IPG follows director independence rules under Nasdaq listing standards and SEC
rules. Also, our Governance Guidelines require that a majority of our Board of Directors satisfy the independence rules of the Nasdaq Global Market and the SEC. Our Nominating and Corporate Governance Committee has determined that Messrs. Blair, Child, Dalton, Gauthier and Hurley and Dr. Krupke are "independent" as defined by Nasdaq Rule 4200(a) (15). Our Nominating and Corporate Governance Committee has determined that no such member has a relationship that would interfere with the exercise of independent judgment in carrying out his responsibilities as a director.
Our independent directors meet privately, without management present, at least four times during the year. These private sessions are generally held in conjunction with the regular quarterly Board meetings. Other private meetings are held as often as deemed necessary by the independent directors. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee meet without management present from time to time as they deem necessary.
Presiding Independent Director
In accordance with our Governance Guidelines, an independent director is
selected at each meeting of the Board of Directors to preside over executive private meetings of the independent directors. The presiding independent director acts as a liaison between the independent directors and our Chief Executive Officer and communicates to him with respect to matters discussed at executive sessions and agenda items for the Board. The position of presiding independent director rotates at each meeting based upon date of first election to the Board.
It has been the practice of our Board to hold at least four regular meetings each year. Our Board of Directors met in person or by telephone nine times and acted by unanimous written consent once in 2007.
Policy Regarding Board Attendance
In accordance with our Governance Guidelines, our directors are expected to prepare for, attend and actively participate in meetings of the Board of Directors and meetings of committees on which they serve. Our directors are expected to spend the time needed at each meeting and to meet as frequently as necessary to properly discharge their responsibilities. We encourage members of our Board of Directors to attend annual meetings of stockholders, but we do not have a formal policy requiring them to do so.
Stock Ownership Guidelines
The Board adopted stock ownership guidelines in 2007 to more closely align the
interests of our directors and executive officers with those of our stockholders. The guidelines provide that nonemployee directors should maintain an investment in our stock that is at least equal to five times their annual cash Board retainer (excluding committee retainers). The Chief Executive Officer should maintain an investment in our
stock that is at least equal to five times his annual salary. Executive officers other than the Chief Executive Officer should maintain an investment that is at least equal to two times their annual salaries. In each case, the investment levels increase over time and the investment levels described above should be achieved within no later than five years following the director's or executive's initial election or appointment or December 12, 2011, whichever occurs later.
Stockholders wishing to write to the Board of Directors or a specified director or a committee of the Board should send correspondence to IPG Photonics Corporation, attention Secretary, 50 Old Webster Road, Oxford, Massachusetts 01540. All written communications received in such manner from stockholders of the Company shall be forwarded to the members or committee of the Board of Directors to whom the communication is directed or, if the communication is not directed to any particular member(s) or committee of the Board of Directors, the communication shall be forwarded to all members of the Board of Directors.
Code of Business Conduct. We have adopted a code of business conduct and ethics that applies to all of our directors and employees, including our Chief Executive Officer, Chief Financial Officer and other executive officers. Our code of business conduct includes provisions covering conflicts of interest, business gifts and entertainment,
outside activities, compliance with laws and regulations, insider trading practices, antitrust laws, payments to government personnel, bribes or kickbacks, corporate record keeping and accounting records.
Procedures for Submitting Complaints Regarding Accounting and Auditing Matters. Our Audit Committee has adopted procedures for the treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential and anonymous submission by our directors, officers and employees of concerns regarding questionable accounting, internal accounting controls or auditing matters.
Committees of the Board
Our Board has three separate standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee operates under a written charter adopted by the Board.
Audit Committee. The current members of our Audit Committee are Mr. Hurley, who serves as Chairman, Mr. Child and Mr. Gauthier, each of whom is "independent" for Audit Committee purposes under the applicable rules of the Nasdaq Global Market and the SEC. The Nominating and Corporate Governance Committee has determined that Mr. Hurley qualifies as an "audit committee financial expert," as defined under the Securities
Exchange Act of 1934 and the applicable rules of the Nasdaq Global Market. Audit Committee Charter
The Audit Committee, among other things:
- appoints, approves the compensation of, and assesses the independence of our independent registered public accounting firm;
- reviews the Audit Committee charter annually and recommends any necessary amendments to such charter to our Board of Directors;
- oversees the work of our independent registered public accounting firm, which includes the receipt and consideration of certain reports from the independent registered public accounting firm;
- resolves disagreements between management and our independent registered public accounting firm;
- pre-approves auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
- reviews and discusses with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
- coordinates the oversight of our internal and external controls over financial reporting, disclosure controls and procedures and code of business conduct and ethics;
- establishes, reviews and updates our code of business conduct and ethics;
- establishes procedures for the receipt of accounting-related complaints and concerns;
- meets independently with our independent registered public accounting firm and management;
- prepares the Audit Committee report required by SEC rules to be included in our proxy statements; and,
- performs any other activities consistent with its charter, the Company's bylaws, and governing law, as the Board deems necessary or appropriate.
Compensation Committee. The current members of our Compensation Committee are Mr. Blair, who serves as Chairman, Mr. Child and Mr. Gauthier, each of whom is an independent director. Compensation Committee Charter
The Compensation Committee, among other things:
- annually reviews and approves base salary and incentive compensation for our Chief Executive Officer, other officers and key executives;
- reviews and approves corporate goals and objectives relevant to compensation of our Chief Executive Officer, other officers and key executives;
- evaluates the performance of our Chief Executive Officer in light of our corporate goals and objectives and determines the compensation of our Chief Executive Officer;
- periodically reviews compensation practices, procedures and policies throughout the Company; and,
- reviews and recommends to the Board compensation for members of the Board.
Nominating and Corporate Governance Committee. The current members of our Nominating and Corporate Governance Committee are Dr. Krupke, who serves as Chairman, Mr. Blair, Mr. Dalton and Mr. Hurley, each of whom is an independent director. Mr. Dalton joined the Committee in March 2008. Nominating and Corporate Governance Committee Charter
The Nominating and Corporate Governance Committee, among other things:
- develops and recommends to the Board criteria for board membership;
- recommends to the Board changes that the Committee believes to be desirable with regard to the appropriate size, functions and needs of the Board of Directors;
- identifies and evaluates director candidates, including nominees recommended by our stockholders;
- identifies individuals qualified to fill vacancies on any committee of the Board;
- reviews procedures for stockholders to submit recommendations for director candidates;
- recommends to the Board the persons to be nominated for election as directors and to each of the Board's committees;
- reviews the performance of the Committee and evaluates its charter periodically;
- develops and recommends to the Board a set of corporate governance guidelines; and,
- reviews and approves related party transactions.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee.