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Corporate Governance

The Securities and Exchange Commission approved amendments to the NASDAQ Stock Market qualitative listing standards to require that a majority of a listed company’s directors be independent and that a compensation committee and nominating committee of the Board composed solely of independent directors be established.

Since the standards are not applicable to any company where more than 50% of the voting power is held by one individual or group, Cal-Maine is exempt from this provision. Fred R. Adams, Jr., Chairman of the Board and Chief Executive Officer and other members of his family own capital stock of our company entitling them to more than 50% of the total voting power of the company. Cal-Maine is subject to a NASDAQ requirement that the independent directors of the board hold regularly scheduled meetings at which only independent directors are present.

We have adopted a broad code of business conduct and ethics which guides the activities of our directors, officers, and employees.

NASDAQ listing standards require that all related party transactions to which our directors or officers are parties be reviewed for potential conflicts of interests on an ongoing basis, and all such transactions be approved, by our Audit Committee or another independent committee of our Board of Directors. Our Board of Directors has established procedures providing for the review and approval by the Audit Committee of any related party transactions.

Additional NASDAQ listing standards that are applicable to our Audit Committee, require that the Audit Committee (i) be composed solely of independent directors; (ii) be directly responsible for the appointment, compensation, retention, and oversight of the independent auditor, which must report directly to the Audit Committee; (iii) establish procedures to receive, retain, and treat complaints regarding accounting, internal accounting controls, and auditing matters, including procedures for employees’ confidential, anonymous submissions of concerns regarding questionable accounting or auditing matters; (iv) have the authority to engage independent counsel and other advisors when the committee determines such outside advice is necessary; and (v) be adequately funded by us. A revised charter of our Audit Committee reflecting compliance with the above amended listing standards has been adopted.