Corporate Governance Guidelines
The following Corporate Governance Guidelines have been adopted by the Board of Directors (the "Board") of Ku6 Media Co., Ltd, (the "Company") to assist the Board in the exercise of its responsibilities. These Corporate Governance Guidelines reflect the Board's commitment to monitor the effectiveness of policy and decision making both at the Board and management level, with a view to enhancing long-term stockholder value. The Board intends that these guidelines serve as a flexible framework within which the Board may conduct its business, not as a set of binding legal obligations.
These Corporate Governance Guidelines are not intended to change or interpret any law or regulation, including the Companies Law of the Cayman Islands, or the Certificate of Incorporation, or Memorandum of Association or Articles of
Association of the Company. These Corporate Governance Guidelines are subject to modification from time to time by the Board.
Role of Directors
The business and affairs of the Company shall be managed by or under the direction of the Board. A director is expected to spend the time and effort necessary to properly discharge such director's responsibilities. Accordingly, a director is expected to regularly attend meetings of the Board and committees on which such director sits, and to review prior to meetings material distributed in advance for such meetings. A director who is unable to attend a meeting (which it is understood will occur on occasion) is expected to notify the Chairman of the Board or the Chairman of the appropriate committee in advance of such meeting.
The Board's Goals
The Board's goals are generally to build long-term value for the Company's stockholders and to assure the vitality of the Company for its customers, employees and the other individuals and organizations that depend on the Company. To achieve these goals the Board is expected to monitor both the performance of the Company (in relation to its financial objectives, major goals, strategies and competitors) and the performance of the management team and offer them
constructive advice and feedback. The Board is also responsible for oversight of the Company's program to prevent and detect violations of law, regulation and Company policies and procedures. The Board will select, evaluate and, where appropriate or necessary, replace the management team (including the Chief Executive Officer and other principal senior executives).
Selection of the Chairman of the Board
The Board shall be free to choose its Chairman in any way that it deems best for the Company at any given point in time.
Size of the Board
The Company's Articles of Association provide that the Board shall have such number of directors as are set by resolution of the Board or the Company's stockholders. The Board shall periodically review the size of the Board, which may be increased or decreased if determined to be appropriate by the Board.
Selection of Directors
The Board shall be responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of stockholders. The Compensation & Leadership Development Committee is
responsible for identifying, screening and recommending candidates to the Board for Board membership.
Each director nominee shall submit to the Board an irrevocable letter of resignation from the Board and all committees thereof, which shall become effective if such director does not receive a majority of votes cast (as defined in the Articles of
Association) and upon acceptance of such letter by the Board. The Board will determine whether to accept or reject such resignation, or what other action should be taken, within 90 days from the date of the certification of election results. The Board may consider any factors they deem relevant in deciding whether to accept a director's resignation. A nominee whose irrevocable letter of resignation has become effective pursuant to this provision shall not participate in the decision-making process of the Board with respect to that resignation. If a majority of the members of the Board receive a greater number of votes "against" than "for" at the same election, then the independent directors who did not receive such votes will consider the tendered resignations.
Board Membership Criteria
Nominees for director shall be selected on the basis of, among other things, knowledge, experience, skills, expertise, integrity, diversity, ability to make independent analytical inquiries, and understanding of the Company's business environment, all in the context of an assessment of the perceived needs of the Board at that time. Nominees should also be willing to devote adequate time and effort to Board responsibilities. Exceptional candidates who do not meet all of these criteriamay still be considered.
The Board shall be responsible for assessing the appropriate balance of criteria required of Board members.
Director Resignation Upon Change in Status
A Board member, who ceases to be actively employed in his or her principal business or profession, or experiences other changed circumstances that could pose a conflict of interest, diminish his or her effectiveness as a Board member, or otherwise be detrimental to the Company, shall offer his or her resignation to the Board. The Board in its discretion will determine whether such member should continue to serve as a director for an unexpired term or any future terms.
The Board does not believe that a fixed retirement age for directors is appropriate.
As each director is subject to election by stockholders on an annual basis, the Board does not feel that it should establish term limits. While term limits could help insure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who over time have developed increasing insight into the Company and its operations and therefore provide an increasing contribution to the Board as a whole. However, in connection with
evaluating recommendations for nomination for re-election, the Board shall consider the issue of continuing director tenure and take steps as may be appropriate to ensure that the Board maintains openness to new ideas.
A director who is also an officer or employee of the Company shall not receive additional compensation for such service as a director. The Company believes that compensation for non-employee directors should be competitive and should encourage increased ownership of the Company's stock through the payment of all or a portion of director compensation in Company stock, options to purchase Company stock or similar compensation. The Compensation & Leadership Development Committee will periodically review the level and form of, and, if it deems appropriate, recommend to the Board changes in, Board compensation. From time to time, the Compensation & Leadership Development Committee may seek out or entertain reports from the staff of the Company on the status of Board compensation in relation to similarly situated companies. Such review will also include a review of both direct and indirect forms of compensation to the Company's directors, including any charitable contributions by the Company to organizations in which a director is affiliated and consulting or other similar arrangements between the Company and a director.
