Exhibit 99.4
CORPORATE GOVERNANCE GUIDELINES
OF
CELERITEK, INC.
(as adopted by the Board of Directors on March 27, 2003)
I. THE PRINCIPAL FUNCTIONS OF THE BOARD OF DIRECTORS.
The Role of the Board of Directors.
The fundamental role of the Board of Directors (the "Board") is to
exercise its business judgment to act in what the directors reasonably believe
to be the best interests of Celeritek, Inc. ("Celeritek") and its shareholders.
It is the duty of the Board to oversee the Chief Executive Officer ("CEO") and
other senior management in the competent and ethical operation of Celeritek on a
day-to-day basis. To satisfy this duty, the directors will set standards to
ensure that Celeritek and its management are committed to business success
through maintenance of the highest standards of responsibility and ethics.
Approve Strategic Direction and Annual Operating Plan.
The Board reviews and approves Celeritek's long-term strategic plans, as
well as its yearly goals and annual operating plan. On an ongoing basis, the
Board monitors Celeritek's performance against its operating plan and against
the performance of its peers.
The Board also stays abreast of economic, regulatory and political trends
and developments that may affect Celeritek's strategic direction.
Evaluate the Chief Executive Officer.
The CEO shall meet with the Board to develop appropriate goals for the CEO
for the next year. At year end, the Board will conduct a review of the CEO's
performance to ensure that the current CEO is providing the best leadership for
Celeritek, from a short, intermediate and long-term perspective.
Review Management Performance and Compensation.
The Compensation Committee evaluates the compensation plans, policies and
programs for officers and other employees to ensure they are appropriate,
competitive and properly reflect the Celeritek's objectives and performance.
The Compensation Committee annually reviews and approves the compensation,
including equity compensation, for the CEO and other officers.
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Manage Succession Planning.
The Board and the Corporate Governance and Nominating Committee shall plan
for succession to the position of CEO and evaluate potential successors to the
CEO.
Advise and Counsel Management.
The Board and its various committees advise and counsel to management both
in formal Board and committee meetings and through informal, individual
director's contacts with the CEO and other members of management.
The Board is composed of individuals whose knowledge, background,
experience and judgment are valuable to Celeritek. Board members have full
access to management and other employees as well as to Celeritek's records and
documents. The Board may also seek legal or other expert advice from a source
independent of management.
Monitor and Manage Potential Conflicts of Interest.
All Board members must inform the lead independent director (as discussed
in Section III below) of all types of transactions between them (directly or
indirectly) and Celeritek, prior to their conclusion, even if such transactions
are in the ordinary course of business.
The Board should ensure that neither the Board nor the officers abuse
corporate assets or enter into any unlawful related-party transactions. The
Board or the Audit Committee shall review all related-party transactions, and
the Audit Committee shall review and approve all related-party transactions for
which audit committee approval is required by the rules of the Nasdaq Stock
Market.
Ensure the Integrity of Financial Information.
The Audit Committee ensures the integrity of Celeritek's accounting and
financial reporting systems, including the independent audit, and that
appropriate systems of control are in place, in particular systems for
monitoring risks, financial controls, and compliance with the law. The Audit
Committee reports to the Board on a regular basis, and the Board, upon the
recommendation of the Audit Committee, takes such actions as are necessary to
ensure the integrity of Celeritek's accounting and financial reporting systems
and that appropriate controls are in place.
Monitor the Effectiveness of Governance Practices.
The Board is responsible for keeping up to date on best governance
practices. The Board, working together with management and the Corporate
Governance and Nominating Committee, determines Celeritek's governance
practices. To promote better governance, the Board will keep abreast of the
rules and regulations of Congress, the Securities and Exchange Commission and
the various self-regulatory organizations such as the Nasdaq Stock Market and
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the New York Stock Exchange. The Board will monitor the way Celeritek governs
itself, including reviewing whether there are alternatives or new ideas that
would strengthen Celeritek's governance structures.
II. BOARD STRUCTURE AND COMPOSITION.
Independence.
