Statement
BALDWIN TECHNOLOGY COMPANY, INC.
BOARD OF DIRECTORS
STATEMENT OF PRINCIPLES
1. Role of the Board
The Board of Directors of Baldwin Technology Company, Inc. (the "Company") represents the interests of the Company's stockholders in maintaining and further developing a successful business, including optimizing long-term financial returns. The Board is responsible for ensuring that the Company is managed in such a way as to attain this result. This is an active, not a passive responsibility. The Board's responsibility is to regularly monitor the effectiveness of management's policies and decisions and the execution of its strategies. The Board should assist in the identification of business risks.
In addition to fulfilling its obligations relating to increasing stockholder value, the Board has responsibilities to the Company's customers, employees and suppliers, and to the communities in which it operates, all of whom are essential to a successful business. The fulfillment of these responsibilities is essential to the successful continuity of the business.
2. Board Membership Evaluation Criteria, Recruiting and Nominating Process
The Lead Director, together with the Chairman of the Board and the Chief Executive Officer, are responsible for reviewing on an annual basis, with the entire Board, the appropriate skills and characteristics required of Board members in the context of the then current make-up of the Board. This review should include an evaluation of judgment and integrity, skills, diversity of background and experience, technical knowledge, constituency representation, etc. – all in the context of an assessment of the perceived needs of the Board at that point in time and with a view to realizing the Board's objectives.
It shall be the responsibility of the Independent Directors, acting together with the Chairman and the Chief Executive Officer, to anticipate the need for, qualify, recruit, and help train new Directors.
The Lead Director, working with the Chairman and the Chief Executive Officer, and with the concurrence of the Independent Directors, shall determine those areas of expertise which would strengthen the overall Board, and endeavor to develop a list of candidates who possess those qualifications.
The Chairman and the Lead Director, along with the Chief Executive Officer and any Independent Director available, shall seek out and interview those individuals willing to serve, with the intent of agreeing upon one or more candidates whose qualifications include expertise needed to enhance the overall Board.
Each candidate who is agreed upon will have his credentials forwarded to all Directors for review prior to being introduced to as many Board members as possible. The Independent Directors will then vote on whether to recommend the individual or individuals to the full Board for selection by the full Board. If selected, then depending upon the Class in which the candidate or candidates are placed, the candidate or candidates will be subject to eventual election by the Company’s stockholders.
3. Independence of Board Members
A majority of the members of the Board of Directors shall be "Independent Directors" as defined by rules promulgated by the Securities and Exchange Commission and any exchange on which the shares of common stock of the Company are traded.
Generally, an "Independent Director" is a person other than an executive officer or employee of the Company. No Director qualifies as Independent unless the Board of Directors affirmatively determines that the Director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director. The following is a non-exclusive list of persons who shall not be considered independent:
(a) a Director who is, or during the past three years was, employed by the Company, other than prior employment as an interim executive officer (provided the interim employment did not last longer than one year);
(b) a Director who accepted or has an immediate family member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:
i. compensation for Board or Board committee service,
ii. compensation paid to an immediate family member who is an employee (other than an executive officer) of the Company,
iii. compensation received for former service as an interim executive officer, (provided the interim employment did not last longer than one year),
iv. benefits under a tax-qualified retirement plan, or non-discretionary compensation;
(c) a Director who is an immediate family member of an individual who is, or at any time during the past three years was, employed by the Company as an executive officer;
(d) a Director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments (other than those arising solely from investments in the Company's securities or payments under non-discretionary charitable contribution matching programs) that exceed 5% of the organization's consolidated gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years;
(e) a Director who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of the Company's executive officers serve on the compensation committee of such other entity; or
(f) a Director who is, or has an immediate family member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years.
To further the independence of the Board, the Board believes that, as a general rule, interlocking Directorships are not to be encouraged. For example, an interlocking Directorship would exist if an officer of the Company served on the board of company X and an officer of company X served on the Board. In addition, as a general rule, the Board believes that former executives of the Company, and persons employed by its general counsel and its bankers, should not serve on the Board.
