PRIMEDIA's Corporate Governance Guidelines
The Board of Directors has formally adopted these practices as its Corporate Governance Guidelines in furtherance of the Corporation's commitment to good corporate governance.
Director Qualification StandardsSelection of Directors
The Board of Directors (the "Board") of PRIMEDIA Inc. (the "Company") is selected by the shareholders to oversee management and to assure that the interests of the shareholders are being served. The Board should consider whether individual directors possess the following personal characteristics: integrity, accountability, informed judgment, financial literacy, mature confidence and high performance standards. The Board as a whole should possess all of the following core competencies, with each candidate contributing knowledge, experience and skills in at least one domain: accounting and finance, business judgment, management, crisis response, industry knowledge, leadership and strategy/vision.
Independent DirectorsThe Board shall at all times have at least three "independent directors," as defined from time to time by the New York Stock Exchange, Inc. (the "NYSE"), by law or by any rule or regulation of any other regulatory body or self-regulatory body applicable to the corporation. Since the corporation is a "controlled company" within the meaning of the NYSE rules, the Board is not required to, but may from time to time, have a majority of directors who are "independent" if the Board so determines.
Board Determination of IndependenceNo director will be considered "independent" unless the Board of Directors affirmatively determines that the director has no material relationship with the corporation (either directly or as a partner, shareholder or officer of an organization that has a relationship with the corporation). The Board has established standards to assist in determining whether a director has a material relationship with the corporation. These standards are below and labeled as Annex A. The Board will annually review all commercial and charitable relationships with directors.
Additional "Independence" Requirements for Audit Committee MembershipNo director may serve on the Audit Committee of the Board unless such director meets all of the criteria established for audit committee service by the NYSE, the NASD, the Sarbanes-Oxley Act of 2002, any other law and any other rule or regulation of any other regulatory body or self-regulatory body applicable to the corporation.
Disclosure of Independence DeterminationsThe corporation shall disclose in its annual proxy statement its independence determination, including the basis for determining that a relationship is not material, with respect to each independent director standing for election and each independent continuing director.
Director Responsibilities
Board Meetings
Regular meetings of the Board shall be held four times per year and special meetings shall be held as required. Without limiting the foregoing, the Board shall meet as frequently as needed for directors to discharge properly their responsibilities. A director who is unable to attend a meeting is expected to notify the Chairman of the Board or the Chairman of the appropriate committee and the Companyâ?Ts Secretary in advance of such meeting. Every effort should be made to schedule meetings sufficiently in advance to ensure maximum attendance at each meeting. All directors are expected to participate, whether telephonically or in person, in all Board meetings, review relevant materials, serve on Board committees, and prepare appropriately for meetings and for discussions with management. When possible, a director should communicate to the Company's Secretary in advance of meetings any question or concern that they wish to discuss so that management will be prepared to address the same before or during the meeting. Accordingly, each director is expected to devote the time and attention necessary to properly discharge his or her responsibilities as director.
Conduct of MeetingsBoard meetings shall be run by the Chairman, and shall be conducted in accordance with customary practice in a manner that ensures open communication, meaningful participation and timely resolution of issues. The Chairman shall set the agenda for each meeting together with management. All directors should be given the opportunity to raise items for consideration to be placed on the agenda. Management and any committees of the Board should provide directors with materials concerning matters to be acted upon well in advance of the applicable meeting. Directors should review such materials carefully prior to the applicable meeting.
Executive Sessions of DirectorsThose directors of the corporation who are not officers of the corporation shall hold regular executive sessions at which management, including the Chief Executive Officer ("CEO"), is not present. These sessions shall occur following meetings of the Board and in no event shall there be less than two sessions a year. In addition, those directors of the corporation who have been determined by the Board to be independent shall hold an executive session at which only independent directors shall be present at least once a year prior to or following the third regularly scheduled meeting of the Board each year or such other time as the Board shall determine. The director with the longest tenure as a director in attendance at an executive session shall preside over such executive session. In order that interested parties may be able to make their concerns known to the non-management directors, the corporation must disclose a means for shareholders and other interested parties to communicate with the presiding director or with all non-management directors of the corporation as a group.
Director Access to Management and Independent AdvisorsBoard Access to Management
Directors shall have complete access to the corporation's management in order to become and remain informed about the corporation's business and for such other purposes as may be helpful to the Board in fulfilling its responsibilities. The Board encourages management to, from time to time, invite to Board meetings managers who (a) can provide additional insight into the items being discussed because of responsibility for and/or personal involvement in these areas, and/or (b) are managers with future potential that the senior management believes should be given exposure to the Board.
Director Access to Outside Counsel, Experts and Other AdvisersThe Board and Board committees may wish to hire their own outside counsel, consultants and other professionals to advise them in the discharge of their duties.
Funding for Board and Committee Outside Counsel, Experts and Other AdvisersThe corporation shall provide appropriate funding, as determined by the Audit Committee, for payment of compensation: (i) to the registered public accounting firm employed by the corporation for the purposes of rendering an audit report; and (ii) to any outside counsel, experts and other advisers employed by the Audit Committee. The Board shall provide appropriate funding as determined by the Board or any other committee for payment of compensation to advisors employed by the Board or such committee.
