A. Board Functions and Responsibilities
Almoayyed Contracting Group’s Board of Directors (the “Board”) is responsible for overseeing management performance, ensuring the long-term interests of shareowners, monitoring adherence to ACG standards and policies, promoting responsible corporate citizenship, and fulfilling duties assigned by the laws of the Ministry of Industry, Commerce, and Tourism, Bahrain
The Board fulfills these functions by, among other things:
•The role involves selecting, evaluating, and compensating company officers, monitoring strategic plans, approving major transactions, assessing risks, and ensuring compliance with processes for integrity, financial statements, relationships, and legal compliance, including the Company’s Code of Conduct.
B. Board Composition
1. The Board of ACG must support growth, commercial strategy, risk management, capital allocation, and leadership succession, evolving their skills and perspectives to meet the company’s changing commercial and strategic goals.
The Corporate Governance and Responsibility Committee reviews the Board’s skills and composition annually, considering factors like independence, diversity, age, skills, experience, and industry backgrounds. Directors must demonstrate integrity and challenge management. The Committee evaluates incumbent directors’ skills and perspectives to ensure the Board evolves and serves the Corporation’s changing business and strategic needs. This includes recommending re-nominations for new directors.
The Corporate Governance and Responsibility Committee recruits new members to the Board through discussions with the Chairman, CEO, and Executive Director. Candidates are identified through professional recruiting agencies, reputation, or existing Board members. Interviews are conducted to ensure candidates possess the necessary skills, personality, leadership traits, work ethic, and independence. The Board nominates the successful candidate for election at the Annual Meeting of Shareowners.
2. The Corporate Governance and Responsibility Committee will annually review directors’ and board candidates’ independence, ensuring a majority of directors are considered independent under MOIC guidelines.
The Company will not make any personal loans to directors or executive officers.
3. The company has no fixed rule for the offices of the Chairman, Executive Director, and CEO, and the Chairman should be an employee or elected from non-employee directors. The Board believes this is part of corporate governance and succession planning.
If the Chairman is an independent director, he or she shall have the following duties and responsibilities:
• The role involves reviewing agendas, schedules, and presentation materials, and serving as a liaison between the CEO and independent directors. It involves the presidency, consultation with shareowners, and calling meetings of non-employee directors. The role also involves consulting with management, identifying strategic direction and operational issues, serving as an ex-officio member of committees, and working with the CEO to prioritize candidate skill sets. Other duties may be determined by the Board.
4. Lead Director.
A Lead Director is elected by independent directors, serving a two-year term at the annual shareowners’ meeting. The Director must have served at least two years on the Company’s Board before joining.
• The individual must be independent, able to commit time and engage in substantial responsibilities, possess effective communication skills, maintain a strong rapport with board members, demonstrate high integrity and ethical character, and align with the Corporation’s corporate strategy.
➢ Leadership experience within a large, complex organization
➢ International experience and exposure to a variety of markets
➢ Expertise aligned with key growth initiatives
The Lead Director will have the following duties and responsibilities:
• Review, and when appropriate, make changes to Board meeting agendas and Board meeting schedules to ensure there is sufficient time for discussion of all agenda items;
• Review, and when appropriate, make changes to presentation material and other written information provided to directors for Board meetings;
• Preside at all meetings at which the Chairman is not present including executive sessions of the non-employee directors and apprise the Chairman of the issues considered;
• Serve as liaison between the Chairman and the independent directors;
• Be available for consultation and direct communications with the Company’s shareowners;
• Call meetings of the non-employee directors when necessary and appropriate;
• Retain outside professionals on behalf of the Board;
• Consult with management about what information is to be sent to the Board;
• Identify key strategic direction and operational issues upon which the Board’s annual core agenda is based;
• Serve as an ex-officio member of each committee;
• As and when the Board considers adding new members, work with the CEO, Chairman, Corporate Governance and Responsibility Committee and the full Board to help identify and prioritize the specific skill sets, experience, and knowledge that candidates for election to the Board must possess; and
• Perform such other duties as the Board may determine from time to time.
5. ACG’s By-laws govern the authorized number of directors, which are reviewed by the Corporate Governance and Responsibility Committee and the Board for effective functioning and appropriate diversity and expertise.
6. The Board opposes arbitrary term limits, arguing they may limit fresh ideas and overlook directors with more extensive insights into ACG’s operations, aiming to maintain a balance between longer-term and recent directors.
The Corporate Governance and Responsibility Committee reviews directors’ board continuation, with non-employee directors serving until their 75th birthday, unless determined by the Board.
7. An individual board member cannot serve on more than four public company boards, including their own company. If a board member serves as a CEO, they should not serve on more than two public companies. Board members should advise their Chairman before accepting invitations to serve on another board and offer to resign if their job responsibilities change.
8. The Company’s By-laws stipulate that in an uncontested election of directors, a director nominee with a majority vote will be elected. If a nominee does not receive a majority vote, they must submit their resignation to the Board Chairman, managed by the Corporate Governance and Responsibility Committee.
C. Board Meetings
1. Regular Board meetings are scheduled in advance and held at the Company’s headquarters. Special meetings can be called by the Chairman, CEO, or other directors.
2. Board members are required to attend and participate in board and committee meetings, with important information distributed in writing to directors in advance to allow them to review materials and consider key issues.
Board members are also encouraged to attend the Annual Meeting of Shareowners.
