ETHICS & COMPLIANCE REPORTING
These guidelines have been adopted by the Board of Directors of Danaos Corporation ("the Company"). The guidelines, together with the Charters of the Board Committees, provide the framework for the governance of the Company. Recognizing that there is an on-going and energetic debate about corporate governance, the Board and its Nominating and Corporate Governance Committee intend to review these guidelines and other aspects of the Company's governance periodically.
I. Role of the Board and Management. The Company's business is conducted by its officers, employers, and manager under the direction of the chief executive officer and the oversight of the Board, to fulfill the Company's mission and enhance the long-term value of the Company for its stockholders. The Board is elected by the stockholders to oversee management and to assure that the long-term interests of the stockholders are being served. Both the Board and management recognize that the long-term interests of stockholders are advanced by responsibly addressing the concerns of other stakeholders and interested parties including employees, customers, suppliers, government officials, and the public at large.
II. Functions of Board. The Board of Directors will hold at least four scheduled meetings a year, at which it will review and discuss reports by management on the performance of the Company, its plans and prospects, as well as immediate issues facing the Company. Directors are expected to attend all scheduled Board meetings and the meetings of those Committees of which they are members. In addition to its general oversight of management, the Board also performs a number of specific functions, including:
(a) Reviewing, approving, and monitoring fundamental financial and business strategies and major corporate actions.
(b) Ensuring that processes are in place for maintaining the integrity of the Company, including the integrity of the financial statements, compliance with law and ethics, and the integrity of relationships with customers, suppliers, and stockholders.
(c) Assessing major risks facing the Company, and reviewing alternatives to mitigate those risks.
(d) Selecting, evaluating and compensating the executive officers and overseeing succession planning.
(e) Providing counsel and oversight on the selection, evaluation, development and compensation of senior management.
III. Qualifications. Each director should possess the highest personal and professional ethics, integrity and values, and be committed to promoting the long-term interests of the Company and its stockholders. Directors should be selected with a view to having a Board representing diverse experience in areas that are relevant to the Company's business activities.
Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time. A director should offer his or her resignation in the event of any significant change in personal circumstances, including any change which could reflect adversely on the reputation of the Company.
The Board does not believe that arbitrary term limits on director' service are appropriate, nor does it believe that a director should expect to be re-nominated continuously. Effective service to the Company by a director should be a principal determinant of Board tenure.
IV. Independence of Directors. The Board intends that in practice a majority of the directors will be "independent" directors under the New York Stock Exchange ("NYSE") listing standards. However, directors who do not meet the NYSE's independence standards also make valuable contributions to the Board and to the Company by reason of their experience and wisdom, and will continue to be valued members of the Board.
An individual director is "independent" if the Board determines that the director has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. This determination, to be made annually, will help assure the quality of the Board's oversight of management, reduce the possibility of damaging conflicts of interest, and comply with NYSE listing standards.
(a) Objective Factors Demonstrating Director Independence. Absent unusual circumstances, a director who satisfies the standards of director independence in Section 303A.02 of the New York Stock Exchange Listed Company Manual will be deemed to be "independent."
(b) Determination of Director Independence. In determining whether a director qualifies as independent, consideration should be given to the following factors, among others:
i. Any facts and circumstances that could reasonably be expected to improperly influence the director's exercise of judgment.
ii. Whether the director would or would not qualify under other standards relating to independence, including definitions of director independence adopted by other national securities exchanges and standards of independence endorsed by persons and groups addressing corporate governance issues, including institutional investors.
iii. Countervailing considerations that tend to show that the director would not face any impairment in fulfilling his or her fiduciary duty of loyalty.
(c) Audit Committee Member's Independence. Directors who serve on the Board's Audit Committee are required to be independent, as determined under these Guidelines, and to meet certain additional requirements under Section 301 of the Sarbanes-Oxley Act of 2002, the rules of the Securities and Exchange Commission and the listing criteria of the New York Stock Exchange. Except as permitted under exemptions as may be adopted by the SEC and the New York Stock Exchange, each director who is member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other Board committee:
i. Accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company.
ii. Be an affiliated person of the Company or any subsidiary.
(d) Procedures. Determinations of director independence will be made in accordance with these procedures:
i. The Board will make its determinations as to Director independence annually at the Board meeting preceding the expected release of the Company's proxy statement for the Annual Meeting of Stockholders.
ii. The Nominating and Corporate Governance Committee will review the independence of directors and report its findings to the Board at that Board meeting.
iii. The Nominating and Corporate Governance Committee or the Board may request a written report or documentation collecting and summarizing information relevant to its determination of a director's independence.
iv. If required by the listing criteria of the New York Stock Exchange, the Board will issue a statement briefly explaining the basis for its determination that a director is independent and include such statement in the proxy statement for the Annual Meeting of Stockholders.
(e) Effect if Director not Determined to be Independent. In applying these Guidelines, the Board is making an affirmative determination of independence. With respect to any Director as to whom the Board does not make such determination, no inference should be drawn that the Board has concluded that the director in fact has a conflict of interest or that the director is in any way impaired in performing the responsibilities of a director in accordance with his or her fiduciary duty of loyalty, nor shall it prejudice the Board in considering whether the director is independent at any later time.
