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General Steel Holdings, Inc.
Corporate Governance Guidelines
The Board of Directors (the “Board”) of General Steel Holdings, Inc. (the “Company”) has adopted the following corporate governance guidelines to help it fulfill its responsibility to the stockholders to oversee the work of management and the Company’s business results. These guidelines establish practices to allow the Board to effectively review and evaluate the Company’s business operations and to make decisions that are independent of the Company’s management. The guidelines are in addition to, and are not intended to change or interpret, any federal or state law or regulation, including the Nevada General Corporate Law, or the Certificate of Incorporation or By-Laws of the Company.
These guidelines are subject to future refinement or changes as the Board may find necessary or advisable for the Company.
II. Board Responsibilities
The Board’s principal role is to maximize long-term stockholder value. The Board is responsible for oversight of management’s strategy and operation of the business and performance evaluation, so as to promote the long-term successful performance of the Company. In order to maximize long-term stockholder value, the directors’ primary functions include:
III. Board Composition and Selection; Independent Directors
A. Board Size. The Board will periodically evaluate the appropriate size of the Board and will set the number of directors in accordance with the Company’s By-laws and recommendations of the Nominating Committee.
B. Selection of Board Members. All Board members are elected annually by the Company’s stockholders, except as noted below with respect to vacancies. Each year at the Company’s annual meeting, the Board recommends a slate of directors for election by stockholders. The Board’s recommendations are based on its determination (based on recommendations, advice and information supplied to by the Nominating Committee) as to the qualifications of each individual, and the slate as a whole, to serve as directors of the Company, taking into account the membership criteria discussed below.
The Board may fill vacancies in existing or new director positions in accordance with the Company’s By-laws. Such directors elected by the Board serve only until the next election of directors unless elected by the stockholders to a further term at the that time.
C. Board Membership Criteria. The Nominating Committee works with the Board as a whole on an annual basis to determine the appropriate characteristics, skills and experience for directors and for the Board as whole. In evaluating the suitability of individual Board members, the Board takes into account many factors: general understanding of marketing, finance and other elements relevant to the success of a large, publicly-traded company, understanding of the Company’s business on an operational level, educational and professional background, and willingness to devote time to Board duties. The Board evaluates each individual in the context of the Board as a whole, with the objective of recommending a group that can best perpetuate success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas. In determining whether to recommend a director for re-election, the Nominating Committee also considers the directors’ past attendance at meetings and participation in and contributions to activities of the Board. In addition, the Board will review annually the relationship each director and each director’s family members have with the Company (directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) to determine whether each director is independent within the meaning of the NYSE Stock Exchange listing requirements. listing requirements. Following such annual review, only those directors who the Board affirmatively determines meet the requirements for independence will be considered independent. The basis for any determination that relationship is not material will be published in the Company’s annually proxy statement.
Directors should be committed to devoting the time and effort necessary to learn the business of the Company and to carrying out the obligations of the Board.
D. Board Composition – Mix of Management and Independent Directors. At least a majority of the Company’s directors must be independent directors.
E. Orientation and Continuing Education. All directors, following their initial appointment shall be given the opportunity to attend, at Company expense, a Company sponsored orientation and there after shall be given the opportunity to attend educational opportunities relevant to their service as directors in accordance with policies and guidelines established by the Nominating Committee from time to time.
F. Retirement Policy. No director, after having attained the age of 72 years, shall be nominated for re-election or reappointment to the Board.
G. Directors with Significant Job Changes. Directors who are also employees of the Company are expected to retire from the Board at the same time that they retire from their corporate officer position. The Board does not believe that non-employee directors who retire or change the position they held when they become members of the Board should necessarily leave the Board. Upon such event, the non-employee director shall provide notice to the Nominating Committee which shall review the independence of the director and the appropriateness of the Board members’ continued service under such circumstances. The affected director shall be expected to act in accordance with the Nominating Committees recommendation.
H. Selection of Chairman. The Board selects the Company’s Chairman of the Board in the manner that it determines to be in the best interest of the Company’s stockholders.
I. Limitation on Other Board Service. In order to promote effective service to the Board, no director should simultaneously serve on the boards of directors of more than four other public companies without express approval of the Nominating Committee. No member of the audit committee may simultaneously serve on the Audit Committees of more than two other public companies.
J. Term limits. The Board does not believe it should limit the number of terms for which an individual may serve as a director. Directors who have served on the Board for an extended period of time are able to provide valuable insight to the operations and future of the Company based on their experience with and understanding of the Company’s history, policies and objectives. The Board believes that, as an alternative to term limits, it can ensure that the Board continues to evolve and adopt new view points through the evaluation and nomination process descried in these guidelines. In connection with the re-nomination recommendations, the nominating Committee shall consider the issue of continuing director tenure and take steps as many be appropriate to ensure that the Board maintains openness to new ideas and willingness to critically re-examine the status quo.
