As adopted by the Board of Managers on February 28, 2024.
COMPOSITION OF THE BOARD OF MANAGERS
The Operating Agreement of Flamsal Holdings LLC (the “Company”) provides that the Members shall create a Board of Managers (the “Board”), with the Members being able to determine at any time the number of managers to constitute the Board.
It is the policy of the Board that the Board at all times reflect the following characteristics.
Each Manager shall at all times represent the interests of the members of the Company.
Each Manager shall at all times exhibit high standards of integrity, commitment and independence of thought and judgment.
Each Manager shall dedicate sufficient time, energy and attention to ensure the diligent performance of such Manager’s duties, including by attending member meetings and meetings of the Board and committees of the Board (“Committees”) of which such Manager is a member, and by reviewing in advance all meeting materials.
The Board shall encompass a range of talent, skill and expertise sufficient to provide sound and prudent guidance with respect to all of the Company’s operations and interests.
The Board shall reflect the diversity of the Company’s members, employees, customers and communities.
FUNCTIONS OF THE BOARD OF MANAGERS
The responsibility of the Board is to supervise and direct the management of the Company in the interest and for the benefit of the Company’s members. To that end, the Board shall, acting directly or through Committees, have the following duties:
- Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed;
- Reviewing and, where appropriate, approving the Company’s major financial objectives, plans and actions;
- Reviewing and, where appropriate, approving major changes in, and determinations of other major issues respecting, the appropriate auditing and accounting principles and practices to be used in the preparation of the Company’s financial statements;
- Assessing major risk factors relating to the Company and its performance, and reviewing measures to address and mitigate such risks;
- Regularly evaluating the performance and approving the compensation of the principal senior executives; and
- Planning for succession with respect to the position of the Executive Chairman and monitoring management’s succession planning for other key executives.
The Board has delegated to the Executive Chairman, working with the other executive officers of the Company and its affiliated, the authority and responsibility for managing the business of the Company in a manner consistent with the standards of the Company, and in accordance with any specific plans, instructions or directions of the Board.
The Executive Chairman shall seek the advice and, in appropriate situations, the approval of the Board with respect to extraordinary actions to be undertaken by the Company, including those that would make a significant change in the financial structure or control of the Company, the acquisition or disposition of any significant business or the entry of the Company into a major new line of business.
BUSINESS RELATIONSHIPS WITH MANGERS
For the purpose of minimizing the risk of actual or perceived conflicts of interest, the Board shall adopt a policy providing for the review of transactions with the Company or any of its affiliates in which any Manager (including any member of a Manager’s immediate family) has a direct or indirect material interest.
MANAGER COMPENSATION
The compensation of Managers who are not employees of the Company shall be determined annually by the Board acting upon recommendation of the Governance and Nominating Committee, which may obtain the advice of such experts as the Governance and Nominating Committee deems appropriate.Compensation may be paid in the form of cash or such other forms as the Board deems appropriate and shall be at levels that are consistent with those in effect for managers of similarly situated businesses. Separate compensation may be provided to members of Committees and additional compensation may be provided to the chairs of Committees, to any non-executive Chairman of the Board and to any independent Lead Manager. Managers who are also employees of the Company shall not receive any additional compensation for their service as Managers. Members who also serve as Managers shall not receive any compensation, other than authorized distributions as described in the Company’s Operating Agreement.
BOARD LEADERSHIP
The Board shall designate one of its members to serve as Executive Chairman. The powers and responsibilities of the Executive Chairman shall be set forth in the Company’s Operating Agreement, as supplemented from time to time by resolution of the Board.
The Executive Chairman shall serve for such term as the Board shall determine. The identity of the Executive Chairman shall be set forth in the proxy statement for the Company’s annual meeting of members, together with a method for interested parties to communicate directly with the Executive Chairman or with the Board as a group.
MANAGEMENT SUCCESSION AND REVIEW
Periodically, but no less frequently than once a year, the Executive Chairman shall meet with the Board to discuss potential successors as chief executive officer. The Executive Chairman shall also have in place at all times a confidential written procedure for the timely and efficient transfer of the Executive Chairman’s responsibilities in the event of the Executive Chairman’s sudden incapacitation or departure, including recommendations for longer-term succession arrangements. The Executive Chairman shall review this procedure periodically with the Governance and Nominating Committee.
