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|Corporate Governance Guidelines|
ATHLON ENERGY INC.
Board of Directors
The following Corporate Governance Guidelines have been adopted by the Board of Directors (the “Board”) of Athlon Energy Inc. (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, interpret or supersede any Federal or state law or regulation, including the Delaware General Corporation Law, or the Amended and Restated Certificate of Incorporation or the Amended and Restated Bylaws of the Company. These Corporate Governance Guidelines are subject to modification from time to time by a majority of the Board.
I. BOARD MISSION
The mission of the Board is to represent the interests of the stockholding body as a whole in perpetuating a business that succeeds in providing high quality services and operates in an ethical and lawful manner while providing financial returns and a growth in assets over the long term. The Board is responsible for actively ensuring that the Company has in place high-performing management focused on achieving this result. By fulfilling its obligations to stockholders to increase value over the long term, the Board fulfills its responsibility to customers, employees, suppliers and to the communities where it operates – all of which are essential to the Company’s success.
B. Directors’ Duties and Responsibilities
The basic responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its stockholders. In discharging that obligation, directors shall be entitled to rely on the honesty and integrity of their fellow directors and of the Company’s senior executives, outside advisers and outside auditors. The Board fulfills its mission by:
II. COMPOSITION OF BOARD
A. Size of Board
The Board believes that it should generally have no fewer than 3 and no more than 15 members. The size of the Board could, 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.
B. Independent Directors
To the extent that the Company is a “controlled company” within the meaning of the NYSE rules, the Company will qualify for, and intends to rely on, exemptions, which include not having a majority of independent directors on the Board. If at any time the Company no longer meets the “controlled company” exception, the Board will take all action necessary to ensure that at least a majority of the Board will be comprised of directors who meet the criteria for independence as required by the NYSE. The Board will determine annually, based on all of the relevant facts and circumstances, whether each director satisfies the criteria for independence and must disclose each of these determinations in the Company’s filings with the Securities and Exchange Commission (the “SEC”). The Board may adopt and disclose categorical standards to assist it in making such determinations and may make a general disclosure if a director meets these standards. Any determination of independence for a director who does not meet these standards, however, must be specifically explained.
C. Board Membership Criteria
The Board seeks members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise relevant to the Company with a reputation for integrity. The Nominating and Corporate Governance Committee is responsible for identifying, screening and recommending candidates to the Board for Board membership in accordance with the policies and principles set forth in its charter. This assessment will include an examination of whether the individual is independent, as well as consideration of diversity, age, skills and experience in the context of the needs of the Board. When formulating its Board membership recommendations, the Nominating and Corporate Governance Committee shall also consider advice and recommendations from others as it deems appropriate.
D. Director Service on other Public Company Boards.
Exceptional candidates who do not meet all of these criteria may still be considered. For purposes of the limitations set forth in subsections (b)(i), (ii) and (iii) above, service on both the boards of a public company and any of its public company affiliates shall qualify as one public company.
E. New Directors
Nominees for directors will be identified, screened and recommended by the Nominating and Corporate Governance Committee in accordance with the policies and principles in its charter, and presented to the full Board.
F. Directors’ Tenure, Retirement and Succession
In discharging their duties, directors should be entitled to rely on the honesty and integrity of the Company’s officers, employees, outside advisers and independent auditors.
Directors are expected to attend Board meetings, meetings of committees of the Board (individually, a “Committee”) on which they serve and meetings of stockholders absent exceptional cause, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Directors are expected to review meeting materials prior to Board meetings, stockholder meetings and meeting of Committees on which they serve and, when possible, should communicate in advance of meetings any questions or concerns that they wish to discuss so that management will be prepared to address the same. Each director’s attendance at, and preparation for, Board meetings, stockholder meetings and meetings of Committees on which they serve, shall be considered by the Nominating and Corporate Governance Committee when recommending director nominees.
B. Board Meetings
C. Director Compensation
The Nominating and Corporate Governance Committee, in accordance with the policies and principles set forth in its charter, will recommend the form and amount of director compensation. The Nominating and Corporate Governance Committee will periodically review directors’ fees and other compensation, including how such compensation relates to director compensation for companies of comparable size and complexity. As part of such review, the Nominating and Corporate Governance Committee also will consider the impact that excessive director compensation could potentially have on director independence. The Nominating and Corporate Governance Committee’s review will include an examination of both direct and indirect forms of compensation to the Company’s directors, including charitable contributions to organizations in which a director is affiliated, and consulting or similar arrangements. Changes to director compensation will be proposed by the Nominating and Corporate Governance Committee to the Board for its consideration.
D. Stock Ownership by Directors
To align the interests of the Board with those of the stockholders, the Board believes that appropriate guidelines should be established with respect to independent director’s compensation, which will set forth the proportion of independent director’s compensation that will include common stock or stock options. In that regard, the Board expects that a meaningful portion of independent directors’ compensation shall consist of restricted stock, stock options or deferred stock units which must be held until some period following the termination of service as a director.
E. Orientation for New Directors; Continuing Director Education
The Nominating and Corporate Governance Committee will facilitate a complete orientation process for new directors that includes background materials, meetings with senior management, visits to Company facilities and other matters that may be relevant. The Board recognizes the importance of continuing education for its directors and is committed to provide such education in order to improve both Board and Committee performance. The Board shall delegate to each Committee Chair the responsibility to arrange for the periodic presentation of continuing education programs at meetings of the Board and of Committees, as deemed necessary and appropriate, regarding topical corporate governance issues.
