• Procedure for Evaluating Related Person Transactions

  • Purpose

    The purpose of this Procedure for Evaluating Related Person 1 Transactions (the “Procedure”) is to provide a framework for evaluating all such transactions in compliance with PHI’s Conflicts of Interest Business Policy, Corporate Governance Guidelines, and applicable law.

    Administration of the Procedure

    This Procedure shall be administered by the Corporate Secretary, who shall monitor compliance therewith. Each director, nominee for director and certain executives shall provide to the Corporate Secretary annually a completed questionnaire setting forth all business and other affiliations which relate in any way to the business and other activities of PHI. Each director and certain executives should also, throughout the year, promptly update the information provided in the questionnaire as necessary to ensure that the Corporate Secretary has been advised of all businesses and affiliations which relate to PHI’s businesses.

    The Procedure

    • When a related person transaction is contemplated, all of the material facts regarding the substance of the proposed transaction, including the material facts relating to the related person’s or other party’s relationship or interest, shall be fully disclosed to the disinterested members of the Corporate Governance/Nominating Committee.
    • The disinterested members of the Corporate Governance/Nominating Committee will review the contemplated transaction and will then make a recommendation to the disinterested members of the Board.
    • At a Board meeting, all of the material facts regarding the substance of the proposed transaction, including the facts relating to the related person’s or other party’s relationship or interest and the recommendation of the disinterested members of the Corporate Governance/Nominating Committee, shall be fully disclosed to the Board.
    • The disinterested members of the Board shall thereafter vote on whether to approve the transaction.
    •  In meetings where Corporate Governance/Nominating Committee or Board members consider related person transactions, interested directors (including management directors) may be present for the disclosure portion of the meeting but shall be excused from the discussion and voting portion of the meeting.


    Standards

    The standards considered by the Corporate Governance/ Nominating Committee in evaluating a related party transaction include the following:

    • the related person’s relationship to the Company and interest in the transaction;
    • material facts of the proposed related party transaction, including the proposed aggregate value of the transaction;
    • benefits or advantages to the Company of the proposed related transaction;
    • availability of other sources of comparable products or services which are the subject of the related party transaction;
    • an assessment of whether the proposed related party transaction is on terms and conditions that are comparable to terms available to an unrelated third party or to employees generally; and
    • any effect on a Director’s independence if the transaction involves a Director.


    Quorum and Voting

    Interested directors may be counted in determining the presence of a quorum at a Committee or Board meeting which considers a related person transaction. Only disinterested Board members may vote on the transaction. Approval of a related person transaction requires the affirmative vote of a majority of the disinterested directors voting.

    This Procedure generally should be used to approve related person transactions in advance of the transaction being entered into. On occasion, however, it may be in the Company’s interest to commence a transaction before the Corporate Governance/ Nominating Committee or Board has had an opportunity to meet, or a transaction may commence before it is discovered that a related person is involved with the transaction. Accordingly, in such instances, notwithstanding the above, the director and/or executive should consult with the Chairman of the Corporate Governance/Nominating Committee to determine the appropriate course of action, which may include a subsequent ratification by disinterested directors. If the Chairman of the Corporate Governance/ Nominating Committee is an interested director, then the director and/or executive should consult with the Lead Independent Director to determine the appropriate course of action.

    1Related persons are directors, nominees for director, certain executives and any immediate family member of such director, nominee for director or executive, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such director, nominee for director or executive officer, and any other person (other than a tenant or employee) sharing the household of such director, nominee for director or executive officer.