The following corporate governance guidelines and the charters of the committees of the Board of Directors of the K3 Telecom AG have been approved by the Board of Directors and provide the framework for the corporate governance of the K3 Telecom AG.
Role of the K3 Telecom AG Board of Directors
The Company’s business is managed under the direction of the Board of Directors. The Board delegates the Chief Executive Officer – CEO of the company, and through that individual to other senior management, the authority and responsibility for managing the Company’s business. The Board’s role is to oversee the management and governance of the Company and to monitor senior management’s performance.
Among the Board’s core responsibilities are to:
- Select individuals for Board membership and evaluate the performance of the Board, Board committees and individual directors.
- Select, monitor, evaluate and compensate senior management.
- Assure that management succession planning is adequate.
- Review and approve significant corporate actions.
- Review and monitor implementation of management’s strategic plans.
- Review and approve the Company’s annual operating plans and budgets.
- Monitor corporate performance and evaluate results compared to the strategic plans and other long-range goals.
- Review the Company’s financial controls and reporting systems.
- Review and approve the Company’s financial statements and financial reporting.
- Review the Company’s ethical standards and legal compliance programs and procedures.
- Oversee the Company’s management of enterprise risk.
- Monitor relations with shareholders, employees, and the communities in which the Company operates.
Board Size and Composition
The Board of Directors is comprised of such number of directors, as the Board deems appropriate to function efficiently as a body, subject to the Company’s Articles of Association. The Board identify the qualifications and areas of expertise needed to further enhance the composition of the Board, makes recommendations to the Board concerning the appropriate size and needs of the Board and, on its own or with the assistance of management or others, identifies candidates with those qualifications.
Selection of Directors
Under the Articles of Association, the Board of Directors has authority to fill vacancies in the Board and appoint additional directors (in each case subject to their re-election at the next annual general meeting) and to nominate candidates for election by the shareholders. The screening process is done by the Nominating Committee with direct input from the Chairman and CEO and from the other directors and from time to time with the assistance of director search firms.
In considering candidates for director, the Board will take into account all factors it considers appropriate, including, among other things, breadth of experience, understanding of business and financial issues, ability to exercise sound judgment, diversity, leadership, and achievements and experience in matters affecting business and industry. The Board considers the entirety of each candidate’s credentials and believes that at a minimum each nominee should satisfy the following criteria: highest character and integrity, experience and understanding of strategy and policy-setting, sufficient time to devote to Board matters, and no conflict of interest that would interfere with performance as a director.
Shareholders may recommend candidates for Board membership for consideration. Such recommendations should be sent to the Board, care of the Secretary of the Company. Candidates recommended by shareholders are evaluated in the same manner as director candidates identified by any other means.
Chairman of the Board and CEO
The positions of Chairman of the Board and CEO are not held by the same person, except in unusual circumstances, such as during a CEO transition. It is the Board’s view that the Company’s corporate governance principles, the quality, stature and substantive business knowledge of the members of the Board of Directors, as well as the Board’s culture of open communication with the CEO and senior management are contributing to Board effectiveness.
CEO Performance Evaluation
At the beginning of each year, the CEO presents his or her performance objectives for the upcoming year to the Board of directors for their approval. At the end of the year, the Board of directors meet to discuss the CEO’s performance for the current year against his or her performance objectives. The Board of directors and the CEO then meet to review the CEO’s performance evaluation and compensation.
Chief Executive Officer Succession
The Board of Directors views CEO selection as one of its most important responsibilities. To assist the Board in succession planning, the CEO reports at least annually to the Board providing an assessment of senior managers and their potential to succeed the CEO, either in the event of a sudden emergency or in anticipation of the CEO’s future retirement.
Board and Board Committee Performance Evaluation
With the goal of increasing the effectiveness of the Board of Directors and its relationship to management, the Corporate Governance and Nominating Committee assists the Board in evaluating its performance as a whole and the performance of its committees. Each Board committee is also responsible for conducting an annual evaluation of its performance. The effectiveness and contributions of individual directors are considered each year when the directors stand for re-nomination.
The CEO and other members of senior management must seek the approval of the Board (or the Board committee to which this responsibility has been delegated), before accepting outside board memberships with for-profit entities.
Code of Conduct
The Company will maintain a code of business conduct and ethics, which will articulate for employees, shareholders, customers and suppliers the standards of conduct, including conflicts of interest matters, to which the Company expects to adhere. Directors will also be required to abide by the code of conduct. Any waivers of the conflict of interest requirements of such code in favor of a director or executive officer will be subject to approval by the Board. In the case of the consideration of such a waiver in favor of a director, such director shall not participate in the deliberation or vote relating to such waiver.
Internal Audit Function
The Company will maintain an internal audit function whose head will report directly to the Audit Committee. The internal audit function is responsible for bringing a systematic, disciplined approach to evaluate the effectiveness of risk management, control and governance processes. Its duties include monitoring the compliance by Company operations with the Company’s internal controls and identifying any deficiencies in the design or operation of such internal controls, which could adversely affect the Company’s ability to record, process, summarize and report financial data.