Governance

Personal and Business Ethics A director must possess unquestionable business ethics and personal integrity. He or she must demonstrate consistent application of these ethical standards in his or her dealings at O’Reilly and all other business environments.

Financial Literacy Financial oversight of O’Reilly is a key function of the Board. Directors, therefore, should possess a broad financial knowledge to effectively read and understand financial statements, ratios and other performance measures. Directors should maintain familiarity with current business legal and regulatory developments.

Broad-Based Business Experience A director’s background should include sufficient business experience and education to be able to provide guidance and direction to management on a wide variety of topics. This experience must be applicable to O’Reilly’s industry segment, such as related fields of retail, distribution, automotive aftermarket, financial, legal or other similar fields.

Track Record of Success Due to the competitive nature of O’Reilly’s business, it is critical that a director have a demonstrated record of achievement. A director must possess high expectations for performance from the management team to continue O’Reilly’s own track record of success.

Commitment Directors should be personally and professionally committed to the ongoing success of O’Reilly, exhibiting pride and enthusiasm in their capacity and responsibility as a member of the Board. They should take initiative and play an active role in Board discussions and decision-making.

Stock Ownership Directors are required to be stockholders and have a financial stake in the Company. The board has specified the level of share ownership in the Company to be at least five (5) times the director’s salary/retainer.

Age Requirements Directors must be at least 35 years of age due to the maturity and business experience that only time can provide. No director having attained the age of 78 years shall be nominated for re-election or reappointment to the Board. However, the Board may determine to waive this policy in individual cases.

Annual Election of All Directors – As provided in the Company’s Bylaws, all directors are elected annually until the next annual meeting of the Board of Directors.

Outside Directorships Directors may serve on the boards of directors of privately-owned companies at their discretion. However, O’Reilly directors who currently serve as a Named Executive Officer (as defined by Securities and Exchange Commission rules) of a publicly traded company may serve on no more than two boards of directors of publicly traded companies (including O’Reilly) and other O’Reilly directors may serve on no more than four boards of directors of publicly traded companies (including O’Reilly). Directors must notify the Executive Chairman of the Board and the Chair of the Corporate Governance/Nominating Committee upon receiving an invitation to serve on the board of directors of another publicly traded company to allow the Company a reasonable opportunity to assess the director’s continued independence, potential conflicts of interest, and other issues raised by the prospective board and committee appointments, and must not accept such an invitation unless it is approved. 

Attendance Directors are required to attend at least 75% of scheduled Board meetings each year. This requirement may be waived if the Board, in its discretion, determines a director’s absence excused. Telephonic or video conference attendance of in person meetings is acceptable when necessary.

Director Education Directors are required to keep abreast of current business trends and regulations.

Change in Status/Resignation O’Reilly directors are required to submit any change in their employment status to the full Board for review. If the change results in their ineligibility to perform the function of Board director, they must submit their resignation in writing to the full Board.

The Board of Directors of O’Reilly shall be comprised of a majority of independent directors.

Independent Directors

O’Reilly defines “independent” director in accordance with legal and stock exchange rules and requirements. To be considered independent, the Board must determine that the director has no material relationship with O’Reilly or its affiliates or any executive officer of O’Reilly and qualifies as independent under Nasdaq listing standards. A relationship shall be considered “material” if it would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

The Board shall use legal and stock exchange rules and requirements to determine director independence.

Where a relationship is not covered by legal and stock exchange requirements, the determination of whether the relationship is material, and therefore whether the director is independent, shall be made by the Board’s current independent directors.

Independent Lead Director

The Board shall designate an independent director as the Independent Lead Director. The responsibilities of the Independent Lead Director include, but are not limited to:

