Investor Relations

corporate governance | highlights

Overview

The Board of 1worldspace has developed corporate governance practices to help it fulfill its responsibility to shareholders to oversee the work of management in the conduct of the Company's business and to seek to serve the long-term interests of shareholders. The governance practices are memorialized in these guidelines to assure that the Board will have the necessary authority and practices in place to review and evaluate the Company's business operations as needed and to make decisions that are independent of the Company's management.

The guidelines are subject to future refinement or changes as the Board may find necessary or advisable for 1worldspace in order to achieve these objectives.

Board Composition and Director Qualifications

The Company's Code of Regulations provides that all of the directors will be elected annually. The Board will have at least a majority of directors who meet the criteria for independence required by the Nasdaq Stock Exchange (the "NASDAQ"). The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the appropriate skills and characteristics of Board members as well as the composition of the Board as a whole. This assessment will include members' qualification as independent, as well as consideration of age, skills and experience in the context of the needs of the Board. Nominees for the Board will be selected by the Nominating and Corporate Governance Committee in accordance with the policies and principles in its charter.

The number of directors is currently fixed, pursuant to the Company's Code of Regulations, at seven. The directors believe that seven to nine members is an appropriate size for the Company's Board, but this will be reviewed and modified by the Board periodically to ensure that the Board can efficiently discharge its fiduciary duties and regulatory responsibilities.

Individual directors whose primary professional position or responsibility changes (other than through internal promotion) from the position or responsibility they held when they were elected to the Board should volunteer to resign from the Board. This would provide an opportunity for the Board, through the Nominating and Corporate Governance Committee, to review the continued appropriateness of Board membership under the circumstances.

Directors are encouraged to limit the number of public company boards on which they serve to six. Directors should advise the Chairman of the Board and the Chairman of the Nominating and Corporate Governance Committee in advance of accepting an invitation to serve on another public company board. No director may serve on the Audit Committee of more than three other public company boards. No director may be nominated for election to the Board if he or she would be age 76 or older at the time of the election.

The Board does not believe that it should establish term limits for directors. After deliberation, the Board has determined that term limits hold the disadvantage of losing the contributions of directors who have been able to develop, over a period of years, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole.

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Director Responsibilities

The basic responsibility of the directors is to exercise their judgment to act in what they reasonably believe to be in the best interests of the Company and its shareholders. In discharging that obligation, directors should be entitled to rely on the honesty and integrity of the Company's senior executives and its outside advisors and auditors. The directors shall also be entitled to have the Company purchase reasonable directors' and officers' liability insurance on their behalf, to the benefits of indemnification to the fullest extent permitted by law and the Company's articles of incorporation, regulations and any indemnification agreements, and to exculpation as provided by state law.

Absent unusual circumstances, directors are expected to attend all Board meetings and all meetings of committees on which they serve. Information that is important to the Board's understanding of the business to be conducted at a Board or committee meeting should generally be distributed in writing to the directors before the meeting, and directors should review these materials in advance of the meeting. It is understood, however, that materials regarding extremely confidential matters may not be delivered to directors in advance.

The Chairman, in consultation with the Board, shall establish the schedule of Board meetings each year. The Chairman will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will review the Company's long-term strategic plans and the principal issues that the Company will face in the future with the Chief Executive Officer and other executive officers during at least one Board meeting each year.

The directors who qualify as "independent" under the Nasdaq listing standards will meet in executive session at least annually. In addition, non-management directors will meet in regularly scheduled executive sessions. The director who presides at these meetings will be chosen by the non-management directors, and his name will be disclosed in the annual proxy statement, to the extent required by applicable rules of the SEC or by Nasdaq listing standards.

The Chairman of the Board and Chief Executive Officer is responsible for establishing effective communications with the Company's various constituencies (such as shareholders, customers, employees, suppliers, community groups and governmental authorities). The Board believes that management should speak for the Company. It is expected that Board members would meet or otherwise communicate with the Company's constituencies only with the knowledge of management and, absent unusual circumstances or as contemplated by committee charters, only at the request of management.

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Committees of the Board of Directors

All of the members of these committees, other than the Executive Committee, will be independent directors under the criteria established by the Nasdaq. Committee members and committee chairs will be appointed by the Board upon recommendation of the Nominating and Corporate Governance Committee. Consideration should be given to rotating committee members and committee chairs periodically, but the Board does not have a formal policy of rotating committee assignments or committee chairs.

Each committee, other than the Executive Committee, will have its own charter. The charters will set forth the purposes, goals and responsibilities of the committees as well as qualifications for committee membership, if any, 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, other than the Executive Committee, will annually evaluate its performance.

The Chairman of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee's charter. The Chairman of each committee, in consultation with the appropriate members of the committee and management, will develop the committee's agenda.

The Board and each committee will have the power to hire independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance.

The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.

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Audit Committee

We have an audit committee that oversees our accounting and financial reporting processes and the audits of our consolidated financial statements. Our audit committee is authorized to, among other things:

  • oversee the integrity of our consolidated financial statements and other financial information we provide to our stockholders;
  • approve, retain and oversee the independent auditor to conduct the annual audit of our consolidated financial statements;
  • meet with our independent auditor and with internal financial personnel regarding our consolidated financial statements and controls;
  • oversee the adequacy of our internal controls and disclosure controls;
  • review and pre-approve the independent auditor's audit and non-audit services rendered;
  • review our consolidated financial statements and our periodic reports in advance of the filings of such reports;
  • review, administer and approve any change in or waiver to our code of ethics for our principal executive and senior financial officers;
  • review and pre-approve transactions between us and our directors, officers and affiliates; and
  • establish and maintain procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls and auditing matters.

