In 1987, the Board of Directors became aware of numerous companies in the United States that appeared to be operating on the concept that what was best for their Board of Directors and management was best for their company.  At that time, the Board of Directors proposed a change in the Company’s By-Laws that would prohibit company management or employees from being a member of the Board.  The objective was to avoid the risk of management having too much influence and control over the Board of Directors.  Therefore, the By-Law changes were designed to establish a corporate structure which emphasizes the Board of Directors as the ultimate authority for all decisions related to Company operation and management.  The shareholders voted to support the changes in the By-Laws at the annual meeting on May 16, 1987.

Per our Governance Plan the Chairman of the Board is the leader of the Company.  The Board of Directors is responsible for corporate policy and overall performance of the Company through oversight of management and by setting goals and objectives that can realistically be attained to enhance the long-term growth of the Company.   In addition to the oversight of management, the Board will provide input and perspective in evaluation and planning the Company’s priorities for allocation of resources to drilling of oil and gas wells, purchase of mineral and acquisition of other property to assure the Company continues a sustained growth in the future.  The planning process also assesses major risks facing the Company and reviewing options for avoiding non productive situations.

Farmers Royalty Company’s day to day business is conducted by its president and management staff under the direction of the Chairman of the Board and the oversight of the Board.   The Board has created three committees, the Compensation Committee, Chaired by Lee Roy Hudson, the Audit Committee, Chaired by Paul Woodson, and the Exploration Committee, Chaired by Charles W. Sandmann.