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|Nominating and Corporate Governance Committee
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
NORTECH SYSTEMS INCORPORATED
Members.The Board of Directors of Nortech Systems Incorporated (the "Company") has established a Nominating and Corporate Governance Committee (the "Committee") of at least three, but not more than five, members, consisting of a majority of independent directors and designates one member as Chairperson. The members of the Committee shall be appointed by the Board based on recommendation from the Committee. The members of the Committee shall be appointed for one-year terms and shall serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any member from the Committee at any time with or without cause. For purposes hereof, an "independent" director is a director who meets definition of "independence," as determined by the Securities and Exchange Commission (SEC) and NASDAQ.
Purpose. The purpose of the Committee is to carry out the responsibilities delegated by the Board relating to the Company's director and committee member nominations process and procedures, developing and maintaining the Company's corporate governance policies and any related matters required by the federal securities laws.
Outside Advisors. The Committee shall have the authority to engage such independent legal and other advisors and consultants as it deems necessary or appropriate to carry out its responsibilities. Such independent advisors and consultants may be the regular advisors and consultants to the Company. The Committee is empowered, without further action by the Board, to cause the Company to pay the compensation of such advisors and consultants as established by the Committee.
- Carry out the responsibilities delegated by the Board relating to the Company's director and committee member nominations process and procedures, developing and maintaining the Company's corporate governance policies and any related matters required by the federal securities laws.
- Review with the Board on a periodic basis the appropriate qualifications, qualities, skills, and other expertise required on the Board in the context of the strategic direction of the Company. Prepare a description of specific, minimum qualifications that must be met by a Committee recommended nominee, including specific qualities or skills that are necessary for one or more of the Company's directors to possess. Establish procedures for identifying and evaluating nominees for director, including nominees appropriately recommended by stockholders, and any differences in the manner in which the Committee evaluates appropriate nominees from stockholders and nominees identified by the Committee. Identify and screen individuals qualified to become members of the Board, consistent with criteria approved by the Board. After a review of Board candidates, and after considering the advice of the chairperson of the Board and the CEO, designate which candidates are to be interviewed.
- Recommend to the Board the existing Board members to be re-nominated, after considering the appropriate skills and characteristics required on the Board, the current makeup of the Board, the results of the individual evaluations of the directors, and the wishes of existing Board members to be re-nominated.
- Design and oversee an orientation program for new directors and a continuing education program for current directors, periodically review these programs and update them as necessary.
- If a vacancy on the Board or any Board committee occurs, to identify and make recommendations to the Board regarding the selection and approval of candidates to fill such vacancy either by election by stockholders or appointment by the Board.
- Manage the process whereby the full Board periodically assesses its performance, and then report the results of this evaluation to the Board along with any recommendations for improvements.
- Conduct an annual performance evaluation of the Committee.
- Recommend committee assignments, including committee chairpersonships, to the full Board for approval. This is done after receiving advice from the chairperson of the Board and the CEO and with consideration of the desires of individual Board members.
- Recommend for Board approval a definition of what constitutes an independent director. The definition should be in compliance with relevant standards by regulators and listing bodies.
- Develop and recommend to the Board for approval a Company policy for the review and approval of related party transactions and to review, approve and oversee any transaction between the Company and any related person (as defined in the SEC Rules and Regulations) on an ongoing basis.
- Investigate any potential violation of conflict of interest by a director as assigned to it by the Board.
- Consider the necessity for, and if deemed advisable establish, procedures for stockholders to send communications to the Board, including a process for determining which communications will be relayed to Board members.
- Oversee the Company’s corporate governance practices and procedures, including identifying best practices and reviewing and recommending to the Board for approval any changes to the documents, policies and procedures in the Company’s corporate governance framework, including its articles of incorporation and by-laws.
- Develop and recommend to the Board for approval a Company Code of Business Conduct and Ethics (the “Code”), to monitor compliance with the Company’s Code, to investigate any alleged breach or violation of the Code, to enforce the provisions of the Code and to review the Code periodically and recommend any changes to the Board.
- Develop and recommend to the Board for approval a CEO succession plan (the “Succession Plan”), to review the Succession Plan periodically with the CEO, develop and evaluate potential candidates for CEO and recommend to the Board any changes to and any candidates for succession under the Succession Plan.
- Meet at such times and places as it deems necessary to fulfill its responsibilities.
