Corporate Governance Guidelines of Fedders
Corporation
The
following Corporate Governance Guidelines have been adopted
by the Board of Directors (the "Board") of Fedders
Corporation (the "Company") to assist the Board
in the exercise of its responsibilities. These Corporate
Governance Guidelines reflect the Board's commitment to
monitor the effectiveness of policy and decision making
both at the Board and management level, with a view to enhancing
long-term stockholder value. These Corporate Governance
Guidelines are not intended to change or interpret any Federal
or state law or regulation, including the laws of the State
of Delaware, or the Certificate of Incorporation or Bylaws
of the Company. These Corporate Governance Guidelines are
subject to modification from time to time by the Board.
THE
BOARD
Role
of Directors
The business and affairs of the Company shall be managed
by or under the direction of the Board. A director is expected
to spend the time and effort necessary to properly discharge
his or her responsibilities. Accordingly, a director is
expected to regularly attend meetings of the Board and committees
on which he or she sits, and to review prior to meetings
material distributed in advance for such meetings. A director
who is unable to attend a meeting (which it is understood
will occur on occasion) is expected to notify the Chairman
of the Board or the Chairman of the appropriate committee
in advance of such meeting.
The
Board's Goals
The Board's goals are to build long-term value for the Company's
stockholders and to assure the vitality of the Company for
its customers, employees and the other individuals and organizations
who depend on the Company.
To
achieve these goals the Board will monitor both the performance
of the Company (in relation to its goals, strategy and competitors)
and the performance of the Chief Executive Officer, and
offer him or her constructive advice and feedback. When
it is appropriate or necessary, it is the Board's responsibility
to remove the Chief Executive Officer and to select his
or her successor.
Selection
of the Chairman of the Board
The Board does not require the separation of the offices
of the Chairman of the Board and the Chief Executive Officer.
The Board shall be free to choose its Chairman in any way
that it deems best for the Company at any given point in
time.
Size
of the Board
The Board believes that it should generally have no fewer
than six and no more than twelve directors. This range permits
diversity of experience without hindering effective discussion
or diminishing individual accountability. The size of the
Board may, however, be increased or decreased if determined
to be appropriate by the Board. For example, it may be desirable
to increase the size of the Board in order to accommodate
the availability of an outstanding candidate for director.
Selection
of New Directors
The Board shall be responsible for nominating members for
election to the Board and for filling vacancies on the Board
that may occur between annual meetings of stockholders.
The Nominating and Corporate Governance Committee is responsible
for identifying, screening and recommending candidates to
the Board for Board membership. When formulating its Board
membership recommendations, the Nominating and Corporate
Governance Committee may also consider advice and recommendations
from others as it deems appropriate.
Board
Membership Criteria
Nominees for director shall be selected on the basis of,
among other things, experience, knowledge, skills, expertise,
integrity, diversity, ability to make independent analytical
inquiries, understanding of the Company's business environment
and willingness to devote adequate time and effort to Board
responsibilities.
The Nominating and Corporate Governance Committee shall
be responsible for assessing the appropriate balance of
criteria required of Board members.
Other
Public Company Directorships
The Company does not have a policy limiting the number of
other public company boards of directors upon which a director
may sit. However, the Nominating and Corporate Governance
Committee shall consider the number of other public company
boards and other boards (or comparable governing bodies)
on which a prospective nominee is a member.
Independence
of the Board
The Board shall be comprised of a majority of directors
who qualify as independent directors ("Independent
Directors") under the listing standards of the New
York Stock Exchange (the "NYSE"). The Board shall
review annually the relationships that each director has
with the Company (either directly or as a partner, stockholder
or officer of an organization that has a relationship with
the Company). Following such annual review, only those directors
who the Board affirmatively determines have no material
relationship with the Company (either directly or as a partner,
stockholder or officer of an organization that has a relationship
with the Company) will be considered Independent Directors,
subject to additional qualifications prescribed under the
listing standards of the NYSE or under applicable law. The
Board may adopt and disclose categorical standards to assist
it in determining director independence.
Directors
Who Change Their Present Job Responsibility
The Board does not believe that directors who retire or
change the position they held when they became a member
of the Board should necessarily leave the Board. Promptly
following such event, the director must notify the Nominating
and Corporate Governance Committee, which shall review the
continued appropriateness of the affected director remaining
on the Board under the circumstances. The affected director
is expected to act in accordance with the Nominating and
Corporate Governance Committee's recommendation following
such review.
Retirement
Age
It is the policy of the Board that members shall retire
from the Board at the annual meeting of stockholders in
the year following the year in which they reach the age
of 78.
Director
Tenure
In connection with each director nomination recommendation,
the Nominating and Corporate Governance Committee shall
consider the issue of continuing director tenure and take
steps as may be appropriate to ensure that the Board maintains
an openness to new ideas and a willingness to critically
re-examine the status quo.
