EPIQ SYSTEMS, INC. BOARD OF DIRECTORS CORPORATE GOVERNANCE GUIDELINES

Transcription

1 EPIQ SYSTEMS, INC. BOARD OF DIRECTORS CORPORATE GOVERNANCE GUIDELINES The Board of Directors (the Board ) of Epiq Systems, Inc. (the Corporation ) has adopted, and amended and restated, these Corporate Governance Guidelines ( Guidelines ) in order to assist the Board in the exercise of its responsibilities and to serve the best interests of the Corporation and its shareholders. The Guidelines are subject to applicable laws and regulations and will be reviewed and modified by the Board as the Board may in its sole discretion deem appropriate and in the best interests of the Corporation and its shareholders, and as required by applicable laws and regulations. 1. BOARD COMPOSITION A. Limitation of Service on Other Public Corporation Boards 1. No non-employee director of the Corporation shall serve on the board of more than three (3) other for-profit, public companies. 2. No employee director of the Corporation shall serve on the board of more than one (1) other for-profit, public company. B. Independent Director Continuing Education The Corporation s Independent Directors (as defined by applicable Nasdaq Global Select Market ( NASDAQ ) Listing Rules) should maintain the necessary level of qualifications to perform the responsibilities of a director and member of any committee of which such person is a member. Accordingly, the Board encourages Independent Directors to participate in ongoing education, as well as participation in accredited director education programs. The Nominating and Corporate Governance Committee is responsible for periodically reviewing and making recommendations to the Board regarding appropriate policies and procedures in relation to the Board s director continuing education requirements.. C. Other Board Service Directors are expected to advise the Chairman in advance of accepting an invitation to serve on another public company board or for-profit private company board and before accepting an assignment to any other public company s Audit Committee or Compensation Committee. No director may serve as a director, officer, or employee of a competitor of the Corporation. 1

2 2. RESPONSIBILITIES OF THE CHAIRMAN OF THE BOARD The duties and responsibilities of the Chairman of the Board include the following: A. determine an appropriate schedule of Board meetings, seeking to ensure that the Independent Directors can perform their duties responsibly while not interfering with the flow of the Corporation s operations; B. seek input from all directors as to the preparation of the agendas for Board meetings, preparing agendas for the Board, and providing input, as appropriate, to the committee chairmen regarding agenda items for committee meetings; C. maintain Board and committees checklists containing a calendar of matters that should be addressed throughout the fiscal year and disseminating this checklist to the Board and its committees for their use; D. assess the quality, quantity and timeliness of the flow of information from the Corporation s management that is necessary for the Independent Directors to effectively and responsibly perform their duties, advise management as to the quality, quantity and timeliness of the flow of information from the Corporation s management that is necessary for the Independent Directors to effectively and responsibly perform their duties, and, although the Corporation s management is responsible for the preparation of materials for the Board, the Independent Directors may specifically request the inclusion of certain material; E. direct, in consultation with the Independent Directors, the retention of consultants who report directly to the Board; F. ensure that the Nominating and Corporate Governance Committee oversees compliance with and implementation of the Corporation s corporate governance policies and ensures that the Chairman of the Nominating and Corporate Governance Committee oversees the process to recommend revisions to the Corporation s corporate governance policies; G. ensure that the Compensation Committee oversees compliance with and implementation of the Corporation s policies and procedures for evaluating and undertaking executive and incentive-based compensation, including stock options; H. require at least two executive sessions of the Board s Independent Directors per year or as may be required by applicable NASDAQ Listing Rules; I. recommend the membership of the various Board committees, and ensuring that the Independent Directors select committee chairs for the Audit and Compensation Committees; and 2

3 J. provide that the Independent Directors shall have the authority to retain counsel or consultants as the Independent Directors deem necessary to perform their responsibilities as committee members. 3. ACCOUNTING RESTATEMENT CLAWBACK PROVISION If the Corporation is required to prepare an accounting restatement on an annual financial statement included in a report on Form 10-K, the Independent Directors shall determine whether the financial restatement was due to fraud, willful misconduct, or gross negligence by the Chief Executive Officer or Chief Financial Officer of the Corporation having caused material noncompliance with any financial reporting requirement under the federal securities laws. If so, the Independent Directors shall have the discretion and authority to require that such officer shall repay to the Corporation the amount of any cash or bonus compensation for each of the applicable years covered by such restated financial statements previously paid to that officer minus the amount of such cash bonus or incentive compensation that would have been earned by that officer for each of the applicable years had the cash bonus or incentive compensation been determined based on the information contained in the restated financial statements. 4. EQUITY COMPENSATION MATTERS A. Compensation Committee Authority All grants of stock options or other awards shall be made by the full Compensation Committee, which shall be solely composed of Independent Directors who are Non-Employee Directors as defined under Rule 16b-3 or its successors promulgated under the Securities Exchange Act of 1934, as amended, and outside directors within the meaning of Treasury Regulation (e)(3). B. Administration of Equity Incentive Plans 1. All grants or other awards shall be made only at a meeting of the Compensation Committee and not by unanimous written consent of the Compensation Committee (or the Board). 2. The Compensation Committee shall obtain approval or ratification by a majority of the Corporation s Independent Directors for grants or other awards to directors and any employees subject to Section 16 of the Securities Exchange Act of The Compensation Committee shall ensure that all of the Corporation s stock option and/or equity incentive plans clearly define the methodology for determining the exercise price, the grant date, and the fair market value of stock with regard to a stock option grant or other award. In no event shall any stock option or equity incentive plan of the Corporation provide for the award of stock options (or other award) on a day other than the grant date (as defined below) or 3

