EXHIBIT 99.1
NATIONAL PROCESSING, INC.
CORPORATE GOVERNANCE GUIDELINES
GENERAL PHILOSOPHY
The board of directors of National Processing, Inc. ("National Processing")
sets high standards for National Processing's employees, officers, and board of
directors. Implicit in this philosophy is the importance of sound corporate
governance. It is the duty of the board of directors to serve as a prudent
fiduciary for shareholders and to oversee the management of National
Processing's businesses. To fulfill its responsibilities and to discharge its
duty, the board of directors follows the procedures and standards that are set
forth in these guidelines.
BOARD OF DIRECTOR FUNCTIONS
The board of directors shall:
o Review and approve strategic plans to enhance shareholder value
o Review corporate performance
o Oversee and evaluate management's systems for internal control,
financial reporting and public disclosure
o Establish corporate governance standards
o Oversee and evaluate senior management performance and compensation
o Plan for effective succession of the chief executive officer and
senior management
o Be apprised of relations with shareholders
o Set a tone for a climate of corporate trust and confidence
o Set standards for director qualification
o Set standards for director orientation and continuing education
o Undertake an annual performance evaluation of the board of directors
DIRECTOR QUALIFICATIONS
The board of directors is responsible for reviewing, on an annual basis,
the requisite skills and characteristics of members of the board of directors.
This assessment will include independence, business, strategic and financial
skills, as well as overall experience in the context of the needs of the board
of directors as a whole. Nominees for directors will be selected by the board of
directors in accordance with the policies and principles of the National
Processing, Inc. Code of Regulations and these Corporate Governance Guidelines.
Shareholders may submit the name and qualifications of candidates for the board
of directors in proper written form to the Secretary. Each shareholder
recommendation must comply with Regulation 13 of the Code of Regulations and the
Securities Exchange Act of 1934, as amended.
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There shall be no more than 9 members on the board of directors. No
director may serve on more than four (4) other public company boards of
directors. To preserve independence and to avoid conflicts of interest, each
director shall advise the Chairman of the board of directors in advance of
accepting an invitation to serve on another public company board of directors.
The following standards shall be used to determine director qualification:
o Experience as a Chief Executive Officer, a member of senior management
or a director of a nationally recognized or otherwise significant
business corporation, educational institution or not-for-profit
organization.
o Serves on no more than four (4) other publicly held corporation boards
of directors.
o Serves on no more than two (2) other audit committees of the boards of
directors of publicly held corporations.
o The individual has particular skills or expertise that enhance the
overall composition of the board of directors.
There is no specified term limit that a director may serve on the National
Processing board of directors. Each director will serve through their respective
term and until their respective successors have been duly elected and qualified.
The board of directors will review each director's performance annually to
assess independence, attendance, and overall performance.
EXECUTIVE SESSIONS OF THE BOARD OF DIRECTORS
Annually, the board of directors shall hold at least two (2) executive
sessions without management. The Chairman of the Compensation Committee shall
preside at the executive sessions of the board of directors.
COMMUNICATIONS WITH NON-MANAGEMENT MEMBERS OF THE BOARD OF DIRECTORS
An employee, officer or other interested party who has an interest in
communicating with non-management members of the board of directors may do so by
directing the communication to the Chairman of the Compensation Committee. The
Chairman of the Compensation Committee is the presiding director for
non-management sessions of the board of directors. Confidential messages for the
Chairman of the Compensation Committee may be delivered through the COMPLIANCE
HOTLINE AT: 1-866-773-4031.
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DIRECTOR RESPONSIBILITY
Directors must exercise sound business judgment and act in what they
reasonably believe to be the best interests of National Processing and its
shareholders. In discharging this obligation, directors may reasonably rely on
the honesty and integrity of National Processing's management as well as that of
its general auditor and independent auditor.
National Processing will purchase reasonable directors' and officers'
liability insurance for the benefit of its board of directors and management. In
addition, directors and management shall be entitled to reasonable
indemnification to the fullest extent permitted by the Ohio Revised Code, the
Articles of Incorporation and Regulation 30 of the National Processing, Inc.
Code of Regulations.
In order to effectively oversee the management of National Processing, all
directors are expected to attend meetings of the board of directors and meetings
of committees of the board of directors of which they are members. Directors are
expected to be prepared for these meetings and to be able to devote the time
required. Information and data that are important to the understanding of the
business to be conducted at a board of directors or committee meeting will
generally be distributed in advance of the meeting.
