EGC Corporate Governance Practices (May 2018)

A Survey and Related Resources PAGE D-10 Non-independent Members of Board Committees All committee members must meet SEC and NYSE independence standards. All committee members must meet SEC independence standards. However, NASDAQ allows a listed company to appoint one non-independent director (one that does not satisfy NASDAQ’s definition of independence and is not an executive officer or employee) to the audit, compensation, or nominating committee under certain limited circumstances. Stockholder Approvals Stockholder approval is required for the following: • Equity compensation plans and any material revisions to those plans. • Issuing securities that would result in a change of control. • Issuing common stock or securities convertible into, or exchangeable for, common stock if: o the common stock will have voting power of 20% or more of the common stock outstanding before the issuance; or o the number of shares of common stock to be issued is 20% or more of the number of shares of common stock outstanding before the issuance. • Issuing common stock or securities convertible into, or exchangeable for, common stock to any director, officer, or substantial securityholder, any of their affiliates or subsidiaries, or any entity in which they have a substantial interest in an amount that exceeds either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance. Stockholder approval is not required for the following: • Equity plans that are made available to stockholders generally or that allow employees or directors to elect to buy shares on the open market or from the company for current fair market value. • Employment inducement awards, including grants to new employees in connection with a merger or acquisition. • Adjusting existing equity awards to reflect a merger or acquisition. • Issuances of shares under plans inherited in mergers or acquisitions to employees of the acquired entities. • Equity plans under Section 401(a) (such as employee stock option plans) or Section 423 (employee stock purchase plans) of the Internal Revenue Code (IRC) or "parallel excess plans" under ERISA and the IRC. Stockholder approval is generally required for issuing securities in: • Acquisitions of stock or assets of another company. • Equity-based compensation of officers, directors, employees, or consultants. • A change in control of the company. • Private placements. In particular, stockholder approval is required for the following: • Issuing securities that will result in a change of control. • Issuing securities in an acquisition if any director, officer, or substantial stockholder has a 5% or more interest in the company or assets being acquired and the issuance could result in an increase in outstanding common stock or voting power of 5% or more. • Issuing securities in an acquisition if: o the common stock to be issued will have voting power of 20% or more of the voting power outstanding before the issuance; or o the number of shares of common stock to be issued will be 20% or more of the number of shares of common stock outstanding before the issuance. • Stock option plans, stock purchase plans, and other equity compensation arrangements by which officers, directors, employees, or consultants can acquire stock and any material amendments to those plans and arrangements. • Issuing securities in a transaction that is not a public offering where: o the sale or issuance of common stock or securities convertible into or exchangeable for common stock is at a price less than the greater of book or market value and represents, together with sales by directors, officers, or substantial holders, 20% or more of the number of shares or voting power