Board
Compensation
A director who is also an officer of the Company shall not
receive additional compensation for such service as a director.
The Company believes that compensation for non-employee
directors should be competitive and should encourage increased
ownership of the Company's stock through the payment of
a portion of director compensation in Company stock, options
to purchase Company stock or similar compensation. The Compensation
Committee will periodically review the level and form of
the Company's director compensation, including how such
compensation relates to director compensation of companies
of comparable size, industry and complexity. Such review
will also include a review of both direct and indirect forms
of compensation to the Company's directors, including any
charitable contributions by the Company to organizations
with which a director is affiliated and consulting or other
similar arrangements between the Company and a director.
Changes to director compensation will be proposed to the
full Board for consideration.
Director's fees (including any additional amounts paid to
chairs of committees and to members of committees of the
Board) are the only compensation a member of the Audit Committee
may receive from the Company; provided, however, that a
member of the Audit Committee may also receive pension or
other forms of deferred compensation from the Company for
prior service so long as such compensation is not contingent
in any way on continued service.
Separate
Sessions of Non-Management Directors
The non-management directors of the Company shall meet in
executive session without management after each regularly
scheduled Board meeting, except the Board meeting following
the annual meeting of stockholders. The Chairpersons of
the Audit Committee, the Compensation Committee, the Finance
Committee and the Nominating and Corporate Governance Committee
shall preside as chairperson of the executive session on
a rotating basis.
Any interested parties desiring to communicate with the
non-management directors regarding the Company may directly
contact such directors by electronic mail through the Company's
website at www.fedders.com.
Self-Evaluation
by the Board
The Nominating and Corporate Governance Committee will sponsor
an annual self-evaluation of the Board's performance as
well as the performance of each committee of the Board,
the results of which will be discussed with the full Board
and each committee. The evaluation should include a review
of any areas in which the Board or management believes the
Board can make a better contribution to the Company. The
Nominating and Corporate Governance Committee will utilize
the results of this self-evaluation process in assessing
and determining the characteristics and critical skills
required of prospective candidates for election to the Board
and making recommendations to the Board with respect to
assignments of Board members to various committees.
Strategic
Direction of the Company
Normally
it is management's job to formalize, propose and implement
strategic choices and the Board's role to approve strategic
direction and evaluate strategic results. However, as a
practical matter, the Board and management will be better
able to carry out their respective strategic responsibilities
if there is an ongoing dialogue among the Chief Executive
Officer, other members of top management and other Board
members. To facilitate such discussions, members of senior
management who are not directors may be invited to participate
in Board meetings when appropriate, at the discretion of
the Chairman.
Board
Access to Management
Board members shall have access to the Company's management
and, as appropriate, to the Company's outside advisors.
Board members shall coordinate such access through the Chief
Executive Officer and Board members will use judgment to
assure that this access is not distracting to the business
operation of the Company.
Board
Interaction with Institutional Investors, Analysts, Press
and Customers
The Board believes that management generally should speak
for the Company. It is suggested that each director refer
all inquiries from institutional investors, analysts, the
press or customers to the Chief Executive Officer or his
or her designee.
Board
Orientation and Continuing Education
The Company shall provide new directors with a director
orientation program to familiarize such directors with,
among other things, the Company's business, strategic plans,
significant financial, accounting and risk management issues,
compliance programs, conflicts policies, code of business
conduct and ethics, corporate governance guidelines, principal
officers, internal auditors and independent auditors. Each
director shall be encouraged to participate in such continuing
education programs as may be advisable to maintain the level
of expertise necessary to perform his or her responsibilities
as a director.
BOARD
MEETINGS
Frequency
of Meetings
There shall be five regularly scheduled meetings of the
Board each year. At least one regularly scheduled meeting
of the Board shall be held quarterly.
Selection
of Agenda Items for Board Meetings
The Chairman of the Board shall prepare an agenda for each
meeting, which will be distributed with relevant meeting
materials. Board members may request discussion of matters
at the meeting, which are not included on the agenda.
Board
Materials Distributed in Advance
Information and materials that are important to the Board's
understanding of the agenda items and other topics to be
considered at a Board meeting should, to the extent practicable,
be distributed sufficiently in advance of the meeting to
permit prior review by the directors. In the event of a
pressing need for the Board to meet on short notice or if
such materials would otherwise contain highly confidential
or sensitive information, it is recognized that written
materials may not be available in advance of the meeting.
Attendance
of Management Personnel at Board Meetings
The Board encourages the Chief Executive Officer to bring
members of management from time to time into Board meetings
to (i) provide management insight into items being discussed
by the Board which involve the manager; (ii) make presentations
to the Board on matters which involve the manager; and (iii)
bring managers with significant potential into contact with
the Board. Attendance of such management personnel at Board
meetings is at the discretion of the Chairman of the Board.
