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, 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 may review each Director’s continuation on the Board regularly but not less than once every three years before the Director’s term has been completed at which time the Nominating and Corporate Governance Committee will evaluate each incumbent board member as to their qualifications to be nominated for another term of office.
c. The Nominating and Corporate Governance Committee consider the qualifications and diversity of any director or candidate prior to recommending for election. 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, which is currently set at six times the current annual retainer.
- 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 have demonstrated 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. Director Responsibilities: The business of Ennis 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.
- 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, currently defined as $500,000 or more.
- 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 position of Lead Director was created in 2019 and will always be the current chair of the Nominating & Governance Committee and an independent director. As Lead Director he will convene and chair regularly scheduled executive sessions (without management). The non-employee directors will meet immediately after all Board meetings without management present.
The non-employee directors, through the lead director, 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 lead director may report back to the board as a whole on the topics and issues discussed at this meeting. It is possible that the lead director could:
- Make recommendations to the full Board regarding the structure of Board meetings and establish procedures to govern the Boards work.
- Ensure adequate lead time for effective study and discussion of matters for consideration by the full Board.
- Identifies guidelines for the conduct of directors.
- Works with the governance committee, ensures proper committee structure, including assignments of members and committee chairs.
- Organizes and presents the agenda for Special board meetings based on input from directors.
- 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 and works with committee chairs to coordinate the schedule of committee meetings.
- Oversee annual evaluations of the Board as a whole and its committees with the help of the Nominating and Corporate Governance Committee.
- Carries out other duties as requested by the CEO and board as a whole, depending on need and circumstances.
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 Company expense their own financial, legal and other experts to assist them in addressing matters of importance to the Corporation.
IV. Non-Employee Director Compensation: The amount and type of compensation for the Company’s non-employee directors will now be recommended by the Nominating and Corporate Governance Committee, which develops its recommendation from a review of practices at similarly situated companies and the Company’s peer group based upon recent proxy statements. The recommendation would be made and approved by the Board. Currently each non-employee director of the Company receives an annual grant of restricted shares of stock equivalent to $50,000 at time of grant and 2,000 restricted shares of stock when they join the Board. In addition, non-employee directors receive a retainer fee of $36,000 and $2,000 for each Board meeting attended. Each Committee Chair receives an annual committee chair retainer of $6,000 and non-employee directors receive $1,500 for each committee meeting attended.
V. Director Orientation and Continuing Education: Directors are provided extensive material regarding Ennis upon their initial election to the Board, including a binder containing information regarding Ennis and its policies and various administrative and legal matters. Other orientation procedures include meetings with senior executives of the Company’s major business units. Board meetings are occasionally held outside the corporate office to permit directors to visit operating locations of Ennis subsidiaries.
VI. Evaluation of the Board and its Committees: The Nominating and Corporate Governance Committee is establishing an annual evaluation of the effectiveness of the Board and each Committee, and oversees the composition, organization (including Committee structure, membership and leadership) practices of the Board.
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 appoints the Committee members and Committee Chairs after some consultation among the retiring chair, the Chairman and other members of the Board. 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 appointed 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 these Guidelines and recommends changes to the Board if appropriate.
As amended on May 3, 2019