I. Director Qualification Standards: The Board of Directors (the “Board”) of Ennis, Inc. (“Ennis”) shall meet the following requirements:
a. A majority of directors shall be independent, and the Audit, The Compensation and Nominating and Corporate Governance Committees are all composed entirely of independent directors. Independence for these purposes shall mean the independence requirements set forth in the Securities Exchange Act of 1934, as amended, and the rules adopted by the Securities and Exchange Commission hereunder and the corporate governance and other listing standards of the New York Stock Exchange as in effect from time to time.
b. The Nominating and Corporate Governance Committee will review each Director’s continuation on the Board regularly but not less than once every three years. Directors who have reached the age of 75 will be reviewed annually by the Committee.
c. The Nominating and Corporate Governance Committee consider the qualifications and diversity of any director or candidate prior to recommending for election at the Annual Shareholders Meeting. Ennis seeks directors with the following minimum qualifications:
- Knowledge of the Company and its industry or diversity of specific experience.
- Business and financial acumen.
- Financial and personal stability.
- Ability to devote time and energy to regularly scheduled board and committee meetings in person, and participate in occasional additional assignments requiring particular skills and experience possessed by the Director.
- Ability and willingness to acquire and demonstrate ownership of shares.
- Proximity to corporate headquarters.
Candidates should have the highest personal and professional character and integrity and have outstanding records of accomplishment in their chosen business or profession. These persons should demonstrate exceptional ability and judgment and have substantial experience of relevance to the Company. The Board also requires that candidates must understand the duty of loyalty and care required of directors to all shareholders under the laws of Texas. Although there is no fixed limit on the number of other boards on which a Director may serve, board memberships are considered along with other time commitments a prospective director may have, and the effect this may have on his or her ability to serve effectively on the Ennis Board of Directors. These factors will also be considered at the time of the annual performance evaluation of the Board and Committees referred to below.
II. Board Responsibilities: Our business is managed under the direction of the Board. The Board monitors management on behalf of the shareholders. Among the Board’s major responsibilities are:
- Selection, compensation and evaluation of the Chief Executive Officer and oversight of succession planning for the Chief Executive Officer.
- Assurance that processes are in place to promote compliance with law and high standards of business ethics.
- Oversight of Ennis’ strategic planning.
- Approval of all material transactions and financings.
- Understanding Ennis’ financial statements and other disclosures and evaluating and changing where necessary the process for producing accurate and complete reporting.
- Using its experience to advise management on major issues facing Ennis.
- Evaluating the performance of the Board and its committees and making appropriate changes where necessary.
Directors are expected to maintain a good attendance record, and familiarize themselves with any materials distributed prior to each Board or committee meeting. All directors may place items on agendas for Board meetings. The chair of the Committee clears agendas for the meeting of committees of the Board, and committee members may place items on the agenda.
The independent directors will meet immediately after all Board meetings without management present. The Company has asked the chairs of each of the committees to rotate as lead independent director, to preside at such meetings.
The non-employee directors, through the rotating chair, can set their own agenda, maintain minutes and report back to the board as a whole. This meeting does not take the place of the normal board meeting and can serve as a committee of the whole of non-employee directors. The presiding chair may report back to the board as a whole on the topics and issues discussed at this meeting. It is possible that the presiding chair could:
- Make recommendations to the full Board regarding the structure of Board meetings
- Recommend matters for consideration by the full Board
- Place additional items on the future board’s agenda in collaboration with the Chief Executive Officer
- Recommend additional appropriate materials to be provided to the directors
- Recommend tasks to the appropriate committees
- Oversee the annual evaluation of the Board and its committees with the help of the Nominating and Corporate Governance Committee.
III. Director Access to Management and Independent Advisors: All directors are able to directly contact members of management, including, in the case of the Audit Committee, direct access to the head of internal audit. Broad management participation is encouraged in presentations to the Board, and executive management frequently meets with Board members on an individual basis. The Board and its Committees are empowered to hire, at the Company’s expense, their own financial, legal and other experts to assist them in addressing matters of importance to the Company.
