Corporate Governance, Nominating and Compensation Committee Charter
The purpose of the Corporate Governance, Nominating and Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Tucows Inc. (“the Company”) is to:
- Identify individuals qualified to become board members, consistent with criteria approved by the Board.
- Select, or recommend that the Board select, the director nominees for election at each annual meeting of stockholders.
- Oversee the evaluation of the Board and management.
- Review and approve corporate goals and objectives relevant to the Company’s Chief Executive Officer (“CEO”) compensation, evaluate the CEO’s performance in light of those goals and objectives, and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve the CEO’s compensation level based on this evaluation.
- Review and approve non-CEO Executive compensation including incentive compensation and equity-based compensation.
- Provide oversight of the Company’s compensation policies and plans and benefits programs, and overall compensation philosophy.
- Administer the Company’s equity compensation plans for its executive officers and employees and the granting of equity awards pursuant to such plans or outside of such plans.
- Cause to be prepared the report of the Committee required by the rules and regulations of the Securities and Exchange Commission (the “SEC”).
A. Number and Independence. The Committee shall be composed of at least three directors, each of whom shall be independent. A director shall qualify as independent if the Board has affirmatively determined, consistent with the independence criteria set forth in Rule 10C-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) promulgated by the SEC and the corporate governance rules of the NASDAQ Stock Market, that the director is independent. In addition, at least two members of the Committee must qualify as “non-employee directors” for the purposes of Rule 16b-3 under the Exchange Act, and as “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code (the “IRC”), as amended.
B. Appointment and Removal. The members of the Committee shall be appointed annually by the Board and may be replaced or removed by the Board at any time with or without cause. Resignation or removal of the Director from the Board, for whatever reason, shall automatically constitute resignation or removal, as applicable, from this committee. Vacancies occurring, for whatever reason, may be filled by the Board. The Board shall designate one member of the Committee to serve as Chair of the Committee.
III. Meetings and Procedures
A. Meetings. The Committee shall meet as frequently as it may deem necessary and appropriate in its judgment. Generally, the Committee shall meet at least twice annually, prior to each face-to-face meeting of the Board of Directors, and hold an additional meeting to review proposed incentive compensation awards for senior management. The Committee may meet in person or by telephone or by Internet-facilitated software. The Committee may also act by unanimous written consent.
B. Quorum. A majority of the members of the Committee shall constitute a quorum for the transaction of business.
C. Special Meetings. The Chairperson of the Committee or a majority of the members of the Committee may call a special meeting of the Committee.
D. Delegation. The Committee may delegate authority to one or more members of the Committee or one or more members of management when appropriate, but no such delegation shall be permitted if the authority is required by law, regulation or listing standard to be exercised by the Committee as a whole.
E. Additional Attendees. The Committee may invite to its meetings any officer, employee or director of the Company and such other persons as it deems appropriate in order to carry out its duties.
F. Minutes. The Committee shall maintain minutes or other records of meetings and activities of the Committee in accordance with the laws of the Commonwealth of Pennsylvania and the Company’s By-laws, which minutes shall be maintained with the books and records of the Company.
IV. Duties and Responsibilities
The Committee shall have the following duties and responsibilities:
A. Compensation Responsibilities
The following are the principal recurring compensation related responsibilities of the Committee. The Committee may perform such other functions as are consistent with its purpose and applicable law, rules and regulations and as the Board may request. In reviewing and approving the Company’s annual and long-term incentive compensation plans for Executive Officers and other senior executives, including equity incentive plans, the Committee shall consider the results of the most recent stockholder advisory vote on executive compensation required by Section 14a-21 of the Exchange Act.
1. Set Compensation for Executive Officers. The Committee shall:
- Review and approve annually the corporate goals and objectives applicable to the compensation of the CEO, evaluate at least annually the CEO’s performance in light thereof, and consider factors related to the performance of the Company in approving the compensation level of the CEO. The CEO may not be present during deliberations or voting on such matters.
- Review and approve annually the CEO’s (a) base salary, (b) incentive bonus, including the specific goals and amount, (c) equity compensation, (d) any employment agreement, severance arrangement or change of control protections and (e) any other benefits, compensation or similar arrangements (including, without limitation, perquisites and any other form of compensation such as a signing bonus or payment of relocation costs). In determining the long-term incentive component of CEO compensation, the Committee may consider, among other things, the Company’s performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies and the awards given to the Company’s CEO in past years. The CEO may not be present during deliberations or voting on such matters.
- In consultation with the CEO review annually and approve items (a) through (e) in the previous bullet for the other individuals who are deemed to be “officers” of the Company under Rule 16a-1(f) promulgated under the Exchange Act (the “Executive Officers”). An Executive Officer may not be present during deliberations or voting on his or her matters.
- Review and approve any compensatory contracts or similar transactions or arrangements with current or former Executive Officers, including consulting arrangements, employment contracts, severance or termination arrangements, which shall include any benefits to be provided in connection with a change of control. In this regard, the Committee shall have the power and authority to adopt, amend and terminate such contracts, transactions or arrangements.