The Executive Chairman shall also review periodically with the Board the performance of other key members of the senior management of the Company, as well as potential succession arrangements for such management members. Any waiver of the requirements of the Company’s Standards of Business Conduct with respect to any such member of senior management shall be reported to, and be subject to the approval of, the Board.
BOARD MEETINGS
The Executive Chairman, in consultation with the other members of the Board, shall determine the timing and length of the meetings of the Board. The Board expects that five regular meetings at appropriate intervals are typically desirable for the performance of the Board’s responsibilities. In addition to regularly scheduled meetings, unscheduled Board meetings may be called upon appropriate notice at any time to address specific needs of the Company.
With respect to each meeting, each Manager shall be entitled to suggest the inclusion of items on the agenda, request the presence of or a report by any member of the Company’s senior management, or at any Board meeting raise subjects that are not on the agenda for that meeting.
The agendas for Board meetings shall provide opportunities for the operating heads of major businesses of the Company to make presentations to the Board during the course of the year. At one meeting each year the Board shall be presented the longterm strategic plan for the Company and the principal issues that the Company expects to face in the future. Sufficient time shall be allocated for this presentation to allow for questions by and full discussion with the members of the Board.
BOARD COMMITTEES
Committees shall be established by the Board from time to time to facilitate and assist in the execution of the Board’s responsibilities. Committees may be standing or ad hoc. Generally, a Committee shall be constituted to address issues that, because of their complexity, technical nature, level of detail, time, requirements and/or sensitivity, cannot be adequately addressed within the normal agenda for Board meetings.
There are currently three standing committees:
- Audit Committee
- Compensation Committee
- Governance and Nominating Committee
Each Committee shall have a written charter of responsibilities, duties and authorities, which shall periodically be reviewed by the Board. Each Committee shall report to the full Board with respect to its activities, finding and recommendations after each meeting.
Each Committee shall have full power and authority, in consultation with the Executive Chairman, to retain the services of such advisers and experts, including counsel, as the Committee deems necessary or appropriate with respect to specific matters within its purview.
COMMITTEE MEMBERSHIP
Each year, the Executive Chairman, after consideration of the desires, experience and expertise of individual Managers and after consultation with the Board, as applicable, shall recommend to the Governance and Nominating Committee the assignment of Managers to Committees, including the designation of Committee Chairs. The Governance and Nominating Committee shall review such recommendations and report to the Board thereon.
In acting upon such recommendation and report, the full Board shall consider that the target size of each Committee should be three to five members, unless circumstances call for an exception. The full Board should also consider periodic rotation of Committee members, taking into account the desirability of rotation of Committee members, the benefits of continuity and experience and applicable legal, regulatory and any stock exchange listing requirements. In addition, the Board should target rotation of Committee Chairs of the Audit, Compensation and Governance and Nominating Committees approximately every five years.
COMMITTEE MEETINGS
Each Committee Chair, after consultation with the Executive Chairman, shall establish agendas and set meetings at the frequency and length appropriate and necessary to carry out the Committee’s responsibilities.
Any Manager who is not a member of a particular Committee may attend any Committee meeting with the concurrence of the Committee Chair, Executive Chairman, or a majority of the members of the Committee.
BOARD MATERIALS
Managers shall receive information and data that are important to their understanding of the businesses of the Company, in writing, and in sufficient time to prepare for meetings. This material shall be as brief as possible whole still providing the desired information; it shall be analytic as well as informational; and it shall include highlights and summaries whenever appropriate. Managers may request that Executive Chairman or appropriate members of senior management present to the Board information on specific topics relating to the Company and its operations. The Board may retain the services of independent advisors as it deems appropriate, and any such advisors shall report directly to the Board. The cost of any such advisors shall be borne by the Company.
Managers are encouraged to keep themselves informed with respect to the Company’s affairs between Board meetings through direct individual contacts with members of the senior management of the Company and its affiliates. The Secretary of the Company, shall, whenever requested, assist in arranging and facilitating such contacts.
BOARD CONDUCT AND REVIEW
Members of the Board shall act at all times in accordance with the requirements of the Company’s Code of Business Conduct and Ethics for Managers. This obligation shall at all times include, without limitation, strict adherence to the Company’s policies with respect to conflicts of interest, confidentiality, protection of the Company’s assets, ethical conduct in all business dealings and respect for and compliance with applicable law. Any waiver of the requirements of the Code of Business Conduct and Ethics for Managers with respect to any individual Manager shall be reported to, and be subject to the approval of, the Board.
