement. Directors must retire as of the Annual Meeting of Shareholders, or any Special Meeting in Lieu of Annual Meeting of Shareholders, next following the date they attain the age of 70. Exceptions to this policy may be made on a case-by-case basis, at the discretion of the Board.

5. Lead Director. In the event that the Chairman of the Board (the “Chairman”) is not an Independent Director, the GNC Committee shall nominate an Independent Director to serve as the lead director (the “Lead Director”), which nominee shall be approved by a majority of the Independent Directors. Unless the Board determines there are special circumstances, an individual shall not serve as Lead Director for more than three consecutive years.

In the event that a Lead Director is appointed, the Lead Director shall: (i) serve as the Chair of any meeting of the Independent Directors in executive session; (ii) meet with any director who is not adequately performing his or her duties as a member of the Board or any committee; (iii) facilitate communications between other members of the Board and the Chairman and/or the Chief Executive Officer; provided, however, that each director is free to communicate directly with the Chairman as well as with the Chief Executive Officer; (iv) work with the Chairman in the preparation of the agenda for each Board meeting and in determining the need for special meetings of the Board; and (v) otherwise consult with the Chairman and/or the Chief Executive Officer on matters relating to corporate governance and Board performance. Otherwise, the Chairman shall be responsible for such matters, as applicable.

6. Minimum Stock Ownership. Each director is strongly urged to acquire and maintain ownership of Company stock in an amount consistent with their financial means upon election to the Board.

7. Director and Executive Officer Status. If the status of a director with respect to any position held by such director with the Company, an affiliate of the Company or an institutional investor in the Company or similar entity changes as compared to when such director was most recently elected to the Board, such director shall promptly notify the Board and the Board shall review the appropriateness of such director’s continued Board membership and take any action it deems necessary or appropriate in relation thereto.

An executive officer, other than the Chief Executive Officer, who also serves as a director shall deliver a resignation from the Board to the Board contemporaneously with any resignation or removal, for whatever reason, from senior management.

8. Separation of the Offices of Chairman and Chief Executive Officer. The Board does not have a policy on whether the offices of Chairman and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman should be selected from among the Independent Directors or should be an employee of the Company.

D. BOARD MEETINGS

1. Number of Meetings. Four standing Board meetings will be scheduled one year in advance and attendance will be required by each director for three out of the four meetings with potential removal from the Board for non-compliance. Special meetings may be scheduled from time to time throughout the year on an as-needed basis.

2. Selection of Agenda Items for Board Meetings. The Chairman shall establish the agenda for each Board meeting after consultation with the directors. At the beginning of each fiscal year, the Chairman shall establish a schedule of subjects to be discussed during the year, to the extent practicable. Each director is free to suggest the inclusion of agenda items and is free to raise subjects at any Board meeting that are not on the agenda for that meeting. During at least one meeting each year, the Board shall review the Company’s long-term strategic plans and the principal issues that the Company expects to confront in the future.

3. Advance Distribution of 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 directors in advance of such meeting to allow time for review and assessment by the directors prior to such meeting and the directors should review such materials in advance of the meeting. The Board acknowledges that certain matters to be discussed at a Board or committee meeting may be of an extremely confidential or time sensitive nature and that the distribution of materials on such matters prior to meetings may not be appropriate or practicable. On those occasions, the materials will be introduced at the meeting.

4. Executive Sessions. The Independent Directors shall meet in executive session at least twice a year. The Chairman or the Lead Director, as the case may be, shall preside over such meetings. The non-management directors will meet in executive session at other times at the request of any non-management director. Absent unusual circumstances, executive sessions shall be held in conjunction with annual or special Board meetings.

5. Attendance of Non-Directors at Board Meetings. It is anticipated and welcomed that members of the Company’s senior management will attend Board meetings on a regular basis. Other members of the Company’s management and staff may attend meetings and present reports from time to time. Specifically, the Board encourages management to bring Company personnel to Board meetings who can provide additional insight into the items being discussed, and to expose the Board to persons who have potential for senior positions within the Company. It is understood that non-directors attending Board meetings may be asked from time to time to leave the meeting in order for the Board to meet in executive session on sensitive matters.

E. BOARD COMMITTEES

1. Key Committees. The Board shall have at all times an Audit Committee and a Governance, Nominating and Compensation Committee (collectively, the “Committees” and each, a “Committee”) with the responsibilities of the Committees set forth in the respective charter of each Committee. From time to time the Board may establish such other standing or special committees as may be necessary, each of which shall comply with the requirements of this Section E.

