Preventing Unlawful Insider Trading: Disclosure and Trading Guidelines
The US federal securities laws prohibit individuals with access to material information that has not been publicly disseminated, absorbed and evaluated (commonly referred to as “inside information”) from: (1) engaging in transactions in the Company’s securities or (2) divulging inside information to enable others to trade on such information. As employees or members of the Board of Directors, you may come into possession of inside information.
If you effect transactions in the Company’s securities while in the possession of inside information, then you, and possibly the Company, could be subject to private lawsuits for damages and/or to civil or criminal proceedings by US state and/or federal governmental authorities. Liability arising from such violations is often significant. For instance, the US Securities and Exchange Commission (“SEC”) is authorised to seek civil money damages of up to three times the profit gained or loss avoided through unlawful insider trading.
In discussing matters pertaining to the Company, all employees and members of the Board of Directors (“Board Directors”) must comply with the following parameters:
1. Matters that you may discuss include the following:
(a) Information that has been published and widely disseminated, such as that contained in the Company’s annual report to shareholders, reports on Form 8-K, Form 10-K and 10-Q, proxy statements and press releases, so long as you limit your discussion to the information that has been published and disseminated.
(b) General industry and economic trends.
(c) Routine aspects of the Company’s business involving products, plants, employees, customers and production.
Requests and questions from investors, analysts, the press or other outsiders should be referred to either the Company’s VP of Investor Relations or to the General Counsel (each a “Monitor” and together the “Monitors”).
2. Matters that you may not discuss outside the Company (including in any social media posts or other manner that is generally available to outsiders via the Internet), except to the extent that the Company has publicly announced and widely disseminated them, include any of the following:
(a) Actual or projected sales, earnings, significant capital expenditures or significant borrowings.
(b) Any action or event that had or is likely to have a significant effect on the Company’s anticipated annual sales or earnings, or that may result in a special or extraordinary charge against earnings (e.g. a large customer contract award, a product recall).
(c) Any non-routine action or event such as a proposed joint venture, merger, acquisition or disposition of shares or assets; major new products, discoveries or services; a change in control or a significant change in management; major financing; significant litigation; a significant change in capital investment plans; significant change in operating or financial circumstances; significant labour disputes; significant lay-offs; a tender offer for another company’s securities; and significant changes in the Company’s asset values, products or lines of business.
As an additional reminder, any of the types of prohibited information described above that may come to your attention regarding other businesses because of the Company’s special relationship with that entity should not be publicly disclosed. Any questions should be referred to a Monitor.
Trading Prohibitions and Guidelines
While investment in the Company’s securities is encouraged, you should do so with caution. Before you buy or sell Company stock, you should recognise the existence of prohibitions against the use by individuals of inside information for their own profit. For Board Directors, those persons designated “Officers” by the Board of Directors for the purposes of Section 16 of the US Securities Exchange Act of 1934 and the rules thereunder (“Executive Officers”), these transactions require prior Company approval in the manner described below under “Additional Rules Applicable to Form 4 Filers”.
Paragraph 1 below applies to all employees and Board Directors. Paragraphs 2 to 4 below apply only to employees at the director level and above and to Board Directors.
ALL EMPLOYEES and BOARD DIRECTORS:
1. Transactions involving the Company’s securities are prohibited at all times if you have knowledge of material information about the Company that the Company has not publicly disseminated. In general, information should be considered “material” if it could be expected that a reasonable investor would attach significance to the information in reaching an investment decision involving the Company’s securities. Determining whether information is material is subjective; accordingly, employees should discuss such issues with a Monitor or other designated Company personnel. Transactions in the Company’s securities are prohibited until the close of the second full trading day after the public disclosure of material information.
EMPLOYEES AT AND ABOVE DIRECTOR LEVEL AND BOARD DIRECTORS:
2. Transactions in the Company’s securities are prohibited starting three (3) weeks before the end of any fiscal quarter and ending at the close of the second full trading day after the public release of the Company’s quarterly or annual financial results.
3. Transactions in the Company’s securities are prohibited during periods that the Company has designated as a limited trading period (also known as “event-specific blackouts”) unless the Board Director or employee obtains the prior approval of a Monitor. For example, limited trading periods would occur if the Company is actively involved in negotiations for the acquisition of a significant business. The Company may notify you that you are subject to a limited trading period, in which case you must refrain from trading in the Company’s securities. Under the US federal securities laws, Board Directors and senior level Company employees are deemed to have knowledge of material Company information, even if they do not have actual knowledge of that information.
4. Board Directors and employees are not prohibited from exercising stock options during any of the foregoing periods; however, the options must be exercised by paying cash for the exercise price and tax withholding and the shares received must be held during the period in which trading is prohibited. Similarly, the purchase of shares under the Company’s Employee Stock Purchase Plan is not prohibited during blackout periods.