BOARD OF DIRECTORS COMMITTEES
The board of directors will maintain an Audit Committee, and a Compensation
Committee, and such other committees as it determines appropriate.
INDEPENDENT DIRECTORS
"Independent director" means that the director (including any member of the
director's immediate family):
o within the last five (5) years, has not received more than $100,000
per year in direct compensation from National Processing and its
affiliates other than director and committee fees and pension or other
forms of deferred compensation for prior service (provided such
compensation is not contingent in any way on continued service);
o within the last five (5) years has not been affiliated with or
employed, by an (present or former) auditor of National Processing or
an affiliate of National Processing;
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o within the last five (5) years, has had no personal service
relationships and has not been affiliated with an organization that
has a personal service relationship with National Processing, or with
a member of National Processing's senior management;
o within the last five (5) years, has not been affiliated with a
not-for-profit entity that receives significant contributions from
National Processing;
o within the last five (5) years, has not had any material business
relationship (such as commercial, industrial, consulting, legal, or
accounting) with National Processing for which National Processing has
been required to make disclosure under Regulation S-K of the
Securities and Exchange Commission; and
o within the past five (5) years, has not been part of an interlocking
directorate in which an executive officer of National Processing
serves on the compensation committee or a committee of a similar
nature of another company that concurrently employs the director.
Each of the Audit Committee and the Compensation Committee shall have
written charters. These charters will address each committee's purpose, duties,
goals and responsibilities as well as qualifications for committee membership,
procedure for committee member appointment and removal, committee structure and
operations, and committee reporting to the board of directors. Each charter
shall be posted on the National Processing web site.
The board of directors and each committee shall have the power to engage
independent legal, financial or other advisors as it may deem necessary, without
consulting or obtaining the approval of the board of directors or management of
National Processing in advance.
The Audit Committee shall have exclusive authority to engage and terminate
National Processing's independent auditor. The Audit Committee shall also
pre-approve all engagements of the public auditor for all non-audit services.
Fees paid to the public auditor for non-audit services should not exceed the sum
of the fees paid for audit and audit-related services.
The board of directors shall have exclusive authority to engage and
terminate any consultant or search firm utilized to identify or recruit director
candidates and to nominate directors for election by shareholders.
The Compensation Committee shall have exclusive authority to set the
compensation of the chief executive officer and senior management.
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DIRECTOR ACCESS TO OFFICERS AND EMPLOYEES
Directors have full and free access to officers and employees of National
Processing. Any meetings or contacts that a director wishes to initiate may be
arranged through the chief executive officer or the secretary or directly by the
director. Directors should use their judgment to ensure that any such contact is
not disruptive to the business operations of National Processing.
DIRECTOR COMPENSATION
The form and amount of director compensation are determined by the board of
directors in accordance with policies and principles set for in the National
Processing, Inc. Code of Regulations. The board of directors will conduct an
annual review of the director compensation.
In order to maintain independence for members of the Audit Committee,
members of the Audit Committee may not directly or indirectly receive fees or
other compensation for services as a consultant, legal advisor or financial
advisor, regardless of the amount. Due to the Audit Committee's time commitment
and responsibilities, Audit Committee members may receive reasonable fees and
compensation that are greater than those paid to other directors.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
All new directors must participate in a comprehensive orientation to
acquaint them with National Processing's strategy, long-range plans, financial
statements, properties and operations, corporate governance guidelines, and the
code of ethics. The orientation program will introduce new directors to National
Processing's principal executives, its general auditor, and its independent
auditor. All other directors are invited to attend the orientation program.
From time to time, directors will receive information and updates on legal
and regulatory changes that affect National Processing, the directors and the
employees.
CRISIS MANAGEMENT
The board of directors shall be proactive in the context of any governance,
compliance or business crisis affecting National Processing. The board of
directors will work with management and any outside advisors in order to assess
a crisis situation and
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choose a proper course of action. The board of directors will use its best
efforts to maintain and preserve the value, integrity and control of National
Processing.
ANNUAL PERFORMANCE EVALUATION
The board of directors will conduct an annual self-evaluation of itself and
its committees to determine whether they are functioning effectively. The board
of directors will survey and receive comments from each director and report
annually to the board of directors with an assessment of the board of director's
performance.
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