The Board shall have a majority of directors who meet the criteria for
independence established by applicable law, including the Sarbanes-Oxley Act of
2002, the rules and regulations of the Securities and Exchange Commission, and
the Nasdaq Stock Market.
Nomination of Directors.
The Corporate Governance and Nominating Committee is responsible for
reviewing with the Board, on an annual basis, the appropriate skills and
characteristics required of Board members as well as the composition of the
Board as a whole. The Corporate Governance and Nominating Committee, in
accordance with its charter and principles, will identify candidates for
membership on the Board and recommend the nomination of such candidates to the
Board. The decision to recommend nominees to the Board shall be based on each
nominee's character, diversity, skills, judgment, and experience in such areas
as operations, technology, finance, marketing, manufacturing and the general
needs of the Board, including the applicable independence requirements.
Board Size.
The Board currently has six members. The Board shall review from time to
time the appropriateness of its size. The Board would consider expanding its
size to accommodate outstanding candidates, within the limits specified by
Celeritek's bylaws.
Board Term and Tenure.
Each director is elected for a one-year term at Celeritek's annual meeting
of shareholders. The Corporate Governance and Nominating Committee will
periodically review the appropriateness of each Board member's continued
service.
The Board does not believe it should establish term limits, because
directors who have developed increasing insight into Celeritek and its
operations provide a valuable contribution to the Board as a whole.
Orientation and Continuing Education.
New directors must participate in an orientation process that includes
presentations and materials that review Celeritek's business strategies, its
financial and accounting systems and risk management controls, its code of
business conduct and methods and compliance programs,
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and its internal and independent auditor. The orientation will include an
introduction to Celeritek's senior management, a visit to Celeritek's corporate
headquarters and to the extent practicable its significant facilities. Incumbent
directors are also invited to attend the orientation program.
The Board believes that ongoing education is important for maintaining a
current and effect Board. Accordingly, incumbent directors are encouraged to
participate in on-going continuing director education programs.
Selection of Chairman and Chief Executive Officer.
The Board does not have a policy on whether or not the roles of CEO and
Chairman of the Board should be separate and, if they are to be separate,
whether the Chairman should be selected from the non-employee directors or be an
employee. The Board believes these issues should be considered from time to time
as part of the Board's broader review of corporate governance principles.
III. BOARD MEETINGS AND OPERATIONS.
Number of Meetings.
The Board shall meet at least quarterly in regularly scheduled meetings
but shall meet more often as necessary.
Preparation and Participation in Meetings.
Generally, information that is important to the Board's understanding of
the business to be conducted at a Board or committee meeting should be
distributed in writing to the directors prior to the meeting, so that Board
meeting time may be conserved and discussion time focused on questions that the
Board has about the materials. Information may include summaries, reports and
other materials prepared by management and/or third parties. Particularly
sensitive subject matters may be discussed at the meeting without advance
distribution of written materials.
Board members are expected to rigorously prepare for, attend and
participate in all Board and applicable committee meetings, and to spend the
time needed and meet as often as necessary to properly discharge their
obligations. Each Board member is expected to ensure that other commitments do
not materially interfere with the director's service to Celeritek.
Directors should advise the Corporate Governance and Nominating Committee
of any invitations to join the Board of any other public company prior to
accepting another directorship.
Agenda for Meetings.
The Chairman of the Board will establish the agenda for each Board meeting
and distribute it in advance to the Board. At the beginning of each year the
Chairman will, to the
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extent foreseeable and practicable, set a schedule of agenda items to be
discussed during the year. Each Board member is free to suggest the inclusion of
items on the agenda and to raise at any Board meeting subjects that are not on
the agenda for that meeting. Ample time shall be scheduled for Board meetings to
assure full discussion of important matters.
Meetings of Independent Directors.
The Board's policy is to have a separate meeting time for the outside
directors, outside the presence of the CEO and any employee directors. Such
meetings should occur on at least a quarterly basis. One independent director
will be selected by the outside directors and will assume the responsibility of
chairing the regularly scheduled meetings of outside directors and bear such
further responsibilities that the outside directors as a whole might designate
from time to time. The identity of such "lead independent director" will be
disclosed in the annual proxy statement.