- Report regularly to the Board regarding its actions and make recommendations to the Board as appropriate.
Structure and Operations. The Board shall designate a member of the Committee as the chairperson. The Committee shall meet at such times and places as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board regarding its actions and make recommendations to the Board as appropriate. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
The Committee may invite such members of management to its meetings as it deems appropriate. However, the Committee shall meet regularly without such members present, and in all cases the CEO and any other such executive offices shall not be present at meetings at which their compensation or performance is discussed or determined.
Approved May 13, 2021
|Compensation and Talent Committee
NORTECH SYSTEMS INCORPORATED
Compensation and Talent Committee Charter
1. Members. The Board of Directors of Nortech Systems Incorporated (the "Company") has established a Compensation and Talent Committee (the "Committee") of at least three members, consisting a majority of independent directors, and designates one member as Chairperson. The members of the Committee shall be appointed by the Board based on recommendations from the nominating and corporate governance committee of the Board. The members of the Committee shall be appointed for one-year terms and shall serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any member from the Committee at any time with or without cause. For purposes hereof, an "independent" director is a director who meets definition of "independence," as determined by the Securities and Exchange Commission (SEC) and NASDAQ. Additionally, the independent members of the Committee must qualify as "non-employee directors" for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and as "outside directors" for purposes of Section 162(m) of the Internal Revenue Code.
2. Purpose. The purpose of the Committee is to discharge the responsibilities of the Board relating to compensation of the Company's executive officers and development of the Company’s workforce.
3. Duties, and Responsibilities. The duties and responsibilities of the Committee are to:
(a) Compensation Plan: Oversee the Company's executive officers' compensation structure, policies and programs, and assess whether the Company's compensation structure establishes appropriate incentives for such executive officers. Make recommendations to the Board with respect to the Company's incentive-compensation and equity-based compensation plans;
(b) CEO Compensation: Review and recommend to the Board annually the corporate goals and objectives applicable to the compensation of the Chief Executive Officer ("CEO"); evaluate at least annually the CEO’s performance in light of those goals and objectives, and recommend to the Board the CEO’s compensation level based on this evaluation. In evaluating and recommending to the Board CEO compensation, the Committee shall consider the results of the most recent stockholder advisory vote on officer compensation ("Say on Pay Vote") required by Section 14A of the Exchange Act; the CEO may not be present during deliberations relating to the CEO's compensation;
(c) Executive and Board Compensation: Review and make recommendations to the Board regarding the compensation of all other executive officers. In evaluating and making recommendations regarding executive officer compensation, the Committee shall consider the results of the most recent Say on Pay Vote. Review, and approve and, when appropriate, recommend to the Board for approval, incentive compensation plans and equity-based plans. The Committee shall also have the authority to administer, in consultation with the Board, the Company’s incentive compensation plans and equity-based plans, including recommendation to the Board the employees to whom the awards are to be granted, the amount of the award or equity to be granted and the terms and conditions applicable to each award or grant, subject to the provisions of each plan. Review annually the compensation of directors for service on the Board and its committees and recommend changes in compensation to the Board.
(d) Talent: Oversee and review talent acquisition and workforce development plans, activities, and metrics needed to realize the goals and objectives in the Company's strategic plan. Assess the impact of exogenous events, trends, and threats to meeting the Company’s workforce needs. Oversee and review talent transitions, vacancies, and projected talent needs. Discuss the development of the Company's top talent. Oversee and review Company succession plans.
(e) Diversity, Inclusion, and Workplace Climate: Oversee and review diversity, inclusion, and workplace climate plans and metrics.
(f) Reporting and Evaluation: Produce the annual report on executive officer compensation for inclusion in the Company's proxy statement. Conduct an annual evaluation of the performance of its duties under this charter as well as a review of this Charter and shall present the results of the evaluation to the Board; and
(g) Other: Perform such other duties and responsibilities as are consistent with the purpose of the Committee and as the Board or the Committee deems appropriate.
4. Subcommittees. The Committee may delegate any of the foregoing duties and responsibilities to a subcommittee of the Committee consisting of not less than two members of the committee.
5. Outside Advisors. The Committee will have the authority to retain at the expense of the Company such outside counsel, experts, and other advisors as it determines appropriate to assist it in the full performance of its functions, including sole authority to retain and terminate any compensation consultant used to assist the committee in the evaluation of director, CEO or executive officer compensation, and to approve the consultant's fees and other retention terms. The Committee shall set the compensation, and oversee the work, of its outside legal counsel and other advisors.
