NOMINATING, COMPLIANCE AND GOVERNANCE COMMITTEE CHARTER
Adopted February 24, 2011
Exactech, Inc. (the “Company”) has previously established a Nominating, Compliance and Governance Committee (the “Governance Committee”). The Governance Committee has prepared and approved this Nominating, Compliance and Governance Committee Charter (the “Charter”) and has presented this Charter to the Board of Directors of the Company (the “Board”) for ratification by the Board.
The Company is committed to effective corporate governance, preserving the integrity of the operation of federal health care programs and a culture of openness, accountability, and compliance throughout the Company. Corporate governance, to be effective, must be adapted to the organization and to the fundamentals of its business activities. The traditional role of a nominating committee is evolving with the changing attitudes toward the responsibilities of the committee to have ongoing oversight over those individuals nominated for and comprising the members of the board.
The Governance Committee believes open and direct communications between or among
management and directors is essential to good governance. The purpose of this Governance
Committee and this Charter is:
- to set forth the basic corporate governance policies and guidelines adopted by the
Governance Committee and by the Board for the Company;
- to define the basic responsibilities and qualifications of individuals nominated and
elected to serve as directors on the Board;
- to identify and nominate individuals qualified to become directors in accordance with
such policies and guidelines;
- to oversee the selection and composition of committees of the Board; and
- to assist the Board in overseeing the corporate governance policies, codes of ethics, and
compliance procedures of the Company.
The committee shall be comprised of three or more members of the Board, each of whom is determined by the Board to be independent in accordance with the rules of the NASDAQ Stock Market (“NASDAQ”) and Sarbanes-Oxley Act, and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Governance Committee. The composition of the Governance Committee shall also conform to the requirements of that certain Deferred Prosecution Agreement, dated as of December 2, 2010 and effective as of December 7, 2010, that certain Corporate Integrity Agreement dated as of December 2, 2010 and effective as of December 7, 2010, and that certain Settlement Agreement, dated as of December 7, 2010 and effective as of December 7, 2010 to which the Company is a party (collectively, the “DOJ/OIG Documents”). The members of the Governance Committee and the Chair of the Governance Committee are to be elected by the Board at the annual organization meeting of the Board and shall serve until their successor shall be duly elected and qualified or until their earlier resignation or removal by the Board. The members of the Governance Committee may be removed, with or without cause, by a majority of the Board.
IV. Chief Compliance Officer
The Board has appointed an individual to serve as its Chief Compliance Officer. The Chief Compliance Officer shall be responsible for developing and implementing policies, procedures and practices designed to ensure compliance with the requirements of the DOJ/OIG Documents, the Company’s voluntary compliance program, which includes the Company’s Code of Business Conduct and Ethics for all employees and other written compliance policies and procedures (the “Compliance Procedures”) and with all applicable Federal health care program requirements. The Chief Compliance Officer shall also be responsible for monitoring the day-today compliance activities engaged in by the Company as well as for reporting any obligations created under the DOJ/OIG Documents. The Chief Compliance Officer shall be a member of senior management and shall report directly to and be subject to the supervision of the Governance Committee and shall report indirectly to the President and Chief Executive Officer. Any change of status to the employment of the Chief Compliance Officer (e.g., termination of employment, revisions to compensation) shall require the express approval of the Committee. The Chief Compliance Officer shall report to the Governance Committee or, at a minimum, the Chair of the Governance Committee, at least once every quarter.
The Governance Committee shall meet at such times as determined necessary or advisable by the Chair or a majority of the Governance Committee. The Committee shall meet in executive session, without management of the Company present, at least on an annual basis. The Chair will chair all regular sessions of the Governance Committee and set the agendas for the Committee Meetings. The Governance Committee shall keep regular minutes of its meetings and report the same to the Board from time to time and upon request.
VI. Duties and Responsibilities of the Governance Committee.
In furtherance of the Governance Committee’s purpose, and in addition to any other responsibilities which may be properly assigned by the Board, the Governance Committee shall carry out the duties and responsibilities set forth below. These functions should serve as a guide with the understanding that the Governance Committee may determine to carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal or other conditions. The Governance Committee shall also carry out any other responsibilities and duties delegated to it by the Board from time to time related to the purposes of the Governance Committee outlined in this Charter.