V. Size of Board and Selection Process. The Board of Directors is divided into three classes, one of which is elected each year by the stockholders at the Annual Meeting of Stockholders. Stockholders may propose nominees for consideration by the Nominating and Corporate Governance Committee by submitting the names and supporting information to the Secretary of the Company. The Board proposes a slate of nominees to the stockholders for election to the Board. Between annual stockholder meetings, the Board may elect directors to serve until the next Annual Meeting of Stockholders. The Bylaws give the Board authority to specify the number of directors, within limits set in the Bylaws.
VI. Board Committees. The Board has established the following committees to assist it in carrying out its responsibilities: (i) Audit Committee; (ii) Compensation Committee; and (iii) Nominating and Corporate Governance Committee. The current Charters of these committees are published on the Company website, and will be mailed to a stockholder upon written request. The chairman of each committee will provide a summary report on committee activities to the full Board following a committee meeting. The committees occasionally may hold meetings in conjunction with the full Board.
VII. Meetings of Independent Directors. The Board will have at least one regularly scheduled meeting a year for the independent directors without management present. The independent directors will appoint a Presiding Director, who will preside at such meetings. The Presiding Director will also perform such other functions as the Board may direct. The independent directors may meet without management present at such other times as determined by the Presiding Director.
VIII. Self-Evaluation. The Board and each of the committees will perform an annual self-evaluation. The directors will be requested to provide their assessments of the effectiveness of the Board and the committees on which they serve. The individual assessments then will be summarized for discussion with the Board and the committees.
IX. Setting Board Agenda. The Board shall be responsible for its agenda. Annually, the chief executive officer of the Company will propose for the Board's approval key issues to be discussed during the course of the next year and members of the Board will be invited to offer their own suggestions as to such issues. As a result of this process, a schedule of major discussion items for the following year will be established. The chief executive officer and the Presiding Director, or the committee chairmen as appropriate, shall determine the nature and extent of information that shall be provided regularly to the directors before each scheduled Board or committee meeting. Directors are urged to make suggestions for agenda items, or additional pre-meeting materials, to the chief executive officer, the Presiding director, or appropriate committee chairmen at any time.
X. Ethics and Conflicts of Interest. The Board expects Company directors, as well as officers and employees, to act ethically at all times and to acknowledge their adherence to the policies comprising the Company's Code of Conduct & Ethics for Corporate Officers & Directors. Only the Board, upon a showing of good reason, may approve any waiver of any ethics policy for any director or executive officer. If an actual or potential conflict of interest arises for a director, the director shall promptly inform the chief executive officer. If a significant conflict exists and cannot be resolved, the director should resign. All directors will recuse themselves from any discussion or decision affecting their personal, business, or professional interests. The Board (including by action of the Audit Committee) shall resolve any conflict of interest question involving the chief executive officer or an executive officer, and the chairman of the Audit Committee shall resolve any conflict of interest issue involving any other officer of the Company.
XI. Reporting of Concerns to Independent Directors or the Audit Committee. Anyone who has a concern about the Company's conduct, or about the Company's accounting, internal controls, or auditing matters, may communicate that concern directly to the Presiding Director, to the independent directors, or to the Audit Committee. Such communications may be confidential or anonymous. Concerns relating to accounting, internal controls, auditing or officer conduct should be sent immediately to the Presiding Director and to the chairman of the Audit Committee. The status of all outstanding concerns addressed to the independent directors, the Presiding Director, or the Audit Committee will be reported to the Presiding Director and the chairman of the Audit Committee on a quarterly basis. The Presiding Director, or the Audit Committee chairman may direct that certain matters be presented to the Audit Committee or the full Board and may direct special treatment, including the retention of outside advisors or counsel, for any concern addressed to them. The Company will not permit retaliation, discrimination or other adverse action, including dismassal, to be taken against an employee for in good faith raising or helping to resolve an ethical concern.
XII. Compensation of Board. The Compensation Committee shall have the responsibility for recommending to the Board compensation and benefits for non-employee directors. In discharging this duty, the Committee shall be guided by three goals: Compensation should fairly pay directors for work required as a director, taking into account the Company's size and scope of business activities; compensation should align directors' interests with the long-term interests of stockholders; and the structure of the compensation should be transparent and easy for stockholders to understand. The Committee shall review non-employee director compensation and benefits not less frequently than every two years.
XIII. Succession Plan. The Board shall approve and maintain a succession plan for the CEO and other executive officers, based upon recommendations from the Nominating and Corporate Governance Committee, as necessary.
XIV. Access to Senior Management. Independent directors are permitted and encouraged to contact executive officers of the Company without other members of management present.
XV. Acess to Independent Advisors. The Board and its committees shall have the right at any time to retain independent outside financial, legal or other advisors.
XVI. Director Orientation. Subject to the directions of the Nominating and Corporate Governance Committee, the chief executive officer, the chief operating officer and the chief financial officer shall be responsible for providing an orientation for new directors, and for periodically providing materials or briefing sessions for all directors on subjects that would assist them in discharging their duties.