Corporate Governance Guidelines
The Board of Directors (the “Board”) of Stem Tronics Corporation (the "Company") has adopted these guidelines to assist the Board in
the exercise of its responsibilities to serve the best interests of the Company and its shareholders. These guidelines are subject to refinement
or change from time to time by the Board as it deems appropriate.
1. Board Composition and Operation
1.1 Role of Directors.
The Company's business and affairs are handled by or under the direction of the Board. A director is required to devote the time and effort
necessary to effectively carry out his or her responsibilities.
1.2 Board Size.
The number of directors on the Board will be determined from time to time by a majority of the full Board voting on a resolution. The size of the
Board will be determined by the supervision and other responsibilities of the Board and its committees.
1.3 Selection of Board Members.
The Board nominates a slate of directors for annual election by the Company's shareholders based on the Governance and Nominating Committee's
recommendation and evaluation of each nominee's and the slate's suitability. On the proposal of the Governance and Nominating Committee, the
Board also fills vacancies in existing or new director positions. In addition, the Governance and Nominating Committee shall examine candidates
suggested by shareholders in accordance with the processes established by the committee from time to time. The qualifications to be considered
in the nomination process include those outlined in the Governance and Nominating Committee's charter, with the goal of building a Board with a
diverse range of viewpoints and abilities based on business and professional experience.
1.4 Voting for Directors.
In order to be elected or re-elected to the Board, a nominee must receive more votes cast for than against his or her election or re-election in
an uncontested election of directors (i.e., an election in which, as of the record date for the meeting, the number of nominees does not exceed
the number of positions on the Board to be filled by election at the meeting). Only candidates who have submitted an irrevocable contingent
resignation in writing to the Chair of the Governance and Nominating Committee, which becomes effective only if the director does not receive a
sufficient number of votes for re-election and the Board accepts the resignation, shall be nominated for re-election by the Board. If a director
does not get the required number of votes to be re-elected, the Governance and Nominating Committee must review the resignation offer promptly
and make a recommendation to the Board on whether to accept or reject it.
1.5 Term Limits; Retirement Policy.
The Board recognizes that directors who have served on the Board for a long time have gained a greater understanding of the Company and its
operations and, as a result, are better able to contribute to the Board's functioning. As a result, the Board does not believe it should impose
a restriction on the number of terms a person can serve or a mandatory retirement policy.
1.6 Board Compensation.
Compensation for Board members should be a mix of cash and equity-based compensation, according to company policy. Management directors will not
be compensated for serving on the Board in addition to their regular compensation. The Compensation Committee will assess and offer
recommendations to the Board on director compensation on a regular basis, but any modifications will only be implemented after the Board has had
a complete debate and unanimous approval.
1.7 Selection of the Chief Executive Officer.
The Chief Executive Officer of the Company will be selected by the Board. The Governance and Nominating Committee will be in charge of
identifying potential Chief Executive Officer candidates, taking into account a candidate's experience, understanding of the Company's business
environment, leadership qualities, knowledge, skills, expertise, integrity, and reputation in the business community, among other things.
1.8 Annual Evaluation of Chief Executive Officer.
The Compensation Committee will prepare a written Chief Executive Officer Performance Review each year, which will be evaluated first by the
Board's independent members. Following the review, the Compensation Committee Chair and the Lead Independent Director or Non-Executive Chairman,
as applicable (or, if the Lead Independent Director or Non-Executive Chairman, as applicable, is also the Chair of the Compensation Committee,
an independent director designated by the Compensation Committee) will meet with the Chief Executive Officer to discuss the findings.
2. Board Meetings
2.1 Frequency of Meetings and Attendance.
Meetings of the Board are held at least once a quarter. As needed, special meetings may be held at any moment. The Board may also take action by
unanimous written approval from time to time. It is agreed that each director has a responsibility to attend all meetings of the Board and each
committee of which he or she is a member as much as possible. A director who will be unable to attend a meeting (which is expected to happen
from time to time) must notify the Chairman of the Board or the chairman of the appropriate committee in advance of the meeting. On the
invitation of the head of a committee of which he or she is not a member, any director may attend a meeting of that committee.
After consulting with the Lead Independent Director and the Company Secretary, the Chairman of the Board creates the agenda for each Board
meeting and delivers it to the Board in advance of the meeting. Additional topics on the agenda may be requested by board members.
2.3 Advance Distribution of Materials.
Board materials related to agenda items should, in general, be distributed to all members of the Board sufficiently in advance of a meeting to
allow members of the Board to review and reflect on key issues, request supplemental information as needed, and generally prepare for the
meeting's discussion. Sensitive information may be held back until the Board meeting.
2.4 Board Presentations and Access to Employees.
Members of management attend Board meetings or portions of them on a regular basis to make presentations and engage in discussions about certain
areas of operations. Any meeting's guest attendees are chosen by the Chairman of the Board. Furthermore, Board members have unrestricted access
to other members of management and personnel.
