AMENDED AND RESTATED
TOWER INTERNATIONAL, INC.
CORPORATE GOVERNANCE PRINCIPLES
(As Amended and Restated Effective as of February 27, 2017)
The Board of Directors (the “Board”) of Tower International, Inc. (the “Company”) has adopted these corporate governance principles, which describe the principles and practices that the Board follows in carrying out its responsibilities. These guidelines will be reviewed by the Board from time to time to ensure that they effectively promote the best interests of both the Company and the Company’s stockholders and that they comply with all applicable laws, regulations and stock exchange requirements.
A. Role and Responsibility of the Board
The Board directs and oversees the management of the business and affairs of the Company in a manner consistent with the best interests of the Company and its stockholders. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the stockholders. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.
B. Board Composition, Structure and Policies
- Board Size. Consistent with the Company’s certificate of incorporation, the Board intends to have 3 to 15 members. The Nominating and Corporate Governance Committee shall consider and make recommendations to the Board concerning the appropriate size and needs of the Board. The Nominating and Corporate Governance Committee shall also consider candidates to fill new positions created by expansion and vacancies that occur by resignation, retirement or for any other reason.
- Independence of Directors. The Company defines an “independent” director in accordance with Section 303A.02 of the Listed Company Manual of the NYSE. A majority of the Board will be comprised of independent directors and the Board shall make an affirmative determination at least annually as to the independence of each such director. The NYSE independence definition includes a series of objective tests, such as that the director is not an employee of the Company and has not engaged in various types of business dealings with the Company. Because it is not possible to anticipate or explicitly provide for all potential conflicts of interest that may affect independence, the Board is also responsible for determining affirmatively, as to each independent director, that no relationships exist which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board will broadly consider all relevant facts and circumstances, including information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management. As the concern is independence from management, the Board does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.
- Selection of Chairperson of the Board and Chief Executive Officer. The Board shall select its chairperson (“Chairperson”) and the Company’s Chief Executive Officer (“CEO”) in any way it considers in the best interests of the Company. Therefore, the Board does not have a policy on whether the role of Chairperson and CEO should be separate or combined and, if it is to be separate, whether the Chairperson should be selected from the independent directors or should be an employee of the Company.
- Director Qualification Standards. The Nominating and Corporate Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board. The Nominating and Corporate Governance Committee will consider (a) minimum individual qualifications, including strength of character, mature judgment, industry knowledge or experience and an ability to work collegially with the other members of the Board and (b) all other factors it considers appropriate, which may include age, gender and ethnic and racial background, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, corporate governance background, financial and accounting background, executive compensation background and the size, composition and combined expertise of the existing Board. The Board should monitor the mix of specific experience, qualifications and skills of its directors in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. Stockholders may also nominate directors for election at the Company’s annual stockholders meeting by following the provisions set forth in the Company’s bylaws. The qualifications of such stockholder nominees will be considered by the Nominating and Corporate Governance Committee.
- Director Orientation and Continuing Education. Management, working with the Board, will provide an orientation process for new directors and encourage director continuing education programs. The orientation programs are designed to familiarize new directors with the Company’s businesses, strategies and challenges and to assist new directors in developing and maintaining skills necessary or appropriate for the performance of their responsibilities. As appropriate, management shall prepare additional educational sessions for directors on matters relevant to the Company and its business.
- Term Limits and Retirement Age. The Board does not believe in term limits for directors because they would deprive the Board of the service of directors who have developed, through valuable experience over time, an increasing insight into the Company and its operations. The retirement age for a director is 72. It is expected that any director reaching the age of 72 will complete the term to which he or she was elected. No person shall be eligible for election or re-election to service as a director if at the time of such election he or she is 72 or more years of age, unless the Nominating and
Corporate Governance Committee has waived the mandatory retirement age of such person as a director in the event of unique circumstances or needs of the Board.
- Unsuccessful Incumbent Directors. An incumbent director who fails to receive a majority of the votes cast in an election that is not a Contested Election (as defined in the Company’s bylaws) and who tenders his or her resignation pursuant to the Company’s bylaws will remain active and engaged in Board proceedings while the Nominating and Corporate Governance Committee and the Board decide whether to accept or reject such resignation, or whether other action should be taken; provided, however, such incumbent director will not participate in any proceedings by the Nominating and Corporate Governance Committee or the Board regarding whether to accept or reject such director’s resignation, or whether to take other action with respect to such director.
C. Board Meetings
Frequency of Meetings. The Board currently plans at least four meetings each year, with further meetings to occur (or action to be taken by unanimous consent) at the discretion of the Board.
- Selection of Board Agenda Items. The CEO shall set the agenda for Board meetings with the understanding that the Board is responsible for providing suggestions for agenda items that are aligned with the advisory and monitoring functions of the Board. Agenda items that fall within the scope of responsibilities of a Board committee shall be reviewed with the chairperson of that committee. Any member of the Board may request that an item be included on the agenda.
- Access to Management and Independent Advisors. Board members shall have free access to all members of management and employees of the Company and, as necessary and appropriate, Board members may consult with independent legal, financial, accounting and other advisors, at the Company’s expense, to assist in their duties to the Company and its stockholders.
- Executive Sessions. To ensure free and open discussion and communication among the non-management directors of the Board, the non-management directors will meet in executive session at most Board meetings with no members of management present. The Chairman of the Board (so long as such person is not the CEO) will preside at the executive sessions. Independent directors will meet in a private session that excludes management and affiliated directors at least once a year.
