Corporate Governance Guidelines of
CONSOL Energy Inc.
Objective
"The objective of these corporate governance guidelines is to
provide direction for the Board of Directors of the Company as it
pursues its role to provide strategic guidance and effective
oversight to the Company and strives to make good decisions on
behalf of its shareholders, employees, and other stakeholders."
- Board Duties and Responsibilities
- Oversight. To maximize long-term
shareholder value, the Company's Board of Directors (the
"Board") must:
- Strive to ensure that the Company operates in a legal, ethical,
and socially responsible manner;
- Select, evaluate, and offer substantive advice and counsel to
the Chief Executive Officer (the "CEO") and work
with the CEO to develop effective measurement systems that will
evaluate and determine the Company's degree of success in creating
long-term economic value for its shareholders;
- Review, approve, and monitor fundamental financial and business
strategies and major corporate actions;
- Oversee the Company's capital structure and financial policies
and practices;
- Oversee the Company's risk management policies and related
practices and assess major risks facing the Company and review
options for their mitigation; and
- 6. Provide counsel and oversight on the selection, evaluation,
development, and compensation of executive officers and provide
critical and candid feedback on their successes and failures.
- Corporate Governance. The Board will
review and, if it deems appropriate, approve changes to these
corporate governance principles that have been recommended to the
Board.
- Charters. The Board will review and, if
it deems appropriate, approve changes to the Company's Audit,
Finance, Compensation, Health, Safety and Environmental and
Nominating and Corporate Governance Committee charters that have
been recommended to the Board by such committees.
- Director Orientation and Continuing
Education. The Company provides director orientation for
new Board members and an educational program for all Board members
that include materials, meetings with key management, industry
specific information and visits to Company facilities.
- Company Visitation. The directors are
encouraged to visit the Company and its subsidiaries at least once
a year to familiarize themselves with the business of the Company
and its subsidiaries.
- Assessing Board and Committee
Performance. The Board will annually conduct a
self-evaluation to determine whether it and its committees are
functioning effectively. The Board's evaluation will be facilitated
by the Nominating and Corporate Governance Committee. Such
evaluations may be conducted with the assistance of appropriate
internal and external advisors.
- Assessing CEO Performance. Each year,
the Nominating and Corporate Governance Committee will oversee the
annual evaluation of the CEO (and other members of management). The
independent directors of the Board shall meet annually with the CEO
to receive his or her: (i) recommendations concerning his or her
goals and objectives for the upcoming year; and (ii)
self-evaluation of his or her performance in light of the prior
year's goals and objectives. The Compensation Committee shall then
evaluate the CEO's performance and review the CEO's self-evaluation
in the development and approval, and the subsequent submission to
the independent directors of the Board for approval, of the CEO's
salary, bonus, and long-term incentives (such as equity-based
compensation). In addition, the Compensation Committee will develop
and approve annual and long-term performance goals for the CEO, and
submit them to the independent directors of the Board for
approval.
- Succession Planning. The Board plans for
the succession to the positions of CEO and other executive officers
of the Company. To assist the Board, the CEO annually provides the
Compensation Committee with an assessment of the executive officers
and their potential to succeed him or her in the event of an
emergency or the unexpected resignation, retirement or disability
of the CEO. The CEO also will provide the Compensation Committee
with an assessment of persons considered to be potential successors
to executive officer positions and a review of any development
plans recommended for such potential successors. The results of
these reports will be reported to and discussed with the
Board.
- Business Conduct and Ethics. In order to
maintain the highest ethical, legal, and socially responsible
conduct, the Company must maintain appropriate codes of business
conduct and ethics. As such, the Company has established a written
Code of Ethics and Business Conduct, which the Nominating and
Corporate Governance Committee reviews periodically to ensure its
compliance with rules and regulations promulgated by the New York
Stock Exchange, the Sarbanes-Oxley Act of 2002 and the Securities
and Exchange Commission.
- Board Composition and Structure
- Size of Board. The Board periodically
reviews its size to consider the size that is appropriate for its
effective operation. In general, the Board believes that its
appropriate size is 8 to 11 members, recognizing that retirements,
resignations, and recruiting delays may result, periodically, in
the Board consisting, for some transitional period, of a slightly
greater or lesser number of directors than the Board may have
targeted.
