Governance Principles

As Last Amended on July 31, 2017 

Governance Principles Quick Links

Role and Responsibilities of The Board
Composition and Criteria for Membership
Board Meeting and Materials
Board Committees
Management and Board Review and Responsibilities
 

The Role and Responsibilities of The Board of Directors


The Board of Directors (the “Board) of NIC Inc. (the “Company”) oversees the exercise of corporate powers and the Company's business affairs to ensure that they are managed to meet stated goals and objectives. The Board has the responsibility to organize its functions and conduct its business in the manner it deems most effective and efficient, consistent with its duties of good faith, due care and loyalty. In that regard, the Board has adopted a set of flexible policies to guide its governance practices in the future. The practices, set forth below, will be regularly reevaluated by the Board's Corporate Governance and Nominating Committee in light of changing circumstances in order to continue serving the best interest of the Company and its stockholders. Accordingly, the summary of current practices is not a fixed policy or resolution by the Board, but merely a statement of current practices that is subject to continuing assessment and change.

 

To fulfill its role and responsibilities, the Board shall:

  • Review, approve and monitor fundamental operating, financial and other corporate plans, strategies and objectives;

  • Evaluate on a regular and timely basis the qualitative and quantitative performance of the Company and its senior management, as well as compensation and succession planning for senior management;

  • Assure maintenance of proper accounting, financial and other appropriate controls;

  • Review the process of providing appropriate financial and operational information within the Company, as well as in its public reporting;

  • Assure adherence to proper policies of corporate conduct, including compliance with applicable laws, regulations, business and ethical standards; and

  • Evaluate and take steps to improve the overall effectiveness of the Board.  

 

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Composition of The Board and Criteria for Membership

The Board recognizes its responsibility to engage, and provide for the continuity of, executive management that possesses the character, skills and experience required to attain the Company's goals and its responsibility to ensure that nominees for the Board of Directors possess appropriate qualifications and reflect a reasonable diversity of backgrounds and perspectives. Directors represent the collective interest of all stockholders of the Company and each director will act in good faith, with due care and in a manner he or she reasonably believes to be in the best interests of the Company and its stockholders.


1. Size of the Board

The Board of Directors has nine available Board seats presently authorized. The Board, through the Corporate Governance and Nominating Committee, will regularly evaluate the size of the Board. A significant majority of the Board is and will continue to be non-employee directors.


2. Board Member Criteria

The Corporate Governance and Nominating Committee is responsible for reviewing the appropriate skills and characteristics required of directors in the context of prevailing business conditions and composition of the Board.

 

The qualifications to be considered in the selection of director nominees include those set forth in the Corporate Governance and Nominating Committee’s charter and have the objective of assembling a Board that possesses a variety of perspectives and skills derived from high quality business and professional experience.

 

Nominees for director shall be selected on the basis of experience, knowledge, skills, expertise, integrity, diversity of background and perspective, ability to make independent analytical inquiries, understanding of the Company's business environment and willingness to devote adequate time and effort to Board responsibilities. Directors should possess the highest personal and professional ethics, integrity and values, informed judgment, and sound business experience, and be committed to representing the long-term interests of the Company and its stockholders. Directors should not have, nor appear to have, a conflict of interest that would impair the nominee's ability to represent the interests of  the Company and its stockholders and to fulfill the responsibilities of a director. Directors should have the ability to understand the sometimes conflicting interests of the various constituencies of the Company (including stockholders, employees, customers, governmental agencies, and the general public) and discharge their duties in good faith and in a manner that they reasonably believe to be in the best interest of the Company.