D. Committees of the Board
The Board shall have at least three committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee shall have a written charter and shall report regularly to the Board summarizing the committee’s actions and any significant issues considered by the committee.
E. Expectations of Directors
The Audit Committee shall be comprised of no fewer than three members. Each of the Compensation Committee and the Nominating and Corporate Governance Committee shall be comprised of no fewer than two members. Each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall be deemed independent by the Board. In addition, each committee member must satisfy the membership requirements set forth in the relevant committee charter. A director may serve on more than one committee.
The Nominating and Corporate Governance Committee shall be responsible for identifying Board members qualified to fill vacancies on any committee and recommending that the Board appoint the identified member or members to the applicable committee. The Board, taking into account the views of the Chairperson and the Nominating and Corporate Governance Committee, shall designate one member of each committee as chairperson of such committee. Committee chairpersons shall be responsible for setting the agendas for their respective committee meetings.
The business and affairs of the Company shall be managed by or under the direction of the Board in accordance with Delaware law and other applicable laws and regulations. In performing their duties, the primary responsibility of the directors is to exercise their business judgment in the best interests of the Company and its stockholders. The Board has developed a number of specific expectations of directors to promote the discharge of this responsibility and the efficient conduct of the Board’s business.
- Commitment and Attendance. All directors are expected to make every effort to attend all meetings of the Board, meetings of the committees of which they are members and the annual meeting of stockholders. Members are encouraged to attend Board meetings and meetings of committees of which they are members in person but may also attend such meetings by telephone or video conference.
- Participation in Meetings. Each director should be sufficiently familiar with the business of the Company, including its financial statements and capital structure, and the risks and competition it faces, to facilitate active and effective participation in the deliberations of the Board and of each committee on which he or she serves. Management will make appropriate personnel available to answer any questions a director may have about any aspect of the Company’s business. Directors should also review the materials provided by management and advisors in advance of the meetings of the Board and its committees and should arrive at Board and committee meetings prepared to discuss the issues presented.
- Loyalty and Ethics. In their roles as directors, all directors owe a duty of loyalty to the Company. This duty of loyalty mandates that the best interests of the Company take precedence over any interests possessed by a director. The Company has adopted a Code of Conduct (the “Code”), which includes a compliance program to enforce the Code, and directors are expected to adhere to the Code
- Other Directorships and Significant Activities. Serving on the Board requires significant time and attention. Directors are expected to spend the time needed and meet as often as necessary to discharge their responsibilities properly. Without specific approval from the Nominating and Corporate Governance Committee or Board, no director may serve on more than five public company boards (including the Company’s Board), and no member of the Audit Committee may serve on more than three public company audit committees (including the Company’s Audit Committee). In addition, directors who also serve as CEOs or in equivalent positions generally should not serve on more than two public company boards, including the Company’s Board, in addition to their employer’s board. Directors should advise the chairperson of the Nominating and Corporate Governance Committee and the Chairperson and CEO before accepting membership on other boards of directors or other significant commitments involving affiliation with other businesses, non-profit entities or governmental units.
- Contact with Management. All directors are invited to contact the Chairperson or CEO at any time to discuss any aspect of the Company’s business. Directors also have complete access to other members of management. The Board expects that there will be frequent opportunities for directors to meet with the Chairperson or CEO and other members of management in Board and committee meetings and in other formal or informal settings.
- Confidentiality. The proceedings and deliberations of the Board and its committees are confidential. Each director shall maintain the confidentiality of information received in connection with his or her service as a director.
F. Management Succession Planning
At least annually, the Board shall review a succession plan, developed by management and reviewed by the Nominating and Corporate Governance Committee and/or the Compensation Committee. The succession plan should include, among other things, an assessment of the experience, performance and skills for possible successors to the CEO.
G. Evaluation of Board Performance
The Board, acting through the Nominating and Corporate Governance Committee, should conduct a self-evaluation at least annually to determine whether it is functioning effectively. The Nominating and Corporate Governance Committee should periodically consider the mix of skills and experience that directors bring to the Board to assess whether the Board has the necessary tools to perform its oversight function effectively. Each committee of the Board should conduct a self-evaluation at least annually and report the results to the Board, acting through the Nominating and Corporate Governance Committee. Each committee’s evaluation must compare the performance of the committee with the requirements of its written charter.
H. Board Compensation
The Compensation Committee will review the form and amount of director compensation from time to time and recommend any changes to the Board, as it deems appropriate. Employee directors are not paid additional compensation for their services as directors..
I. Communications with Stockholders
The CEO is principally responsible for establishing effective communications with all interested parties, including stockholders of the Company. It is the policy of the Company that management speaks for the Company. This policy does not preclude outside directors from meeting with stockholders, but it is suggested that, in most circumstances, any such meetings be held with management present.
J. Communications with Non-Management Directors
Anyone who would like to communicate with, or otherwise make his or her concerns known directly to the chairperson of any of the Audit, Nominating and Corporate Governance and Compensation Committees, or to the non-management or independent directors as a group, may do so by (1) addressing such communications or concerns to the Secretary of the Company, 17672 Laurel Park Drive North, Suite 400E, Livonia, Michigan 48152, who will forward such communications to the appropriate party, or (2) sending an e-mail to Corporate_Secretary@towerinternational.com. Such communications may be done confidentially or anonymously.