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Corporate Governance Guidelines
Corporate Governance Guidelines (Print Friendly Version)
(As updated December 4, 2017)
The following Corporate Governance Guidelines (the “Guidelines”) have been adopted by the Board of Directors (the “Board”) of Energen Corporation (the “Company” or “Energen”) to assist the Board in the exercise of its responsibilities. The Guidelines are subject to modification from time to time by the Board.
1. Role of Board of Directors.
The Board, which is elected by the shareholders, is the ultimate decision-making body of the Company, except with respect to those matters specifically reserved to the shareholders. The Board selects the senior management team, which is charged with the conduct of the Company’s business. The Board does not generally involve itself in the day-to-day operations of the Company, but acts as an advisor and counselor to senior management and monitors its performance on behalf of shareholders. In that capacity, the Board provides input to the Company’s yearly strategic planning process and reviews the Company’s strategic plans, including goals and objectives relating to short- and long-term financial performance, operations, safety, social responsibility, and environmental stewardship. The Board also reviews with senior management significant public policy, regulatory, legislative, political, and/or social trends, including safety, health, and environmental trends that may materially affect the Company’s financial and operating performance. In its risk oversight role, the Board and its Committees review and discuss with senior management the identification, assessment and balancing of risks associated with the Company’s strategy and operations.
2. Chairman and Lead Director Positions.
The Board of Directors has the discretion to determine, from time to time, how to configure the leadership of the Board and the Company in the way that best serves the Company. The Board reserves the right to vest the responsibilities of Chairman of the Board and CEO in the same individual but has no fixed policy with respect to this issue.
If the Board does not have an independent Chairman, an independent director will be appointed by the Board to serve as Lead Director. The Lead Director will serve as liaison between the Chairman and the independent directors. The Lead Director’s responsibilities will include consulting with the Chairman on meeting agendas, schedules, and the nature and substance of information to be sent to the Board. The Lead Director has the authority to call and convene executive sessions of non-management directors and of independent directors. The Lead Director will set the agenda for, chair, and report to the Company’s Chairman with respect to such sessions. The Lead Director may also perform such other responsibilities as may be designated by a majority of the independent directors from time to time.
3. Size of the Board.
The Company’s certificate of incorporation specifies that the Board should have no fewer than 9 and no more than 15 directors.
4. Selection of New Directors.
The entire Board shall be responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of shareholders. The Governance and Nominations Committee is responsible for identifying, screening and recommending candidates to the entire Board for Board membership. The Governance and Nominations Committee considers candidates to fill new positions created by expansion and vacancies that occur by resignation, by retirement or for any other reason. In selecting individuals to stand for election as Board members, the Committee considers such criteria as it deems appropriate. Directors are expected to possess high personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders. They are also expected to have an inquisitive and objective perspective, practical wisdom and good judgment.
Ordinarily, it is expected that directors will not sit on more than four other boards of public companies in addition to the Company board. This is a general guideline and a factor considered when determining whether an individual would be a good candidate for election, or re-election, to the Company’s Board. It is not a definitive rule or limitation. Directors are expected to advise and consult with the Chairman of the Board and the Chairman of the Governance and Nominations Committee prior to accepting any other public company directorship or any assignment to the audit committee or compensation committee of the board of directors of any public company of which such director is a member.
5. Director Development and Education.
All new Directors participate in the Company’s orientation initiatives as soon as practicable after the meeting at which they are elected. The initiatives include presentations by senior management and outside advisors as appropriate to familiarize new Directors with the Company’s business, its strategic plans, its significant financial, accounting, and risk management issues, and its compliance programs, as well as their fiduciary duties and responsibilities as Directors.
The Board of Directors periodically receives presentations at Board meetings relating to the Company’s business and operations, its compliance programs and any significant financial, accounting, litigation and risk management information and issues as well as any other matters of interest to the Board.
6. Director Independence.
It is the policy of the Company that the Board consist of a majority of independent directors. An independent director is one who meets the independence requirements of the applicable
Securities and Exchange Commission and New York Stock Exchange regulations and rules. Directors are expected to disclose to other Directors any potential conflicts of interest they may have with respect to any matters under discussion, and, if appropriate, refrain from voting on a matter in which they may have a conflict.
7. Conflicts of Interest.
Directors are expected to avoid any action, position or interest that conflicts with the interests of the Company or gives the appearance of a conflict. If an actual or potential conflict of interest develops, the Director will report all facts regarding the matter to the Chairman of the Governance and Nominations Committee (or if the conflicted Director serves in that role, to the Chairman of the Board). Any material conflict must be resolved or the director should resign. If a Director has a personal interest in a matter before the Board, the Director must disclose the interest to the Board, excuse himself or herself from discussion, and abstain from voting, on the matter.
In addition to complying with all other applicable confidentiality policies of the Company, each Director shall comply with the Board Confidentiality Policy set forth in Appendix A to these Corporate Governance Guidelines.
9. Interaction with Third Parties.
The Board believes that management speaks for the Company. Each Director should refer to management all inquiries from the press or other media, shareholders and third parties regarding the Company’s operations. Individual Directors may, from time to time at the request of the management or the Board of Directors, meet or otherwise communicate with various constituencies that are involved with the Company.
10. Non-Management and Independent Director Executive Sessions.
The non-management directors of the Company shall meet in regularly scheduled executive sessions, but no less than once per year. If all of the non-management directors are not independent, then the independent directors shall meet in an executive session at least once per year. “Non-management” directors are all those directors who are not executive officers of the Company. “Independent” directors are as defined in Section 6 above.
11. Retirement Age.
Directors are expected to retire from the Board not later than the annual meeting of shareholders that follows their seventy-second birthday. Directors may stand for re-election even though the Board’s retirement policy would prevent them from completing a full term.