Director CompensationCompensation Generally
The corporation shall disclose its policy regarding compensation for directors in its annual proxy statement. The Board, with the assistance of the Compensation Committee, shall periodically review director compensation (including additional compensation for committee members) in comparison to corporations that are similarly situated to ensure that such compensation is reasonable, competitive and customary. Directors may be awarded compensation sufficient to compensate them for the time and effort they expend to fulfill their duties. A director who is also an officer of the corporation or any of its affiliates will not receive additional compensation for such service as a director.
Other CompensationThe Board shall review any charitable contributions to be made by the corporation to organizations with which any director is affiliated. In addition, the Board shall review all consulting contracts with, or other arrangements that provide other indirect forms of compensation to, any director or former director.
Director Orientation
The corporation shall establish an orientation program for all newly elected directors in order to ensure that the corporation's directors are fully informed as to their responsibilities and the means at their disposal for the effective discharge of those responsibilities. The orientation program shall, at a minimum, familiarize new directors with the corporation's (i) strategic plans, (ii) financial control systems and procedures and any significant financial, accounting and risk-management issues, (iii) compliance programs, including with Securities and Exchange Commission reporting obligations and NYSE corporate governance listing standards, (iv) code of ethics, conflict policies and other controls, (v) principal officers and (vi) internal and independent auditors. The new directors shall be introduced to such management and other personnel, and representatives of the corporation's outside legal, accounting and other outside advisors as is appropriate to familiarize them with the resources available to them. The corporation will also make available from time to time continuing education programs for directors, when appropriate.
The Board shall establish policies, principles and procedures for the selection of the CEO. The Board shall review annually, with the CEO, management succession planning and development.
Annual Performance EvaluationsBoard Evaluation
The Board shall evaluate annually the effectiveness of the Board and its committees. The purpose of this evaluation is to increase the effectiveness of the Board as a whole, and specifically review areas in which the Board and/or management believes a better contribution could be made from the Board. The Board should consider and set forth other criteria for self-evaluation. As appropriate, the Board shall then meet in executive session to discuss these assessments.
Evaluation of CEOThe Compensation Committee shall establish policies, principles and procedures for the evaluation of the CEO. This evaluation shall be made annually under the oversight of the Compensation Committee. Such evaluation shall be based on objective criteria including performance of the business, accomplishment of long-term strategic objectives and development of management.
Internal AuditThe corporation shall have an internal audit function.
Board CommitteesNumber of Committees and Independence of Audit Committee
The corporation shall have an Audit Committee, and may, but is not required to, also maintain a Corporate Governance Committee, Compensation Committee and Special Compensation Committee. The Board may want, from time to time, to form a new committee or disband a current committee depending on the circumstances. Additionally, the Board may determine to form ad hoc committees from time to time, and determine the composition and responsibilities of such committees. The Audit Committee will be comprised of a number of independent directors as set forth in its respective charter.
Selection of Committee MembersThe Board shall select the directors to serve on each committee, giving consideration to the requirements of the NYSE (and any other applicable law or any rule or regulation of any other regulatory body or self-regulatory body applicable to the Company).
Because of the Audit Committee's demanding role and responsibilities, and the time commitment attendant to membership on the Audit Committee, each prospective Audit Committee member, prior to being nominated, should be encouraged to evaluate carefully the existing demands on his or her time before accepting any nomination.
ChartersThe Audit Committee and Corporate Governance Committees shall each have a written charter. The Board, or the applicable committee pursuant to a Board delegation of authority, shall adopt a charter for such committee in compliance with all applicable rules and regulations. The charter for the each committee shall include, at a minimum, those responsibilities required to be set forth therein by the rules of the NYSE, by law or by the rules or regulations of any other regulatory body or self-regulatory body applicable to the Company.
Board SizeThe Board should determine the appropriate Board size, taking into consideration any parameters set forth in the corporation's charter and by-laws, and periodically assess overall Board composition to ensure the most appropriate and effective Board membership mix. The Board should neither be too small to maintain the needed expertise and independence, nor too large to function efficiently. If appropriate, the Board should recommend amendments to the corporationâ?Ts charter or by-laws in order to provide for a different Board size than may be set forth therein.
Code of Business ConductEach Director is expected to comply with the terms of the Company's Code of Business Conduct and Ethics applicable to directors, as in effect from time to time.
Annex A
Standards for Determining Independence of Directors
(A) A director will not be deemed "independent" if, within the preceding five years: (i) the director was employed by the Company; (ii) an immediate family member of the director was employed by the Company as an executive officer; (iii) the director was employed by or affiliated with the Company's independent auditor; (iv) an immediate family member of the director was employed by the Company's independent auditor as a partner, principal or manager; or (v) an executive officer of the Company was on the board of directors of a company that employed the director, or which employed an immediate family member of the director as an executive officer.
(B) The following commercial or charitable relationships will not be considered to be material relationships that would impair a director's independence: (i) if a director is an executive officer of another company that does business with the Company and the annual sales to, or purchases from, the Company are less than two percent (2%) of the annual revenues of that other company or (ii) if a director serves as an officer, director or trustee of a charitable organization, and the Company's discretionary charitable contributions to the organization in the aggregate are less than two percent (2%) (or $100,000, if greater) of that organization's most recent publicly available annual operating budget. (The amount of any "match" of employee charitable contributions will not be included in calculating the amount of the Company's contributions for this purpose.)
(C) Under these guidelines, the "Company" will be deemed to include PRIMEDIA Inc. and any of its subsidiaries or affiliates.