Code of Conduct and Ethics
The Board has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”). The Code of Conduct applies to all employees including the Company’s Board of Directors, Chief Executive Officer, Chief Financial Officer, Corporate Controller, and other key employees. The Code of Conduct is publicly available on our website at www.lannett.com. If the Company makes any substantive amendments to the Code of Conduct or grants any waiver, including any implicit waiver, from a provision of the Code of Conduct to our Chief Executive Officer, Chief Financial Officer, or Corporate Controller, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K.
Our Code of Conduct is a guide to build on our legacy. It is designed to guide members of the Lannett family to navigate ethical situations, interact ethically, make good decisions and handle workplace situations with integrity.
All employees at Lannett and its subsidiaries, including corporate officers and members of our Board of Directors, are required to read, understand and follow our Code of Conduct. Our employees undergo periodic training on the Company’s policies and procedures and, in addition to completing a required number of annual outside training credits, the Board undergoes annual compliance training by a compliance professional. Business partners, such as vendors, consultants and temporary employees who serve as an extension of the Company are expected to follow our lead in how we conduct business.
Anti-Hedging and Anti-Pledging Policy
The Board has established effective anti-hedging and anti-pledging policies. We have an insider trading policy which among other restrictions prohibits employees, officers and Directors, including Named Executive Officers (“NEOs”), from entering into short sales, calls or any other hedging transaction involving Lannett securities. In addition, the Board has a policy that prohibits Directors and NEOs from pledging Lannett stock. None of our Directors or NEOs have pledged Lannett stock as collateral for personal loans or other obligations.
Board Attendance
The members of the Board are expected to attend all Board meetings whether in person or via teleconference. Additionally, members of the Board are expected to attend the Annual Meeting.
The Board met seven times during the fiscal year ended June 30, 2021 (“Fiscal 2021”). In addition to meetings of the Board, Directors attended meetings of individual Board committees. Each of the Directors attended at least 85% of the Board meetings and meetings of Board committees of which they were a member during Fiscal 2021. All Directors were present at the 2021 Annual Meeting.
Board Leadership Structure
The Company’s Corporate Governance Guidelines provide that a majority of our Directors should meet New York Stock Exchange (“NYSE”) independence requirements. A director will not be considered independent unless the Board determines that the director meets the NYSE independence requirements and has no relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director.
Our Board leadership structure is one under which Patrick G. LePore serves as the non-executive, independent Chairman of the Board. We currently have six other Directors, including Timothy C. Crew, Chief Executive Officer. Five of the seven Directors currently serving on the Board of Directors are “independent” as defined by the NYSE. During Fiscal 2021, the Board had four permanent committees: the Audit Committee, Compensation Committee, Governance and Nominating Committee, and Environmental, Social and Governance Committee. The ESG Committee was formed in April 2021. In addition, the non-management members of the Board of Directors meet regularly without management Directors or management personnel present.
The Board believes that the role of Chairman of the Board and Chief Executive Officer should be separate, and that the Chairman should not be an employee of the Company. The Board believes that this separation benefits the stockholders in the form of increased oversight. As further oversight, the independent Board members also meet throughout the year in executive sessions where neither management personnel nor other non-independent Directors are present. In the Company’s case, this excluded Jeffrey Farber and Timothy C. Crew, Chief Executive Officer.
Overall, we believe that the separation of the Chairmanship and Chief Executive Officer positions, our strong committee system, and regular non-management director and independent director meetings allow for effective Board oversight of management.