3. Director Resignation if Elected by Less Than a Majority of Voting Stockholders

If a nominee for director that is elected at a meeting of the stockholders receives more votes “withheld” than votes “for” his or her election (“Majority Vote Against”) in an uncontested election, such director shall promptly tender an offer of resignation to the Chairman of Board following the certification of the stockholder vote from the meeting at which the election occurred. The Corporate Governance and Nominating Committee shall promptly make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken.  Within 90 days after the date of the certification of the meeting election results, the Board shall act on whether to accept the director's offer and publicly disclose (in a filing with the Securities and Exchange Commission, if required, or other broadly disseminated means of communication) its decision and, if the decision is other than acceptance of the resignation, the rationale behind it. The Board and the Corporate Governance and Nominating Committee may each consider any factors or other recommendations that it considers relevant and appropriate. The incumbent director who offers to tender his or her resignation shall not participate in the Corporate Governance and Nominating Committee’s or the Board's decision with respect to that director. If other directors who are members of the Corporate Governance and Nominating Committee receive a Majority Vote Against in the same uncontested election of directors, so that a quorum of the Corporate Governance and Nominating Committee cannot be achieved, then the other independent directors on the Board who were elected at such meeting by more than a majority of the votes cast shall appoint a committee among themselves to consider the resignation offers and recommend to the Board whether to accept them.

 

4. Board Definition of What Constitutes Independence for Non-Employee Directors

A majority of the members of the Board must qualify as independent directors. The term "independent directors" describes directors (a) who qualify as independent directors pursuant to the applicable provisions of the Securities Exchange Act of 1934, the rules promulgated thereunder and the rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”) and (b) who, in the Board's judgment, do not have a material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company).


5. Procedure for Selecting New Director Candidates

The Board is responsible for selecting its members, subject to stockholder approval, but delegates the screening process to the Corporate Governance and Nominating Committee.


6. Extending the Invitation to a Potential New Director to Join the Board

Upon concurrence of the members of the Board, invitations to join the Board will generally be extended on behalf of the Board by the Chairman of the Board. Other Board members may participate as appropriate.


7. Directors Who Change Their Job Responsibilities

A Board member, including the Chief Executive Officer, who ceases to be actively employed in his or her principal business or profession, or experiences other changed circumstances that could pose a conflict of interest, diminish his or her effectiveness as a Board member, or otherwise be detrimental to the Company, is expected to notify the Board. The Board in its discretion will determine whether such member should continue to serve as a director for  any future terms and may request that such director resign during the unexpired term.


8. Term Limits/Retirement Age

No term limits or retirement age for directors have been established. The Board will evaluate each director's effectiveness during his or her prior term before nominating such director for re-election.


9. Responsibilities of the Lead Independent Director

A Lead Independent Director will be elected by and from the independent Board members.  In addition to the responsibilities defined above for all Board members, the powers and duties of the Lead Independent Director shall include, but are not limited to


  • Presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
  • Serving as liaison between the Chairman of the Board and the independent directors;
  • Reviewing and/or supplementing materials sent to the Board that are initially prepared by or under the direction of the Chairman of the Board;
  • Reviewing and/or supplementing meeting agendas for the Board that are initially prepared by or under the direction of the Chairman of the Board;
  • Reviewing meeting schedules that are initially prepared by or under the direction of the Chairman of the Board in order to assure that there is sufficient time for discussion of all agenda items;
  • Having the authority to call meetings of the independent directors;
  • If requested by major stockholders, ensuring that he or she is available for consultation and direct communication as an independent point of contact;
  • Creating the agenda and materials for independent director meetings
  • Making recommendations to the Board regarding the structure of Board meetings;
  • Collaborating with the Chairman of the Board on recommending tasks to be assigned to the appropriate committees;
  • Having the right to engage legal, financial and other advisers to represent the independent directors;
  • Mentoring new independent directors;
  • Assisting the Corporate Governance and Nominating Committee to help make the CEO development and succession planning process robust;
  • Evaluating the Board education program; and
  • Collaborating with the Chairman in facilitating consensus among Board members on key issues.

 

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Board Meeting and Materials

1. Frequency of Board Meetings; Attendance

Currently, the Board has at least four regular meetings each year, with additional meetings as required or as deemed necessary. The Board considers its current meeting schedule to be adequate, but the number of regular meetings may be adjusted as necessary to meet changing conditions and needs. Directors will be informed of the date of each Board meeting as far in advance as practical. Members are expected to attend all meetings barring special circumstances.

 

2. Selection of Agenda Items for Board Meetings

The Chairman, together with appropriate members of Management, develops the agenda for each Board meeting and submits the agenda for approval by the Lead Independent Director, who may offer suggestions. The agenda is then circulated in advance to all Board members, who may suggest additional items for consideration.

