Majority Election of Directors; Procedure for Director Resignation
In an uncontested election of Directors (i.e., an election where the only nominees are those recommended by the Board), any nominee for Director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election by stockholders present in person or by proxy at the Annual or Special Meeting of the Stockholders and entitled to vote in the election of Directors (“Majority Withheld Vote”), will tender a written offer to resign from the Board within five business days of the certification of the stockholder vote by the Inspector of Elections.
The Nominating and Governance Committee will promptly consider the resignation offer and recommend to the full Board whether to accept it. In considering whether to accept or reject the resignation offer, the Nominating and Governance Committee will consider all factors deemed relevant by members of the Nominating and Governance Committee, including, without limitation, (i) the perceived reasons why stockholders withheld votes 'for' election from the Director, (ii) the length of service and qualifications of the Director, (iii) the Director's contributions to the Company, (iv) compliance with any applicable Securities and Exchange Commission rules or Nasdaq listing standards, (v) possible contractual ramifications in the event the Director in question is a management Director or a Director nominated by a principal stockholder, (vi) the purpose and provisions of these principles, and (vii) the best interests of the Company and its stockholders.
To the extent that a Director’s resignation is accepted by the Board, the Nominating and Governance Committee will recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the Board.
Any Director who tenders his or her offer to resign from the Board pursuant to this provision will not participate in the Nominating and Governance Committee or Board deliberations regarding whether to accept the offer of resignation. If each member of the Nominating and Governance Committee received a Majority Withheld Vote at the same election, then the independent Directors who did not receive a Majority Withheld Vote shall appoint a special committee amongst themselves to consider the resignation offers and to recommend to the Board whether to accept them. If the only Directors who did not receive a Majority Withheld Vote in the same election constitute three or fewer Directors, all Directors may participate in the action regarding whether to accept the resignation offers.
The Board will act on the Nominating and Governance Committee’s recommendation within 90 days following the certification of the stockholder vote by the Inspector of Elections, which action may include, without limitation, acceptance of the offer of resignation, adoption of measures intended to address the perceived issues underlying the Majority Withheld Vote, or rejection of the resignation offer. Thereafter, the Board will disclose its decision whether to accept the Director's resignation offer and the reasons for rejecting the offer, if applicable, in a current report on Form 8-K to be filed with the Securities and Exchange Commission within four business days of the Board's determination.
This process relating to nominees for Directors who receive a Majority Withhold Vote will be summarized and included in each proxy statement relating to an election of Directors of the Company. The Board believes that this process enhances accountability to stockholders and responsiveness to stockholders’ votes, while allowing the Board appropriate discretion in considering whether a particular Director's resignation would be in the best interests of the Company and its stockholders.
Contested Elections of Directors/Director Vacancies
In accordance with the Company’s Bylaws, in the event of a contested election (i.e. an election where there are more nominees presented for election than those recommended by the Board of Directors), Directors are elected by the vote of a plurality of the votes cast. That is, at each election the persons receiving the greatest number of votes, up to the number of Directors then to be elected, are the persons then elected as Directors. The Company’s Bylaws also provide for the filling of vacancies, generally by vote of the majority of the remaining Directors.