- Mix of Directors; "Independent"
Directors. A substantial majority of the Board will be
independent under the listing standards of the New York Stock
Exchange and any other applicable regulatory authority. No director
will be independent unless the Board affirmatively determines that
the director has no material relationship with the Company (either
directly or indirectly, including as a partner, shareholder, or
officer of an organization that has a relationship with the
Company), considering all relevant facts and circumstances. The
Board has established the following standards for determining
director independence. A director will not be deemed independent
if:
- the director is, or has been within the previous three years,
employed by the Company, or an immediate family member is, or has
been within the previous three years, an executive officer of the
Company; provided, that employment as an interim Chairman or CEO or
other executive officer shall not disqualify a director from being
considered independent following that employment;
- the director or an immediate family member has received, during
any twelve-month period within the last three years, more than
$120,000 in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service); provided, that
compensation received by a director for former service as an
interim Chairman or CEO or other executive officer need not be
considered in determining independence under this paragraph (ii)
and provided, further, that compensation received by an immediate
family member for service as an employee of the Company (other than
an executive officer) need not be considered in determining
independence under this paragraph (ii);
- (A) the director or an immediate family member is a current
partner of the firm that is the Company's internal auditor or
external auditor (each an "Audit Firm"); (B) the director is a
current employee of an Audit Firm; (C) the director has an
immediate family member who is a current employee of an Audit Firm
and who personally works on the Company's audit; or (D) the
director or an immediate family member was, within the previous
three years (but is no longer), a partner or employee of an Audit
Firm and personally worked on the Company's audit within that
time;
- the director or an immediate family member is, or has been
within the previous three years, employed as an executive officer
of another company where any of the Company's present executive
officers at the same time serves or served on such company's
compensation (or equivalent) committee of the board of directors;
or
- the director is a current employee, or an immediate family
member is an executive officer, of a company that has made payments
to, or received payments from, the Company for property or services
in an amount which, in any of the previous three fiscal years,
exceeds the greater of $1 million or 2% of such other company's
consolidated gross revenues. For purposes of the foregoing, both
the payments and the consolidated gross revenues to be measured
shall be those reported in the last completed fiscal year;
- for members of the audit committee only: other than in the
capacity as a member of the audit committee, the Board, or any
other committee of the Board, the director (A) may not accept,
directly or indirectly, any consulting, advisory, or other
compensatory fee from the Company, provided that compensatory fees
do not include the receipt of fixed amounts of compensation under a
retirement plan (including deferred compensation) for prior service
with the Company (provided that such compensation is not contingent
in any way on continued service), or (B) may not be an affiliated
person of the Company; and
- for members of the Compensation Committee only: other than in
the capacity as a member of the Compensation Committee, Board, or
any other committee of the Board, the Board will consider all
factors specifically relevant to determining whether a director has
a relationship to the Company which is material to that director's
ability to be independent from management in connection with the
duties of a Compensation Committee member, including, but not
limited to, (A) the source of compensation of such director,
including any consulting, advisory or other compensatory fee paid
by the Company to such director and (B) whether the director is
affiliated with the Company or an affiliate of the Company.
References to the "Company" in this Part II.B include any parent
or subsidiary in a consolidated group with CONSOL Energy Inc.
Immediate family members of a director are the
director's spouse, parents, children, siblings, mothers and
fathers-in-law, sons and daughters-in-law, brothers and
sisters-in-law, and anyone (other than domestic employees) who
share such person's home. When applying the look-back period
referenced in clauses (i) - (v) above, directors need not consider
individuals who are no longer immediate family members as a result
of legal separation or divorce, or those who have died or become
incapacitated.
Executive Officer has the meaning specified for
the term "officer" in Rule 16a-1(f) under the Securities Exchange
Act of 1934, as amended.
Any related person transaction required to be disclosed under
Regulation S-K, Item 404, shall be considered in determining the
independence of a director or nominee. The basis for any
determination that a relationship is not material, which does not
meet the standards set forth above, will be explained in the
Company's annual proxy statement.
- Selection of Directors. Each year at the
Company's annual 'shareholders' meeting, the Board recommends a
slate of nominees for election by shareholders. In addition, the
Board fills vacancies on the Board when necessary or appropriate.
The Board's recommendations or determinations are based on the
recommendations of, and information supplied by, the Nominating and
Corporate Governance Committee as to the suitability of each
individual and, where applicable, the slate as a whole to serve as
directors, taking into account the criteria described in the
Nominating and Corporate Governance Committee Charter.
- Nomination of Proposed Directors by
Shareholders. The Company's By-laws contain a procedure
allowing for the nomination by shareholders of proposed
directors.
- Board Membership Criteria. The
Nominating and Corporate Governance Committee is responsible for
reviewing with the Board, on an annual basis, the size, function,
and needs of the Board. The criteria for Board membership is set
forth in the Nominating and Corporate Governance Committee
Charter.