IV. BOARD COMMITTEES.
Composition of Committees.
The Board has the following four committees: Corporate Governance and
Nominating Committee, Audit Committee, Compensation Committee and Stock Option
Committee. All of the members of the Corporate Governance and Nominating
Committee, Audit Committee and Compensation Committee will meet the criteria for
independence established by the Nasdaq Stock Market, the Securities and Exchange
Commission, and applicable law. The members of these committees will also meet
the other membership criteria specified in the respective charters for these
committees.
Responsibilities of Each Committee.
The Audit Committee is responsible for overseeing Celeritek's financial
reporting process. In discharging its responsibilities, the Audit Committee,
among other things, monitors Celeritek's system of internal controls, reviews
and evaluates independent auditors, including the independence of such auditors,
recommends or replaces such auditors, and reports to the Board the results of
such auditors' examinations and recommendations.
The Compensation Committee is responsible for, among other things,
reviewing and recommending to the Board the compensation and benefits for
Celeritek's CEO and other executive officers, making recommendations to the
Board with respect to incentive compensation plans. The Compensation Committee
may grant options to Celeritek's employees pursuant to Celeritek's equity
compensation plans.
The Corporate Governance and Nominating Committee is responsible for,
among other things, assisting the Board by identifying prospective director
nominees and determining the director nominees for the next annual meeting of
shareholders; developing and recommending to
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the Board the governance principles; overseeing the evaluation of the Board and
management; and recommending to the Board director nominees for each committee.
The Stock Option Committee has the authority to grant stock options under
Celeritek's equity compensation plans to non-executive officers and consultants.
Committee Charters.
The Corporate Governance and Nominating Committee, Audit Committee and
Compensation Committee shall each have its own charter. Each charter will set
forth the principles, policies, objectives and responsibilities of the committee
in addition to the qualifications for committee membership. The charters will
provide that each committee will meet to review its performance once a year.
Meeting Procedures.
Each committee will, in consultation with the appropriate 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.
At the beginning of the year, each committee will establish a schedule of agenda
subjects to be discussed during the year (to the extent these can be foreseen).
The schedule for each committee will be furnished to the full Board.
Outside Consultation.
The Board and each committee shall have the authority to obtain advice,
reports or opinions from internal and external counsel and expert advisors and
shall have the power to hire independent legal, financial and other advisors as
they may deem necessary, without consulting with, or obtaining approval from,
any officer of Celeritek in advance.
New Committees.
The Board may, from time to time, form new committees as it deems
appropriate.
V. BOARD ACCESS TO MANAGEMENT AND THIRD-PARTIES.
Access to Management.
The Board has complete access to all Celeritek officers and employees. Any
meetings or contacts that a director desires to initiate may be arranged
directly by the director or through the CEO or other Celeritek officer. The
directors should use their judgment to ensure that any such contact or
communication is not disruptive to the business operations of Celeritek.
The Board welcomes the attendance of senior officers at each Board
meeting. The Board also encourages management to schedule managers to present at
Board meetings who: (a) can provide additional insight into the items being
discussed because of personal involvement in
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these areas, or (b) have future potential that management believes should be
given exposure to the Board.
Interaction with Third Parties.
The Board believes that management speaks for Celeritek. Individual Board
members may occasionally meet or otherwise communicate with various
constituencies that are involved with Celeritek, but it is expected that Board
members would do this with the knowledge of management and, in most instances,
absent unusual circumstances or as contemplated by the committee charters, at
the request of management.
VI. DIRECTOR COMPENSATION.
The form and amount of director compensation will be determined by the
entire Board or the Compensation Committee. It is appropriate for the staff of
Celeritek to report from time to time to the Board or the Compensation Committee
on the status of Board compensation in relation to other comparable U.S.
companies. The Board or the Compensation Committee will conduct an annual review
of director compensation.
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