Corporate Governance Guidelines
These Corporate Governance guidelines established by the Board of Directors of MGT Inc. provide a structure within which our directors and management can effectively pursue MGT’s objectives for the benefit of its stockholders. The Board intends that these guidelines serve as a flexible framework within which the Board may conduct its business, not as a set of binding legal obligations. These guidelines should be interpreted in the context of all applicable laws, MGT’s charter documents, and other governing legal documents.
B. Board Structure and Composition
1. Size of the Board. The authorized number of directors will be determined from time to time by resolution of the Board, provided the Board consists of at least one member(s).
2. Board Membership Criteria. The current board and active shareholder will evaluate and recommend candidates for membership on the Board consistent with criteria established by the Board, including director nominees to be proposed by the Board to MGT’s stockholders for election or any director nominees to be elected or appointed by the Board to fill interim director vacancies on the Board.
3. Director Independence. The Board believes that a number of directors on the Board should be independent of the company, taking into account the definitions of the Sarbanes-Oxley Act of 2002, the rules and regulations of the Securities and Exchange Commission, and the NYSE & NASDAQ Stock Market. The Board also believes that it is in the best interest of MGT and its stockholders to have a majority of non-independent directors, including current and (in some cases) former members of management, serve as directors.
4. Director Tenure. Directors are reelected each year by the shareholders and the Board does not believe it should establish term limits because directors who have developed increasing insight into MGT and its operations over time provide an increasing contribution to the Board as a whole. To ensure the Board continues to generate new ideas and to operate effectively, the Nominating and Corporate Governance Committee shall monitor performance and take steps as necessary regarding continuing director tenure.
5. Directors Who Change Their Present Job Responsibility. The Board believes that directors who experience a material reduction in their job responsibilities in the position they held when they came on the Board should deliver a notice of such change in status to the Board.
C. Principal Duties of the Board of Directors
1. To Oversee Management and Evaluate Strategy. The fundamental responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be the best interests of MGT and its stockholders. It is the duty of the Board to oversee the chief executive officer and the Presidents who together run the Company on a daily basis. The Board also monitors management’s performance to ensure that MGT operates in an effective, efficient and ethical manner in order to produce value for MGT’s stockholders. The Board also evaluates MGT’s overall strategy and monitors MGT’s performance against its operating plan and against the performance of its peers. Directors are expected to invest the time and effort necessary to understand MGT’s business and financial strategies and challenges. The basic duties of the directors include attending Board meetings and actively participating in Board discussions. Directors are also expected to make themselves available outside of board meetings for advice and consultation.
2. To Select the Chair and Chief Executive Officer. The Board will select the chairman of the Board and the chief executive officer in compliance with MGT’s Certificate of Incorporation, which provides that the chairman of the board may or may not be a current employee of MGT. However, if there is no chief executive officer or president of MGT as a result of the death, resignation or removal of such officer, then the chairman of the Board of Directors may also serve in an interim capacity as the chief executive officer of MGT until the Board appoints a new chief executive officer.
3. To Evaluate Management Performance and Compensation. At least annually, the Board will evaluate the performance of the chief executive officer and the other officers. On an annual basis it will determine the compensation of the chief executive officer and the other officers. It will also evaluate the compensation plans, policies and programs for officers and employees to ensure they are appropriate, competitive and properly reflect MGT’s objectives and performance.
4. To Review Management Succession Planning, the Board will review and recommend plans for the development, retention and replacement of executive officers of MGT.
5. To Monitor and Manage Potential Conflicts of Interest, all members of the Board must inform the Board of all types of transactions between them (directly or indirectly) and MGT as soon as reasonably practicable even if these transactions are in the ordinary course of business. The Board will review and approve all related party transactions for which Board approval is required by applicable law or the rules of the NASDAQ Stock Market. The Board will also ensure that there is no abuse of corporate assets or unlawful related party transactions.
6. To Ensure the Integrity of Financial Information, The Board evaluates the integrity of MGT’s accounting and financial reporting systems, including the audit of MGT’s annual financial statements by the independent auditors, and that appropriate systems of control are in place, namely MGT’s Independent, Third Party CFO. The CFO reports to the Board on a regular basis and the Board, upon the recommendation of the CFO, takes the actions that are necessary to ensure the integrity of MGT’s accounting and financial reporting systems and that appropriate controls are in place.
7. To Monitor the Effectiveness of Board Governance Practices. The Board will periodically review and evaluate the effectiveness of the governance practices under which the Board operates and make changes to these practices as needed.
D. Board Procedures
Directors are expected to prepare for, attend, and contribute meaningfully in all Board and applicable committee meetings in order to discharge their obligations.