COMMITTEE
MATTERS
Number
and Names of Board Committees
The Company shall have five standing committees: Audit,
Compensation, Executive, Finance and Nominating and Corporate
Governance. The purpose and responsibilities for at least
the Audit, Compensation and Nominating and Corporate Governance
committees shall be outlined in committee charters adopted
by the Board. The Board may, from time to time, form a new
committee or disband a current committee, depending on circumstances.
In addition, the Board may determine to form ad hoc committees
from time to time, and determine the composition and areas
of competence of such committees.
Independence
of Board Committees
Each of the Audit Committee, the Compensation Committee
and the Nominating and Corporate Governance Committee shall
be composed entirely of Independent Directors satisfying
applicable legal, regulatory and stock exchange requirements
necessary for an assignment to any such committee.
Assignment
and Rotation of Committee Members
The Nominating and Corporate Governance Committee shall
be responsible, after consultation with the Chairman of
the Board, for making recommendations to the Board with
respect to the assignment of Board members to various committees.
After reviewing the Nominating and Corporate Governance
Committee's recommendations, the Board shall be responsible
for appointing the Chairperson and members to the committees
on an annual basis.
The Nominating and Corporate Governance Committee shall
annually review the Committee assignments and shall consider
the rotation of the Chairpersons and members with a view
toward balancing the benefits derived from continuity against
the benefits derived from the diversity of experience and
viewpoints of the various directors. With regard to the
Chairman of the Nominating and Corporate Governance Committee,
such position shall rotate at least once every three years.
LEADERSHIP
DEVELOPMENT
Selection
of the Chief Executive Officer
The Board shall be responsible for identifying potential
candidates for, and selecting, the Company's Chief Executive
Officer. In identifying potential candidates for, and selecting,
the Company's Chief Executive Officer, the Board shall consider,
among other things, a candidate's experience, understanding
of the Company's business environment, leadership qualities,
knowledge, skills, expertise, integrity, and reputation
in the business community.
Evaluation
of Chief Executive Officer
The Compensation Committee, with the oversight of the Nominating
and Corporate Governance Committee, shall be responsible
for annually evaluating the performance of the Chief Executive
Officer.
Succession
Planning
The Board shall plan for the succession to the position
of the Chief Executive Officer. To assist the Board, the
Chief Executive Officer shall prepare and distribute to
the Board an annual report on succession planning for all
senior officers of the Company with an assessment of senior
managers and their potential to succeed the Chief Executive
Officer and other senior management positions. The report
shall include a short-term succession plan, which delineates
a temporary delegation of authority to certain officers
of the Company, if all or a portion of the senior officers
should unexpectedly become unable to perform their duties.
Management
Development
The Board shall determine that a satisfactory system is
in effect for education, development, and orderly succession
of senior and mid-level managers throughout the Company.
Annex A - Excerpt From Rule Proposals
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9.
Listed companies must adopt and disclose corporate governance
guidelines.
Commentary:
No single set of guidelines would be appropriate for
every company, but certain key areas of universal importance
include director qualifications and responsibilities, responsibilities
of key board committees, and director compensation. Given
the importance of corporate governance, each listed company's
website must include its corporate governance guidelines,
the charters of its most important committees (including
at least the audit, compensation and nominating committees)
and the company's code of business conduct and ethics (see
subsection 10 below). Each company's annual report must
state that the foregoing information is available on its
website, and that the information is available in print
to any shareholder who requests it. Making this information
publicly available should promote better investor understanding
of the company's policies and procedures, as well as more
conscientious adherence to them by directors and management.
The
following subjects must be addressed in the corporate governance
guidelines:
- Director
qualification standards. These standards should, at
minimum, reflect the independence requirements set forth
in subsections 1 and 2 of this Section 303A. Companies
may also address other substantive qualification requirements,
including policies limiting the number of boards on which
a director may sit, and director tenure, retirement and
succession.
- Director
responsibilities. These responsibilities should clearly
articulate what is expected from a director, including
basic duties and responsibilities with respect to attendance
at board meetings and advance review of meeting materials.
- Director
access to management and, as necessary and appropriate,
independent advisors.
- Director
compensation. Director compensation guidelines should
include general principles for determining the form and
amount of director compensation (and for reviewing those
principles, as appropriate). The board should be aware
that questions as to directors' independence may be raised
when directors' fees and emoluments exceed what is customary.
Similar concerns may be raised when the company makes
substantial charitable contributions to organizations
in which a director is affiliated, or enters into consulting
contracts with (or provides other indirect forms of compensation
to) a director. The board should critically evaluate each
of these matters when determining the form and amount
of director compensation, and the independence of a director.
- Director
orientation and continuing education.
- Management
succession. Succession planning should include policies
and principles for CEO selection and performance review,
as well as policies regarding succession in the event
of an emergency or the retirement of the CEO.
- Annual
performance evaluation of the board. The board should
conduct a self-evaluation at least annually to determine
whether it and its committees are functioning effectively.
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BUY 
OWNERS CENTRAL 
