Corporate Governance Guidelines

South Jersey Industries, Inc.’s (SJI’s or Company’s) Corporate Governance Guidelines

Mission of SJI’s Board of Directors

The Board of Directors (the “Board”) of South Jersey Industries, Inc. (“SJI” or the “Company”), which is elected by SJI’s shareholders, is the ultimate decision‐making body of the Company except with respect to those matters, including the election of directors, that are reserved to the Company’s 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. The Board does not manage the Company on a day-to-day basis.

  1. Selection and Composition of the Board
    • Board Membership Criteria
      • The Nominating and 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 Company’s strategic forecast. 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 Board’s needs at that point in time.
      • It is the Company’s policy that the Board consists 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 Board’s opinion, would interfere with the exercise of his or her independent judgment as a Board member. The Board shall determine on an annual basis whether each director qualifies as an “independent director” pursuant to NYSE listing standards.
      • It is the Company’s policy 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 annual proxy statement. In advance of accepting an invitation to serve on a for-profit (public or private), government-related or regulatory board, Board members shall advise the Chairman of the Board (the “Chairman”) of the invitation to serve so that a determination can be made regarding conflicts of interest and compliance with these Guidelines and any applicable laws or regulations. This process shall be implemented by the Nominating and Governance Committee. The Nominating and Governance Committee will report the results of the determination to the Board.
      • Any former Chief Executive Officer’s (CEO) 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 CEO and the Board.
    • Size of Board and Selection Process
      • It is the Company’s policy that the number of directors shall not exceed a number that can function efficiently as a body. The Nominating and Governance Committee, in consultation with the Chairman and the CEO, considers and makes recommendations to the Board concerning the appropriate size and needs of the Board. The Nominating and 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 Nominating and Governance Committee. The Nominating and Governance Committee will recommend to the Board the action to be taken with respect to the resignation.
    • Director Elections/Term
      • Pursuant to the Company’s bylaws, 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. While such limits may be one way to facilitate contribution of fresh ideas to the Board, they also risk loss of contribution from directors who have developed institutional memory and insight into the Company’s future direction in a mechanical fashion without substantive consideration of the value of such institutional memory and inside to the proper functioning of the Board. Instead of a term limitation, it is the policy of the Board that no director may stand for election beyond his/her 72nd birthday, unless otherwise determined by the Board.
      • Any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall tender his or her resignation for consideration by the Nominating and Governance Committee. The Nominating and Governance Committee shall determine whether to accept the director’s resignation and submit that recommendation for consideration by the Board. The Nominating and Governance Committee and the Board may consider any factor they deem relevant in deciding whether to accept a director’s resignation. The director who tenders a resignation shall not participate in consideration of the resignation by the Board or Nominating and Governance Committee. The Board will decide whether to accept the resignation within 100 days of the certification of the elections results.
  2. Board Training and Orientation
    • 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 insider trading in Company stock, Board compensation, meetings with senior management, and visits to various Company facilities.
    • Board members shall have available to them resource materials that are supplemented and periodically updated. The resource materials shall include the bylaws, Board committee charters, Code of Ethics, the policy relating to insider trading in Company stock and confidentiality of information, Company locations and other pertinent information on the Board, senior management, and organizational structure of the Company and each of its functioning subsidiaries.
    • 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 and, at a minimum, every other year, each director should attend one external continuing education seminar, class, and/or conference on the topic of corporate governance and/or the utility industry or other courses designed for directors of publicly traded companies. The requirement to attend an external continuing education seminar may be met via webinar attendance. No more than two members should be given credit for attending any particular continuing education requirement offering as to encourage as much diversity of training as possible. This continuing education requirement shall be disclosed in the Company’s annual proxy statement, and any member who fails to meet the requirement should provide a written explanation for his/her non-performance in the proxy statement.
  3. Board Decision Making and Participation
    • It is the Company’s general policy that all major decisions be considered by the Board as a whole. As a consequence, the Board’s committee structure is limited to those committees considered to be targeted to or required for the operation of a publicly owned company. Members of these committees are recommended to the Board by the Nominating and Governance Committee. The Audit Committee, Compensation Committee, Nominating and Governance Committee, Environmental, Social and Governance Committee, and Strategy & Finance Committee comprise only outside independent directors. Membership on these committees shall be rotated from time to time.
