Albemarle Corporation - About Albemarle - Governance

Corporate governance guidelines
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February 15, 2006

I. Board of Directors

The Directors of Albemarle Corporation (the “Company”) are elected by its shareholders to oversee Management and to act in the best interests of the Company and its shareholders.

II. Ethical Business Principles

Integrity and ethical behavior are core values of the Company. The Company’s Board of Directors, officers and employees will reflect such principles in the conduct of the Company’s business. The Board is responsible to provide the best example of these values and should reinforce their importance at appropriate times.
The Corporate Governance and Social Responsibility Committee shall periodically review the Company’s Code of Conduct, including related polices. The Committee shall have Management confirm periodically that the Code of Conduct, and related policies, are fully understood and implemented.

III. Board Composition

Given the current size of the Company and the nature of its business, a Board consisting of 7 to 12 members is appropriate.
A majority of the Directors shall be independent. In order for a Director to be considered independent by the Board, he or she must (i) be free of any relationship that, applying the rules of the New York Stock Exchange, would preclude a finding of independence and (ii) not have material relationship (either directly or as a partner, shareholder or officer of an organization) with the Company or any of its affiliates or any executive officer of the Company or any of its affiliates. In evaluating the materiality of any such relationship, the Board of Directors shall take into consideration whether disclosure of the relationship would be required by the proxy rules under the Securities Exchange Act of 1934, as amended. If such disclosure is required, the Board of Directors must make a determination that the relationship is not material as a prerequisite to finding that the Director is independent.
Diversity of backgrounds and expertise should be emphasized. Whether a Director is qualified to serve depends in part on the backgrounds of the other Directors, so that the Directors as a whole have an appropriate mix of backgrounds and breadth of experience.
The Director must fit into the corporate culture to maintain the professionalism, collegiality and effectiveness of the Board and Committees.
Directors must have the ability to understand financial reports, including balance sheets, income statements, statements of cash flow, and the various methods of measuring return on investments. At least three of the Directors shall meet the New York Stock Exchange financial and accounting experience requirements and the heightened independence standards of the Securities and Exchange Commission (“SEC”). At least one Director shall have sufficient financial experience to qualify as the “audit committee financial expert,” as defined by the SEC.
Whether an individual has sufficient time to serve diligently is an important consideration in the selection of a nominee for the Board. The Corporate Governance and Social Responsibility Committee will review each individual’s commitments to other boards and organizations and discuss with the nominee or existing Board member any concerns regarding such commitments. In any event, no Director shall serve as a director of more than four other public companies.
The Corporate Governance and Social Responsibility Committee may retain a third-party search firm to assist in the identification of possible candidates for election to the Board of Directors.
The Corporate Governance and Social Responsibility Committee will evaluate all candidates for election to the Board of Directors, regardless of the source from which the candidate was first identified, based upon the totality of the merits of each candidate, and not based solely upon minimum qualifications or attributes.
When a Director no longer holds the principal position that he or she held when first elected to the Board of Directors, he or she shall tender a letter of resignation to the Chairman, who will discuss the change with the Corporate Governance and Social Responsibility Committee. The Corporate Governance and Social Responsibility Committee will make a recommendation to the Board of Directors regarding the Director’s continued service on the Board.
While the Company does not have a formal retirement policy, the Corporate Governance and Social Responsibility Committee will review the desirability of the continuing service of each Director no less often than every three years.

IV. Board Meetings

Directors are expected to attend all meetings, including the Company’s annual meeting of shareholders. The Chairman will discuss attendance with any member whose attendance falls below 75% to determine if excessive time conflicts are likely to continue, and whether the member should continue to serve on the Board.
The Non-Management Directors shall meet as a group in executive session at least twice a year. At these sessions, the Chair shall be the current chair of the Corporate Governance and Social Responsibility Committee. The Chair is expected to report to the Chairman any concerns, requests for changes in the Board meetings, or suggestions for future topics of discussion.
An agenda shall be distributed before each meeting of the Board of Directors with the opportunity provided for each Director to request additions to the agenda.
Meeting materials will be delivered to each Director in sufficient time in advance of each regular meeting of the Board of Directors to permit a thorough review.