- Chairman of the Board. Upon the
recommendation of the Nominating and Corporate Governance
Committee, the Board will annually elect a chairperson from among
the directors. The director who is appointed Chairperson is
appointed on an annual basis by at least a majority of the
remaining directors. The Chairperson shall be principally
responsible for communicating with the Board members, and shall
preside at all meetings of the Board.
- Retirement; Resignation.
- Resignation Policy. Non-management directors
who change their primary job responsibilities that they held at the
time of their election to the Board shall notify the Board of such
change. Management directors will offer to resign from the Board
upon their resignation, removal, or retirement as an officer of the
Company. The Board will, in its sole discretion, determine whether
or not to accept such resignation, provided that, if approved by
the Board, such director shall only continue to serve as a director
after his resignation, removal, or retirement for a transition
period of up to one year after the date that he or she ceases to be
an executive officer.
- Retirement Age Policy. It is the policy of the
Board that no director having attained the age of 75 years shall be
nominated for re-election or re-appointment to the Board, unless
(i) the members of the Nominating and Corporate Governance
Committee unanimously waive such requirement due to special
circumstances, and (ii) the Nominating and Corporate Governance
Committee's action is ratified and approved by a majority of the
disinterested directors on the Board.
- Bylaws Resignation Provision. Article II,
Section 2.9 of the Company's Bylaws sets forth the Company's
resignation policy for a director who receives a greater number of
votes "withheld" than "for" his or her election in an uncontested
election.
- Additional Directorships. Directors are
encouraged to limit the number of other boards of directors
(excluding non-profit boards of directors) on which they serve,
taking into account potential meeting attendance, participation,
and effectiveness on these boards of directors. Every director must
seek the consent of the Chairperson of the Nominating and Corporate
Governance Committee and the Chairperson of the Board to confirm
the absence of any actual or potential conflict prior to accepting
any invitation to serve on another corporate or not-for-profit
board of directors or with any government or advisory group. Such
Chairpersons shall take into account the nature of and the time
involved in a director's service on other boards of directors in
evaluating the suitability of individual director
candidates.
- Compensation of Directors.
- Non-Employee Directors. The Compensation
Committee shall report periodically as to how the Company's
non-employee director compensation practices compare with those of
other similarly situated public corporations. The Board should make
changes in its non-employee director compensation practices only
upon the recommendation of the Compensation Committee after
discussion and unanimous concurrence by the full Board and with the
advice of qualified independent advisors. In discharging this duty,
the Committee and the full Board should be guided by the following
principles: compensation should fairly pay directors for the work
required; 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.
- Management Directors. Directors, who are also
employees of the Company, do not receive director fees for their
service on the Board.
- Lead Independent Director. In the event
that the director serving as Chairman of the Board is not
independent, the Board shall, upon the recommendation of the
Nominating and Corporate Governance Committee, designate one of its
independent members who has served as a director of the Company for
at least one year to serve as Lead Independent Director of the
Board, with the following specific duties and
responsibilities:
- To act as a liaison between the Chairman and the independent
directors;
- To preside at all meetings of the Board at which the Chairman
is not present, including executive sessions of the independent
directors;
- To review and approve with the Chairman the schedule of
meetings, meeting agendas and type of information to be provided
for each of the applicable Board meetings and review with the
Chairman whether there are risks which the Board should focus upon
at such meetings;
- Authority to direct the Chief Executive Officer or Secretary to
call a special meeting of the independent directors;
- Authority to consult directly with major stockholders, when
requested and appropriate to do so; and
- To perform such other duties as may from time to time be
delegated to the lead independent director by the Board.
The director who is appointed Lead Independent Director of the
Board shall be appointed on an annual basis by at least a majority
of the remaining directors.
- Board Meetings and Procedures
- Board Meetings.
- Number of Meetings; Attendance and
Preparation. The Board holds six regularly scheduled
meetings per year. Directors are expected to attend all regularly
scheduled meetings and to have, prior to the meetings, reviewed all
written meeting materials distributed to them in advance. Directors
are expected to be physically present at all regularly-scheduled
meetings, and a director who is unable to attend a meeting is
expected to notify the Chairperson of the Board in advance of such
meeting. Attendance at a meeting by telephone, videoconference or
other means of communication is permissible.
- Selection of Agenda Items. The Chairperson of
the Board and CEO should establish the agenda for Board meetings;
directors may at any time suggest that particular items be placed
on the agenda. The Chairperson of the Board, and the CEO, with
input from each director, will annually prepare a "Master Agenda"
that will set forth a general list of items to be considered at
each of the Board's regularly scheduled meetings during the year.
Thereafter, the Chairperson of the Board and CEO will adjust the
agenda for each specific meeting, if necessary, to include special
items that had not been contemplated during the initial preparation
of the Master Agenda. The Master Agenda will be provided to the
entire Board.
