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Adopted March 29, 2004; amended March 3, 2006, March 6, 2008, June 1, 2008, July 2, 2008, August 11, 2011, December 16, 2011, and December 11, 2014.
The following Governance Guidelines have been adopted by the Board of Directors of Pineapple Holdings, Inc. (the “Company”) to assist the Board in the exercise of its responsibilities. These Governance Guidelines are not intended to change or interpret any Federal or state law or regulation, including the laws of the State of Minnesota, or the Articles of Incorporation or Bylaws of the Company.
MISSION AND RESPONSIBILITIES OF THE BOARD
The Board’s primary objective is to maximize long-term shareholder value and to assure the vitality of the Company for its owners, employees, customers and the other individuals and organizations who depend on the Company.
Responsibility of the Board
The business and affairs of the Company shall be managed by or under the direction of the Board. In furtherance of its mission, the Board delegates certain authority to the executive offices of the Company (“Management”). Management is responsible for managing the Company, not the Board. The Board also advises Management with respect to strategic plans and expects and requires that the Company’s Management and employees operate in a legal and ethically responsible manner. The Board fulfills its oversight responsibility directly, through Committees and through independent directors to which specific responsibilities are assigned.
Each director is expected to spend the time and effort necessary to properly fulfill his or her responsibilities. This includes preparing for and making every reasonable effort to attend meetings of the Board, committees on which he or she serves and meetings of shareholders, and engaging in personal self education regarding the role and responsibilities of individual directors. It is understood that on occasion a director may be unable to attend a Board or committee meeting, and a director who is unable to attend any such meeting is expected to notify the Board Chair or committee Chair regarding such absence reasonably in advance of such meeting.
BOARD COMPOSITION, INDEPENDENCE AND LEADERSHIP
1. Size of the Board
The Board should generally have between five and eight directors. If appropriate, the Board can determine to increase or decrease its size, including in order to accommodate the availability of an outstanding candidate.
2. Mix of Inside and Independent Directors
A majority of directors on the Company’s Board shall be “independent.”
3. Definition of What Constitutes an Independent Director
The Company adopts the definition of independence as provided in the listing standards of The NASDAQ Stock Market (NASDAQ), as amended from time to time.
4. Board Membership Criteria
The Lead Governance Director shall facilitate the Board’s consideration of the appropriate skills and characteristics required of Board members in the context of the existing makeup of the Board. This assessment should include issues of relevant experience, integrity, ability to make independent analytical inquiries, ownership of or commitment to purchase the Company’s common stock, understanding of the Company’s business, relationships and associations related to the Company’s business, personal health and a willingness to devote adequate time and effort to Board responsibilities, all in the context of an assessment of the perceived needs of the Board at that point.
5. Selection of Director Candidates
The Board is responsible for identifying, evaluating, and selecting candidates for membership to the Board, including candidates proposed for election to the Board by a shareholder or shareholders. This process shall be facilitated by the Lead Governance Director.
The process by which shareholders may submit proposed director candidates to the Board shall be as follows: Shareholders shall submit the name(s) and appropriate biographical information regarding the proposed candidate(s) to the Lead Governance Director at the Company’s principal executive office. Submissions will be forwarded to the Board for review and consideration by the Board directly or as first evaluated by an ad hoc committee appointed to conduct an initial review; provided that any Shareholder desiring to submit a director candidate for consideration at an annual meeting of shareholders must ensure that the submission is received by the Company no later than the preceding December 1 (or at such later date as is set forth in the Company’s proxy materials for the annual meeting in the previous year) in order to provide adequate time for the Board to properly consider the candidate. In addition, a shareholder wishing to directly nominate a director candidate for consideration at an annual shareholder meeting may follow the procedure established in the Company’s bylaws.
6. Board Leadership
The Board shall appoint a director who is not the Company’s CEO or other Company executive to serve as Board Chair. The Board Chair shall have the authority to call meetings of the Board, and shall preside at meetings of the full Board and the annual meetings of shareholders. The Board Chair shall also have the authority to call executive sessions of the Board, facilitate discussion among non-management directors on key issues and concerns between Board meetings and serve as a non-exclusive conduit to the CEO of views, concerns and issues of non-management directors. The Board Chair, at the discretion of the CEO, shall also be available to represent the Company with shareholders and employees and shall carry out other duties as requested by the CEO or Board as a whole, as appropriate.