6. Structure and Operations. The Board shall designate a member of the Committee as the chairperson. The Committee shall meet at such times and places as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board regarding its actions and make recommendations to the Board as appropriate. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
The Committee may invite such members of management to its meetings as it deems appropriate. However, the Committee shall meet regularly without such members present, and in all cases the CEO and any other such executive offices shall not be present at meetings at which their compensation or performance is discussed or formulated for recommendation to the Board.
Revised: May 13, 2021
|NORTECH SYSTEMS INCORPORATED
Audit Committee Charter
The purpose of the Audit Committee (the "Committee") of Nortech Systems Incorporated (the "Company") is to represent and assist the Board of Directors (the "Board") in its oversight of (1) the integrity of the financial reporting of the Company, (2) the independence, qualifications and performance of the Company's independent auditor, (3) the performance of the Company's internal audit function, and (4) the Company's compliance with legal and regulatory requirements. The Committee also prepares the report required by the rules of the Securities and Exchange Commission (SEC) to be included in the Company's annual proxy statement.
The Committee shall consist of at least three members of the Board who satisfy the independence requirements under the rules of the National Association of Securities Dealers, Inc. (NASD) and the SEC, as such requirements are interpreted by the Board in its business judgment. The Board shall designate one member as Chairperson or delegate authority to designate a Chairperson to the Committee. Each member of the Committee shall be financially literate and at least one member of the Committee shall be an "audit committee financial expert" as defined by the SEC.
The Committee shall have the authority to retain such outside legal, accounting or other consultants or advisors as it determines appropriate to assist it in the performance of its functions, or to advise or inform the Committee. The Committee may also meet with investment bankers and financial analysts. The Committee may request any officer or employee of the Company or the Company's outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent auditor and to any advisors retained by the Committee.
Duties and Responsibilities On behalf of the Board, the Committee shall, among its duties and responsibilities:
- Review and discuss the annual audited financial statements with management and the independent auditor, including the Company's disclosures under Management's Discussion and Analysis of Financial Condition and Results of Operations, significant issues and judgments regarding accounting and auditing principles and practices, and the effect of regulatory and accounting initiatives on the Company's financial statements, and recommend to the Board whether the financial statements should be included in the Form 10-K. The review of the annual audited financial statements also includes a review of any transactions as to which management obtained a letter pursuant to Statement on Auditing Standards No. 50.
- Review and discuss with management and the independent auditor the Company's quarterly financial statements prior to filing the Form 10-Q, including the results of the independent auditor's review of them and the Company's disclosures under Management's Discussion and Analysis of Financial Condition and Results of Operations.
- Review major changes to the Company's auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management.
- Meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with the Company's independent auditors.
- The Committee shall be directly responsible, in its capacity as a committee of the Board, for the appointment, compensation and oversight of the work of the independent auditor for the purpose of preparing or issuing an audit report or related work. In this regard, the Committee shall appoint, retain, compensate, evaluate, and terminate when appropriate, the independent auditor, which shall report directly to the Committee.
- Preapprove all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor and establish policies and procedures for the engagement of the independent auditor to provide auditing and permitted non-audit services.
- Obtain and review, at least annually, a report by the independent auditor describing: the independent auditor's internal quality-control procedures; and any material issues raised by the most recent internal quality-control review, or peer review, 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 independent auditor, and any steps taken to deal with any such issues; and (to assess the auditor's independence) all relationships between the independent auditor and the Company.
- Receive at least annually and discuss with the independent auditor the auditor's report regarding its independence.
- Meet with the independent auditor prior to the audit to review the scope and planning of the audit.
- Review with the independent auditor the results of the annual audit examination, and any issues the auditor may have encountered in the course of its audit work and management's response. This review should include, among other things, any management letter, any restrictions on the scope of activities or access to required information, and changes required in the planned scope of the internal audit.
- Discuss the Company's earnings press releases and corporate policies with respect to earnings releases and financial information and earnings guidance provided to analysts and rating agencies.