IV. Board Meetings/Communications
A. Agenda. The Chairman of the Board and the CEO, taking into account suggestions from other members of the Board, will set the agenda for each Board meeting, and will distribute this agenda in advance to each director.
B. Advance Distribution of Materials. All information and data that is relevant to the Board’s understanding of matters to be discussed at an upcoming Board meeting should, whenever feasible, be distributed in writing or electronically to all members of the Board in advance of the meeting to facilitate the efficient use of time. In preparing this information, management should ensure that the materials being distributed are as concise as possible while giving directors sufficient information to make informed decisions. The Board acknowledges that certain items to be discussed at Board meetings are of an extremely sensitive nature and that the distribution of material on these matters prior to Board meetings may not be appropriate. Directors are expected to review all materials distributed prior to attendance at meetings.
C. Attendance. Directors are expected to regularly attend, either in person or by telephone or other remote communication, all meetings of the Board and committees on which he or she sits, with the understandings that on occasion a director may be unable to attend a meeting.
D. Access to Employees and Independent Advisors. The Board shall have reasonable access to Company management and other employees to ensure that directors can ask all questions and obtain all information necessary to fulfill their duties. Board members shall use sound business judgment to ensure that such contact is not distracting. The board may create specific protocol for making such inquires. Management is encouraged to invite Company personnel to any Board meeting at which their presence and expertise would help the Board to have full understandings of a matter being considered. The Board, in its discretion, also shall have access to any independent advisors of the Company.
E. Executive Sessions of Non-Management Directors. As part of each regularly scheduled meeting of the Board, non-management directors of the company will meet in executive session, i.e., with no employee directors or management present. Executive sessions of the non-management directors will be called and chaired by the non-executive chairman of the Board (or if there is no such individual, by the lead director chosen from time to time by the independent directors). These executive session discussions may include such topics as the non-management directors determine, but actions of the Board shall be taken separately at a full Board or committee meeting. In addition, at least annually, the company’s independent directors shall meet in executive session, chaired by the lead director chosen from time to time by the independent directors.
F. Board interaction with the Press, Institutional Investor and Others. Directors receiving inquires about the Company should interact with press and other third parties only with concurrence of the CEO or his/her designee.
V. Performance Evaluation; Succession Planning
A. Annual CEO Evaluation. The Compensation Committee of the Board must conduct a review at least annually of the performance of the CEO. The Committee establishes the evaluation process and determines the specific criteria on which the performance of the CEO is evaluated.
B. Board Self-Evaluation. The Board shall conduct a self-evaluation at least annually to determine whether it is functioning effectively. In addition, the Nominating committee is responsible for conducting an annual evaluation of the performance of the individual directors, the Full Board and the committees of the Board and reporting its conclusions and recommendations to the Board. In conducting its review of the recommendations of the Nominating Committee, the full Board shall critically assess the self-evaluation of the Nominating Committee and evaluate the effectiveness and performance of such committee. The Nominating Committee’s report should generally include an assessment of the Boards’ compliance with the principles set forth in these guidelines, as well as identification of areas in which the Board could improve its performance.
C. Succession Planning. As part of the annually CEO evaluation process, the Compensation Committee of the Board should work with the CEO to plan for CEO succession, as well as develop plans for interim succession for the CEO in the event of an unexpected occurrence. Succession planning may be reviewed more frequently by the Compensation Committee of the Board as it deems warranted.
D. Management Development. The Board shall determine that a satisfactory system is in effect for education, development and orderly succession of senior an mid-level managers throughout the Company.
A. Board Compensation. Directors (other than those who also are salaried employees of the Company or any of its subsidiaries) are entitled to receive reasonable compensation for the services, as may be determined from time to time by the Board upon recommendation of the Compensation Committee, as well as reimbursement of expenses. The Board shall be guided by three goals when determining compensation: compensation should fairly pay Directors for work required in a company of General Steel’s size and scope; compensation should align Directors’ interests with the long-term interests of shareholders; and the structure of the compensation should be simple, transparent and easy for shareholders to understand.
A. Number and Type of Committees. The Board shall have the following 3 committees – an Audit Committee, A compensation Committee, and a Nominating Committee. The Board may add or remove from time to time additional committees as it deems advisable for purposes of fulfilling it primary responsibility. Each committee will perform it duties as assigned by the Board in compliance with the Company’s by laws and each committee’s duly adopted charter. These duties, further outlined in the charter of each committee, may be described briefly as follows:
B. Composition of Committees; Committee Chairpersons. Each of the Audit, Compensation and Nominating Committee must consist solely of independent directors. The Board is responsible for the appointment of committee members and committee chairpersons according to criteria that it determines to be in the best interest of the Company and its stockholders and in accordance with the listing standards of the NYSE and other applicable regulations.