The Board of Directors, which is elected by the shareholders, is the ultimate decision-making body of the Company except with respect to those matters reserved to the shareholders. The Board selects the senior management team, which is charged with conduct of the Company’s business. Having selected the senior management team, the Board acts as an advisor and counselor to senior management and ultimately monitors its performance. From time to time, the office of Chairman/Chief Executive Officer is separated and filled with two individuals. At those times, references in these Guidelines to Chairman and Chief Executive Officer will mean both individuals.
1.
Selection and Composition of the Board
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A. Board
Membership Criteria
1) The Governance Committee is responsible for reviewing with the Board on an annual basis the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board and the strategic forecast of the Company. This assessment includes issues of industry experience, education, general business and leadership experience, judgment, diversity, age, and other applicable and relevant skills as determined by an assessment of the needs of the Board at that point in time.
2) It is the policy of the Company
that the Board consist of a majority of outside directors
who are independent directors as defined by the rules
of the New York Stock Exchange (NYSE), and free from
any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent
judgment as a member of the Board.
3) It is the policy
of the Company that Board members may not serve on
more than four other boards of publicly traded companies.
In addition, consistent with NYSE rules, if an audit
committee member simultaneously serves on the audit
committees of more than three public companies, the
Board must determine that such simultaneous service
would not impair the ability of such member to effectively
serve on the Company’s audit committee and the Company will disclose such determination in the Company’s annual proxy statement.
4) The Board believes that any former
Chief Executive Officer’s board membership is a matter to be decided in each individual instance depending on the facts and circumstances of each case. Whether the individual continues to serve on the Board is a matter for discussion at that time with the new Chief Executive Officer and the Board.
B. Size
of Board and Selection Process
It is the policy of the Company that the number of Directors shall be set forth in Article II of the Company Bylaws and not exceed a number that can function efficiently as a body. The Governance Committee, in consultation with the Chairman and CEO, considers and makes recommendations to the Board concerning the appropriate size and needs of the Board. The Governance Committee considers candidates to fill new positions created by Board expansion and vacancies that occur by resignation, by retirement or for any other reason. When a Director’s principal occupation or business association changes substantially during his or her tenure as a Director, that Director shall tender his or her resignation for consideration by the Governance Committee. The Governance Committee will recommend to the Board the action to be taken with respect to the resignation.
C. Term
Pursuant to the Company’s By-laws, each member of the Board will be elected by the shareholders for one year and will serve until his/her successor has been elected, (except in the instance of filling an unexpired term or when the number of directors is increased prior to the Annual Meeting of Shareholders).
There is no limit on the number of
terms a director may serve, except that no director
may stand for election beyond his/her seventy-second
(72) birthday, except in special cases in which the
unique expertise and skill of a director are needed
by the Board. A board member asked to stand for election
to the Board beyond his/her seventy-second (72) birthday
will serve for no more than the term to which he/she
is elected.
2.
Board Training and Orientation
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A. The Board authorizes and directs management to continue the orientation process for new Board members to include background information on the Company and the industry. Such orientation should include but not be limited to a review of the Company Code of Ethics, the policy regarding trading in Company stock, Board compensation, meetings with senior management, and visits to various Company facilities.
B.
Board members shall have available to them resource
materials which are supplemented and periodically
updated. The resource materials shall include the
By-laws, Board committee charters, Code of Ethics,
Policy on the Purchase and Sale of Company Securities,
Company locations and other pertinent information
on the Board, Management, and organizational structure
of the Company and each of its functioning subsidiaries.
C.
Funds shall be set aside by the Board on an annual
basis for the continuing education of its sitting
directors. Each Director shall attend at least
one education activity per year.
3.
Board Decision
Making and Participation
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A. It is the general policy of the Company that all major decisions be considered by the Board as a whole. As a consequence, the committee structure of the Board is limited to those committees considered to be basic to or required for the operation of a publicly owned company. Currently these committees are the Executive Committee, Audit Committee, Compensation Committee, Governance Committee and Corporate Responsibility Committee. Members of these committees are recommended to the Board by the Governance Committee. The Audit Committee, Compensation Committee and Governance Committee comprise only outside independent Directors. Membership on these three committees shall be rotated from time to time.
B. The independent Directors of the
Board will meet in Executive Session at least two
times each year. Executive Sessions will be chaired
by the Chairman of the Board if not the CEO or by
the Lead Independent Director. A discussion with
the Chief Executive Officer shall follow each such
session.
C. Board members are expected to attend
and participate in all meetings of the Board and
committees on which they serve. When attendance
in person is impossible, every effort should be made
to attend via telephone or video conference.
D. The CEO and /or employee(s) designated
by the CEO are the official Company spokespersons.
No outside Board member shall represent him/herself
as spokesperson to investors, media or others without
prior request from the CEO or his/her executive designee.
4.
Board Compensation
Review
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A. Board compensation should be both cash and stock-based. Total compensation should be comparable to that paid to boards included in compensation studies which are performed by independent external compensation consultants selected by the Board.
B. It is the responsibility of the
Governance Committee, in consultation with its independent
executive compensation consultants, to review the
total Board compensation package every two years
to insure that the compensation is competitive so
that the Company may attract and maintain quality
Board members.
C. The Board shall approve the total
Board compensation package and every two years approve
retainer and attendance fees.
D. It is the responsibility
of the Compensation Committee, in consultation with
its independent compensation consultants, to administer
the executive compensation program.
E. The Board
of Directors supports the belief that significant
ownership of SJI common stock better aligns the interest
of the Board of Directors with that of SJI shareholders.