3. The Board reviews annual agenda subjects, allowing each member to suggest items for future consideration. They also review foreseen topics and allow members to raise unaddressed subjects.
4. The Board welcomes senior officers and employees to meetings, allowing for key insights and leadership potential. Management presentations should be scheduled for open discussions, allowing for question-and-answer sessions and policy discussions.
5. The Board conducts quarterly executive sessions for non-employee directors, discussing management performance, succession plans, corporate governance policies, and board needs, ensuring board compliance.
The Chairman, if an independent director, or the Lead Director, if not, chairs executive sessions. After the session, the Chairman meets with the CEO or Lead Director to discuss agenda items and information requests.
D. Board Committees
1. Committees: The Board has four committees: Audit, Management Development and Compensation, Corporate Governance and Responsibility, and Retirement Plans. All committee members are independent directors, meeting MOIC criteria. Additional committees may be established as needed. The Chairman or Lead Director serves as an ex-officio member.
2. The Board appoints committee members and chairpersons based on its Corporate Governance and Responsibility Committee recommendation, with chairpersons typically having prior committee experience.
3. Charters. Each committee operates under a written charter setting forth its purpose, duties and responsibilities, and providing for an annual self-evaluation of its performance. These charters are published on the Company’s website and are made available in print to any shareowner who requests them.
4. Committee meetings are held alongside full Board meetings, with the chairperson determining frequency and length. They develop agendas with management assistance, and directors receive schedules. Board members not on a committee are welcome to attend meetings.
E. Access to Management, Employees and Independent Advisors
1. Management and Employees. Directors have full and free access to management and employees of the Company. Meetings or contacts may be arranged through the Company’s CEO or Corporate Secretary or directly by the director.
2. Independent Advisors. The Chairman, if an independent director, or the Lead Director, if the Chairman is not an independent director, the Board and its committees have the right to retain independent outside financial, legal, or other advisors as they may deem necessary.
F. Director Orientation and Continuing Education
The Corporate Secretary will create an orientation manual for new directors, schedule an orientation program with senior management presentations, and provide periodic updates on the Company’s strategic plans, financial statements, and key issues to help directors fulfill their responsibilities.
Board members may attend, at the Company’s expense, seminars, conferences and other continuing education programs designed for directors of public companies.
G. Director Compensation
The Corporate Governance and Responsibility Committee reviews and recommends compensation for non-employee directors, ensuring it aligns with peer companies and addresses the increased time, effort, expertise, and accountability required of active Board membership in light of evolving corporate governance requirements.
The Corporate Governance and Responsibility Committee suggests that annual compensation for outside directors should include a cash component for their service on the Board and its Committees and an equity component to align interests between directors and shareowners. This includes an annual retainer for the Chairman, the Lead Director, and each committee served upon, along with deferred compensation in the form of common stock equivalents.
Non-employee directors must hold company stock with a market value of at least five times the annual cash retainer and net gain shares from option exercises for one year.
H. Management Compensation and Succession
1. Succession Plan. . The Board reviews leadership development and succession plans for CEO and senior management annually, with the Management Development and Compensation Committee preparing for discussion by the full Board.
The Board selects the CEO, with independent Directors assessing candidates based on business strategy, prospects, and challenges. They consider the incumbent CEO’s perspectives on internal candidates’ performance. The Board assesses leadership development and assessment process, considering directors’ familiarity with senior management for informed decisions.
2. The Management Development and Compensation Committee reviews and approves the CEO’s compensation level, evaluating their performance, and determining the compensation level for other executive officers, in line with the company’s corporate goals and objectives.
3. The executive stock ownership guidelines require officers to meet ownership thresholds and hold net gain shares for one year, with five years to meet. They do not apply to executives over 60 with 10 years of service.
4.The Board will review incentive compensation paid to senior executives during a significant restatement of financial results. If the compensation was calculated based on reduced financial results, the executive engaged in misconduct, or the amount of incentive compensation would have been lower had the financial results been properly reported, the Board will seek to recoup it, considering relevant factors and potential prejudice to the Company’s interests.
For purposes of this policy, the following terms shall have the meanings set forth below:
“senior executives” shall mean executive officers
“incentive compensation” shall mean bonuses or awards issued under any compensation plan approved by the shareholders of the Company; and
“misconduct” shall mean a knowing violation of MOIC rules and regulations or Company policy.
The Board determines misconduct for this policy independently of management’s or committee’s determinations of senior executive conduct. This policy does not modify the right to pay or credit due under incentive compensation plans, except for the right to recoup previously paid or credited compensation. The Board’s recoupment claim cannot survive a change in company control.
I. Annual Performance Evaluation
The Board will conduct an annual self-evaluation, led by the Chairman, Lead Director, and Corporate Governance and Responsibility Committee Chairman, to assess the effectiveness of its committees and seek feedback on its evolution and strategic needs.
1. The Corporate Governance and Responsibility Committee will annually review the scope and content of the self-evaluation to ensure it is contemporary and appropriate for the needs of ACG, and that actionable feedback is solicited on the operation and effectiveness of the Board and its committees.
2. After the distribution of the self-evaluation materials to directors, the Corporate Governance and Responsibility Committee will receive comments from all directors and report to the Board, which report will identify areas for improvement in the performance of the Board and its committees.
J. Review and Modification of Corporate Governance Guidelines
The Corporate Governance and Responsibility Committee will review these guidelines annually (and more often if necessary) and will report to the Board any recommendations that it may have regarding modification of these guidelines.