2.5 Executive Sessions of Outside Directors.
Non-management directors will meet in executive session on a regular basis, with no management directors or other current or past members of
management present, to discuss whatever topics they choose. An executive session of solely the independent directors must be conducted at least
once a year. Such executive meetings will be called and officiated by the Lead Independent Director or Non-Executive Chairman, as
2.6 Access to Independent Advisors.
The Board has the authority to conduct investigations and to retain, at the Company’s expense, independent legal, accounting, investment
banking, or other professional advisors selected by the Board for any matters relating to the purpose or responsibilities of the Board.
3. Board Committees
3.1 Number and Structure.
The Board has three standing committees: Audit, Compensation, Governance and Nominating. The Governance and Nominating Committee reviews the
committee structure annually and recommends changes to the Board, if any are considered beneficial or prudent.
3.2 Assignment of Committee Members.
The Governance and Nominating Committee recommends to the Board the members and chairs of each committee after consulting with the Chairman of
the Board and the Lead Independent Director (or, if the Lead Independent Director is also the Chair of the Governance and Nominating Committee,
an independent director designated by the Governance and Nominating Committee). Because the Board believes that a director's specific knowledge
or experience may justify a director serving on a committee for a lengthy period of time, the Board does not have a policy mandating rotation of
3.3 Frequency of Committee Meetings and Committee Agenda.
After consulting with the Chairman of each committee, the Lead Independent Director, and the Company Secretary, the Chairman of the Board shall
set the frequency and length of regularly scheduled committee meetings, as well as develop the agenda. Otherwise, each committee will meet as
often as it sees necessary to carry out its obligations. Each committee's agendas and meeting minutes will be shared with the entire Board.
Code of Conduct
Stem Tronics is dedicated to operating in an ethical and legal manner. This Code of Conduct provides policies and processes to guide employees,
executives, and directors in carrying out their tasks and obligations and to assure compliance with the company's commitment to ethical and
All workers and executives (referred to collectively as "employees"), as well as directors of Stem Tronics and its domestic and overseas
subsidiaries, are subject to these policies and procedures. The company's divisions, subsidiaries, and operating units, as well as the corporate
office, have established and will release further policies and procedures.
- Compliance with laws: The business and affairs of the company will be conducted in line with all applicable laws, rules, and regulations, as
well as the company's high ethical standards.
- Product development: The company is dedicated to creating safe and effective products. The company has created and will adhere to standards
that meet or exceed laws when designing and manufacturing medical devices and other items. The company shall follow all applicable rules and
regulations when manufacturing its products, including those relating to the environment and occupational health and safety.
- Marketing and sales: The company will represent its products and services accurately and will comply with applicable regulatory and legal
requirements governing the marketing and sale of its products and services.
- Recording and reporting information: In recognition of the fact that accurate information is essential to the company's ability to satisfy
legal and regulatory obligations, all employees and directors will record and report all information accurately and honestly. No employee or
director will sign or submit, or permit others to sign or submit on behalf of the company, any document or statement that he or she knows or
has reason to believe is false.
- Payments: The company, its employees, and directors will not make any improper payments to government or non-government officials,
employees, customers, persons, or entities, nor will they request or accept any improper payments from suppliers, customers, or anyone
wishing to do business with the company.
- Fair dealing: Each employee and director will treat customers, suppliers, competitors, independent auditors, and other employees fairly and
will not take unfair advantage of anybody by manipulating, concealing, abusing privileged information, misrepresenting material facts, or
any other unfair dealing or practice.
- Confidential information: No employee or director will use, for his or her own personal gain, or disclose to any third party, any
confidential or proprietary information that he or she obtained as a result of his or her employment with or relationship to the company.
Confidential or proprietary information includes all non-public information that might be of use to competitors or harmful to the company
and its customers if disclosed. No employee or director will buy, sell, or deal in the company’s stock based on non-public
- Political contributions: The company will make no corporate political contributions to parties or individuals, even where such contributions
may be legal, but encourages employees and directors to participate in community affairs and to exercise citizenship responsibilities.
- Corporate opportunities: Employees and directors have a responsibility to advance the company's legitimate interests whenever the
opportunity arises. Employees and directors are restricted from profiting personally from opportunities identified via the use of corporate
property, information, or position, from utilizing corporate property, information, or position for personal gain, and from competing with
- Conflicts of interest: No employee or director will engage in any activity or have any outside interest that could sway his or her loyalty
away from the company, interfere with the satisfactory performance of his or her duties, make it difficult to perform his or her duties
objectively and effectively for the company, or be harmful or detrimental to the company. Employees and directors must immediately notify
the president or executive in charge of the applicable division, subsidiary, or operating unit, or the company's chief executive officer, in
writing, of any real or prospective conflict of interest. A conflict of interest arises when a person's personal interests conflict with or
appear to conflict with the company's interests in any way. It can also occur when an employee or director, or a member of his or her
family, receives improper personal benefits as a result of his or her position with the company.
- Asset protection and proper use: Theft, carelessness, and waste have a direct impact on a company's profitability. All workers and directors
will take the necessary steps to safeguard the company's assets and guarantee that they are used efficiently for legitimate business