 

3. Board Member Orientation

Orientation materials will be made available and appropriate meetings will be held to acquaint new directors with the business, history, current circumstances, key issues and management of the Company. The Board has assigned the responsibilities for developing such orientation materials to management under the general direction of the Corporate Governance and Nominating Committee. Board members are encouraged to participate in continuing education programs related to director duties and responsibilities. The Company, upon the approval of the Chairman of the Corporate Governance and Nominating Committee or the Board Chairman, will approve reimbursement for reasonable costs and expenses of attendance at continuing education programs.

 

4. Board Materials Distributed in Advance

As much information and data as practical on the meeting agenda items and the Company's financial performance will be sent to Board members in advance of meetings.

 

5. Board Access to Senior Management

All Board members have access to senior management, with the expectation that such contact would be minimally disruptive to the business operation of the Company. The Chief Executive Officer is encouraged to invite to Board meetings senior managers that can provide additional insight into business matters being discussed and those with high future potential who should be given personal exposure to members of the Board.

 

6. Executive Session of Outside Directors

At each meeting of the Board, the agenda includes time at the end of the meeting for an executive session with only non-employee directors. The executive sessions shall be chaired by the Lead Independent Director. In advance of such meetings the Lead Independent Director shall communicate with other non-employee directors to develop an agenda of issues for discussion in the executive session.

 

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Board Committees

1. Number of Committees

The present Board committees are: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee. Members of all committees shall be "independent" under applicable Nasdaq guidelines. The Board considers its current committee structure to be appropriate but the number and scope of committees may be revised as appropriate to meet changing conditions and needs. At its discretion and as permitted by applicable laws and regulations, the entire Board may perform the function of any committee.

 

2. Frequency and Length of Committee Meetings

Generally, committees meet in conjunction with regular Board meetings. Committee chairpersons may also call meetings when they deem it necessary. Committee meetings may be as frequent and as long as needed.  The Chair of the Board, the Senior Executive Officers and the Secretary may attend any meeting or meetings of the committees of the Board, except for portions of the meetings where such presence would be inappropriate, as determined by such committee or its chair.


3. Committee Agenda

The agenda for committee meetings is developed by Committee Chairpersons in consultation with appropriate members of management. The agenda for each meeting is circulated in advance and Committee members may suggest additional items for consideration.

 

4. Assignment and Rotation of Committee Members

The Corporate Governance and Nominating Committee is responsible for reviewing and recommending to the Board the assignment of directors to various committees. This committee will also recommend to the Board, subject to applicable membership requirements and as practical, an appropriate rotating process to ensure diversity of Board members experience and variety of exposure to the affairs of the Company.


 

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Management and Board Review and Responsibilities

1. Selection of the Chairman and Chief Executive Officer

The Board elects the Chairman and Chief Executive Officer in the manner and based on the criteria that it deems appropriate and in the best interests of the Company given the circumstances at the time of such election. 

 

2. Formal Evaluation of the Chief Executive Officer

Each year, the chairpersons of the Corporate Governance and Nominating Committee and the Compensation Committee will conduct a formal evaluation of the Chief Executive Officer's performance based on appropriate quantitative and qualitative criteria. 

 

3. Succession Planning

The Chief Executive Officer will annually review Executive succession planning with the Board, and provide the Board with any current recommendations as to Executive succession plans in the event of an officer's termination of employment, disability or death.


4. Board Interaction with Institutional Investors, the Media and Customers

Management is responsible for communications and relationships on behalf of the Company with investors, the media, and customers.


5. Assessing the Board's Performance

The Corporate Governance and Nominating Committee will conduct an annual assessment of the overall effectiveness of the organization of the Board and the Board's performance of its governance responsibilities. The Committee will report its findings to the whole Board for discussion. 


6. Board Compensation Review

The Compensation Committee will periodically review the Board's compensation in relation to other companies as determined appropriate by the Compensation Committee. Any changes in Board compensation will be recommended by the Compensation Committee and approved by the Board.

 

Disclaimer: The information posted is as of the date indicated. We are under no obligation to update or remove outdated information other than as required by applicable law or regulation.