Independence of the board

No director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with the Company. The Corporate Governance Guidelines provide that the Board should consist of at least a two-thirds majority of independent directors. The Board’s standard of independence, as set forth in Appendix A to the Guidelines, is more comprehensive than the standard established by the New York Stock Exchange.

The Guidelines state that the Board shall annually review whether its directors meet the Guidelines set forth in Appendix A and publish the results of the review in the Company’s proxy statement. The Board has reviewed the director independence criteria set forth in the Guidelines and has affirmatively determined that eight of the nine directors do not have material relationships either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. All directors, except Mr. Klappa, were affirmatively determined by the Board to be independent directors. Mr. Klappa is an employee of the Company and thus does not satisfy independence criteria.