4 provide for a fair market value of the Corporation s stock less than 100% or, solely in the case of an option granted under an employee stock purchase plan subject to Section 423 of the Internal Revenue Code 1, 85% of the closing price for a share of the Corporation s stock on a national exchange. 4. The grant date of an option or other award shall, for all purposes, be the date on which the Compensation Committee makes the determination to grant such option or other award, and such determination shall include the option or award recipients, option or award price, number of options or awards granted to each recipient and the type of such options or award (e.g., ISO, NSO, restricted stock). 5. Written documentation specifying each grantee and the number of shares for all awards shall be prepared not later than the time of the grant. If, with respect to an original approved list of grantees or award quantities, there is a bona fide mistake of fact as to a grantee or an award quantity, the original list may be amended and re-approved by the Compensation Committee. The final list shall be kept with the official minutes of the Corporation s Board or Compensation Committee. The Compensation Committee shall instruct the Corporation s executive management to ensure that all further required documentation regarding grants or other awards, including the grant price as per the terms of the relevant equity incentive plan, shall be prepared and completed promptly following such approval. 6. The Compensation Committee shall ensure that the Corporation maintains adequate internal controls with respect to the accounting and recordkeeping for grants and other awards, including but not limited to, prompt entry of grant or other award data into the Corporation s equity awards database, and review of the final approved list of grantees and comparison to the equity awards database. In order to accomplish this, the Compensation Committee may inquire of management, internal audit, or the external auditors regarding the results of the annual evaluation of the effectiveness of internal controls over financial reporting conducting in accordance with the requirements of Section 404 of the Sarbanes- Oxley Act of Except as set forth in the applicable award agreements (e.g., with respect to cancellation of awards upon termination of employment), the Compensation Committee shall not make any adjustment to the grantees, number of shares, or exercise prices with regard to any grant after the grant date, and no amendment to 1 Stock compensation plans that satisfy the conditions of Internal Revenue Code 423 are called employee stock purchase plans ( ESPP s ). Under an ESPP, a public company allows certain of its employees to use after-tax payroll deductions to acquire their company s stock, usually at a discount from fair market value without any taxes owed on the discount at the time of purchase. In some cases, a holding period will be required for the purchased stock in order to receive favorable long-term capital gains tax treatment on a portion of gains when the shares are sold. 4

5 any outstanding stock option shall be made which would be deemed a repricing under the rules of the New York Stock Exchange or of Nasdaq unless such pricing is approved by the Corporation s shareholders. 5. WRITTEN NOTICE TO CORPORATE SECRETARY REQUIRED FOR ANY DIRECTOR RESIGNATION In furtherance of the requirements contained in Article III ( Directors ), Section 15 ( Resignations ) of the Amended and Restated Bylaws of the Corporation, any director intending to resign shall provide written notice via overnight mail to the Secretary of the Corporation at the corporate offices located at 501 Kansas Avenue, Kansas City, Kansas The written notice shall designate the date and time that such resignation will be effective. 6. SELF-EVALUATION The Board and each committee thereof shall conduct a comprehensive self-evaluation on an annual basis. The assessment will focus on the Board s and the committees contributions to the Corporation and specifically focus on areas in which the Board or management believes that the Board could improve. 7. SUCCESSION PLANNING The full Board has the primary responsibility for reviewing the performance of the Chief Executive Officer and the succession plan for this position. The Board will review and discuss the succession plan of the Chief Executive Officer at least annually. The CEO should make available to the Board his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. The CEO will also review with the Board at least annually the performance of the Corporation s other executive officers and key contributors and the succession plans for each. Effective as of June 2, 2010, and amended and restated on June 7, 2011, March 6, 2014, and February 26,