• • Serving as a liaison among other directors, with O’Reilly’s management, between Board committees and the Board;
  • Presiding at Board meetings in the absence of the Chairman of the Board, or at the request of the Chairman of the Board;
  • Ensuring Board leadership in the absence or incapacitation of the Chairman of the Board;
  • Chairing executive sessions involving only the independent directors, developing the agenda for executive sessions to ensure that independent directors have adequate opportunities for these meetings to be held and adequate time to discuss issues, and communicating the results of the executive sessions with O’Reilly’s management, as appropriate;
  • Consulting with the Chairman of the Board as to the appropriate schedules and agendas of Board meetings to ensure there is sufficient time available for serious discussion of appropriate topics proposed by the independent directors;
  • Advising the Chairman of the Board on the conduct of Board meetings to facilitate teamwork and communication among independent and non-independent directors;
  • Together with the Chairman of the Board, collaborating with O’Reilly’s management to determine the information and materials provided to the directors, so that the independent directors have adequate resources, especially by way of full, timely and relevant information, to support their decision-making responsibilities;
  • Being entitled to request materials from and receive notice of, and attend, all meetings of Board committees;
  • Being available to advise committee chairs in fulfilling their designated roles and responsibilities to the Board;
  • Collaborating with the Board to guide O’Reilly’s management on strategic issues and long-term planning;
  • Consulting with the Chairman of the Board on such matters as are pertinent to the Board and O’Reilly;
  • Working with the Corporate Governance/Nominating Committee Chair to analyze the annual Board self-assessment results;
  • Collaborating with the Chairman of the Board and Corporate Governance/Nominating Committee on Board succession planning;
  • Acting as the focal point on the Board concerning issues such as corporate governance and suggestions from independent directors and monitoring and coordinating with O’Reilly’s management on corporate governance issues and developments;
  • Collaborating with the Human Capital and Compensation Committee to ensure a succession plan is in place for O’Reilly’s Chief Executive Officer;
  • Being available for direct communication and consultation with shareholders, upon request through Board approved procedures; and
  • Performing such other duties as the Board or Chairman of the Board may delegate, from time to time.

Other

Director Orientation New directors shall participate in an orientation program that includes discussions with management, visits to our facilities, and review of business plans, organizational structure, financial statements and other financial reporting, governance, other key policies and procedures and additional background materials regarding the business and its operations.

Board and Committee Evaluations The Corporate Governance/Nominating Committee oversees an annual assessment of the Board of Directors, the committees and individual directors.

Board Compensation. Directors who are employees of the Company shall not receive additional compensation for service as a director. The Human Capital and Compensation Committee will periodically review, consider and recommend to the Board the total compensation program for all non-employee directors of the Company for service on the Board and its committees.

The Board shall at all times have an Audit Committee, a Human Capital and Compensation Committee and a Corporate Governance/Nominating Committee. The Board may, by resolution of a majority of the Board, create such other committees as it deems advisable for the purposes of fulfilling its primary responsibilities. The Corporate Governance/Nominating Committee, in consultation with the Chairman of the Board, will review and recommend committee assignments and committee chair positions to the Board on at least an annual basis. Each committee shall perform its duties as assigned by the Board in compliance with its committee Charter and any applicable laws, rules or regulations.

What is the Audit Committee?

The Audit Committee shall be composed of three or more independent directors. The Audit Committee Charter details the responsibilities and duties of the Audit Committee, as well as further independence and financial literacy requirements of the members. The primary responsibilities of the Audit Committee include, but are not limited to:

• • Review reports of the Company’s financial results, audits and internal controls and communicate the results of those evaluations to management;
  • Review the Company’s financial policies and procedures and direct changes as appropriate;
  • Direct and oversee the performance of the Company’s internal audit function;
  • Review of information security and cybersecurity risks;
  • Recommend the engagement of the Company’s independent auditors;
  • Confer with the independent auditors regarding the adequacy of the Company’s financial controls and fiscal policy in accordance with generally accepted auditing standards;
  • Oversee the development of the annual corporate risk assessment and review quarterly high-risk updates;
  • Review the independent auditor’s procedures for ensuring its independence with respect to the services performed for the Company;
  • Review the Company’s compliance program annually, including the whistleblower program’s quarterly updates; and
  • Review all related party transactions.

The Audit Committee shall meet at least four times annually.