F. Assessing Board Performance
The Board, in conjunction with the Nominating and Corporate Governance Committee, will conduct an annual self-evaluation to determine whether it and its Committees are functioning effectively. The Nominating and Corporate Governance Committee will ask all directors to comment as to the Board’s performance and will report annually to the Board with an assessment of the Board’s performance, to be discussed with the full Board following the end of each fiscal year. 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.
G. Access to Officers and Employees
Board members have complete and open access to the Company’s CEO, CFO and Chief Accounting Officer. Board members who wish to have access to other members of management should coordinate such access through one of the foregoing.
H. Interaction with Third Parties
The Board believes that management should speak for the Company and that the Chairman should speak for the Board. It is suggested that each director shall refer all inquiries from institutional investors, analysts, the press or customers to the CEO or his or her designee.
I. Board Authority
The Board and each Committee have the power to hire independent legal, financial or other advisers as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance.
The Board believes maintaining confidentiality of information and deliberations is an imperative. Information learned during the course of service on the Board is to be held confidential and used solely in furtherance of the Company’s business, as set forth in the Athlon Energy Inc. Code of Business Conduct and Ethics.
IV. COMMITTEE ISSUES
A. Board Committees
The Board will have at all times such Committees as required pursuant to the NYSE listing standards. To the extent required pursuant to the NYSE listing standards, each of these Committees will consist solely of independent directors satisfying applicable legal, regulatory and stock exchange requirements. Committee members will be appointed by the Board upon recommendation of the Nominating and Corporate Governance Committee with consideration of the desires of individual directors.
The Board may, from time to time, establish or maintain additional committees as they deem necessary or appropriate.
B. Rotation of Committee Assignments and Chairs
Committee assignments and the designation of Committee chairs should be based on each director’s knowledge, interests and areas of expertise. The Board does not favor mandatory rotation of Committee assignments or chairs. The Board believes experience and continuity are more important than rotation. Committee members and chairs may be rotated in response to changes in the membership of the Board and in all cases should be rotated only if rotation is likely to increase Committee performance.
C. Committee Charters
Each Committee shall have its own charter. The charters will set forth the purposes, goals and responsibilities of the Committees as well as qualifications for Committee membership, procedures for Committee member appointment and removal, Committee structure and operations and Committee reporting to the Board. The charters will also provide that each Committee will annually evaluate its own performance.
D. Frequency and Length of Committee Meetings
The chair of each Committee, in consultation with the Committee members, will determine the frequency and length of the Committee meeting consistent with any requirements set forth in the Committee’s charter.
V. CHIEF EXECUTIVE OFFICER EVALUATION AND SERVICES
The Board should set 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. The Board also shall establish policies and principles for the long-term succession to the position of the CEO. The Nominating and Corporate Governance Committee shall not assume the foregoing duties unless directed by the Board.
The Compensation Committee, in accordance with the policies and principles set forth in its charter, will conduct, at least annually, a review and approve corporate goals and objectives relevant to CEO compensation and set the CEO’s compensation level based on this evaluation.
VI. MANAGEMENT DEVELOPMENT AND SUCCESSION PLANNING
There will be a periodic report to the Board by the CEO on the Company’s program for the development of, and succession planning for, management.
VII. MANAGEMENT STOCK OWNERSHIP GUIDELINES
To align the interests of management with those of the stockholders, the Board believes that management should own a meaningful amount of common stock of the Company. To that end, the Board may adopt, in its discretion, Stock Ownership Guidelines that require the CEO and other members of management to hold a meaningful amount of common stock of the Company.
VIII. STANDARDS OF ETHICAL BUSINESS CONDUCT AND REPORTING OF IRREGULARITIES
A. Personal Loans
The Company will not extend credit or arrange for the extension of credit in the form of a personal loan to directors or officers.
B. Standards of Ethical Business Conduct
The Company has adopted a Code of Business Conduct and Ethics for directors, officers and other employees of the Company. The purpose of the Code of Business Conduct and Ethics is to focus on areas of ethical risk, provide guidance in recognizing and dealing with ethical issues, provide mechanisms to report unethical conduct and help foster a culture of honesty and integrity. The Code of Business Conduct and Ethics is posted on the Company’s website. Directors, officers and other employees are expected to act in accordance with the requirements of the Code of Business Conduct and Ethics. Waivers for any director, the CEO, the CFO and other executive officers may only be made by the Board. Any such waiver will be posted on the Company website and otherwise disclosed as required by law.
C. Reports of Irregularities
Any reports of concerns regarding accounting, internal auditing controls, auditing matters or other irregularities or concerns, will be brought to the attention of the Chair of the Audit Committee. These reports may be anonymous if made using the Athlon Energy Inc. Ethics Helpline at 1-866-869-3360. The Chair of the Audit Committee will report periodically to the Board concerning these matters.
IX. AUTHORITY TO RETAIN ADVISERS
The Board and each Committee has the authority, at the Company’s expense, to obtain advice, reports or opinions from internal or external counsel and expert advisers and shall have the sole authority to approve related fees and retention terms.