- Review and discuss with management the current and prospective risks faced by the Company and the policies, guidelines and process by which management assesses and manages the Company's risks, including the Company's cash flow, liquidity and other major financial risk exposures, and risks identified in the risk factors disclosed in the Company’s public filings relevant to the Committee’s responsibilities and the steps management has taken to monitor and control such exposures. In this regard, the Company will ensure that management’s actions to control and monitor such risks are tightly coupled with the Company’s strategic planning and budgeting processes.
- Review the adequacy and effectiveness of the Company's internal controls, including any significant deficiencies in internal controls and significant changes in such controls reported to the Committee by the independent auditor, the internal auditor or management, and review the adequacy and effectiveness of the Company's disclosure controls and procedures.
- Review with the independent auditor and the internal auditor the scope and results of the internal audit program, including responsibilities and staffing, and review the appointment and replacement of the director of the internal audit department.
- Review candidates for the positions of chief financial officer and controller of the Company.
- Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
- Establish policies for hiring employees and former employees of the independent auditor.
- Advise the Board with respect to the Company's policies and procedures regarding compliance with applicable laws and regulations and with the Company's Code of Business Conduct and Ethics.
- Review with the Company's General Counsel and independent auditor (1) legal matters that may have a material impact on the financial statements, (2) accounting or compliance policies, and (3) any material reports or inquiries received from regulators, governmental agencies or employees that raise material issues regarding the Company's financial statements and accounting or compliance policies.
- Review all related party transactions for potential conflict of interest situations and review and approve all related party transactions required to be disclosed under Item 404 of SEC Regulation S-K.
- Review this Charter annually and recommend any changes to the Board for approval.
- Review the Committee's own performance annually.
The Committee shall meet at least four times per year, either in person or telephonically, and at such times and places as the Committee shall determine. The Committee shall meet with the chief financial officer, the controller, the director of the internal audit department and the independent auditor in separate executive sessions periodically. The Committee shall report regularly to the Board.
Revised: May 13, 2021.
|Science and Technology Committee
NORTECH SYSTEMS INCORPORATED
Science and Technology Committee Charter
The Committee is appointed by the Board of Directors to advise on and oversee Nortech’s overall strategic direction and investment in research and development, digital, technological and scientific initiatives, new technology-driven product or line of business development, and to review and identify specific technology, science and innovation matters that could have a significant impact on Nortech’s business performance, growth and competitive position as well as operational and technology risk.
The Committee shall consist of three or more directors, all of whom shall be determined by the Board to have appropriate scientific, digital or other relevant expertise. Committee members shall be appointed by the Board, serve at the pleasure of the Board and for such term as the Board determines. The Board shall designate one Committee member as the Committee’s chair.
The Committee shall meet independently as well as with Nortech management quarterly each year and at such other times as it deems necessary to fulfil its responsibilities. The Committee may invite to its meetings other directors and any other such persons as it deems appropriate in order to carry out its responsibilities. The Committee shall have the authority to obtain advice and assistance with internal and external scientific experts and consultants to advise the Committee.
Duties and Responsibilities
On behalf of the Board, the Committee shall, among its duties and responsibilities:
- To oversee Nortech’s technology and innovation strategy and approach, including its impact on Nortech’s performance, growth and competitive position.
- Subject area focus will be on the technologies that will impact and enhance Nortech’s current and future core business capabilities including Med-tech, EMS, IoT, digital platforms, and digital operations which includes operations, quality management, system security and automation.
- To assist the Board in its oversight of Nortech’s investments in science, technology and digital initiatives, including through corporate development and other business development activities.
- To review science and technology trends that could significantly affect Nortech and the industries in which it operates. Trend sources include but are not limited to: industry and market experts, conferences and trade shows; customers and supplier interactions and relations; leading institutions, accelerators and incubators; and Nortech engineering and business development teams.
- To review and advise the Board and management on Nortech’s overall intellectual property and related investment strategy including for products, services, platforms and process.
- To coordinate with Nortech management and the Nortech Board to help ensure that each committee of the Board and the Board receive the information necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management and risk assessment guidelines and policies associated with technology and innovation matters.
- To specifically oversee and review with senior management Nortech’s risks relating to IT infrastructure and security; ensuring the company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.
The Committee shall report its actions and recommendations to the Board after each Committee meeting and shall conduct and present to the Board a bi-annual performance evaluation of the Committee. The Committee shall review at least annually the adequacy of this charter and recommend any proposed changes to the board for approval.
Revised: May 13, 2021