NYSE Listed Company Manual
These guidelines have been approved by the board of directors and, along with the by-laws of the Company, the Code of Business Conduct and Ethics and the charters of the board committees, provide the framework for the governance of Murphy. The board will review these guidelines and other aspects of corporate governance annually or more often if appropriate.
1. Role of Board and Management
Murphy’s business is conducted by its employees, managers and officers under the direction of the chief executive officer (CEO) and the oversight of the board to enhance the long-term value of the Company for its stockholders. The board of directors 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 of directors and management recognize that the long-term interests of the stockholders are advanced by responsibly addressing the concerns of other stakeholders and interested parties including employees, customers, suppliers, our communities, governments and the public at large.
2. Functions of Board
The board of directors has six (6) scheduled meetings per year at which it reviews and discusses 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 and committee meetings. In addition to its general oversight of management, the board also performs a number of specific functions, including:
a. selecting, evaluating and compensating the CEO and overseeing CEO succession planning;
b. providing counsel and oversight on the selection, evaluation and compensation of senior management;
c. reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions;
d. assessing major risks facing the Company---and reviewing options for their mitigation;
e. determining the independence of Board and committee members; and
f. ensuring processes are in place for maintaining the integrity of the Company---its financial statements, its compliance with law and ethics, the integrity of its relationships with customers, suppliers, and other stakeholders.
Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders.
Directors should also have an inquisitive and objective perspective, practical wisdom and mature judgment. The Company endeavors to have a board representing diverse experience at policy-making levels in business areas that are relevant to the Company’s global 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. Directors should tender their resignation in the event of any significant change in their personal circumstances, including change in their principal job responsibilities.
Directors should not serve on more than four other boards of public companies or serve on the audit committee of more than two other public companies. Current positions in excess of these limits may be maintained unless the board determines that doing so would impair the director’s service on the Company’s board.
Directors should not be nominated for election to the board after their 72nd birthday, although the full board may nominate candidates older than 72 for special circumstances.
4. Independence of Directors
At least a majority of the directors shall be independent directors. It is, however, recognized that directors who do not meet the independence standards can also make valuable contributions to the board and to the Company by reason of experience and wisdom. The board has determined that as of February 6, 2013, all but one of Murphy’s directors are independent.
For a director to be considered “independent,” the Board of Directors must affirmatively determine that the director has no material relationship with Murphy Oil Corporation or its affiliates. The board will review the independence of directors on an annual basis, applying the independence standards attached hereto as Exhibit A. These standards are applied to all directors and include the principles contained in the New York Stock Exchange (NYSE) Listed Company Manual Section 303A.02
as well as a heightened standard recommended by the board.
The Company will not make any personal loans or extensions of credit to directors or executive officers, other than consumer or credit card services on terms offered to the general public. Neither directors nor their immediate family member may provide personal services for compensation to the Company.
5. Size of Board and Selection Process
Currently, the By-laws provide for eleven directors; this number may be increased or decreased to a minimum of three by amendment of the By-laws. The directors are elected each year by the stockholders at the annual meeting. The board proposes a slate of nominees to the stockholders for election to the board. The board also determines and the by-laws specify the number of directors on the board. Between annual stockholder meetings, the board may elect directors to serve until the next annual meeting. Stockholders desiring to recommend candidates for membership on the Board of Directors for consideration by the Nominating and Governance Committee should address their recommendations to: Nominating and Governance Committee of the Board of Directors, c/o Secretary, Murphy Oil Corporation, P.O. Box 7000, El Dorado, AR 71731-7000.
6. Board Committees
The board has established the following committees to assist the board in discharging its responsibilities (i) audit; (ii) executive compensation; (iii) nominating and governance; (iv) environmental, health and safety; and (v) executive. The current charters of the committees (other than the executive committee whose duties are specified in the bylaws) are published on the Murphy website, and will be mailed to stockholders on written request. The committee chairs report highlights of their meetings to the full board following each meeting of the respective committees.
7. Independence of Committee Members
All members of the audit, nominating and governance, and executive compensation committees must satisfy the independence standards discussed in section 4 above, and members of the audit committee must also satisfy additional independence requirements prohibiting them from receiving, directly or indirectly, certain types of compensation from the Company other than their directors’ compensation or from being an affiliated person of the issuer or any subsidiary thereof.
8. Meetings of Non-Management Directors
The board will have at least three regularly scheduled meetings a year for the non-management directors. These meetings will be held in conjunction with the regular board meetings in the months of February, August and December. The directors have determined that the non-executive chairman of the board will preside at such meetings, and will serve as the presiding director in performing such other functions as the board may direct, including advising on the selection of committee chairs and advising management on the agenda for board meetings. The non-management directors will meet without management present at such other times as determined by the chairman of the board.
The board and each of the committees will perform an annual self-evaluation. Each November, 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 will be organized and summarized for discussion with the board and the committees.