2. Set Compensation for Directors. The Committee shall evaluate director compensation and make recommendations to the Board regarding director compensation, including consulting, retainer, Board meeting, committee and committee chair fees and stock option grants or awards.
3. Oversee Compensation Plans and Programs. The Committee shall:
- Review, approve and administer annual and long-term incentive compensation plans for service providers of the Company, including Executive Officers and other senior executives, including:
- Establishing performance objectives and certifying performance achievement; and
- Reviewing and approving all equity incentive plans and grant awards of shares and stock options pursuant to such plans.
- Administer the Company’s equity incentive plans. In its administration of the plans, the Committee may (i) grant stock options, restricted stock units, stock purchase rights or other equity-based or equity-linked awards to individuals eligible for such grants (including grants to individuals subject to Section 16 of the Exchange Act in compliance with Rule 16b-3 promulgated thereunder) in accordance with procedures and guidelines as may be established by the Board and (ii) amend such stock options, restricted stock units, stock purchase rights or other equity-based or equity-linked awards. The Committee may also adopt, amend and terminate such plans, including approving changes in the number of shares reserved for issuance thereunder.
- Approve all option grants and performance awards to Executive Officers of the Company to the extent necessary or desirable to ensure that such grants and awards comply with Section 162(m) of the IRC. The Committee will not be required to qualify awards under Section 162(m) of the IRC if it determines it is not in the Company’s interest to do so.
- Review, approve and administer any of the Company’s employee benefit plans that the Committee deems appropriate, including by adopting, amending and terminating such plans.
- Oversee the Company’s overall compensation philosophy and any compensation plans and benefits programs that the Committee deems appropriate, and amend or, make recommendations to the Board, with respect to improvements or changes to such plans or programs or the termination or adoption of plans or programs when appropriate.
- In connection with executive compensation programs:
- Review and approve new executive compensation programs;
- Review on a periodic basis the operations of the Company’s executive compensation programs to determine whether they are properly coordinated and achieving their intended purpose(s); and
- Establish and periodically review policies for the administration of executive compensation programs.
- Periodically review executive compensation programs and total compensation levels, including the impact of tax and accounting rules changes.
- Periodically review remuneration to ensure no bias exists by gender and make recommendations to the Board on any required actions.
- If applicable, review and recommend to the Board for approval the frequency with which the Company will conduct stockholder advisory votes on executive compensation (“Say on Pay Vote”), taking into account the results of the most recent stockholder advisory vote on frequency of Say on Pay Votes required by Section 14a-21 of the Exchange Act, and review and approve the proposals regarding the Say on Pay Vote and the frequency of the Say on Pay Vote to be included in the Company’s proxy statement.
- Review and discuss annually with management the risks arising from the Company’s compensation philosophy and practices applicable to all employees to determine whether they encourage excessive risk-taking and to evaluate compensation policies and practices that could mitigate such risks.
4. Compliance. The Committee shall:
- Review and discuss with management the Company’s Compensation Discussion and Analysis (“CD&A”) and related disclosures required by the rules and regulations of the SEC, to the extent required of the Company. The Committee will also review and recommend the final CD&A to the Board for inclusion in the Company’s annual report on Form 10-K or proxy statement, to the extent required of the Company.
- Prepare a report of the Committee required by the rules and regulations of the SEC to be included with the Company’s annual report on Form 10-K or proxy statement.
- Oversee the Company’s submissions to stockholders on executive compensation matters, including advisory votes on executive compensation and the frequency of such votes, incentive and other executive compensation plans, and amendments to such plans (to the extent required under the listing standards of the securities exchange on which the Company’s securities are listed) and, engagement with proxy advisory firms and other stockholder groups on executive compensation matters.
B. Nominating and Corporate Governance Responsibilities
The following are the principal recurring responsibilities of the Committee with respect to nominating and corporate governance. The Committee may perform such other functions as are consistent with its purpose and applicable law, rules and regulations and as the Board may request.
1. Board Composition, Evaluation and Nominating Activities. The Committee shall:
- Determine the qualifications, qualities, skills and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director (see Appendix A for the “Director Criteria”).
- Evaluate the current composition, organization and governance of the Board and its committees, determine future requirements and make recommendations to the Board for approval consistent with the Director Criteria.
- Search for, identify, evaluate and select, or recommend for selection by the Board, candidates to fill new positions or vacancies on the Board consistent with the Director Criteria, and review any candidates recommended by stockholders, provided such stockholder recommendations are made in compliance with the Company’s bylaws and its stockholder nominations and recommendations policies and procedures.
- Review and consider any nominations of director candidates validly made by stockholders in accordance with applicable laws, rules and regulations and the provisions of the Company’s certificate of incorporation and bylaws.
- Evaluate the performance of individual members of the Board eligible for re-election, and select, or recommend for the selection of the Board, the director nominees by class for election to the Board by the stockholders at the annual meeting of stockholders or any special meeting of stockholders at which directors are to be elected.
- Consider the Board’s leadership structure, including the separation of the Chairman and CEO roles and/or appointment of a lead independent director of the Board, either permanently or for specific purposes, and make such recommendations to the Board with respect thereto as the Committee deems appropriate.
- Develop and review periodically the policies and procedures for considering stockholder nominees for election to the Board.
- Evaluate and recommend termination of membership of individual directors for cause or for other appropriate reasons.
- Evaluate the “independence” of directors and director nominees against the independence requirements of the securities exchange on which the Company’s securities are listed, applicable rules and regulations promulgated by the SEC and other applicable laws.
2. Board Committees. The Committee shall:
- Review annually the structure and composition of each committee of the Board and make recommendations, if any, to the Board for changes to the committees of the Board, including changes in structure, composition or mandate of committees, as well as the creation or dissolution of committees.
- Recommend to the Board persons to be members and chairpersons of the various committees.
3. Corporate Governance. The Committee shall:
- Develop and recommend to the Board a set of corporate governance guidelines applicable to the Company.
- Review annually the corporate governance guidelines approved by the Board and their application, and recommend any changes deemed appropriate to the Board for its consideration.
- Oversee the Company’s corporate governance practices, including reviewing and recommending to the Board for approval any changes to the Company’s corporate governance framework, including its certificate of incorporation and bylaws.
- Develop, subject to approval by the Board, a process for an annual evaluation of the Board and its committees, and to oversee the conduct of this annual evaluation.
- Conduct a periodic review of the Company’s succession planning process for the CEO and any other members of the Company’s executive management team, report its findings and recommendations to the Board, and assist the Board in evaluating potential successors to the CEO or other members of the Company’s executive management team.
- Evaluate the participation of members of the Board in orientation and continuing education activities in accordance with applicable listing standards.
- Review the disclosure included in the Company’s proxy statement regarding the Company’s director nomination process and other corporate governance matters.
- Review any proposals properly submitted by stockholders for action at the annual meeting of stockholders and make recommendations to the Board regarding action to be taken in response to each such proposal.
- Review and discuss with management the disclosure regarding the operations of the Committee and director independence, and recommend that this disclosure be included in the Company’s proxy statement or annual report on Form 10-K.
4. Conflicts of Interest. The Committee shall:
- Review and monitor compliance with the Company’s Code of Business Conduct and Ethics.
- Consider questions of possible conflicts of interest of Board members and of corporate officers.
- Review actual and potential conflicts of interest of Board members and corporate officers, other than related party transactions reviewed by the Audit Committee of the Board, and approve or prohibit any involvement of such persons in matters that may involve a conflict of interest or the taking of a corporate opportunity.
- Develop and periodically review and assess the adequacy of any of the Company’s Corporate Governance Guidelines, Code of Conduct and Ethics Policy, monitor compliance with those policies and make recommendations for changes to the Board when necessary.
- Review on an ongoing basis all related-party transactions required to be disclosed pursuant to Regulation S-K for potential conflict of interest situations and approve all such transactions.
- Report to the Board with respect to the Committee’s activities and report to the Company’s shareholders in the annual proxy statement.
- Consult with the CEO, as appropriate, and other Board members to assure that its decisions facilitate a sound relationship between and among the Board, Board committees, individual directors, and management.
- Review and assess the performance of the Committee on an annual basis.
- Review and reassess the adequacy of this Charter and the charters of each of the other standing committees of the Board annually and recommend any proposed changes to the Board for its approval.
- Perform any other activities consistent with this Charter, the Company’s Articles of Incorporation, the Company’s By-laws and governing law as the Committee or the Board deems necessary or appropriate.
D. Other Matters
- Nothing contained in this Charter is intended to, or should be construed as, creating any responsibility or liability of the members of the Committee except to the extent otherwise provided under the laws of the Commonwealth of Pennsylvania which shall continue to set the legal standard for the conduct of the members of the Committee.
Criteria for Director Nominees
In making recommendations to the Company’s Board to serve as directors, the Committee will examine each director nominee on a case-by-case basis, regardless of who recommended the nominee, and take into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skill, financial acumen, diversity of viewpoint, and industry knowledge. However, the Board and the Committee believe the following minimum qualifications must be met by a director nominee to be recommended by the Committee:
- Each director must display high personal and professional ethics, integrity and values.
- Each director must have the ability to exercise sound business judgment.
- Each director must be accomplished in his or her respective field, with broad experience at the executive and/or policy-making level in business, government, education, technology or public interest.
- Each director must have relevant expertise and experience, and be able to offer advice and guidance based on that expertise and experience.
- Each director must be able to represent all shareholders of the Company and be committed to enhancing long-term shareholder value.
- Each director must have sufficient time available to devote to activities of the Board and to enhance his or her knowledge of the Company’s business.
The Board also believes the following qualities or skills are necessary for one or more directors to possess:
- At least one independent director should have the requisite experience and expertise to be designated as an “audit committee financial expert” as defined by applicable SEC rules.
- One or more of the directors generally should be active or former executive officers of public or private companies or leaders of major complex organizations, including commercial, scientific, government, educational and other similar institutions.
- Directors should be selected so that the Board as a whole collectively possess a broad range of skills, expertise, industry and other knowledge, and business and other experience useful to the effective oversight of the Company’s business. The
Board also seeks members from diverse backgrounds so that the Board consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. Directors should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated, and be selected based upon contributions that they can make to the Company.