The Board does not believe in arbitrarily limiting how long a director should serve. The Lead Governance Director shall facilitate the Board’s consideration of the issue of continuing director tenure in relation to any particular director in light of the criteria under paragraph 4 above.
Personal loans to directors and executive officers are not permitted.
9. Number of Committees
The Board has the following standing committees: Audit & Finance and Compensation. The Board has the flexibility to form a new committee or disband a current committee. It is the policy of the Board that only independent directors serve on the Audit & Finance and Compensation Committees, as those terms are defined and applicable to the respective committees in the Securities Exchange Act of 1934, the Exchange Act Rules, the NASDAQ listing standards, and the Internal Revenue Code.
The Board shall appoint the members (“Appointed Members”) and chairs of the committees taking into account the desires of individual Board members.
11. Scheduling of Committee Meetings
Generally, the date, time and place of regular meetings of a committee shall be determined by each committee chair in consultation with other committee members and the CEO no less than approximately 30 days in advance of a proposed meeting date, and when determined written notice shall be given to the appointed members, with copies to the CEO and Board Chair. In extraordinary circumstances, the chair of the committee may call a meeting for a date and time that is no earlier than 72 hours after advance notice thereof is given to each committee member in person, by telephone or by email.
12. Notice to Directors Generally
Directors shall be given reasonable advance notice of all regularly scheduled meetings of board committees.
13. Committee Materials Distributed in Advance
Information and data that are important to the committee’s understanding of matters to be considered at a committee meeting should be distributed as early as practicable before the committee meets.
14. Frequency and Length of Committee Meetings
The Chair of each committee, in consultation with its appointed members and invited management or other guests, shall determine the frequency and length of the meetings of the committee.
15. Committee Agenda
The Chair of each committee, in consultation with its other appointed members, and as appropriate, management, staff and independent advisors, will develop the committee’s agenda.
16. Attendance by Directors Other Than Appointed Members
The CEO shall be available to attend all committee meetings. The Board Chair may, by virtue of the position, attend committee meetings, as desired. However, if directors other than Appointed Members and the Board Chair wish to attend a committee meeting, they should do so only if they have first given reasonable advance notice to the Chair of such committee of their desire to attend, and their attendance is subject to the authority of such Chair to exclude other directors from all or any portion of such committee’s meeting due to the subject matter under consideration.
17. Reports to the Board
At each meeting of the Board of Directors, each Committee shall report whether a meeting of the Committee occurred and, if so, briefly summarize the topics covered and action taken. Minutes of committee meetings shall be sent to other directors when available.
BOARD OPERATIONS AND PERFORMANCE
18. Agenda for Board Meetings
The Chair of the Board and Chief Executive Officer will determine the agenda for each Board meeting. Each Board member is free to suggest the inclusion of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting.
19. Board Materials Distributed in Advance
Information and data that are important to the Board’s understanding of the business should be distributed to the Board before the Board meets. Management will make every attempt to see that this material is as complete and concise as possible.
As a general rule, presentations on specific subjects should be sent to Board members in advance so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the material.
21. Attendance of Non-Directors at Board Meetings
The Chair and Chief Executive Officer may invite officers and key employees to attend Board meetings.
22. Board Interaction with Institutional Investors, the Press, Customers, Etc.
The Board believes that management should speak for the Company. Individual Board members may, from time-to-time, meet or otherwise communicate with various constituencies that are involved with the Company, but only at the request of Management.
23. Executive Sessions of Independent Directors
The independent directors will meet in executive session at each regular Board meeting.
24. Board Access to Senior Management and Advisers
Board members shall have complete access to the Company’s management, auditors (after consulting with the Chair of the Audit Committee) and outside counsel. It is assumed that Board members will use judgment to be sure that this contact is not distracting to the business operation of the Company and that such contact, if in writing, be copied to the Chair of the Board and the Chair of any relevant committee.
Furthermore, the Board encourages management to bring managers into Board meetings as needed to: (a) provide additional insight into the items being discussed because of personal involvement in these areas, and/or (b) represent managers with future potential that senior management believes should be given exposure to the Board.
The Board has authority to retain outside counsel of its choice at Company expense with respect to any issue relating to its activities.