12. Directors Who Change Their Present Job Responsibility.
When a non-management director’s principal occupation or business association changes substantially during his or her tenure as a director, that director is expected to promptly advise the Chairman of the Board and the Chairman of the Governance and Nominations Committee and offer to resign from the Board. The Governance and Nominations Committee will recommend to the Board the action, if any, that it determines appropriate for the Board to take with respect to the Director. Such recommendation may include, without limitation, no action needed, no recommendation for reelection to the Board at the end of the Director’s current term, or acceptance of the resignation.
Similarly, a management director who has a substantial change in job responsibility with the Company shall offer to resign from the Board and the Governance and Nominations Committee will recommend the action, if any, that it determines appropriate for the Board to take with respect to the Director.
13. Evaluation of Board.
The Board shall be responsible for annually conducting a self-evaluation. The Governance and Nominations Committee shall be responsible for establishing the evaluation criteria and implementing the process for such evaluation. The Board evaluation shall include individual evaluations of whether the Board’s committees are functioning effectively.
14. Board Contact with Management; Independent Advisors.
The Board has access to management in order to ensure that Directors can ask any questions and receive all information necessary to perform their duties. Any meetings or contacts that a Director wishes to initiate with non-officers may be arranged through the Chairman, Chief Executive Officer or Lead Director or any of their respective designees. Directors should exercise judgment to ensure that their contact with management does not distract managers from their jobs or disturb the business operations of the Company.
The Board and its committees have the authority to retain such legal, financial and other advisors as they may deem appropriate. The Company shall provide adequate funds to retain such advisors.
15. Board Compensation.
The Company’s executive officers shall not receive additional compensation for their service as directors. Only non-management Directors are compensated for their service as Directors. Their compensation is intended to be sufficient to attract and retain qualified candidates and may include a combination of cash and stock-based compensation. Director compensation is reviewed by the Board of Directors from time to time. The Governance and Nominations Committee is responsible for making recommendations to the Board concerning Director compensation.
As a matter of governance policy there is a strong preference that Directors refrain from accepting compensation from parties other than the Company in connection with their Board service. Any such arrangements shall be disclosed to the Board.
16. Frequency of Meetings.
The number and scheduling of regular Board meetings is at the discretion of the Board. It is expected that there will be 5 to 8 such meetings annually. Directors are expected to attend a minimum of seventy-five percent (75%) of all Board meetings.
17. Provision of Meeting Materials to the Board.
Board materials related to agenda items are expected to be provided to Board members sufficiently in advance of Board meetings to allow the Directors to prepare for discussion of the items at the meeting. The Company expects that all Directors shall review any Board materials circulated prior to Board meetings prior to the meeting date at which such materials are to be discussed.
18. Succession Planning.
The Compensation Committee is responsible for the succession planning for the position of CEO. When it becomes necessary to appoint a new CEO, the Committee, in consultation with all non-management Directors (and members of Management as deemed appropriate), reviews and recommends one or more candidates for consideration by the full Board of Directors.
19. Stock Ownership.
Each non-management director is expected to hold, directly or indirectly, at least 5,000 shares of the Company’s common stock. New directors have five years to meet the ownership threshold. Shares or share equivalents allocated to a director under a Company compensation plan will be included in calculating the director’s ownership.
Board ConfidentIality Policy
Consistent with their fiduciary and other legal duties to Energen Corporation (the “Company”), members of the Board of Directors (the “Board”) shall protect and hold confidential all Confidential Information obtained through their position as Directors, absent express permission from the Board or the Chairman of the Board to disclose such information. As used in this policy, “Confidential Information” is all non-public information entrusted to or obtained by a Director by reason of his or her position as a Director of the Company or its subsidiaries, including but not limited to:
- non-public information that, if disclosed, might be of use to competitors or harmful to the Company or its stakeholders;
- non-public information about the Company’s financial condition, business plans or prospects, current or prospective mineral interest positions and development plans, completed and prospective leasing activity, operational results, trade secrets and other proprietary information, compensation and benefit information, cost and pricing information, information technology, information about the Company’s customers, suppliers, joint venture partners or other third parties, and information relating to potential transactions, mergers and acquisitions, and divestitures; and
- non-public information respecting the proceedings of the Board and its committees, including information concerning discussions and deliberations between and among directors, officers and employees relating to business issues and decisions involving the Company, whether preliminary or final.
In keeping with their fiduciary duties and confidentiality obligations to the Company, Directors must avoid the improper use of Confidential Information and therefore:
- Directors shall only use Confidential Information for the benefit of the Company, and not for personal benefit or the benefit of other persons or entities; and
- Directors shall not disclose Confidential Information to any other person or entity, either during or after his or her service as a Director of the Company, except with the written permission of the Board or the Chairman of the Board.
Notwithstanding any other provision of this policy, nothing in this policy shall (a) prohibit a current or former Director from making any disclosure to a third party that is required by applicable law, in which event the Director shall give notice to the Board and/or the Chairman of the Board a reasonable time in advance of any such anticipated disclosure, consult with the Company on the advisability of taking legally available steps to resist or narrow such disclosure and assist the Company, at the Company’s expense, in taking such steps; (b) prohibit a current or former Director from discussing Confidential Information with such Director’s personal counsel to get legal advice from such counsel with the understanding from such counsel that he or she shall maintain the confidentiality of such Confidential Information; (c) prevent a Director from trading in the securities of the Company in accordance with applicable law, during a window period where such trading is permitted pursuant to the Company’s policy on insider trading; or (d) prevent a Director from employing the knowledge gained from mental impressions of Confidential Information in his or her current or future profession.