SUPERIOR ENERGY SERVICES, INC.
CORPORATE GOVERNANCE PRINCIPLES
(Revised effective as of March 26, 2015)
Role of Board and Management
The Company's business is conducted by its employees, managers and officers, under the direction of the Company's Chief Executive Officer (CEO) and the oversight of the Board of Directors, to enhance the long-term value of the Company for its shareholders. The Board oversees management and exercises its business judgment to act in what it reasonably believes to be in the best interests of the Company and its shareholders. Both the Board and senior management believe that the Company's interests are best served by responsibly addressing the needs of the Company's customers, employees and the communities where it operates – all of whom are essential to a successful business – in accordance with the Company's shared core values.
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The Board of Directors has at least four scheduled meetings a year at which it reviews and discusses reports by management on the performance of the Company and its prospects, as well as immediate issues facing the Company. Directors are expected to be on-call to meet more frequently if business needs or unusual circumstances warrant. Directors are also expected to attend all scheduled Board and committee meetings in person or by teleconference.
In addition to its general oversight of management, the Board also performs a number of specific functions, including:
- Selecting, evaluating and compensating the CEO and overseeing CEO succession planning;
- Providing counsel and oversight on the selection, evaluation and compensation of senior management;
- Reviewing, monitoring and, where appropriate, approving fundamental financial and business strategies and major corporate actions;
- Assessing major risks facing the Company—and reviewing options for their mitigation; and
- Ensuring processes are in place for maintaining the integrity of the Company's financial statements, compliance with the law and relationships with customers.
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Composition of the Board of Directors
- Size of the Board and Selection Process. The directors are elected each year by the shareholders at the annual meeting of shareholders. Shareholders may propose nominees for consideration by the Nominating and Corporate Governance Committee (Corporate Governance Committee) by submitting names and supporting information in accordance with the Company's bylaws. The Board proposes a slate of nominees to the shareholders for election to the Board. The Corporate Governance Committee annually evaluates and makes recommendations to the Board concerning the appropriate size of the Board and the availability of qualified candidates.
- Election of Directors. Any nominee for director in an uncontested election (i.e., an election where the only nominees are those recommended by the Board) who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a Majority Withheld Vote) will promptly tender his or her resignation following certification of the shareholder vote.
The Corporate Governance Committee will promptly consider the tendered resignation and recommend to the Board whether to accept the tendered resignation or to take some other action, such as rejecting the tendered resignation and addressing the apparent underlying causes of the “withheld” votes. In making this recommendation, the Corporate Governance Committee will consider all factors deemed relevant by its members including, without limitation, (i) the underlying reasons why shareholders “withheld” votes for election from such director (if ascertainable), (ii) the length of service and qualifications of the director whose resignation has been tendered, (iii) the director's contributions to the Company, (iv) the current mix of skills and attributes of directors on the Board, (v) whether, by accepting the resignation, the Company will no longer be in compliance with any applicable law, rule, regulation or governing document, and (vi) whether or not accepting the resignation is in the best interests of the Company and its shareholders.
The Board will act on the Corporate Governance Committee's recommendation no later than at its first regularly scheduled meeting following certification of the shareholder vote, but in any case, no later than 120 days following the certification of the shareholder vote. In considering the Corporate Governance Committee's recommendation, the Board will consider the factors considered by the Corporate Governance Committee and such additional information and factors the Board believes to be relevant. The Company will promptly publicly disclose the Board's decision and process in a periodic or current report filed with the Securities and Exchange Commission.
Any director who tenders his or her resignation pursuant to this provision will not participate in the Corporate Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation. However, such director shall remain active and engaged in all other committee and Board activities, deliberations and decisions during this process.
If a majority of the members of the Corporate Governance Committee receive a Majority Withheld Vote, then the independent directors of the Board who did not receive a Majority Withheld Vote will appoint a Board committee amongst themselves to consider the tendered resignations and recommend to the Board whether to accept them. If the only directors who did not receive a Majority Withheld Vote in the same election constitute two or fewer directors, then all directors may participate in the Board consideration regarding whether or not to accept the tendered resignations.
- Director Independence. A significant majority of the directors will always consist of independent, non-management directors who meet the criteria for independence established by the New York Stock Exchange (NYSE), as well as other factors consistent with those established by NYSE that the Board considers appropriate for effective oversight and decision making by the Board. Currently, the CEO is the only director who is also a Company employee. The Corporate Governance Committee is responsible for reviewing the qualifications and independence of the members of the Board, and the Board affirmatively determines that no non-employee member of the Board has a material relationship to the Company that may interfere with the exercise of his or her independence from management or the Company.
- Lead Director. The Corporate Governance Committee annually recommends a lead director who shall be elected annually by the Board. The lead director communicates any issues discussed by the non-management directors back to the CEO, confers with the CEO at intervals between Board meetings, and assists in planning for Board and Board committee meetings. In addition, he or she acts as a liaison between the Board and the CEO to ensure close communication and coordination between them and to promote a harmonious and effective relationship.