    • The Board or any committees shall have access to, and the authority to engage, at the Company’s expense, independent third-party advisors, as they deem necessary, to carry out its duties. Any information requested from a third-party advisor by the Board or any committee pursuant to this provision shall be made available to all directors (or each member of the committee, as applicable). As with all decisions, the Board and its committees will use their informed business judgment in retaining and providing oversight of outside advisors and information requested.
    • The Board’s independent directors will meet in executive session at least two times each year. Executive sessions will be chaired by the Chairman. A discussion with the CEO shall follow each such session.
    • 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.
    • 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 or prior approval of the Board.
  4. Compensation Review
    • Board compensation should be both cash and stock‐based. Total compensation should be comparable to that paid to boards included in compensation studies that are performed by independent external compensation consultants selected by the Board.
    • It is the responsibility of the Nominating and Governance Committee, in consultation with its independent executive compensation consultants, to review and approve the total Board compensation package annually to ensure that the compensation is competitive so that the Company may attract and maintain quality Board members.
    • It is the responsibility of the Compensation Committee, in consultation with its independent compensation consultants, to administer the executive compensation program.
    • The Board supports the belief that significant ownership of SJI common stock better aligns the interest of the Board with that of SJI shareholders. Therefore, the Board has enacted the following stock ownership requirements for directors: 
      • Members of the Board shall, within six years of joining the Board, the board of South Jersey Gas Company or the Executive Committee of 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 for Board service.
      • Shares owned outright will be combined with restricted shares awarded as part of the annual stock retainer for the purpose of meeting these requirements.
      • Directors should be aware of and follow the Company’s insider trading policy and comply with all internal, regulatory and/or legal requirements when acquiring or disposing of Company securities, including notifying the Company’s General Counsel for advice prior to engaging in any transactions in Company stock.
  5. Board’s Performance Assessment
    • The full Board shall annually conduct an assessment of the Board’s performance. The Company, through the office of the General Counsel and Corporate Secretary, 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 senior management believes a better contribution could be made. The Board should discuss each assessment to determine what, if any, actions should be taken to improve the effectiveness of the Board.
  6. CEO Performance Evaluation
    • 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 determines the CEO’s annual bonus using pre-approved objective performance goals. The Board also rates the CEO’s overall performance using both quantitative and qualitative measures. This process is designed to: create the opportunity for structured dialogue between the Board and CEO regarding CEO performance; provide feedback so that the CEO can grow in his/her ability to create business value and success for SJI and; serve as input for executive development and succession planning. These processes are implemented by the Compensation Committee.
  7. Meeting Procedures
    • The Chairman will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of item(s) on the agenda.
    • 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.
    • As a general rule, presentations on specific subjects should be sent to the Board and committee members well in advance so that Board and committee 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.
    • As additional resources on Company matters, Board members shall have free access to all members of the Company’s senior management team but shall ensure that any such contact is not unduly disruptive to the business or operations of the Company. Any information requested by one director pursuant to this provision shall be available to all directors (or each member of a committee, as applicable).
  8. Meeting Attendance and Preparation
    • Directors have a responsibility to participate actively in overseeing the Company’s activities. Directors are expected to attend regularly scheduled Board meetings, meetings of the Board committees on which they serve and the annual meeting of shareholders. Regular attendance at Board meetings and Board committees is a requirement for acceptable director performance.
    • Directors are expected to have thoroughly reviewed all materials distributed to the Board prior to Board meetings, giving special attention to all matters to be acted on (such as financial statements, minutes or proposals) and arrive at such meetings prepared to discuss the issues presented.
    • 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
    • Except for required meetings, the frequency, length and agenda of committee meetings are determined by the committee chair. Sufficient time to consider the agenda items should be provided.
    • Responsibilities of each committee are determined by the Board from time to time and detailed in committee charters. The Nominating and Governance Committee shall coordinate the periodic review and approval of committee charters with the committees.
    • Executive Committee members shall be the Chairman, CEO, and the chairs of the Audit, Compensation and Nominating and Governance Committees. The Chairman shall serve as the chair of the Executive Committee.
    • Committee chairs shall be approved by the full Board. In selecting committee 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.
