The Board of Directors of WidePoint Corporation (the “Company”) has adopted the corporate governance principles (the “Principles”) set forth below as a framework for the governance of the Company. The Corporate Governance and Nominating Committee (the “Governance Committee”) reviews the Principles annually and recommends changes to the Board of Directors as appropriate.
1. ROLE AND COMPOSITION OF THE BOARD OF DIRECTORS
The Board of Directors, which is elected by the Company’s stockholders, oversees the management of the Company and its business. The Board appoints the Chief Executive Officer (“CEO”) and elects the officers of the Company, who are responsible for operation of the Company’s business. The Board also monitors and evaluates the performance of the CEO and the officers of the Company.
Size, Composition and Membership Criteria
A majority of the Board is made up of independent directors. An “independent” director is a director who meets the NYSE Mkt U.S definition of independence, as determined by the Board. The Board makes an affirmative determination regarding the independence of each director annually, based upon the recommendation of the Governance Committee. The Governance Committee considers and makes recommendations to the Board regarding the size, structure, composition and functioning of the Board.
The Governance Committee is responsible for establishing processes and procedures for the selection and nomination of directors. The Board’s criteria include business experience and skills, independence, judgment, integrity, the ability to commit sufficient time and attention to Board activities, and the absence of conflicts with the Company’s interests. The Governance Committee considers these criteria in the context of the perceived needs of the Board as a whole and seeks to achieve a diversity of occupational and personal backgrounds on the Board.
The Governance Committee reviews the qualifications of director candidates in light of criteria approved by the Board and recommends candidates to the Board for election by the Company’s stockholders at the annual meeting. The Governance Committee also considers nominations by Company stockholders that recommend candidates for election to the Board in compliance with the advance notice provisions in the Company’s by-laws and any other applicable Securities and Exchange Commission rules or regulations.
The Board presently believes that it is in the best interests of the Company for a single person to serve as Chairman of the Board and CEO. The Board may in its discretion separate the roles if it deems it advisable and in the Company’s best interests to do so.
Change in Principal Occupation
The Board does not believe that directors who retire or change from the position they held when they came on the Board should necessarily leave the Board. There should, however, be an opportunity for the Board, via the Governance Committee, to review the continued appropriateness of Board membership under these circumstances.
Service on Other Boards and Audit Committees
Directors are encouraged to limit the number of other boards on which they serve so as not to interfere with their service as a director of the Company. Directors should also advise the chair of the Governance Committee in advance of accepting an invitation to serve on another corporate board. Members of the Audit Committee may not serve on the audit committees of more than two other public companies.
Retirement; Term Limits
The Board does not believe that it should establish term limits. Term limits may result in the loss of directors who, over a period of time, have developed substantial insight into the Company and its operations. As an alternative to term limits, the Governance Committee assesses the contributions of each incumbent director prior to the director’s nomination to another term. This also gives each director the opportunity to confirm his or her desire to continue as a member of the Board.
2. FUNCTIONING OF THE BOARD
Attendance at and Participation in Board and Committee Meetings
Board and committee meetings are generally held on a pre-determined schedule, with additional meetings scheduled as needed with no less than four meetings annually. The Chairman/CEO presides at Board meetings except for executive sessions of independent directors. Board members are expected to prepare for, attend and participate in all Board and applicable committee meetings. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as a director. These other commitments will be considered by the Governance Committee and the Board when reviewing Board candidates and in connection with the Board’s annual self-assessment process.
Distribution and Review of Board Materials
Board materials are provided to directors sufficiently in advance of Board meetings to allow directors to review and prepare for discussion of the items at the meeting. Directors should review and devote appropriate time to studying Board and committee materials distributed in advance. In some cases, due to timing or the sensitive nature of an issue, materials are presented only at the Board meeting.
Executive Sessions of Independent Directors
The independent directors, as defined by the NYSE Mkt U.S, meet in executive session as needed, but no less than once a year without any non-independent directors or management in attendance.
The Board reviews the Company’s long-term strategic plan and business unit initiatives at least annually.