Board Access to Management and Outside Advisors
Board members shall have access to the Company's management and, as appropriate, to the Company's outside advisors. Board members shall coordinate such access through the Chairman of the Board, and Board members will use judgment to assure that this access is not distracting to the business operations of the Company. Additionally, the Board and its Committees may retain independent outside advisors, at the expense of the Company, as they determine necessary to carry out their responsibilities.
Board Interaction with Investors, Analysts, Press and Customers
The Board believes that management generally should speak for the Company. It is suggested that each director shall refer all inquiries from investors, analysts, the press or customers to the Chief Executive Officer or his or her designee.
Communications to the Board of Directors
Stockholders and other interested parties may contact any member (or all members) of the Board (including without limitation the non-management directors as a group), any Board Committee or any Chair of any such Committee by mail. To communicate with the Board of Directors, any individual Director or any group or Committee of Directors, correspondence should be addressed to the Board of Directors or any such individual Director or group or Committee of Directors by either name or title. Such correspondence should be sent c/o Board Secretary, Ku6 Media Co., Ltd, Building No.6, Zhengtong Shidai Creative Centre, No. 18 Xibahe Xili, Chaoyang District, Beijing 100020.
All communications received as set forth in the preceding paragraph will be opened by the Board Secretary (or his or her designee) for the sole purpose of determining whether the contents represent a message to the Company's Directors. The Board Secretary (or his or her designee) will forward copies of all correspondence that, in the opinion of the Board Secretary (or his or her designee), deals with the functions of the Board of Directors or its committees or that he or she otherwise determines requires the attention of any member, group or committee of the Board of Directors. The Board Secretary (or his or her designee) will not forward junk mail, job inquiries, business solicitations, complaints by users or customers with respect to ordinary course of business customer service, offensive or otherwise inappropriate materials.
Attendance at Annual Meeting of Stockholders
It is Company policy that Directors are invited and encouraged to attend the Annual Meeting of Stockholders.
Director Orientation and Continuing Education
The Company shall provide new directors with a director orientation program to familiarize such directors with, among other things, the Company's business, strategic plans, significant financial, accounting and risk management issues, compliance programs, conflicts policies, code of ethics, corporate governance guidelines, principal officers, internal auditor(s) and independent auditors. Directors may be expected to participate in continuing educational programs in order to maintain the necessary level of expertise to perform their responsibilities as directors.
Frequency of Meetings
There shall be at least four regularly scheduled meetings of the Board each year. At least one regularly scheduled meeting of the Board shall be held quarterly, plus special meetings as required by the needs of the Company.
Selection of Agenda Items for Board Meetings
In preparation for meetings of the Board, the Chairman, with support from the Board Secretary and such other officers as the Board Secretary shall designate, shall disseminate to directors on a timely basis briefing materials regarding matters to be included in the meeting agenda, as well as minutes from prior meetings and any written reports by committees. Each Board member shall be free to suggest inclusion of items on the agenda as well as free to raise at any Board meeting subjects that are not specifically on the agenda for that meeting.
Attendance of Management Personnel at Board Meetings
The Board encourages the Chief Executive Officer to bring members of management from time to time into Board meetings to (i) provide management insight into items being discussed by the Board because of management involvement in these areas; (ii) make presentations to the Board; and (iii) bring managers with significant potential into contact with the Board.
Board Materials Distributed in Advance
Information and materials that are important to the Board's understanding of the agenda items and other topics to be considered at a Board meeting should, to the extent practicable, be distributed sufficiently in advance of the meeting to permit prior review by the directors. Sensitive subject matters may be discussed at the meeting without written materials being distributed in advance or at the meeting. Similarly, matters may be discussed at a meeting called on short notice in the event of a pressing need without written material being made available.
Number and Names of Board Committees
The Company shall have the following standing committees: (i) Audit Committee; (ii) Compensation & Leadership Development Committee; (iii) Corporate Development and Finance Committee. The purpose and responsibilities for each of these committees shall be outlined in committee charters adopted by the Board. The Board may, from time to time, form a new committee, re-allocate responsibilities of one committee to another committee or disband a current committee depending on circumstances. In addition, the Board may determine to form ad hoc committees from time to time, and determine the composition and areas of competence of such committees.
Selection of the Executive Officers
The Compensation & Leadership Development Committee shall be responsible for identifying potential candidates for, and selecting, the Company's Executive Officers (including the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Technology Officer, and the President or equivalent). In identifying potential candidates for, and selecting, the Company's Executive Officer, the Compensation & Leadership Development Committee shall consider, among other things, a candidate's experience, understandings of the Company's business environment, leadership qualities, knowledge, skills, expertise, integrity, and reputation in the business community.
Evaluation of Executive Officers
The Compensation & Leadership Development Committee shall conduct an evaluation annually in connection with the determination of the salary and executive bonus of all executive officers (including the Chief Executive Officer, the Chief
Financial Officer, the Chief Operating Officer, the Chief Technology Officer, and the President or equivalent).