IV. Non-Employee Director Compensation and Stock Ownership: The Nominating and Corporate Governance Committee reviews non-employee director compensation and benefits on an annual basis and makes recommendations to the Board regarding appropriate compensation for the Board’s approval. The Committee develops its recommendation from a review of practices at similarly situated companies (the Company’s Peer Group) as well as third party information. Currently each non-employee director receives a cash retainer of $34,800 per annum (effective May 1, 2015) and $2,000 for each meeting attended. Each Committee Chair receives an annual chair retainer of $6,000 and each member of a committee receives $1,500 for each committee meeting attended. It is the Company’s policy that a portion of non-employee directors’ compensation should be equity-based. Therefore each director receives stock grants valued at $50,000 on the date of grant, beginning in 2014. For details on the compensation currently provided to non-employee directors, please see the Director Compensation section of the most recent Proxy Statement.
In 2011, a stock ownership policy for all non-employee directors was modified and adopted by the Board. This policy requires that all non-employee directors will maintain at all times a minimum ownership investment in the Company’s common stock equal to six times their annual retainer with additional ownership investment encouraged. A newly elected non-employee director has five years to satisfy this minimum ownership investment. For additional information of non-employee director stock ownership, please see Security Ownership of the Board of Directors and Executive Officers section of the most recent Proxy Statement.
The Company also expects all directors to comply with all federal and state laws regarding trading in securities of the Company and disclosing material, non-public information regarding the Company. The Company has procedures in place to assist directors in complying with these laws.
V. Director Orientation and Education: Directors are provided, as may be required, with materials regarding Ennis upon their initial election to the Board. Other orientation procedures include meetings with senior executives of the Company in its major business units. Board meetings are occasionally held outside the corporate office to permit directors to visit operating locations of Ennis subsidiaries.
VI. Board Self-Evaluation: The Nomination and Corporate Governance Committee conducts a self-evaluation of the Board’s performance annually, which includes a review of the Board’s composition, responsibilities, leadership and committee structure, processes and effectiveness. This committee of the Board conducts a similar self-evaluation with respect to each committee. In addition, each member of the Board is individually evaluated by each other member of the Board, on a periodic basis. Directors who have reached the age of 75 during any fiscal year, whether within their term, or being considered for re-nomination, will be evaluated annually from that point forward.
VII. Management Compensation, Evaluation and Succession: The Board provides annual goals for the Chief Executive Officer and the Compensation Committee evaluates the CEO’s performance, including his or her success in achieving these goals, in setting compensation. The Board recognizes that the selection of the CEO and the oversight of succession planning are among the most important duties of the Board. The Compensation Committee evaluates the form and amount of compensation of Ennis’ senior management, and provides a report thereon annually in the proxy statement.
VIII. Board Committees: There are three standing committees of the Board, to wit: the Compensation Committee, the Audit Committee, and the Nominating and Corporate Governance Committee. Other committees can be created at the discretion of the Board, including ad hoc committees established for specific concerns or issues confronting the Board. The Board elects the Committee members and Committee Chairs upon the recommendation of the Nominating and Corporate Governance Committee who, after some consultation among the retiring chair, the Chairman and other members of the Board, consider and recommend the candidates for Committee positions and Chairs. The consultations generally address the skill-sets needed, desire to serve on a particular committee, and ability to commit the necessary time for a particular committee as a means of placing the appropriate directors in their respective committees. The committee members and committee chairs are elected in the first directors meeting following the annual meeting of shareholders.
IX. Evaluation of Corporate Governance Guidelines: Annually, the Nominating and Corporate Governance Committee reviews the Corporate Governance Guidelines and recommends changes to the Board if appropriate.
As amended on May 1, 2015.