2. Assignment and Rotation of Committee Members. The GNC Committee shall be responsible for recommending to the Board the directors to be appointed to each Committee. Except as otherwise permitted by the applicable laws, rules and regulations, the Committees shall be comprised solely of Independent Directors.

3. Committee Charters. In accordance with applicable laws, rules and regulations, the charter of each Committee shall set forth the purposes, goals and responsibilities of such Committee as well as the structure and operations of such committee. The charter of each Committee shall be approved by the Board. The Board and each Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of such Committee’s charter and make appropriate changes.

4. Agenda. At the commencement of each fiscal year of the Company, the chair of each Committee, in consultation with the members thereof, shall develop an agenda of subjects to be covered at meetings throughout the year, to the extent practicable, and shall distribute such agenda to the Committee members.

5. Committee Meetings. The chair of each Committee, in consultation with the Committee members, will determine the frequency and length of meetings of each Committee consistent with such Committee’s charter. Special meetings may be called from time to time as determined by the needs of the business and the responsibilities of the Committees. Notices of meetings shall be given in accordance with the Company’s By-Laws. Formal minutes will be kept of meetings of the Committees and distributed for all directors to review and will be maintained at the Company with the minutes of the meetings of the Board.

F. DIRECTOR ACCESS TO MANAGEMENT AND INDEPENDENT ADVISORS

Directors will have full access to the Company’s officers, employees and principal advisors and to any Company information that the directors believe is necessary to fulfill their obligations as directors. Any meetings or contacts that a director wishes to initiate may be arranged through the Chief Executive Officer or the Clerk of the Company or directly by the director. Directors will use their judgment to ensure that such contact is not disruptive to the business or operations of the Company and shall, to the extent the director deems it appropriate, copy the Chief Executive Officer on any written communications between a director and an officer, employee or principal advisor to the Company.

The Board and its Committees shall be authorized to retain outside experts and advisors at the Company’s expense to the extent they consider it necessary and appropriate under the circumstances, without consulting or obtaining the approval of any officer of the Company in advance. Such independent advisors may be the regular advisors to the Company. The Board and each Committee is empowered, without any further action by the Company, to cause the Company to pay the compensation of such advisors.

G. Code of Ethics

Directors shall act at all times in accordance with the requirements of the Company’s Code of Business Conduct and Ethics (the “Code of Ethics”), which shall be applicable to each director in connection with his or her activities relating to the Company. Any request for a waiver of the requirement of the Code of Ethics with respect to any director shall be reported to, and be subject to the approval of, the Board, with any such director seeking such waiver abstaining from such determination by the Board.

H. Board Interaction with Institutional Investors, the Media, etc.

The Board believes that the senior management of the Company, including the Chief Executive Officer, speak for the Company. Individual directors may, from time to time, meet or otherwise communicate with various constituencies that are involved with the Company. However, it is expected that directors would speak for the Company only with the knowledge of and, absent unusual circumstances or as contemplated by the charter of any Committee, only at the request of the Company’s senior management.

I. ANNUAL PERFORMANCE EVALUATION OF THE BOARD AND COMMITTEES

The GNC Committee shall, in accordance with its charter, oversee an annual self-evaluation by the Board to determine whether the Board is functioning effectively. To assist in its self-assessment, the Board shall, at the beginning of each year, consider establishing an agreed-upon list of objectives and performance goals for the year, which shall be used as benchmarks in evaluating its performance at the end of the year. The purpose of this process is to improve the effectiveness of the Board. The GNC Committee shall oversee a similar self-evaluation by each Committee.

J. Management Evaluation

The GNC Committee shall conduct a periodic (but not less than annual) evaluation of the Company’s senior executives. The GNC Committee shall (except with respect to the Company’s senior financial executives, in which case the Committee shall, together with the Audit Committee,) determine the nature and frequency of the evaluation and the persons subject to the evaluation, conduct the evaluation and prepare assessments of the performance of the Company’s senior executives, to be discussed with the Board. The Board shall review the assessments to ensure that the senior executives are providing the best leadership for the Company over both the long- and short-term.