Messrs. Kebede, Laramie and Schneider are currently serving as members of our audit committee. Each of the members of our audit committee meets the independence and financial literacy requirements of the NASDAQ National Market, Inc. (NASDAQ), the SEC and applicable law. All members of our audit committee are able to read and understand fundamental financial statements, including the balance sheet, income statement and cash flow statement. The board of directors has determined that Mr. Kebede is an "audit committee financial expert" pursuant to the definition adopted by the SEC. Mr. Laramie serves as the Chair of our audit committee.

Compensation Committee

We have a compensation committee that discharges responsibilities relating to compensation of our executives. Our compensation committee is authorized to, among other things:

  • review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the performance of the Chief Executive Officer in light of those goals and objectives and determine, or recommend to the board of directors for determination, the level of the Chief Executive Officer's compensation based on this evaluation;
  • determine, or recommend to the board of directors for determination, the base and incentive compensation of our other executive officers and senior officers with a rank of Vice President or above;
  • make recommendations to the board of directors with respect to our equity-based compensation plans;
  • administer our equity-based compensation plans; and
  • oversee, in consultation with management, our regulatory compliance with respect to compensation matters.

Messrs. Kebede and Schneider are currently serving as members of our compensation committee. Each of the members meets the independence requirement of the NASDAQ and applicable law. Mr. Schneider serves as Chair of our compensation committee.

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Nominating and Corporate Governance Committee

We have a nominating and corporate governance committee. Our nominating and corporate governance committee is authorized to, among other things:

  • identify and recommend to the board of directors the individuals to be nominated for election as directors and the persons to be elected by the board of directors to fill any vacancies on the Board;
  • review with the board of directors, on an annual basis, the requisite skills and criteria for new board of directors members as well as the composition of the board of directors as a whole;
  • oversee the board of directors in the board of directors' annual review of its performance;
  • recommend to the board the directors board members to be appointed to each committee of the board of directors; and
  • review annually our Corporate Governance Guidelines.

Messrs. Kebede, Kemp and Nobel are currently serving as members of our nominating and corporate governance committee. Each of the members meets the independence requirement of the NASDAQ and applicable law. Mr. Kebede serves as Chair of our nominating and corporate governance committee.

Compensation Committee Interlocks and Insider Participation

None of our present or former officers or other employees serves as a member of our compensation committee. During the 2004 fiscal year, none of our executive officers served on the board of directors or compensation committee (or other committee serving a similar function) of any entity, one of whose executive officers served as a member of our board of directors or compensation committee.

Director Access to Officers and Employees

Directors have full access to management and are entitled to expect management to be responsive to requests for information from directors. Except for meetings or contacts with management required pursuant to committee charters, if a director wishes to initiate contact with a member of management, the director may arrange to do so through the CEO. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company and will, to the extent not inappropriate, copy the CEO on any written communications between a director and an officer or employee of the Company.

Executive officers and other members of management may attend Board meetings by invitation.

Executive Compensation

The form and amount of director compensation will be determined by the Executive Compensation Committee of the Board in accordance with the policies and principles set forth in its charter, and the Executive Compensation Committee will conduct an annual review of director compensation. The Executive Compensation Committee will consider that directors' independence may be jeopardized if the Company makes substantial charitable contributions to organizations with which a director is affiliated or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director or an organization with which the director is affiliated.

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Director Orientation and Continuing Education

All new directors must participate in an orientation program, which should be conducted as soon as practicable, but in any event within twelve months of the new directors' appointments. This orientation will include presentations by senior management to familiarize new directors with the Company's strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Business Conduct and Ethics, its principal officers, and its internal and independent auditors. All other directors are also invited to attend the orientation program. All directors will participate in such continuing education programs as the Nominating and Corporate Governance Committee may specify.

Management Succession

The Nominating and Corporate Governance Committee will make an annual report to the Board on succession planning. The entire Board will work with the Nominating and Corporate Governance Committee to consider and evaluate potential successors to the position of CEO or, if no potential successors are within the Company, to determine alternatives such as conducting an executive search. The CEO should at all times make available his or her recommendations and evaluations of potential successors, if any, along with a review of any development plans recommended for such individuals.

Annual Performance Evaluation

The Board of Directors will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Nominating and Corporate Governance Committee will establish and maintain a process that will facilitate input from all directors and will report annually to the Board with an assessment of the Board's performance. The assessment will focus on the Board's contribution to the Company and specifically focus on areas in which the Board or management believes that the Board could improve.

Director Succession

The Nominating and Corporate Governance Committee will make an annual report to the Board regarding director succession planning and committee assignments. The Board will review and assess the report and provide guidance and direction to the Committee regarding these matters for the coming year.

Contacting the Board of Directors or any Director

Any investor who wants to communicate with the Board or any individual director may send communications by sending an e-mail to or by writing to the Corporate Secretary. All communications will be received and processed by the Corporate Secretary, although the Corporate Secretary will not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

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