4. Lead Director
If the Chairman of the Board is an Independent Director, he/she shall be the Lead Director of the Independent Directors. If the Chairman of the Board is not an Independent Director, the Independent Directors shall meet in separate session to select one of them to be the Lead Director. The Lead Director will be responsible for calling Independent Directors' meetings as required or appropriate, chairing such meetings, setting the agenda for such meetings, ensuring that minutes of such meetings are properly recorded, and undertaking such other duties and responsibilities as are provided for in this Statement of Principles or that the Independent Directors may ask of him/her from time to time. The Lead Director will also be the Chairman of the Nominating Committee. Finally, he will be responsible for interacting, on behalf of the Independent Directors, with the Non-Independent Directors, the elected Chairman of the Board (if not Independent), and the Chief Executive Officer (if the Chief Executive Officer is not the Chairman of the Board).
5. Board Size
The Board in recent years has averaged 8 members. It is the sense of the Board that in order to ensure that there are a sufficient number of Independent Directors and to provide needed expertise there should be between 8 and 10 members. The Board will periodically review its own size and determine, from time to time, the size that would be most effective.
6. Commitment/Changes in Job Responsibility
It is not the sense of the Board that in every instance a Director who retires or changes from the position he or she held when he or she was elected to the Board should necessarily leave the Board. There should be an opportunity for the Board to review the continued appropriateness of Board membership under these circumstances. Directors should advise the Board in advance of accepting an invitation to serve on another public company’s board.
7. Election Term/Term Limits/Retirement
The Board does not believe that it should establish term limits. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, term limits hold the disadvantage of losing the contributions of Directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide increasing contributions to the Board.
An appropriate retirement age for a Director would be 72 and, therefore, unless the Board determines that continued Board membership would be in the best interest of the Company and its stockholders, a Director should not be elected or re-elected to the Board following the year in which his or her 72nd birthday occurs.
8. Meetings and Agendas
The Chairman of the Board will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of item(s) on the agenda. The Board will meet at least four times a year.
The Lead Director will establish the agenda for each Independent Directors' meeting. Each Independent Director is free to suggest the inclusion of item(s) on the agenda. The Independent Directors will meet at least once a year.
9. Board Materials and Presentations
Information and data that is important to the Board's understanding of the business should be distributed in writing to the Board before each meeting of the Board. Company management will make every attempt to see that this material is concise.
As a general rule, presentations on specific subjects should be sent to Board members in advance so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the material. Occasionally, materials may be distributed at the Board meeting; Management may also make some presentations orally, as appropriate.
10. Attendance of Non-Directors at Board Meetings
The Board encourages management to bring, from time-to-time, managers into Board meetings who: (a) can provide additional insight into the items being discussed because of personal involvement in those areas; and/or (b) have future potential and whom the senior management believes should be given exposure to the Board.
11. Number, Structure and Independence of Committees
There will be, from time-to-time, occasions in which the Board may want to form a new Committee, depending upon the circumstances. The current Committees are the Executive, Audit, Compensation and Nominating Committees. The membership of the Audit, the Compensation, and the Nominating Committees will consist only of Independent Directors, except that the Board in appropriate circumstances may determine otherwise for any Committee's membership, in accordance with the rules of the SEC and any exchange on which the shares of common stock of the Company are traded. The Chairman of the Board will normally be the Chairman of the Executive Committee.
12. Rotation and Assignment of Committee Members
Consideration should be given to rotating Committee members periodically at about three year intervals. However, rotation will not be mandated as a matter of policy since there may be reasons at a given point in time to maintain an individual Director's Committee membership for a longer period.
13. Committee Meeting Frequency, Length and Agenda
Each Committee Chairman, in consultation with his or her Committee's members, will determine the frequency and length of the meetings of the Committee. The Chairman of each Committee, in consultation with appropriate members of management and staff, will develop the Committee's agenda. At the beginning of each fiscal year, each Committee will review the suggested schedule of agenda subjects to be discussed during the ensuing year (to the degree these can be foreseen). A suggested agenda schedule should be included in the Committee Charter. To the extent there are additions or deletions to these agenda, they will be shared with the Board.
14. Internal Controls
As provided in the Sarbanes-Oxley Act, management, subject to oversight of the Board, has responsibility for the appropriate reporting of operating results. In order to effectively carry out this function, the Board, through the Audit Committee, monitors the effectiveness of the Company's financial and reporting systems and internal controls. The Company's senior management, subject to review as appropriate by the Board, is responsible for the design of these systems and controls which shall provide reasonable, but not absolute, assurance against material misstatements or omissions in the Company's disclosures. These systems and controls are intended to enable the timely identification of problems which require the attention of the Audit Committee and/or the Board.
The performance of the Company is monitored on a regular basis through annual operating and capital budgets which have been established by relevant members of management and approved by the Board.