- Qualifications. The Corporate Governance Committee is responsible for annually reviewing with the Board the skills and characteristics required in light of the Board's composition. The Board will select director candidates who represent a mix of backgrounds and experiences that will enhance the quality of the Board's deliberations and decisions. Candidates should have substantial experience with one or more publicly-traded domestic or multinational companies in or serving the oil and gas industry or shall have achieved a high distinction in their chosen field. The Board is particularly interested in maintaining a mix that includes, but is not necessarily limited to, active or retired chief executive officers and senior executives, particularly those with significant management experience in operations, international business, finance, accounting or significant targeted expansion areas for the Company. The Board believes that a diverse membership with varying perspectives and breadth of experience is an important attribute of a well-functioning board that will enhance the quality of the Board's deliberations and decisions. As a result, the Board will seek diversity of background, experience, gender, race and skills among its members. Board members should also display the personal attributes necessary to be an effective director, unquestioned integrity, sound judgment, independence in fact and mindset, ability to operate collaboratively and commitment to the Company and its shareholders.
Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serving on the Board for an extended period of time. Directors should offer their resignation in the event of any significant change in their personal circumstances, including a change in their principal job responsibilities. A director should ordinarily not serve on the boards of more than five public companies in total or, if the director is the chief executive officer of another public company, on the boards of more than three in total.
- Term Limits. The Board does not believe it should establish arbitrary term limits for directors. While term limits could help insure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who over time have developed increasing insight into the Company and its operations and therefore provide an increasing contribution to the Board as a whole.
- Retirement Age. It is the sense of the Board that a retirement age of 75 is appropriate. Directors are expected to retire from the Board at the annual meeting of stockholders following the director's 75th birthday, unless they are asked by the Board to continue to serve beyond that time.
- Directors' Orientation. The Company will conduct an orientation program for new non-employee directors that includes presentations by senior management to familiarize new directors with the Company's business and strategic plans, general information about the Board and its committees and a review of director duties and responsibilities.
- Attendance at Shareholders' Meeting. The Board encourages all of its members to attend the annual meeting of shareholders.
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Meetings of Board of Directors
- Setting Board Agenda. The Chairman of the Board (in consultation with the CEO and the lead director) establishes the agenda for each Board meeting. Each director is free to suggest the inclusion of item(s) on the agenda.
- Director Materials. Information and data that is important to the Board's understanding of the business to be discussed and considered at a meeting will be distributed in writing to each director before a board meeting. Senior management makes every attempt to see that this material is as brief as possible while still providing the desired information.
- Executive Sessions. The Board's policy is that all non-employee directors will meet in executive sessions of the Board at each regularly scheduled Board meeting. Senior management and employee directors may not attend these executive sessions, unless expressly invited to attend by the non-employee directors. After an executive session, the substance of the discussions and any action by the Board should be shared with the CEO.
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Committees of the Board of Directors
- Number, Structure and Independence of Committees. The three current Board committees are Audit, Compensation, and Corporate Governance. Each member of the Audit, Compensation, and Corporate Governance Committees will be independent in accordance with the criteria for independence established by the NYSE. From time to time, the Board may provide for such other standing or special committees as may be necessary to carry out its responsibilities.
- Assignment; Rotation. The Corporate Governance Committee is responsible for the assignment of Board members to various committees. Continuity of membership and orderly rotation is important to the effectiveness of committees. Service on different committees from time to time by directors is desirable and increases a director's contribution to the Company. Concurrent membership on more than one committee is also desirable.
- Committee Meeting Frequency and Length. The committee chairman, in accordance with the committee charter and consultation with committee members, determines the frequency and length of the meetings of the committee.
- Committee Agendas. The committee chairman, in accordance with the committee charter and consultation with the committee members and management, develops the committee's agenda.
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Compensation and Performance Evaluation
- Director Compensation. The Corporate Governance Committee has the responsibility for recommending to the Board compensation and benefits for directors. In discharging its duty, the Corporate Governance Committee is guided by the principles that the Company should fairly pay directors for work required while on the Board and that compensation should align directors' interests with the long-term interests of shareholders. The Corporate Governance Committee reviews non-employee director compensation and benefits on an annual basis.
- Share Ownership by Directors. The Board believes that each non-employee director should have a substantial personal investment in the Company. A personal holding of five times the annual cash retainer is required. Shares counted toward this guideline include any shares held by a director, whether or not restricted, and restricted stock units. Directors have three years from joining the Board to attain this ownership threshold. Once the ownership threshold is achieved (measured in the share's fair market value at the time the threshold is achieved), the share ownership threshold must be maintained as long as a person serves as a director. In the event the cash retainer increases, directors have three years from the time of the increase to acquire any additional shares needed to meet this guideline.
- Assessing the Board's Performance. The Board and each committee conducts a self-evaluation annually. The Corporate Governance Committee oversees this self-evaluation process and assesses the full Board's performance.
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Relationship with Senior Management and Outside Advisors
- Regular Attendance of Senior Management at Meetings. The Board welcomes the regular attendance of senior management at each Board meeting. The Board encourages senior management to, from time to time, bring managers into Board meetings who can provide additional insight into the items being discussed because of personal involvement in these areas or are managers with future potential that senior management believes should be given exposure to the Board.
- Access to Senior Management. Non-employee directors are encouraged to contact senior managers of the Company without senior corporate management present.
- Board Access to Outside Advisors. The Board retains such outside advisors, including counsel, accountants and compensation consultants, that it deems necessary or advisable.
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Ethics and Conflicts of Interest
The Board expects directors, as well as officers and employees, to act ethically at all times consistent with Our Shared Core Values at Work, the Company's Code of Conduct. The Board also expects directors, officers and employees to acknowledge their adherence to the Code of Conduct.
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The Board evaluates annually these Corporate Governance Principles and whether the Board and its committee are functioning effectively.
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