25. Lead Governance Director
The Board may appoint an Independent Director as “Lead Governance Director” who shall serve at the discretion of the Board and shall be responsible for facilitating the fulfillment by the Board of its corporate governance responsibilities in the following and related areas: determining the size and composition of the Board and Board Committees; assuring the Board reflects an appropriate balance of knowledge, experience, skills, expertise, diversity, and independence required for the Board as a whole; periodically reviewing and updating these guidelines to assure that they are appropriate for the Company and comply with all legal and regulatory requirements; annually assessing Board and committee performance; conducting an annual evaluation of CEO performance and compensation; providing for relevant director education; evaluating potential director candidates identified by the Board and any nominees recommended by Company eligible shareholders who follow the procedures set forth in the Company’s Bylaws.
If the offices of Chairman of the Board and Chief Executive Officer (“CEO”) are held by the same person, the independent members of the Board of Directors will annually elect an independent Director to serve in a lead capacity (the “Lead Independent Director”). Although elected annually, the Lead Independent Director is generally expected to serve for more than one year.
The Lead Independent Director coordinates the activities of the other non-management Directors, and performs such other duties and responsibilities as the Board of Directors may determine.
The specific responsibilities of the Lead Independent Director are as follows:
Presides at Executive Sessions
- Presides at all meetings of the Board at which the Chairman and CEO is not present, including executive sessions of the independent Directors.
Calls Meetings of Independent Directors
- Has the authority to call meetings of the independent Directors.
Conducts Evaluation of Chairman and CEO
- Conducts independent Director evaluation of the Chairman and CEO, including an annual evaluation of his or her interactions with the Board.
Functions as Liaison with the Chairman and CEO
- Serves as liaison between the independent Directors and the Chairman and CEO.
Approves appropriate provision of information to the Board such as board meeting agendas and schedules
- Approves information sent to the Board, including the quality, quantity and timeliness of this information, as well as approving meeting agendas.
- Facilitates the Board’s approval of the number and frequency of Board meetings, and approves meeting schedules to ensure there is sufficient time to discuss of agenda items.
Authorizes Retention of Outside Advisors and Consultants
- Authorizes the retention of outside advisors and consultants who report directly to the Board of Directors on board-wide issues.
- If requested by shareholders, ensures that he/she is available, when appropriate, for consultation and direct communication.
26. Board Secretary
The Board may appoint an Independent Director as “Board Secretary” who shall serve at the discretion of the Board and be responsible for keeping minutes of Board and Committee Meetings, developing and maintaining an annual calendar of Board and Committee meetings and responsibilities, assuring that the Board has adequate information regarding business operations and results, assisting the Chairman and CEO in developing agendas for Board meetings, interfacing with Company officers and providing them with Board level input on pending legal matters, material contracts and corporate documents, and developments in the Company’s business.
27. Board Compensation Review
Changes in Board compensation, if any, should come at the suggestion of the Compensation Committee, but with full discussion and action by the Board.
It is the policy of the Board that at least half of each non-employee director’s compensation be in the form of stock, restricted stock units or stock options, consistent with the Company’s equity compensation plans then in effect.
28. Assessing the Board’s Performance
The Lead Governance Director is responsible for facilitating an assessment the Board’s performance. The Board assessment will be discussed with the full Board. This assessment should be of the Board as a whole and Board Committees, as well as individual director self assessments. The assessment should cover all areas considered relevant to determining Board effectiveness and should seek recommendations on how to improve Board effectiveness.
29. Process for Shareholders to Contact the Board of Directors
Subject to and consistent with the Company’s Articles of Incorporation and Bylaws, shareholders may communicate with the Board or any member of the Board by the following process: Any shareholder who desires to contact the Board or any member of the Board may do so by writing to the Board of Directors of the Company generally or to an individual director at the address of Company’s principal executive offices. Communications received will be distributed to the full Board of Directors, a committee or an individual director, as appropriate, depending on the request of the shareholder sending the communication and other facts and circumstances outlined in the communication received. For example, a complaint or other communication regarding accounting, internal accounting controls or auditing matters will be forwarded to the Chair of the Audit Committee for review. Complaints or other communications may be submitted on a confidential or anonymous basis.