Corporate Governance/Nominating Committee

The Corporate Governance/Nominating Committee shall be composed of three or more independent directors. The Corporate Governance/Nominating Committee Charter shall detail the responsibilities and duties of the Governance/Nominating Committee as deemed advisable by the Board. The primary responsibilities of the Corporate Governance/Nominating Committee include, but are not limited to:

• Establish criteria for the selection of directors, identify any additional skills sets or attributes necessary to fill gaps on the current Board and to recommend to the Board the nominees for director in connection with the Company’s Annual Meeting of Shareholders;
• Consider changes in principal employment of directors and new directorships by directors to ensure there are no conflicts of interest or loss of skill set;
• Take a leadership role in shaping the Company’s corporate governance policies and to issue and implement the Corporate Governance Principles of the Company;
• Develop and coordinate annual evaluations of the Board, its committees and its members;
• Advise the Board regarding long-term Board succession;
• Adhere to all legal standards required by the SEC and Nasdaq; and
• Review and assess the Company’s environmental, sustainability, social and governance policies, goals and programs, and make recommendations to management based on their review and assessment.

Human Capital and Compensation Committee

The Human Capital and Compensation Committee shall be composed of three or more independent directors. The Human Capital and Compensation Committee Charter shall detail the responsibilities and duties of the Human Capital and Compensation Committee as deemed advisable by the Board. The primary responsibilities of the Human Capital and Compensation Committee include, but are not limited to:

• Act on behalf of the Board with respect to the establishment and administration of the policies governing the annual compensation of the Company’s executive officers;
• Define and articulate the Company’s overall executive compensation philosophy and to administer and approve all elements of compensation for the Company’s executive officers and senior management;
• Review and approve the corporate goals and objectives relevant to the Chairman of the Board and CEO’s compensation;
• Evaluate the Chairman of the Board and CEO’s performance based on those goals and objectives;
• Work with, and receive recommendations from, the Company’s Human Resources Department regarding the Company’s executive officers’ total compensation;
• Oversee the awards and related actions under the Company’s various equity plans; and
• Provide oversight and guidance on all human capital management development efforts, including succession planning, recruiting and retention, and engagement and experience.

The Board of Directors meets quarterly every year, and the directors also attend O’Reilly’s Annual Meeting of Shareholders. Additionally, special meetings may be called from time to time, and telephonic or virtual meetings are occasionally arranged. The Board receives a monthly packet relative to O’Reilly’s financial performance and is kept abreast of new operational issues, such as major acquisitions or procedural changes. Information and materials that are important to the Board’s understanding of the agenda items and other topics to be considered at a Board meeting should, to the extent practicable, be distributed sufficiently in advance of the meeting to permit prior review by the directors.

The independent directors shall meet in executive session independent of the CEO and other executive officers at least twice annually.

The Board believes that management speaks for the Company. In accordance with this philosophy and given their obligations respecting confidentiality, directors should defer initially to O’Reilly’s investor relations Senior Vice President (or Vice President in the event there is no Senior Vice President) or its General Counsel when requested to make any comments regarding O’Reilly or its business. If comments from the Board are appropriate, they should, in most circumstances, come from the Chairman, the Independent Lead Director or committee chair following consultation with the Chief Executive Officer and others in Executive Management, as needed.

The selection of O’Reilly’s independent auditor shall be ratified by shareholders at O’Reilly’s Annual Meeting of Shareholders held each May.

The Audit Committee shall consist of no fewer than three members. The members of the Audit Committee shall meet the independence, financial literacy and expertise and other qualification requirements of the federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the Nasdaq National Market. In addition, at least one member of the Committee must be designated by the Board to be an “audit committee financial expert,” as defined by Item 407(d) of Regulation S-K of the Securities and Exchange Commission.

The members of the Audit Committee shall be appointed by the Board. The Corporate Governance/Nominating Committee, in consultation with the Chairman of the Board, will recommend to the Board, and the Board shall designate, one member of the Committee to serve as Chairperson. If the Chairperson is absent from a meeting, another member of the Committee may act as Chairperson. Audit Committee members may be replaced by the Board. Members of the Committee will be appointed for a one-year term and shall serve until their resignation, retirement, or removal by the Board or until their successors shall be appointed. The Board may fill vacancies on the Committee and remove a member of the Committee at any time with or without cause. No member of the Committee shall be removed except by majority vote of the Board, provided that a member that no longer serves as a director of the Company shall be deemed automatically removed without any further action by the Board.

The Audit Committee shall have the sole authority to appoint or replace the independent auditor, and shall approve, in advance, all audit engagement fees and terms and all non-audit engagements with the independent auditors permitted under applicable law, rules and regulations.