The Board shall conduct an annual review and evaluation of its conduct and performance based upon participation by all Managers in an evaluation that includes, among other things, an assessment of:
a. the Board’s composition;
b. the Board’s access to and review of information from senior management, and the quality of such information;
c. the Board’s responsiveness to Member concerns;
d. maintenance and implementation of the Company’s standards of conduct; and
e. maintenance and implementation of these Guidelines.
The review shall seek to identify specific areas, if any, in need of improvement or strengthening and shall culminate in a discussion by the full Board of the results and any actions to be taken. The Governance and Nominating Committee shall have responsibility for ensuring that the annual review and evaluation are carried out.
SELECTION OF NEW MANAGERS
The Board shall be responsible for selecting its own members. The Board delegates the screening process for new Managers to the Governance and Nominating Committee.
In selecting new Managers, the Board shall give the highest priority to meeting the standards and qualifications set forth at the beginning of these Guidelines. The Governance and Nominating Committee shall also consider candidates proposed by members in accordance with these Guidelines. In connection with this, the Board shall seek candidates whose service on other boards will not adversely affect their ability to dedicate the requisite time to service on this Board. The Board believes that Managers who are executive officers of other companies should not serve on more than two boards (including the Board of the Company) at a time, and that other Managers should not serve on more than four company boards (including the Board of the Company). The Board may, however, make exceptions to this standard as it deems appropriate in the interest of the Company’s members.
The Company shall assist the Board by providing appropriate orientation programs for new Managers, which shall be designed both to familiarize new Managers with the full scope of the Company’s businesses and key challenges and to assist new Managers in developing and maintaining skills necessary or appropriate for the performance of their responsibilities. The Board and the Company’s senior management shall similarly work together to develop and implement appropriate continuing education programs for the same purposes.
BOARD TENURE POLICY
The Board recognizes that it is important for the Board to balance the benefits of continuity with the benefits of fresh viewpoints and experience. Therefore, the Board will not nominate for re-election any non-management Manager if: (a) the Manager shall have completed fifteen years of service as a member of the Board on or prior to the date of the election as to which the nomination relates or (b) the Manager turned 75 years of age or older in the calendar year preceding the related annual meeting; unless, in each case, the Board concludes that, in light of the circumstances then present when any such decision is made, the best interests of members would be otherwise better served. In any circumstances in which the Board so determines that the best interests of members would be better served, the Board shall (a) provide a written statement in its next proxy statement for the Company’s annual meeting of members discussing why the different arrangement is in the best interests of members and (b) in connection with each proxy statement thereafter for an annual meeting after which the Board expects the arrangement to continue, determine whether the arrangement remains in the best interests of members and include a written statement in the proxy statement giving the reasons for this determination.
Unless its submission with respect to a certain event is waived by the Board, each non-management Manager shall submit to the Board a letter of resignation upon resignation or retirement from, or termination of, the Manager’s principal current employment, or other similarly material changes in professional occupation or association. Such letter of resignation will be evaluated by the Governance and Nominating Committee and the Governance and Nominating Committee will recommend to the Board whether or not to accept the resignation. The Board shall be free to accept or reject this letter of resignation, and shall act promptly with respect to the letter and promptly notify the Manager concerned of its decision.
SOCIAL RESPONSIBILITY
The Company has a responsibility to the communities in which it operates, as well as to its members. To allow appropriate Board review and input, management shall prepare and present to the Board a periodic review of the policies, practices and contributions made in fulfillment of the Company’s social responsibilities. In addition, management shall report annually on its diversity efforts and the results thereof.
IMPLEMENTATION OF THE GUIDELINES
If the Board ascertains at any time that any of the Guidelines set forth herein are not in full force and effect, the Board shall take such action as it deems reasonably necessary to assure full compliance as promptly as practicable.
These Guidelines are intended as a component of the flexible framework within which the Board, assisted by its Committees, directs the affairs of the Company. While they should be interpreted in the context of applicable laws, regulations and stock exchange listing requirements (if any), as well as in the context of the Company’s Certificate of Formation and Operating Agreement, each as amended and in effect from time to time, they are not intended to establish by their own force any legally binding obligations. The Board may modify or make exceptions to these Guidelines from time to time in its discretion and consistent with its duties and responsibilities to the Company and its members.