K. SUCCESSION PLANNING

The GNC Committee shall present an annual report to the Board on succession planning, which shall include suggestions for transitional Board and senior executive leadership in the event of an unplanned vacancy. In the event of a vacancy in the office of Chief Executive Officer or Chief Financial Officer, the GNC Committee shall assist the Board in identifying and evaluating potential successors to the vacant office. The Chief Executive Officer and the Chief Financial Officer shall, at all times, make available to the Board and the GNC Committee his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. The Board shall identify, and periodically review and reassess, the qualities and characteristics necessary for an effective Chief Executive Officer and Chief Financial Officer. With these principles in mind, the Board should periodically monitor and review the development and progression of potential internal candidates against these standards.

L. BOARD COMPOSITION

1. Selection of New Director Candidates. Except where the Company is legally required by contract, its Articles, its By-Laws or otherwise to provide third parties with the right to nominate directors, the GNC Committee shall have sole responsibility and authority for identifying and recommending to the Board (i) any person(s) to be nominated by the Board for election to the position of director at the annual or any other properly convened meeting of shareholders and (ii) any person(s) to be elected by the Board or to be nominated by the Board for election by shareholders in accordance with the Company’s By-Laws to fill any vacancies on the Board, each in accordance with the Company’s Policy Governing Director Nominations and Shareholder-Board Communications (the “Policy”).

2. Application of Criteria to Existing Directors. The re-nomination of existing directors should not be viewed as automatic but should be based on continuing qualification under the criteria set forth above as well as the existing directors’ past attendance at meetings and participation in and contributions to the activities of the Board and any committee. If such incumbent director has had a significant change in status referred to in Section C.7 above, the Board shall also take this event into consideration.

3. Criteria for Composition of the Board. The backgrounds and qualifications of directors considered as a group should provide a significant breadth of experience, knowledge and abilities that shall assist the Board in fulfilling its responsibilities.

4. Extending an Invitation to Join the Board. It is the responsibility of the Chairman, on behalf of the Board, and the Chairman of the GNC Committee to extend an invitation to a duly nominated individual to join the Board after such individual has been duly elected to the Board by the shareholders of the Company, or, in the case of a vacancy, by the shareholders or the directors in accordance with the Company’s By-Laws.

5. Former Chief Executive Officer’s Board Membership. Upon the resignation or removal from office, for any reason, of the Chief Executive Officer who is also a member of the Board, the Committee shall have the power, in its discretion based upon the facts and circumstances of each case, to request that such former Chief Executive Officer resign from the Board effective upon the resignation or removal of such individual from the position of Chief Executive Officer.

M. Director Compensation

1. Role of Board and GNC Committee. The GNC Committee, in accordance with its charter, shall conduct an annual review of the compensation of the Company's directors and make recommendations to the Board with respect thereto. The form and amount of director compensation shall be determined by the Board in accordance with the policies and principles set forth in this Subsection M.

2. Form of Compensation. The Board believes that directors should be incentivized to focus on long-term shareholder value. Including equity as part of director compensation helps align the interest of directors with those of the Company’s shareholders.

3. Amount of Consideration. The Company seeks to attract exceptional talent to its Board. Therefore, the Company’s policy is to compensate directors at least competitively relative to comparable companies. The Board believes that it is appropriate for the Chairman and the chairpersons and members of the committees to receive additional compensation for their services in those positions.

4. Employee Directors. Directors who are also employees of the Company shall receive no additional compensation for Board or committee service.

N. Director Orientation and Continuing Education

1. Director Orientation. The Board and the Company’s management shall conduct a mandatory orientation program for new directors. The orientation program shall include presentations by management to familiarize new directors with the Company’s strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Ethics, its principal officers, its internal and independent auditors and its legal advisors. In addition, the orientation program shall include a review of the Company’s expectations of its directors in terms of time and effort, a review of the directors’ fiduciary duties and visits to Company headquarters and, to the extent practical, certain of the Company’s significant facilities. All other directors are also invited to attend the orientation program.

2. Continuing Education. Each director is expected to be involved in continuing director education on an ongoing basis to enable him or her to better perform his or her duties. The Company shall pay all reasonable expenses related to continuing director education.

O. Periodic Review of the Corporate Governance Guidelines

The GNC Committee shall periodically, but not less than annually, review and reassess the adequacy of these Corporate Governance Guidelines and recommend any proposed changes to the Board for approval.

P. Publication of Guidelines

The Company shall publish these Corporate Governance Guidelines on its website.