- Distribution of Materials. The Company will
distribute written materials, including the agenda, for use at
Board meetings sufficiently in advance of meetings to permit
meaningful review.
- Attendance of Non-Directors. The Board
believes that attendance of key executive officers augments the
meeting process by providing certain expertise and insight into
items that are open for discussion at certain meetings.
- Executive Sessions of Non-Employee Directors.
The non-employee directors of the Board will meet in regularly
scheduled executive sessions, without any management directors and
any other members of the Company's management present, and at least
annually (i) evaluate the CEO; and (ii) review management
succession planning. The Chairperson of the Board shall preside
over such executive sessions. The directors may meet in executive
session at any time to consider issues that they deem important to
address without management present.
- Access to Senior Management/Independent
Advisors. Board members have complete and open access to
members of management and the Company's independent advisors. The
CEO will invite key employees to attend Board sessions at which the
CEO believes they can meaningfully contribute to Board discussion.
The Board, including the independent members of the Board, have the
authority, in their discretion, to retain independent
advisors.
- Access to Shareholders and Other Interested
Parties. The Chairperson of the Board and the CEO are
responsible for establishing effective communications with the
Company's shareholders, customers, associates, communities,
suppliers, creditors, and corporate partners. Directors may meet
with such parties, but any such meetings generally should be held
with management present.
- Confidentiality. The Board
believes that maintaining confidentiality of information and
deliberations is an imperative.
- Board Committees
- Board Committees; Committee Charters.
The Board has determined to constitute only those committees that
it believes are critical to the efficient operation of the Board or
are required by applicable law or a listing standard. The Board
currently has five standing Committees: the Audit Committee; the
Compensation Committee; the Finance Committee; the Health, Safety
and Environmental Committee; and the Nominating and Corporate
Governance Committee. The Board has the authority to establish such
other committees, temporary or permanent, as the Board deems
advisable. Each of the Audit Committee, the Compensation Committee
and the Nominating and Corporate Governance Committee will consist
of three or more directors, each of whom will satisfy the
independence requirements set forth herein and any additional
requirements set forth in their respective charters and any other
listing or regulatory requirements. The Finance Committee and the
Health, Safety and Environmental Committee will consist of three or
more directors. The Nominating and Corporate Governance Committee
will recommend, and the Board will designate, a chairperson of each
committee. Each committee shall have the duties and
responsibilities set forth in its respective charter.
- Each committee will have the opportunity to meet in executive
session in conjunction with each of the Board's regularly scheduled
meetings.
- Each of the Audit Committee, the Compensation Committee, the
Finance Committee, the Health, Safety and Environmental Committee
and the Nominating and Corporate Governance Committee will have
appropriate written charters. The charter of each committee will be
reviewed annually by the Board and the relevant committee. These
committee charters will be made available on the Company's
website.
- Committee Agendas. The chairperson of
each committee, in consultation with the appropriate members of the
committee and management, will develop their committee's agenda.
Each committee will issue a schedule of agenda subjects to be
discussed for the ensuing year at the beginning of each year. This
forward agenda also will be shared with the Board.
- Board Oversight; Committee Reports. The
Board is responsible for overseeing the activities of its
committees (except where such committees have sole authority to act
pursuant to applicable law or a listing standard) and for ensuring
that the committees are fulfilling their duties and
responsibilities. The Board will regularly receive reports from its
committees regarding their activities and will take such actions as
it deems necessary and appropriate in response to these
reports.
- Other Principles
- Confidential Voting. The Board has
adopted a policy whereby shareholders' proxies are received by the
Company's independent tabulators and the vote is certified by
independent inspectors of election. Proxies and ballots that
identify the vote of individual shareholders will be kept
confidential from the Company's management and directors, except as
necessary to meet legal requirements, in cases where shareholders
request disclosure, or in a contested election.
- Rights Plans. The Board believes that
rights plans, or "poison pills," have enhanced the Board's ability
to protect shareholders' interest in certain circumstances. The
Company adopted a rights plan in December 2003 which plan expires
in December 2013.
- Disclosure and Review of Corporate Governance
Principles. These corporate governance principles will be
made available on the Company's website. The Nominating and
Corporate Governance Committee will review these corporate
governance principles from time to time, but not less frequently
than annually, and will report the results of the review to the
full Board.
- Disclosure Policy. The Board believes
that it is imperative that the Company promote full, fair,
accurate, timely, and understandable disclosure in the periodic
reports and other statements required to be filed by the
Company.
- Share Ownership by Directors and Executive
Officers. The Board encourages each director and executive
officer to own stock in the company.
Effective: May 8, 2013