In addition, the Audit Committee shall approve all related party transactions. The Audit Committee may consult with management, but shall not delegate these responsibilities.

The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to conduct investigations into any matters within the scope of its responsibility and to retain special legal, accounting or other consultants to advise the Audit Committee.

The Audit Committee shall establish procedures for the receipt, retention and treatment of complaints regarding the Company’s accounting, financial reporting, internal accounting controls and auditing matters. The Audit Committee shall also establish procedures for the confidential, anonymous submission by the Company’s employees regarding questionable accounting or auditing matters.

The Audit Committee shall make regular reports to the Board and shall annually review its own performance.

The Company will provide appropriate funding, as determined by the Audit Committee, for compensation to the independent auditor, to any advisers that the Audit Committee chooses to engage and for payment of ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.

The Audit Committee shall:

Financial Statement and Disclosure Matters

1. Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management’s discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K.

2. Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of its Quarterly Reports on Form 10-Q, including the results of the independent auditors’ reviews of the quarterly financial statements.

3. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls, the development, selection and disclosure of critical accounting estimates, and analyses of the effect of alternative assumptions, estimates or GAAP methods on the Company’s financial statements.

4. Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies.

5. Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements.

6. Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.

7. Review any disclosures made by CEO and CFO during the Forms 10-K and 10-Q certification process about significant deficiencies in the design or operation of internal controls or any fraud that involves management or other employees who have a significant role in the Company’s internal controls.

8. Discuss with the independent auditor the matters relating to the conduct of the audit. In particular, discuss:

(a) The adoption of, or changes to, the Company’s significant auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management.

(b) The management letter provided by the independent auditor and the Company’s response to that letter.

(c) Any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, and any significant disagreements with management.

9. Review and approve the “Report of the Audit Committee” to be included in the Company’s Annual Proxy Statement.

10. Review significant new accounting, financial, external reporting and asset-safeguarding policies and practices.

Oversight of the Company’s Relationship with the Independent Auditor

11. Review the experience and qualifications of the senior members of the independent auditor team.

12. Obtain and review a formal, written report from the independent auditor at least annually regarding (a) the auditors’ internal quality-control procedures, (b) any material issues raised by the most recent quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company (consistent with applicable auditor professional responsibility standards).

13. Obtain and review from the independent auditor all written statements and communications relating to relationships between the independent auditor and the Company required by applicable auditing standards of the Public Company Accounting Oversight Board and Securities and Exchange Commission rules.

14. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and the internal auditor. The Audit Committee shall present its conclusions to the Board and, if so determined by the Audit Committee, recommend that the Board take additional action to satisfy itself of the qualifications, performance and independence of the auditor.

15. Require the rotation of the lead audit partner and the concurring audit partner every five years in order to assure continuing auditor independence. The Audit Committee shall consider whether it is appropriate to adopt a policy of rotating the independent auditing firm itself on a regular basis.

16. Recommend to the Board policies for the Company’s hiring of employees or former employees of the independent auditor who were engaged on the Company’s account. The Audit Committee shall require a one year “cooling off” period before a member of the independent auditor team can begin working for the Company in certain key positions such as chief executive officer, controller, chief financial officer, chief accounting officer or any equivalent position.

17. Discuss with management, the internal auditors and the independent auditors any accounting adjustments that were noted or proposed by the independent auditor, but were not adopted or reflected.

18. Review and discuss with the independent auditor its annual audit plan, including the timing and scope of audit activities, and monitor such plan’s progress and results during the year.

19. Review with management, the independent auditor and the director of the Company’s internal auditing department, the following:

(a) All critical accounting policies and practices to be used.

(b) Any critical audit matters arising from the current period audit.

(c) All alternative treatments of financial information that the independent auditor has discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.

(d) All other material written communications between the independent auditor and management, such as any management letter and any schedule of unadjusted differences.

Oversight of the Company’s Internal Audit Function

20. Review with management and internal audit the charter, plans, activities, staffing, and organizational structure of the internal audit function.

21. Review the appointment and replacement of the senior internal auditing director.

22. Discuss with the independent auditor the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.

23. Review the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures on a regular basis, including the responsibilities, budget, compensation and staffing of the Company’s internal audit function, through inquiry and discussions with the independent auditor, management and director of the Company’s internal auditing department.