In discharging its oversight role, the Governance Committee is empowered to study or investigate any matter of interest or concern that the Governance Committee deems appropriate and shall have the sole authority, without seeking Board approval, to retain outside counsel or other advisors for this purposes, including the sole authority to approve the fees payable to such counsel or advisors and any other terms of retention.
A. Establishment and Evaluation of Corporate Governance Policies and Guidelines
- Establish corporate governance policies for the Company and evaluate management’s adherence to the policies.
- Adopt further governance procedures as set forth in this Charter and in a separate set of corporate governance guidelines and as may be approved from time to time by resolution of the Governance Committee. The corporate governance policies set forth in this Charter and in any other document and any adopted in the future by resolution of the Governance Committee are subject to ratification by the Board.
- Periodically review this Charter, the Company’s Certificate of Incorporation, Bylaws and other corporate governance documents and recommend any changes or amendments to the Board, as the Governance Committee deems appropriate, including changes necessary to satisfy any applicable requirements of the NASDAQ, the Securities and Exchange Commission and any other legal or regulatory requirements.
- Oversee the Company’s efforts to comply with the terms of the DOJ/OIG Documents.
B. Nomination of Board, Governance Committee Members and Corporate Officers
- Review and make recommendations to the Board annually with respect to the composition, size and needs of the Board.
- Assist the Board with the identification, evaluation and recommendation of nominees and the establishment of qualifications and criteria for election or for reelection as Directors to the Board and to each committee of the Board, including a chairman for each committee.
- Recommend a slate of officer nominees for consideration and election by the Board.
- Recommend a slate of director nominees for approval by the Board and election by the stockholders in connection with the Annual Meeting of Stockholders.
- Recommend new directors for approval and election by the Board to fill vacancies on the Board, including any newly created directorships, as needed.
- Review stockholder nominations for candidacy to the Board, if any, and any shareholder proposals affecting corporate governance, and make recommendations to the Board accordingly.
- Conduct all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates.
- Review, annually or more frequently as necessary, and recommend for approval and adoption by the full Board a succession plan for the position of Chairman of the Board and Chief Executive Officer and other senior management positions. To assist the Governance Committee with this responsibility, the Chief Executive Officer will annually provide the Governance Committee with recommendations and evaluations of potential successors to succeed him or her and other members of senior management.
C. Committee Selection and Composition
- Review the composition of each committee of the Board and present recommendations to the Board for committee memberships annually and to fill vacancies as needed.
- Recommend members of the Board to serve on the committees of the Board, giving consideration to the criteria for service on each committee as set forth in the charter for such committee, as well as to any other factors the Committee deems relevant, and when appropriate, make recommendations regarding the removal of any member of any committee.
- Recommend members of the Board to serve as the Chair of the committees of the Board.
- Establish, monitor and recommend the purpose, structure and operations of the various committees of the Board, the qualifications and criteria for membership on each committee of the Board, and as circumstances dictate, make any recommendations regarding periodic rotation of directors among the committees and impose any term limitations of service on any Board committee.
- Periodically review, in consultation with the respective committee Chairs and outside counsel, the charter and composition of each committee of the Board and make recommendations to the Board for the creation of additional committees or the elimination of Board committees.
D. Maintenance of Independent Board and Certain Governance Committees
- Recommend to the Board any changes in membership or size of the Board deemed necessary to maintain majority of the directors who are determined by the Governance Committee and the Board to be independent.
- Consider questions of independence and possible conflicts of interest of members of the Board and executive officers.
- Ensure that the members of the Board committees are, at all times during their service on any of such committees, determined to be independent members of the Board.
- Periodically review and report to the Board on the effectiveness of corporate governance procedures and the Board as a governing body, including conducting an annual self-assessment of the Board and its standing committees.
- Annually perform a self-evaluation of the Governance Committee’s members and the Governance Committee’s performance under this Charter.
- Report regularly to the Board following meetings of the Governance Committee, (a) with respect to such matters as are relevant to the Governance Committee’s discharge or its responsibilities, and (b) with respect to such recommendations as the Committee may deem appropriate. The report to the Board may take the form of an oral report by the Chair or any other members of the Committee designated by the Committee to make such report.
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