10. Setting Board Agenda
The board shall be responsible for its agenda. The CEO and the chairman of the board, or committee chair 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 CEO, the chairman of the board, or appropriate committee chair at any time.
11. Ethics and Conflicts of Interest
The board expects all directors, officers and employees to act ethically at all times and to acknowledge their adherence to the policies comprising Murphy’s Code of Business Conduct and Ethics (the “Code”) as set forth in the Company’s website. In addition, all officers of the Company shall adhere to the section of the Code entitled “Ethical Conduct for Executive Management.” Except in unusual circumstances the board should not permit 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 CEO and the chairman of the board. 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 shall resolve any conflict of interest question involving the CEO, or senior management, and the CEO shall resolve any conflict of interest issue involving any other officer of the Company.
12. Reporting of Concerns to Non-Employee Directors or the Audit Committee
Anyone who has a concern about Murphy’s conduct, or about the Company’s accounting, internal accounting controls or auditing matters, may communicate that concern directly to the chairman of the board, non-employee directors, or to the audit committee. Such communications may be confidential or anonymous, and may be e-mailed, submitted in writing, or reported in writing or by phone, to special addresses and a toll-free phone number that will be published on the Company’s website. All such concerns will be forwarded to the appropriate directors for their review. The status of all such outstanding concerns will be reported to the directors on a quarterly basis. The non-employee directors, the presiding director, or the audit committee may direct special treatment, including the retention of outside advisors or counsel for any concern addressed to them. The Company prohibits any employee from retaliating or taking any adverse action against anyone for raising or helping to resolve integrity concerns.
13. Compensation of Board
The executive compensation committee shall have the responsibility for recommending to the board compensation and benefits for non-employee directors. In discharging this duty, the committee should be guided by the following principles: (i) compensation should fairly pay directors for work required in a company of Murphy’s size and scope; (ii) compensation should align directors’ interests with the long-term interests of stockholders; and (iii) the structure of the compensation should be simple, transparent and easy for stockholders to understand. The executive compensation committee shall review non-employee director compensation and benefits annually.
14. Succession Plan
The board shall oversee succession planning for the CEO and senior executives. The CEO shall periodically report to the board recommending and evaluating potential successors, along with a review of any development plans recommended for such individuals.
15. Annual Compensation Review of Senior Management
The executive compensation committee shall annually approve the goals and objectives for compensating the CEO. That committee shall evaluate the CEO’s performance in light of these goals before setting the CEO’s salary, bonus and other incentive and equity compensation. The committee shall also annually approve the compensation structure for the Company’s officers, and shall evaluate the performance of the Company’s senior executive officers before approving their salary, bonus and other incentive and equity compensation.
16. Access to Senior Management
In the event of questions and concerns which are not adequately addressed at Board or committee meetings, non-employee directors are encouraged to contact senior managers of the Company without senior corporate management present.
17. Access to Independent Advisors
The board and its committees shall have the right at any time to retain independent outside financial, legal or other advisors.
18. Director Orientation
The general counsel 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. Each new director shall, within six months of election to the board, spend a day at corporate headquarters for personal briefing by senior management on the Company’s strategic plans, its financial statements, and its key policies and practices.
19. Communications with the Board
Security holders may send communications to the board and/or specified individual directors c/o the Secretary, Murphy Oil Corporation, P.O. Box 7000, El Dorado, AR 71731-7000. The Secretary shall promptly relay all such communications to the appropriate director(s).
20. Attendance at Annual Meeting of Stockholders
Absent extenuating circumstances, all board members are expected to attend each annual meeting of shareholders.
EXHIBIT A: INDEPENDENCE PRINCIPLES AND STANDARDS
To be considered an independent director of Murphy Oil Corporation , the board must determine that a director does not have any direct or indirect material relationship with the Company. Additionally:
a. A director who is an employee, or whose immediate family member is an executive officer, of the Company, is not independent until three years after the end of such employment relationship;
b. A director who receives, or whose immediate family member receives, more than $120,000 per year in direct compensation from the listed company, 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) is not independent until three years after he or she ceases to receive more than $120,000 per year in such compensation;
c. A director is not independent if: 1) the director or an immediate family member is a current partner of a firm that is the Company’s internal or external auditor; 2) the director is a current employee of such a firm; 3) the director has an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or 4) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such firm and personally worked on the listed company’s audit within that time.;
d. A director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of the listed company’s present executives serve on that company’s compensation committee is not independent until three years after the end of such service or the employment relationship;
e. A director who is an executive officer or an employee, or whose immediate family member is an executive officer, of a company that makes payments to, or receives payments from, the listed company for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, is not independent until three years after falling below such threshold.
f. A director who is an executive officer or an employee, or whose immediate family member is an executive officer, of a charitable, educational or other nonprofit organization to which Murphy Oil Corporation or its subsidiaries make contributions (excluding contributions to match those of employees or directors) in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of the organization’s consolidated gross revenues is not independent until three years after falling below such threshold.