Therefore, the Board of Directors has enacted the
following stock ownership requirements for directors:
Members of the Board of Directors
shall, within six years of joining the Board of the
Company, South Jersey Gas Company or South Jersey
Energy Solutions, LLC, own shares of SJI Common Stock
with a market value equal to a minimum of five times
the current value of the Board’s annual cash retainer.
Shares owned outright will be combined
with restricted shares awarded as part of the annual
stock retainer for the purpose of meeting these requirements.
5.
Board's Performance Assessment
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The full Board shall annually conduct an assessment of the Board’s performance. The Company through the office of the General Counsel and Secretary shall contract with an external consultant who shall facilitate the annual assessment. This assessment should be of the Board’s contribution as a whole and specifically review areas in which the Board and/or the Management believes a better contribution could be made. Its purpose is to increase the effectiveness of the Board.
6.
CEO Performance Evaluation
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The Board is responsible for setting annual and long-term performance goals for the CEO and for evaluating his or her performance against such goals. The Board meets annually with the CEO to receive his or her recommendations concerning such goals. The Board then meets with the CEO to evaluate his or her performance against stated goals. The Compensation Committee coordinates the evaluation process.
A. The Chairman, CEO and the Lead Independent Director will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of item(s) on the agenda.
B. It is the desire of the Board to
receive Company business information and data important
to the Board's understanding of the business in writing
at least five business days before the Board meets.
C. As a general rule, presentations
on specific subjects should be sent to the Board
members well in advance so that Board meeting time
may be conserved and discussion time focused on questions
about the material. On those occasions in which the
subject matter is too sensitive to put on paper,
the presentation will be discussed at the meeting.
D. As additional resources
on Company matters, Board members shall have free
access to all members of the Company’s senior management team.
8.
Meeting Attendance and Preparation
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Directors have a responsibility to participate actively in overseeing activities of the Company. Directors are expected to attend regularly scheduled meetings of the Board and the annual shareholders meeting. Regular attendance at meetings of the Board and Board committees is a requirement for acceptable director performance. The Board encourages in-person attendance at all meetings. When attendance in person is impossible, every effort should be made to attend via telephone or video conference.
Directors are expected to have thoroughly
reviewed all materials distributed to the members
of the Board prior to Board meetings, giving special
attention to all matters to be acted on (such as
financial statements, minutes or proposals).
A director
can make a valuable contribution through focused
and full discussion of and relevant inquiry into
management’s proposals. Any questions that occur to a director should be raised and discussed. Directors are encouraged to make independent inquiries on matters of concern and to register objections when needed.
9.
Committee Structure and Functioning
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A. The Audit, Compensation and Governance committees shall comprise only outside independent Directors.
B. Except for required meetings, the
frequency, length and agenda of committee meetings
are determined by the chair of the committee. Sufficient
time to consider the agenda items should be provided.
Materials related to agenda items are provided to
committee members sufficiently in advance of meetings
to allow members to be prepared for discussion of
those items at the meeting.
C. Responsibilities of
each committee are determined by the Board from
time to time and detailed in committee charters.
The Governance Committee shall coordinate this review
and approval process with the Committees.
D. Executive Committee
members shall be the Chairman and CEO, the Lead Independent
Director, and the chairmen of the Audit, Compensation,
Corporate Responsibility and Governance Committees.
The Chairman of the Board shall serve as the Chairman
of the Executive Committee.
E. Committee Chairs shall
be approved by the full Board. In selecting Chairs,
consideration should be given to such factors as
an individual’s expertise, experience in relevant areas, knowledge of the Company, ability to devote time required and other factors that are relevant at the time.
The Board is responsible for assuring a qualified, knowledgeable management team is in place to lead the operations of the Company. To that end, the Board engages in an Executive succession planning process to match Company needs with management and leadership traits required to address those needs. The position of CEO is the primary focus for direct Board participation. The CEO annually provides the Board with an assessment of senior managers and of their potential to succeed him or her. He or she also provides the Board with an assessment of persons considered potential successors to all other senior management positions. The full Board shall be responsible for this process.
11.
Lead Independent Director
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The Lead Independent Director shall be an independent member of the Board elected annually by a majority of the full Board. The Lead Independent Director shall preside over all meetings of the Board's independent directors and Non-Management Directors. The Board shall conduct at least two meetings or executive sessions of the Non-Management Directors annually and at least one meeting or executive session of the Independent Directors annually. The Lead Independent Director shall consult with the Chairman and CEO on agenda matters for the Board.
The role of the Lead Independent Director
shall be to aid and assist the Chair and the remainder
of the Board in assuring effective corporate governance
in managing the affairs of the Board and the Company.
The Lead Independent Director shall be an independent
member of the Board and must be able to effectively
work closely with and in an advisory capacity to
the Chair, and be able to objectively discuss and
relay the concerns of the Board.
Duties and Responsibilities:
• Chair all meetings of the
Board's independent directors and may attend all
Board and Committee meetings.
• Provide input to the Board Chair and Corporate Secretary on the preparation of agendas for Board and Committee meetings.
• Chair Board meetings when the Board Chair is unavailable or when there is any potential conflict of interest.
• The Lead Independent Director
shall be available as a resource to consult with
the Company's Chair and Corporate Secretary and other
Board members on corporate governance practices and
policies, and shall assume the primary leadership
role in addressing issues of this nature if, under
the circumstances, it is inappropriate for the Chair
to assume such leadership.
• The Lead Independent Director will communicate with the Board Chair and the entire Board, as appropriate, the results of private discussions among outside directors or the results of meetings of the independent directors.
These Guidelines shall be reviewed by the Board annually.
rev.
9.09