Internal Control Matters

24. Understand the scope of internal and external auditors’ review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management’s responses.

25. Review the yearly report prepared by management, and attested to by the independent auditor, assessing the effectiveness of the Company’s internal control over financial reporting and stating management’s responsibility for establishing and maintaining adequate internal control over financial reporting prior to its inclusion in the Company’s Annual Report on Form 10-K.

Compliance Oversight Responsibilities

26. Obtain from the independent auditor assurance that Section 10A of the Securities Exchange Act of 1934 has not been implicated.

27. Obtain reports from management, the Company’s senior internal audit director and the independent auditor that the Company is in conformity with applicable legal requirements and the Company’s Code of Business Conduct and Ethics. Review reports and disclosures of insider and affiliated party transactions.

28. Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding the Company’s financial statements or accounting policies.

29. Discuss with the Company’s General Counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies.

30. Meet periodically with the Company’s General Counsel to review legal and regulatory matters, including (i) any matters that may have a material impact on the financial statements of the Company and (ii) any matters involving potential or ongoing material violations of law or breaches of fiduciary duty by the Company or any of its directors, officers, employees or agents or breaches of fiduciary duty to the Company.

IT Information Security Oversight

31. Obtain and review timely reports on a quarterly basis on the status of the IT information security program including status, initiatives and test results, business continuity planning, PCI compliance status, and significant cybersecurity risks, including cybersecurity incidents, the impact on the Company of any significant cybersecurity incident, and any disclosure obligations arising from any such incident.

The Audit Committee shall meet as often as it may deem necessary and appropriate in its judgment, but not less frequently than quarterly.

A majority of the members of the Audit Committee shall constitute a quorum. The Audit Committee may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. The Audit Committee shall meet with management, the internal auditors and the independent auditor in separate executive sessions at least quarterly.

The Audit Committee shall fix its own rules of procedure, which shall be consistent with the Amended and Restated Bylaws of the Company and this Charter. The Audit Committee shall keep written minutes of Audit Committee meetings, which minutes shall be maintained with the books and records of the Company. The Audit Committee may form and delegate authority to subcommittees when appropriate, but no such delegation shall be permitted if the authority is required by law, regulation or listing standard to be exercised by the Audit Committee as a whole.

The Audit Committee, with the assistance of counsel, internal audit and/or the Company’s independent accountants, shall reassess the adequacy of its Charter at least annually to ensure consistency with changing needs and compliance with all legal and regulatory requirements, and recommend any proposed changes to the Board for approval.

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor.

The Committee shall be composed of three or more directors. Each member of the Committee shall meet the independence and experience requirements of the federal securities laws and the applicable rules and regulations of the SEC and Nasdaq, as such requirements may change from time to time.

The members of the Committee shall be appointed by the Board. The Board shall designate one member of the Committee to serve as Chairperson. If the Chairperson is absent from a meeting, another member of the Committee may act as Chairperson. Members of the Committee will be appointed for a one-year term and shall serve until their resignation, retirement, or removal by the Board or until their successors shall be appointed. The Board may fill vacancies on the Committee and remove a member of the Committee at any time with or without cause. No member of the Committee shall be removed except by majority vote of the Board, provided that a member that no longer serves as a director of the Company shall be deemed automatically removed without any further action by the Board.

The Committee shall:

Nomination of Directors

1. Consider and make recommendations to the Board concerning the appropriate size and overall characteristics of the Board, including desired competencies, skills and attributes and the desired ratio of independent and non-independent directors.

2. Establish criteria for persons to be nominated for election to the Board and its committees, taking into account the composition of the Board as a whole. At a minimum, the criteria should include (a) a candidate’s qualification as “independent” under the federal securities laws and the rules and regulations of the SEC and Nasdaq applicable to the Board and each of its committees; (b) depth and breadth of experience within the Company’s industry and otherwise; (c) outside time commitments; (d) special areas of expertise; (e) accounting and finance knowledge; (f) business judgment; (g) leadership ability; (h) experience in developing and assessing business strategies; (i) corporate governance expertise; (j) risk management skills; and (k) for incumbent members of the Board, the past performance of the incumbent director.

3. Conduct searches for prospective directors based on the foregoing criteria, review candidates recommended by shareholders, and evaluate and recommend to the Board candidates for election to the Board by the shareholders or to fill vacancies.