1. Frequency of Board Meetings. Regular meetings of the Board shall be held at such times and places as determined by the Board. There will be at least four regularly scheduled meetings of the Board each year but the Board will meet more often if necessary.
2. Attendance at Board Meetings. To facilitate participation at the Board meetings, directors may attend in person, via telephone conference or via video-conference. Materials are distributed in advance of meetings.
3. Other Commitments. Each member of the Board is expected to ensure that other existing and future commitments, including employment responsibilities and service on the boards of other entities, do not materially interfere with the member’s service as director. The members of the Board cannot have more than five (5) public company board memberships, including membership on the MGT Board.
4. Board Membership Limits of the Chief Executive Officer. The chief executive officer cannot have more than three (3) public company board memberships, including membership on the MGT Board.
5. Executive Sessions of Non-Management Directors. NASDAQ rules require independent Board members to regularly meet in executive session without non-independent directors. The Board’s policy is to hold executive sessions without the presence of management, including the chief executive officer and other non-independent directors in connection with each regularly scheduled Board meeting, and at other times as necessary. Committees of the Board may also meet in executive session as deemed appropriate.
6. Board Access to Management. Members of the Board will have access to MGT’s management and employees as needed to fulfill their duties. Furthermore, the Board encourages management to, from time to time, bring managers into meetings of the Board who: (a) can provide additional insight into the items being discussed because of personal involvement in these areas, and/or (b) are managers with future potential that senior management believes should be given exposure to the Board.
7. Code of Ethics. MGT has adopted a Code of Conduct to provide guidelines for the ethical conduct by directors, officers and employees. The Code of Conduct is posted on MGT’s website.
8. Engaging Experts. The Board and each committee of the Board will have the authority to obtain advice, reports or opinions from internal and external counsel and expert advisers and will have the power to hire independent legal, financial and other advisers as they may deem necessary or appropriate, without consulting with, or obtaining approval from, management of MGT in advance.
9. Minimum Share Ownership Requirement. In an effort to more closely align the interests of our directors and executive officers with those of our stockholders, each director and executive officer will be required to meet the following minimum share ownership requirements: (i) each director shall own at least 500 shares of MGT stock; (ii) our Founders and our Chief Executive Officer shall own at least 7,500 shares of MGT stock; and (iii) our Senior Vice Presidents shall own at least 2,000 shares of MGT stock. Our directors shall have two years from the date they became a director of MGT to come into compliance with these ownership requirements. Our executive officers shall have five years from the date they became executive officers of MGT to come into compliance with these ownership requirements.
E. Board Committees
1. Number and Composition of Committees. The Board intends to have the following committees: an Audit Committee, a Compensation Committee, a Corporate Governance Committee and an Executive Committee. From time to time the Board may form a new committee or disband a current committee depending on the circumstances. Each committee will comply with the independence and other requirements established by applicable law and regulations, including SEC and NASDAQ rules.
2. Committee Appointments. Members of all committees are appointed by the Board. The Board determines the exact number of members and can at any time remove or replace a Committee member.
3. Committee Proceedings. The Chair of each committee of the Board will, in consultation with appropriate committee members and members of management, and in accordance with the committee’s charter, determine the frequency and length of committee meetings and develop the committee’s agenda.
F. Director Continuing Education
The Board believes that ongoing education is important for maintaining a current and effective Board. Accordingly, the Board encourages directors to participate in ongoing education, as well as participation in accredited director education programs. The Board will reimburse directors for expenses incurred in connection with these education programs.
G. Board Performance
The Board develops and maintains a process whereby the Board, its committees and its members are subject to evaluation and self-assessment. The Nominating and Corporate Governance Committee oversees this process.
H. Board Compensation
The Compensation Committee of the Board will have the responsibility to review and recommend to the Board compensation programs for non-employee directors.
I. Auditor Rotation The Audit Committee of the Board will ensure that the lead audit partner and the audit review partner be rotated every 3-5 years as is required by the rules of the SEC.
J. Communications with Stockholders
1. Stockholder Communications to the Board. Stockholders may contact the Board about bona fide issues or questions about MGT by sending an email to:
Attn: Corporate Secretary
3960 Bell Road, Suite 211
Hermitage, TN 37076
2. Annual Meeting of Stockholders. Each director is encouraged to attend the Annual Meeting of Stockholders.
K. Periodic Review of the Corporate Governance Guidelines
These guidelines shall be reviewed periodically by the Nominating and Corporate Governance Committee and the Board will make changes when appropriate based on recommendations from the Committee. Last updated: June 03, 2015