3. STRUCTURE AND FUNCTIONING OF COMMITTEES
Number, Structure and Independence of Committees
The Board has three standing committees: Audit, Compensation, and Corporate Governance and Nominating.
The Governance Committee, along with the Audit and Compensation Committees, consists solely of independent directors. In addition, directors who serve on the Audit Committee must be “independent” within the meaning of the NYSE Mkt U.S criteria for audit committee members. The Board may also establish and maintain other committees from time to time as it deems necessary and appropriate.
Assignment of Governance Committee Members
The Governance Committee considers and makes recommendations to the Board regarding committee size, structure, composition and functioning. Board committee members and chairs are recommended to the Board by the Governance Committee and appointed by the full Board.
The Governance Committee, along with the Audit and Compensation Committees, operates under a written charter that sets forth the purposes and responsibilities of the committee as well as qualifications for committee membership. Each standing committee assesses the adequacy of its charter annually and recommends changes to the Board as appropriate. All committees report regularly to the full Board with respect to their activities.
Meetings and Agendas
Agenda items that fall within the scope of responsibilities of a Board committee are prepared in consultation with the chair of that committee. Directors are encouraged to suggest the inclusion of items on the agenda. Directors are also free to raise subjects at a Board meeting that are not on the agenda for that meeting.
Materials related to agenda items are provided to committee members sufficiently in advance of meetings where necessary to allow the members to review and prepare for discussion of the items at the meeting.
4. DIRECTOR ACCESS TO MANAGEMENT, EMPLOYEES AND ADVISORS
At the invitation of the Board, members of senior management may attend Board meetings or portions of meetings for the purpose of presenting matters to the Board and participating in discussions. Directors also have full and free access to other members of management and to employees of the Company.
The Board has the authority to retain such outside counsel, experts and other advisors as it determines appropriate to assist it in the performance of its functions. Each of the Audit, Compensation and Corporate Governance and Nominating Committees has similar authority to retain outside advisors as it determines appropriate to assist it in the performance of its functions.
5. DIRECTOR COMPENSATION
The Compensation Committee annually reviews the compensation of non-management directors. Director compensation is set by the Board based upon the recommendation of the Compensation Committee. Non-management directors receive a combination of cash and equity compensation for service on the Board. Employee directors do not receive separate compensation for Board service, but are reimbursed for attendance expenses.
6. SUCCESSION PLANNING
The Board plans for succession of senior management positions. The CEO reports to the Board annually on succession planning and management development and provides the Board with recommendations and evaluations of potential successors. The Chairman and CEO also makes available to the Board, on a continuing basis, recommendations regarding who should assume the position of Chairman/CEO in the event that he or she becomes unable or unwilling to perform the duties of this position.
7. FORMAL EVALUATION OF THE CEO AND OTHER EXECUTIVE OFFICERS
The Compensation Committee is responsible for setting annual and long-term performance goals for the CEO, evaluating the CEO’s performance against those goals, and recommending the CEO’s compensation to the independent directors for approval. Both the goals and the evaluation are submitted for consideration by the independent directors meeting in executive session. The results of the evaluation are shared with the CEO and used by the Compensation Committee in considering the CEO’s compensation, which is approved by the independent directors meeting in executive session.
The Compensation Committee also is responsible for reviewing and approving annual and long-term performance goals for other executive officers of the Company. The Governance Committee, with the Chairman/CEO, reviews the performance of these executive officers against the goals and sets the executive officers’ compensation.
8. ANNUAL PERFORMANCE EVALUATIONS
The Board conducts self-evaluations to assess its performance, typically on an annual basis. The Audit, Compensation and Corporate Governance and Nominating Committees conduct self-evaluations to assess their performance, typically on an annual basis. The ability of individual directors to contribute to the Board is considered in connection with the nomination process.
9. CODE OF BUSINESS CONDUCT AND ETHICS
The Board has adopted a Code of Business Conduct and Ethics for directors, officers and employees to foster a common set of fundamental values and operating principles. The Board oversees procedures for administering and promoting compliance with the Code of Business Conduct and Ethics.