V. Responsibilities of the Board of Directors and Committees

The Board of Directors and Committees of the Board shall:

Approve major corporate decisions and oversee, develop and implement Board policies.
Periodically review the Company’s legal compliance programs and procedures.
Monitor and assess performance and ask appropriate questions of Management to address accountability with established goals.
Stay well informed regarding the Company’s businesses; Management is responsible for providing accurate information to Board members.
Be a partner with the Chief Executive Officer on strategic issues by advising and consulting.
Be willing to be proactive in crisis situations.
Review and approve major capital allocation recommendations of Management.
Monitor financial statements through the Audit Committee.
Assume responsibility for the selection, evaluation, retention and succession of the Chief Executive Officer.
Establish proper governance, which includes a periodic review of the Corporate Governance Guidelines by the Corporate Governance and Social Responsibility Committee, the consideration by such Committee of other corporate governance issues and related matters, and any resulting recommendation by such Committee as to the governance issues that should be addressed by the Board of Directors.
Recruit effective new members; recruiting efforts to be led by the Chairman and the Corporate Governance and Social Responsibility Committee.
The Board shall have four standing committees: Audit, Executive, Executive Compensation and Corporate Governance and Social Responsibility. The responsibilities of the Executive Committee are set forth in the Bylaws; the responsibilities of the other three committees are set forth in the Bylaws and in their respective charters.

VI. Director Compensation and Ownership of Capital Stock

Non-employee directors currently receive reasonable compensation in the form of an annual Director Fee and, if applicable, a Committee Fee and a Chair Fee, each paid quarterly. All elements of compensation and the relative mix of the elements shall be recommended by the Corporate Governance and Social Responsibility Committee and approved at least annually by the Board of Directors. Board members are expected to comply with the Company’s stock ownership guidelines.

VII. Director Orientation

The Chairman of the Board shall have responsibility for conducting an orientation for new Directors.
The Company shall provide periodic opportunities for Director continuing education.

VIII. Board Contacts and Access

Board members have free access to the Company’s Management at all times through telephonic, electronic and written means of communication. Directors are expected to consider whether the results of any contact with a member of Management other than the Chief Executive Officer should be reported to the Chief Executive Officer.
Dealings with the press and with investors generally shall be the sole province of the Chief Executive Officer and his designees. From time to time the Chief Executive Officer may request Director participation.
Board members may retain independent advisors, from time to time, as appropriate and necessary.

IX. Board Performance Review

The Board of Directors will conduct a self-evaluation at least annually to determine whether it and its Committees are functioning effectively.

X. Chief Executive Officer Performance Review

Board members or the Chairman of the Board shall provide for regular oral communication to the Chief Executive Officer regarding concerns, suggestions, needs and expectations; written communication will be provided to the Chief Executive Officer upon the request of the Board.
The Executive Compensation Committee shall provide an annual review of the Chief Executive Officer’s performance.

XI. Chief Executive Officer Succession

The Chief Executive Officer succession planning process shall include a regular Board review. Any review of possible internal candidates should include:
- Readiness and potential
- Demonstrated skills and competencies
- Needed experience and training to fill gaps
- Plan for adequate exposure to Board of Directors

XII. Shareholder Access to Directors

Shareholders may communicate with the Board of Directors by sending written correspondence to the Chairman of the Corporate Governance and Social Responsibility Committee at the Company’s headquarters in Richmond, Virginia and by email at governance@albemarle.com. Financial and accounting matters may also be sent directly to the Audit Committee at audit_chair@albemarle.com.
The Chairman of the Corporate Governance and Social Responsibility Committee and his or her duly authorized agents shall be responsible for collecting and organizing shareholder communications. Absent a conflict of interest, the Chairman of the Corporate Governance and Social Responsibility Committee is responsible for evaluating the materiality of each shareholder communication and determining whether further distribution is appropriate, and, if so, whether to (i) the full Board, (ii) one or more Committee members, (iii) one or more Board members and/or (iv) other individuals or entities.