Corporate Governance Principles
PURPOSES
These principles have been adopted by the Board of Directors of Introgen Therapeutics, Inc., a Delaware corporation (the "Company"), acting upon the recommendation of its Nominating and Corporate Governance Committee, to:
- Promote the functioning of the Board of Directors and its committees;
- Promote the interests of Company shareholders; and
- Set forth a common set of expectations as to how the Board of Directors, its various committees and individual directors should perform their functions.
BOARD COMPOSITION
The composition of the Board of Directors should balance the following goals:
- The size of the Board should facilitate substantive discussions of the whole Board in which each director can participate meaningfully;
- The composition of the Board should encompass a broad range of skills including (i) business judgment, (ii) industry knowledge, (iii) accounting and finance, (iv) leadership, (v) corporate governance, (vi) business strategy, (vii) management and (viii) crisis management;
- A majority of the Board should consist of directors who are neither officers or employees of the Company nor have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and who are otherwise "independent" under the requirements of NASDAQ and applicable federal law.
SELECTION OF CHAIRPERSON OF THE BOARD AND CHIEF EXECUTIVE OFFICER
The Board is free to select its Chairperson and the Company's Chief Executive Officer (the "CEO") in the manner it considers in the best interests of the Company at any given point in time. These positions may be filled by one individual or by two different individuals.
SELECTION OF DIRECTORS
Nominations. The Nominating and Corporate Governance Committee is responsible for determining the slate of director nominees for election to the Company's Board of Directors and the individuals to fill vacancies occurring between annual meetings of shareholders.
Criteria. The Nominating and Corporate Governance Committee shall determine new nominees for the position of independent director who satisfy the requirements of NASDAQ, applicable federal law and the following criteria:
- Director candidates shall have the highest personal and professional integrity
- Director candidates shall have a record of exceptional ability and judgment
- Director candidates must be able and willing to devote the required amount of time to the Company's affairs, including attendance at Board and committee meetings
- Director candidates should have the interest, capacity and willingness, in conjunction with the other members of the Board, to serve the long-term interests of the Company's stockholders
- Director candidates shall be free of any personal or professional relationships that would adversely affect their ability to serve the best interests of the Company and its stockholders
The Committee also takes into account that the Board as a whole shall have competency in the following areas: (i) business judgment, (ii) industry knowledge, (iii) accounting and finance, (iv) leadership, (v) corporate governance, (vi) business strategy, (vii) management and (viii) crisis management.
Invitation. The invitation to join the Board should be extended by the Board itself via the Chairperson of the Board or the Chief Executive Officer, together with an independent director, when deemed appropriate.
Orientation and Continuing Education. Management, working with the Board, will provide an orientation process for new directors, including background material on the Company, its business plan and its risk profile, and meetings with senior management. Periodically, management should prepare additional educational sessions for directors on matters relevant to the Company, its business plan and risk profile.
BOARD MEETINGS
The Board of Directors currently plans four meetings each year, with further meetings to occur (or action to be taken by unanimous consent) at the discretion of the Board. The meetings will usually consist of committee meetings and the Board meeting.
The agenda for each Board meeting will be determined by the Board Chair in consultation with the Chief Executive Officer. The agenda will be prepared by the Corporate Secretary. Management will seek to provide to all directors an agenda and appropriate materials in advance of meetings, although the Board recognizes that this will not always be consistent with the timing of transactions and the operations of the business and that sometimes it may not be possible.
EXECUTIVE SESSIONS
To ensure free and open discussion and communication among the independent directors of the Board, the independent directors will have at least two regularly scheduled executive sessions each year, and more frequently as necessary or desirable, in conjunction with meetings of the Board. The independent directors may designate a presiding director to preside at their executive sessions. The presiding director will establish the agenda for each of these meetings and may invite additional participants as appropriate.
THE COMMITTEES OF THE BOARD
The Company shall have at least the committees required by the rules of NASDAQ and applicable federal law. Except to the extent that the Board has delegated or delegates in the future its authority to a committee, all power and authority of the Board is reserved by the Board to itself. Currently, the Company's committees consist of the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Executive Committee.
The Chair of each Committee shall set the agenda for meetings of his or her Committee. All directors, whether members of a committee or not, are invited to make suggestions to a committee chair for additions to the agenda of his or her committee or to request that an item from a committee agenda be considered by the Board. Each committee chair will periodically report his or her committee's activities to the Board.