4. Review on an annual basis and, in consultation with the Chairman of the Board, recommend to the Board one member of the Board to serve as Independent Lead Director.

5. Review on an annual basis and, in consultation with the Chairman of the Board, recommend to the Board committee assignments and committee chair positions.

6. Review any proposed amendments to the Company’s Articles of Incorporation and By-laws and recommend appropriate action to the Board.

Corporate Governance Oversight

7. Periodically review and assess the adequacy of the Company’s Corporate Governance Principles and recommend any proposed changes to the Board for its approval and adoption.

8. Periodically review and reassess the adequacy of the charters of the various committees of the Board and recommend any proposed changes to the Board for its approval and adoption.

9. Oversee the review and update, when appropriate, of the Company’s Code of Business Conduct and Ethics.

10. Review and recommend adoption of all director and officer insurance policy requirements.

11. Oversee the annual assessment process for the Board of Directors, the committees and individual directors, and monitor the functioning and effectiveness of the committees of the Board and make recommendations for any changes, including the creation and elimination of committees.

Corporate Environmental, Social and Sustainability Oversight

12. Review and evaluate the Company’s programs, policies, goals and practices pertaining to sustainability, environmental, social, and governance issues and impacts.

13. Review the Company’s annual Impact Report.

Other Powers and Responsibilities

14. Make regular reports to the Board, providing an overview of its activities, summarizing Committee actions and commenting on the fulfillment of the Committee’s duties under this Charter. The Committee shall also present resolutions to the Board that the Committee has recommended be adopted at the Board level.

15. Have the authority to retain consultants and other third-party advisors of its selection as it deems necessary to provide it with advice and counsel, including a search firm to fulfill its responsibilities of identifying candidates for Board membership. The Company shall provide appropriate funding for the Committee to retain such advisors without requiring the Committee to seek Board approval.

16. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for its approval.

17. Perform any other activities consistent with this Charter, the Company’s Articles of Incorporation, Amended and Restated Bylaws, and governing law, as the Committee or the Board deems necessary or appropriate.

The Committee shall meet when, where and as often as it may deem necessary and appropriate in its judgment, but in no event less than four (4) times per year, either in person, telephonically, or virtually. A majority of the members of the Committee shall constitute a quorum. The Chairman of the Board, the Chairman of the Committee, or the Company’s Independent Lead Director shall have the right to call a special meeting of the Committee. The Committee may request that any directors, officers or employees of the Company, or other persons whose advice and counsel are sought by the Committee, attend any meeting to provide such information as the Committee requests.

The Committee shall fix its own rules of procedure, which shall be consistent with the Amended and Restated Bylaws of the Company and this Charter. A member of the Committee or the Corporate Secretary shall keep written minutes of Committee meetings, which minutes shall be maintained with the books and records of the Company. The Committee may delegate authority to one or more members of the Committee when appropriate, but no such delegation shall be permitted if the authority is required by law, regulation or listing standard to be exercised by the Committee as a whole.

The Committee shall be composed of three or more directors. Each member of the Committee shall meet the independence and experience requirements of the federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and the Nasdaq National Market (“Nasdaq”), as such requirements may change from time to time.

The members of the Committee shall be appointed by the Board. The Corporate Governance/Nominating Committee, in consultation with the Chairman of the Board, will recommend to the Board, and the Board shall designate, one member of the Committee to serve as Chairperson. If the Chairperson is absent from a meeting, another member of the Committee may act as Chairperson. Members of the Committee will be appointed for a one-year term and shall serve until their resignation, retirement, or removal by the Board or until their successors shall be appointed. The Board may fill vacancies on the Committee and remove a member of the Committee at any time with or without cause. No member of the Committee shall be removed except by majority vote of the Board then in office, provided that a member that no longer serves as a director of the Company shall be deemed automatically removed without any further action by the Board.

The Committee will have the resources and authority necessary to discharge its duties and responsibilities, including the authority to retain or obtain the advice of a compensation consultant, outside legal counsel or other expert or adviser (“adviser”) to assist the Committee in carrying out its duties, at the Company’s expense. The Committee shall have the authority and responsibility for hiring, approving the fees and retention terms, overseeing, and terminating the services of any adviser. The Committee may select an adviser only after taking into consideration all factors relevant to that person’s independence from management, including the factors specified in the applicable Nasdaq listing standards.

Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications.

Subject to the provisions of the Company’s Corporate Governance Principles, the principal responsibilities and functions of the Human Capital and Compensation Committee are as follows:

1. Review the competitiveness of the Company’s executive compensation programs to ensure (a) the attraction and retention of corporate officers, (b) the motivation of corporate officers to achieve the Company’s business objectives, and (c) to align the interest of key leadership with the long-term interests of the Company’s shareholders.

2. Review trends in management compensation, oversee the development of new compensation plans and, when necessary, approve the revision of existing plans.

3. Review the performance of executive management.

4. Review and approve the goals and objectives of the Chairman and Chief Executive Officer, evaluate the performance of the Chairman and Chief Executive Officer in light of these corporate objectives, and set the compensation level of the Chairman and Chief Executive Officer consistent with Company philosophy. The Chief Executive Officer may not be present during voting or deliberation on his or her compensation.

5. Approve the salaries, bonuses and other compensation for all corporate officers.

6. Review and approve compensation packages for new corporate officers and termination packages for corporate officers as requested by management.

7. Periodically review, consider and recommend to the Board the total compensation program for all non-employee directors of the Company for service on the Board and its committees.

8. Review and approve the awards made under any executive officer bonus plan, and provide an appropriate report to the Board.

9. Review and discuss with the Board, Independent Lead Director and senior officers plans for officer development and corporate succession plans for the Chief Executive Officer and other senior officers.

10. Review and make recommendations concerning long-term incentive compensation plans, including the use of stock options and other equity-based awards. Except as otherwise delegated by the Board, the Committee will act on behalf of the Board as the “Committee” established to administer equity-based and employee benefit plans, and as such will discharge any responsibilities imposed on the Committee under those plans, including making and authorizing grants, in accordance with the terms of those plans.

11. Review compensation arrangements for the Company’s employees to evaluate whether incentive and other forms of pay encourage unnecessary or excessive risk taking, and review and discuss, at least annually, the relationship between risk management policies and practices, corporate strategy and the Company’s compensation arrangements.

12. Annually evaluate the Committee’s performance and this Charter.

13. Monitor the Company’s compliance with the requirements of the Sarbanes-Oxley act of 2002 and other applicable laws, regulations and rules relating to compensation arrangements for directors and executive officers.

14. Review and discuss the Compensation, Discussion and Analysis (“CD&A”) required to be included in the Company’s proxy statement and annual report on Form 10-K by the rules and regulations of the SEC with management, and, based on such review and discussion, determine whether or not to recommend to the Board that the CD&A be so included.

15. Prepare the Committee report in accordance with the rules and regulations of the SEC for inclusion in the Company’s annual proxy statement and annual report on Form 10-K.

16. Oversee the administration of any clawback policies and the administration of any clawback or forfeiture provisions of compensation plans for which the Committee is the administrator.

17. Oversee the Company’s compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and the frequency of such votes, and the requirement under the Nasdaq rules that, with limited exceptions, shareholders approve equity compensation plans. The Committee also shall review the results of such advisory votes and consider any implications.

18. On-going review of the Company’s initiatives related to human capital management, engagement and experience, and other workforce initiatives.

The Committee shall meet when, where and as often as it may deem necessary and appropriate in its judgment, but in no event less than four (4) times per year, either in person, telephonically, or virtually. A majority of the members of the Committee shall constitute a quorum. The Chairman of the Board, the Chairman of the Committee, or the Company’s Independent Lead Director shall have the right to call a special meeting of the Committee. The Committee may request that any directors, officers or employees of the Company, or other persons whose advice and counsel are sought by the Committee, attend any meeting to provide such information as the Committee requests.

The Committee shall fix its own rules of procedure, which shall be consistent with the Amended and Restated Bylaws of the Company and this Charter. A member of the Committee or the Corporate Secretary shall keep written minutes of Committee meetings, which minutes shall be maintained with the books and records of the Company. The Committee may delegate authority to one or more members of the Committee when appropriate, but no such delegation shall be permitted if the authority is required by law, regulation or listing standard to be exercised by the Committee as a whole.