Corporate Governance

Board Independence

The NASDAQ stock market qualitative listing standards 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. These standards are not applicable to any company where more than 50% of the voting power is held by one individual or group.  Dolph Baker, Chairman of the Board 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.  Accordingly, the Company is a “controlled company” and thus exempt from those NASDAQ listing standards. As executive officers of the Company, Messrs. Baker, Bowman and Miller do not qualify as independent pursuant to the NASDAQ listing standards. Additionally, Mr. Baker serves as chair of the Nominating Committee. Our Board determined that, under the NASDAQ listing standards, the following directors are independent: Ms. Hughes, Mr. Poole, Mr. Sanders and Ms. Young.

Notwithstanding the Company’s status as a controlled company and although not required, a majority of the directors on our Board are independent in accordance with the NASDAQ listing standards applicable to non-controlled companies and the governance policies of certain institutional investors and advisory groups, and our Compensation Committee includes only independent directors.

Code of Ethics

We have adopted a broad code of ethics and business conduct 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.

Ethics & Compliance Reporting

Cal-Maine Foods is committed to a culture of the highest values and standards of ethics.  We view this as a critical part of our success. We encourage any employee or other stakeholder to report, anonymously if desired, potential violations of law, our Code of Ethics, Company policies, or accounting/auditing policies or procedures to ethics@cmfoods.com.