  10. Succession Planning
    • The Board is responsible for assuring a qualified, knowledgeable management team is in place to lead the Company’s operations. 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. As part of this annual process, the Board works with the CEO to develop plans for interim or emergency succession for the CEO and other senior management positions in the event of retirement or an unexpected occurrence. The full Board shall be responsible for this process.
  11. Chairman of the Board
    • The Chairman shall be an independent member of the Board elected annually by a majority of the full Board.
    • Duties and Responsibilities
      • Presides over all Board meetings.
      • Provides leadership to the Board.
      • Establishes procedures to govern the Board’s work, sets and monitors the ethical tone of the Board and monitors how the Board functions and works together effectively.
      • Ensures the Board’s full discharge of its duties.
      • In consult with the CEO and Corporate Secretary, prepares agenda matters for the Board, schedules meetings for the Board and, along with the committee chairs, coordinates scheduling of committee meetings.
      • Ensures proper flow of information to the Board, reviewing adequacy and timing of documentary materials in support of management’s proposals.
      • Ensures adequate lead time for effective study and discussion of business under consideration by the Board.
      • Helps the Board fulfill its goals by assigning, allocating and delegating tasks to Board members.
      • Identifies guidelines for the conduct of directors and ensures that each director is making an effective contribution to the Board and the Company.
      • Serves as a resource to consult with the CEO, Corporate Secretary and other Board members on corporate governance practices and policies.
      • Works with the Nominating and Governance Committee and CEO to ensure proper committee structure, including assignments of members and committee chairs.
      • Manages conflict (if any) amongst the Board or with respect to the Board.
      • Carries out other duties as requested by the CEO and Board as a whole, depending on need and circumstances.
        • .
  12. Shareholder Access to CEO and Communication with Directors
    • Subject to reasonable constraints of time and topics and the rules of order, shareholders are allowed to direct comments to or ask questions of the CEO or his/her designee(s) during the annual meeting of shareholders.
    • Shareholders, employees and others may contact the Board by writing to [Corporate Secretary, South Jersey Industries, Inc., 1 South Jersey Plaza, Folsom, New Jersey 08037]
  13. Confidentiality
    • The proper functioning of the Board requires a candid and open exchange of information, ideas and opinions among the directors in an atmosphere of trust, confidence and mutual respect. Directors have an affirmative duty to protect and hold confidential all non-public information obtained in the role of director. Accordingly:
      • no director shall use Confidential Information (as defined below) for his/her own personal benefit or to benefit persons or entities outside the Company; and
      • no director shall disclose Confidential Information to any person or entity outside the Company (which prohibits a director designated by any other person or entity from disclosing Confidential Information to such person or entity), either during or after his/her service as a director of the Company, except with express prior authorization of the Company’s General Counsel or the Chairman or as may be otherwise required by law (in which event a director shall promptly advise the General Counsel and the Chairman of such anticipated disclosure and take all reasonable steps to minimize the disclosure of such Confidential Information). In considering whether to permit a director to share Confidential Information, the General Counsel or Chairman may consider, among other things, whether sharing the information would give rise to a conflict and/or potential harm, including whether the information is protected by attorney-client privilege.
    • For purposes of these Guidelines, “Confidential Information” is all non-public information (whether or not material to the Company) entrusted to or obtained by a director by reason of his/her position as a director of the Company. In addition to information regarding Board meetings, discussions, deliberations and decisions, Confidential Information includes, but is not limited to, non-public information that might be of use to competitors or harmful to the Company, its customers, suppliers or other stakeholders if disclosed, including but not limited to:
      • non-public information about the Company’s business, including its financial condition, forecasts, supply chain, prospects or plans, marketing and sales programs, products, technology, specifications, methods and processes, designs and developments, ideas and concepts, intellectual property, trade secrets and know-how and research and development, proprietary and technical information and data, as well as information relating to mergers and acquisitions, stock repurchases and dividends, stock splits and divestitures;
      • non-public information concerning possible transactions with other companies or information about the Company’s customers, suppliers or joint venture partners, which the Company is under an obligation to maintain as confidential; and
      • non-public information about discussions, deliberations and decisions relating to business issues between and among employees, officers and directors.
  14. Periodic Review
    • These guidelines shall be reviewed by the Board annually.
Rev. 02.12.21