Each of the Nominating and Corporate Governance Committee, the Audit Committee and the Compensation Committee shall be composed of directors who are not officers or employees of the Company or any other individual having a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and who are otherwise "independent" and qualified to serve as a member of such committee under applicable federal law and under the rules of NASDAQ. A director may serve on more than one committee for which he or she qualifies.
BOARD COMPENSATION
The Compensation Committee shall review periodically and not less frequently than every three years, and report to the Board with its recommendations regarding, the components and amount of Board compensation, including its evaluation of compensation of boards of similarly situated companies. In order to align the interests of directors and shareholders, the Board believes that directors should receive a significant part of their on-going compensation in the form of equity in the Company. Such equity compensation should consist of stock option grants that entitle directors to receive shares of the Company's common stock. The Board believes that such stock option grants will firmly align directors' interests with the long-term interests of the Company's shareholders. The Board also intends to continue to use stock option grants in order to attract leading candidates to serve on the Board.
EXPECTATIONS OF DIRECTORS
The business and affairs of the Company shall be managed by or under the direction of the Board in accordance with Delaware law. In performing their duties, the primary responsibility of the directors is to exercise their business judgment in the best interests of the Company and its shareholders. The Board has developed a number of specific expectations of directors to promote the discharge of this responsibility and the efficient conduct of the Board's business.
Commitment and Attendance. All directors should make all reasonable efforts to attend meetings of the Board and meetings of committees of which they are members. Members may attend by telephone or videoconference (when available) to mitigate conflicts.
Participation in Meetings. Each director should be sufficiently familiar with the business of the Company, including its financial statements and capital structure, and the risks and competition it faces, to facilitate active and effective participation in the deliberations of the Board and of each committee on which he or she serves. Upon request, management will make appropriate personnel available to answer any questions a director may have about any aspect of the Company's business. Directors should review the materials provided by management and advisors in advance of the meetings of the Board and its committees and should arrive prepared to discuss the issues presented.
Loyalty and Ethics. In their roles as directors, all directors owe a duty of loyalty to the Company. This duty of loyalty mandates that the interests of the Company take precedence over any interests possessed by a director.
Other Directorships. The Company values the experience directors bring from other boards on which they serve, but recognizes that those boards may also present demands on a director's time and availability and may present conflicts or legal issues. Directors should be cognizant of time demands and conflicts or other legal issues raised by memberships on other boards, and should raise any concerns with the Audit Committee, the Nominating and Corporate Governance Committee or the Board.
Contact with Management. All directors are invited to contact the CEO at any time to discuss any aspect of the Company's business. Directors also have access to other members of management. The Board expects that there will be frequent opportunities for directors to meet with the CEO and other members of management in Board and committee meetings and in other formal or informal settings. In addition, members of management are encouraged to communicate directly with members of the Board from time to time; provided that members of management should advise the CEO of communications with directors when they occur.
Further, the Board encourages management to, from time to time, bring managers into Board meetings who: (a) can provide additional insight into the items being discussed because of personal involvement and substantial knowledge in those areas, and/or (b) are managers with future potential that the senior management believes should be given exposure to the Board.
Contact with Other Constituencies. It is important that the Company speak to employees and outside constituencies with a single voice, and that management serve as the primary spokesperson.
Confidentiality. The proceedings and deliberations of the Board and its committees are confidential. Each director shall maintain the confidentiality of information received in connection with his or her service as a director.
EVALUATING BOARD PERFORMANCE
The Board, acting through the Nominating and Corporate Governance Committee, should conduct a self-evaluation periodically to determine whether it is functioning effectively. The Nominating and Corporate Governance Committee should periodically consider the mix of skills and experience that directors bring to the Board to assess whether the Board has the necessary tools to perform its oversight function effectively.
Each committee of the Board should conduct a self-evaluation periodically and report the results to the Board. Each committee's evaluation must compare the performance of the committee with the requirements of its written charter, if any.
RELIANCE ON MANAGEMENT AND OUTSIDE ADVICE
In performing its functions, the Board is entitled to rely on the advice, reports and opinions of management, counsel, accountants, auditors and other expert advisors. The Board shall have the authority to retain and approve the fees and retention terms of its outside advisors.
