Governance

Corporate Governance

Corporate Governance is the set of rules and procedures for the direction and control of public companies. The importance and significance of Corporate Governance has dramatically increased in the past year. Today, public companies are faced with a complex and continually changing regulatory environment. Responding to the concern of investors for greater corporate transparency, Chaparral has improved its Corporate Governance by:

Establishing a set of rules regarding its corporate structure
Improving the supervision of the Company’s policies and activities
Adopting a culture of best practices

  1. The Board of Directors plays an important role in the Corporate Governance system of the Company.
  2. Each director brings to the Company a strong background of knowledge and experience.
  3. The Board of Directors has added to its already existing Audit and Compensation Committees, a newly created Corporate Governance Committee.

Audit Committee
The Audit Committee oversees Chaparral’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. The Audit Committee operates pursuant to a written charter, which was approved and adopted by the Board in August 2000. Chaparral’s independent accountants, Ernst & Young LLP, are responsible for expressing an opinion on the conformity of Chaparral’s audited financial statements to accounting principles generally accepted in the United States. The Board’s Audit Committee consists of only independent directors, each one of whom is able to read and understand fundamental financial statements.

Compensation Committee
The Compensation Committee recommends cash and non-cash compensation for Chaparral’s executives to the full Board and reviews and recommends to the full Board stock plans for adoption by Chaparral for its directors, officers, employees, and consultants. The Compensation Committee is also responsible for developing Chaparral’s executive compensation program. The Compensation Committee monitors and grants awards according to Chaparral’s executive compensation program and administers Chaparral’s 2001 Stock Incentive Plan.

Corporate Governance Committee
The Corporate Governance Committee assists the Board in fulfilling its oversight responsibilities related to developing and implementing the Company’s corporate governance guidelines, recommending and approving candidates for membership on the Board, and assessing the corporate governance policies and effectiveness of the Board. The Committee was established on December 10, 2002 to ensure that the Board is appropriately constituted to meet its fiduciary obligations to the shareholders and the Company.

In addition:

  • The Investor Relations representative and the Corporate Secretary have been designated by the Company to develop a dialogue with analysts, institutional investors, brokers and shareholders, respectively. For example, the Company has implemented a corporate disclosure policy and a policy regarding investments by insiders.
  • An internal audit procedure has been implemented to verify the compliance with the internal procedures of the Company.
  • Annual Shareholders’ Meetings are conducted with strict guidance from legal counsel followed by an extensive question and answer session.
  • Information about the Company and its activities is contained in the annual report, periodic press releases and quarterly financial SEC filings. Other information is available on Chaparral’s web site, via e-mail (cri@chaparralresources.com) or by phone at +281-877-7100.

Information on the Directors’ remuneration and ownership of Chaparral stock is contained in the Annual Report on Form 10-K.

CEO/CFO Certification
On November 19, 2002, in connection with the filing of the Company’s quarterly report on Form 10Q, the following certification was submitted to the Securities and Exchange Commission for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United States Code:

“An evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2002. There have been no significant changes in the Company’s internal controls or in other factors that could have a significant adverse effect on internal controls subsequent to September 30, 2002.”

To view a copy of the certification documents, please click here. You may also visit the investor relations portion of the Web site for additional information regarding the company’s operations and policies.