30. Selection of the Chief Executive Officer
The Board shall be responsible for identifying potential candidates for, and selecting, the Company’s Chief Executive Officer. In doing so, the Board shall consider, among other things, a candidate’s experience, understanding of the Company’s business environment, leadership qualities, skills, integrity, reputation in the business community, and willingness to devote the necessary time and effort to make the Company successful. This process shall be guided by the Governance and Nominating Committee.
31. Formal Evaluation of the Chief Executive Officer
The Lead Governance Directors shall facilitate establishing and implementing an evaluation process by the Board of the Chief Executive Officer.
The independent directors serving on the Board should make this evaluation annually, and it should be communicated to the Chief Executive Officer by the Chairs of the Compensation Committee and the Governance and Nominating Committee or as otherwise determined by the Board.
The evaluation should be based on objective criteria including performance of the business, accomplishment of long-term strategic objectives, development of management and development of management succession.
The evaluation will be used by the Compensation Committee in the course of its deliberations when considering the compensation of the Chief Executive Officer.
32. Strategic and Succession Planning and Management Development
At least annually, the CEO shall report to the Board and the Board shall review, discuss and provide input and direction to the CEO in regard to the Company’s annual and longer-term strategic plans. The Lead Governance Director shall facilitate the Board’s oversight of succession planning at the management level and management development.
DUTY OF LOYALTY
Directors are expected to discharge their responsibilities in good faith and in a manner that advances the best interests of the Company – and not in the director’s own interest or in the interest of another person or an organization with which the director is associated. Paragraphs 31 to 34 provide guidance in certain areas where the duty of loyalty applies.
Directors shall maintain the confidentiality of all non-public information they receive from employees or agents of the Company or other Company directors (“Confidential Information”). The director shall not disclose any Confidential Information to any person other than another director or a person who the director reasonably believes (i) is either an employee of the Company or an agent of the Company (e.g., an accountant, lawyer or investment banker), and (ii) is entitled to access to the Confidential Information or has a need to know the Confidential Information. If in doubt regarding whether information received is “non-public” and therefore Confidential Information, the director should assume the information is Confidential Information unless otherwise advised by the Company’s Chief Executive Officer or primary legal counsel.
34. Conflict of Interest
A “conflict of interest” can occur when a director’s personal interest is adverse to – or may appear to be adverse to – the interests of the Company. Conflicts of interest also arise when a director, or a member of his or her immediate family, receives improper personal benefits as a result of his or her position as a director. Directors must avoid any conflicts of interest between the director and the Company. Any situation that involves, or may reasonably be expected to involve, a conflict of interest with the Company, will be disclosed promptly to the Chief Executive Officer, or the Chairman of the Nominating and Governance Committee, and the Company’s primary legal counsel.
Without attempting to describe all possible conflicts of interest that could develop, the following are some of the more common conflicts from which a director must refrain:
- Relationship of the Company with third parties. Directors may not knowingly engage in any conduct or activities that are inconsistent with the Company’s best interests or that disrupt or impair the Company’s relationship with any person or entity with which the Company has or proposes to enter into a business or contractual relationship.
- Compensation from non-Company sources. Directors may not accept compensation (in any form) for services performed for the Company from any source other than the Company.
- Gifts. Directors and members of their families may not accept gifts from persons or entities that deal with the Company in those cases where any such gift is being made in order to influence the directors’ actions as a member of the Board, or where acceptance of the gifts could create the appearance of a conflict of interest.
- Personal use of Company assets. Directors may not use Company assets, labor or information for personal use unless as part of a compensation or expense reimbursement program available to all directors.
35. Corporate Opportunities
Directors are prohibited from: (a) taking for themselves personally opportunities related to the Company’s business; (b) using the Company’s property, information, or position for personal gain; or (c) personally competing with the Company for business opportunities, provided, however, if the Company’s disinterested directors determine that the Company will not pursue an opportunity that relates to the Company’s business, a director may do so.
36. Conflicts of Fiduciary Obligations in connection with Other Directorships and Positions
If a director is also a director or executive officer of another organization and encounters any situation where her or his role with that other organization may be in conflict with the Company’s interests, the director must (i) inform the Company’s Chairman of the Board and the Company’s primary legal counsel of the potential conflict and (ii) take appropriate action, including to recuse herself or himself from participation in the Board’s consideration of the matter giving rise to the conflict and such other action necessary under the circumstances.
 This section added July 2, 2008.