Management will also provide reports to the Board on a quarterly basis regarding issues affecting the Company in areas such as litigation, environment, risk management, safety and regulatory and public affairs. The Company's external auditors report directly to the Audit Committee, not to management, and will review and test the Company's systems and controls to the extent necessary to render opinions on the Company's financial statements and on the Company’s internal controls over financial reporting.
15. Evaluation of Board Performance
The Board will assess its performance at the end of each fiscal year. This assessment process will be lead by the Chairman of the Board and the Lead Director, and will include an evaluation of the Board's performance as a whole and with respect to specific areas in which the Board and/or management believes a better contribution could be made. The purpose of the assessment will be to increase the effectiveness of the Board.
16. Evaluation of Committee Performance
Each Committee, led by its Chairman, will annually assess its performance to confirm that it is meeting its responsibilities under its charter. Some of the items that Committees should consider include: (i) appropriateness of the scope of their respective charters; (ii) appropriateness of matters presented for information and for approval; (iii) sufficiency of time for consideration of agenda items; (iv) frequency of meetings; (v) length of meetings; and (vi) quality and length of written materials and presentations.
17. Board Compensation
As part of a Director's total compensation and in order to more closely align his or her interests with those of the Company's stockholders, a meaningful portion of each Director's compensation should be provided in stock options or restricted stock or stock units. Directors will be required to maintain a minimum level of stock ownership. See Attachment 1.
The Board believes that management can effectively monitor trends in board compensation, and should present recommendations to the Board when appropriate. Changes in Board compensation, if any, should come at the suggestion of management, but with full discussion and concurrence by the Board. Only non-employee Directors should receive payment for serving on the Board.
18. Board Relationship with Management/Board Access to Senior Management
The management of the business of the Company is to be conducted by or under the supervision of the Chief Executive Officer.
In order that the Board may fulfill its oversight responsibilities, Board members will have complete access to the Company's management, including the Chief Executive Officer, and to information about the Company's operations. It is assumed that Board members will use their judgment to be sure that their contacts with any levels of management are not distracting to the business operations of the Company. Any such contact, if in writing, should be copied to the Chairman of the Board and the President and Chief Executive Officer.
(The Board may choose to designate the Chairman of the Board or the Chief Executive Officer to act as a liaison between management and the Directors to ensure that the roles of the Board and management are respected.)
19. Board Communications with Institutional Investors, Press, Customers, etc.
The Board believes that management speaks for the Company. Individual Board members may, from time-to-time at the request of management, meet or otherwise communicate with various constituencies that are involved with the Company. If comments from the Board are appropriate, they should, in most circumstances, come from the Chairman of the Board or in his/her absence, the Lead Director.
20. Formal Evaluation of the Chief Executive Officer
The Independent Directors should evaluate the Chief Executive Officer annually. The Chairman of the Board or, if the Chairman of the Board is not an Independent Director, the Chairman of the Compensation Committee should communicate the evaluation to the Chief Executive Officer. The evaluation should be based on objective criteria including the performance of the business, accomplishment of long-term strategic objectives, development of management, etc. The evaluation will be used by the Independent Directors in annually reviewing and setting the compensation of the Chief Executive Officer.
21. Succession Planning/Management Development
The Chief Executive Officer will submit an annual report to the Board on succession planning. There should also be available, on a continuing basis, the Chief Executive Officer's recommendation as to a successor should he or she be unexpectedly disabled. The Chief Executive Officer will provide an annual report to the Board on the Company's program for management development. This report should be given to the Board at the same time as the succession planning report.
22. Oversight of the Board
The Board will be responsible for ensuring that it complies with the foregoing requirements and performs its duties in accordance with these principles. The Board will review these principles not less often than annually and will make such changes therein as it deems appropriate.
Updated June 2010
BALDWIN TECHNOLOGY COMPANY, INC.
BOARD OF DIRECTORS
STATEMENT OF PRINCIPLES
ATTACHMENT 1
STOCK OWNERSHIP REQUIREMENT
Every Board Member of the Company (employee and non-employee) is required to own shares of Baldwin stock with an original investment value of approximately $50,000. Board Members will have five (5) years from the date of election to the Board to achieve this. The guideline for stock ownership achievement is expected to be about $10,000 to $15,000 per year. (Unexercised options will not be considered as stock ownership; vested restricted stock and stock units will be considered stock ownership.)