The Mission of the Mohawk Board of Directors

The Mohawk Board of Directors represents the stockholders’ interests in perpetuating and increasing the value of the business enterprise, including optimizing long-term financial returns. The Board is responsible for ensuring that management is capably executing its duties by regularly monitoring the effectiveness of management policies and decisions, including the execution of the Company’s strategic plan.

In fulfilling its obligation to enhance stockholder value, the Board is permitted to consider the interests of the following constituencies important to Mohawk’s success: Mohawk’s customers, employees, suppliers and the communities where it operates.

In fulfilling the Board’s general responsibilities described above, the Board and its committees have complete authority to consult with outside counsel and to engage other professional advisors with respect to any issues relating to their activities. Any expenses incurred by the Board or its committees in connection with any such consultation or engagement shall be paid by Mohawk.

SELECTION OF THE BOARD

1) Board Membership Criteria

The Nominating and Corporate Governance Committee should annually review with the Board the appropriate experience, skills and characteristics required of Board members in the context of the current membership of the Board. This assessment should include, in the context of the perceived needs of the Board at that time, issues of experience, judgment and skills such as understanding of manufacturing and distribution technologies, accounting or financial management expertise, etc.

2) Selection of New Directors

The Board itself should be responsible for selecting its own nominees and recommending them for election by the stockholders. The Board delegates the screening process necessary to identify qualified candidates to the Nominating and Corporate Governance Committee, including consultation with the Chairman of the Board and the Chief Executive Officer.

3) Orientation and Continuing Education

New Directors are provided with a complete orientation process, which includes comprehensive information regarding the Company’s business and operations, information regarding the industry in which the Company operates and other background material, meetings with senior management and visits to Company facilities. As a part of the Company’s continuing education efforts, supplemental information is provided to Directors from time to time and meetings of the Board are held from time to time in alternate locations in order to provide the Directors an opportunity to become familiar with additional Company facilities.

BOARD LEADERSHIP

4) Selection of Chairman and CEO

The Board has the responsibility to fill these leadership positions as it deems best for the Company at a given point in time. The Board’s policy on whether or not the role of the Chairman and Chief Executive Officer should be separate is to make this determination based on serving the best interests of the Company and its stockholders at any given time.

BOARD COMPOSITION AND PERFORMANCE

5) Size of the Board

The Company’s Restated Certificate of Incorporation, as amended, provides for between two and eleven members of the Board, with the exact number to be fixed by resolution of the Board. The Board will determine the number of members of the Board required from time to time to ensure that all of the core competencies required are possessed by the Board as a whole.

6) Mix of Management and Independent Directors

A majority of the members of the Board must be independent Directors. A Director will be considered “independent” if he or she:

(i) has not, and none of his or her immediate family members has, within the previous three years, been employed by Mohawk or an Affiliate (as defined in Rule 144 under the Securities Act of 1933, as amended) of Mohawk;

(ii) has not, and none of his or her immediate family members has, within the previous three years, been affiliated with or employed by an entity that provides or has provided, within the previous three years, audit services to Mohawk or an Affiliate of Mohawk;

(iii) has not, and none of his or her immediate family members has, within the previous three years, been a part of an interlocking directorate in which an executive officer of Mohawk serves on the compensation committee of another company that concurrently employs the Director;

(iv) has not, and none of his or her immediate family members has within the previous three years, received more than $100,000 per year in direct compensation, except for certain payments specified in Section 303A(2)(b)(ii) of the New York Stock Exchange’s listing standards;

(v) has not, and none of his or her immediate family members has, within the previous three years, been an executive officer of or employed by an entity that, within the previous three years, makes or has made payments to or received or has received payments from Mohawk or its Affiliates for property or services in an amount that in any single fiscal year exceeds the greater of $1,000,000 or 2% of such other entity’s consolidated gross revenues.

For purposes hereof, the term “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in law, brothers and sisters-in-law and anyone (other than domestic employees) who shares such person’s home.

7) Service on Other Boards of Directors

Prior to accepting an invitation to serve on another public company board of directors, Directors should advise the Chairman of the Board and the Chairman of the Nominating and Corporate Governance Committee. The Board believes that Directors should limit the number of other public company boards on which they serve, taking into account potential board attendance, participation and effectiveness on these boards.

8) Directors Who Change Their Present Job Responsibility

Directors who change the occupation they held when initially elected are expected to submit a letter of resignation to the Board. The Board does not believe that in every instance Directors who retire or change from the position they held when they came on the Board should necessarily leave the Board. There should, however, be an opportunity for the Board, through the Nominating and Corporate Governance Committee, to review the continued appropriateness of Board membership under the changed circumstances.

9) Term Limits

The Board has determined not to establish term limits. Although term limits could help make fresh ideas and viewpoints available to the Board, they also could result in the loss of the valuable contribution of Directors who have been able to develop, over a period of time, increasing insight into Mohawk and its operations.

As an alternative, the Nominating and Corporate Governance Committee, in conjunction with the Chief Executive Officer, will formally review each Director’s continuation on the Board shortly before the end of such Director’s then-current term. This review shall be conducted in connection with the consideration of nominations to the Board at the stockholder meeting at which such Director’s term shall expire.

10) Retirement Age

Subject to agreements that provide rights to designate directors, the Board believes that it is in the best interests of Mohawk that Directors offer to resign as of the end of the three-year term such Director is serving on their 75th birthday. Upon receipt of any such offer to resign, the Nominating and Corporate Governance Committee shall evaluate whether to accept such offer at its next regularly-scheduled meeting and provide its recommendation to the full Board, together with its recommendation for a potential replacement, if appropriate.

11) Board Compensation

Annually, management shall report to the Nominating and Corporate Governance Committee the status of Mohawk Board compensation in relation to other comparable U.S. companies. In order to create a direct linkage with corporate performance, the Board believes that a meaningful portion of a Director’s compensation should be provided in Mohawk common stock to further the direct correlation of director and stockholder interests.

Changes in the compensation of Directors, if any, should come at the suggestion of the Nominating and Corporate Governance Committee, but with full discussion and approval by the Board.

12) Executive Sessions of Non-Management Directors

All Directors who are not members of Mohawk’s management team shall meet in executive session outside the presence of the Chief Executive Officer and other Company personnel during a portion of each of the Board’s in-person meetings. In addition, any non-management Director may call an executive session of non-management Directors at any time. The executive sessions shall be chaired on a rotating basis by the Chairmen of each of the Company’s standing committees in the following order: Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee. All independent Directors shall meet in executive session outside the presence of Mohawk’s management team and other Directors at least once on an annual basis.

13) Board’s Interaction with Institutional Investors and Other Stakeholders.

The Board believes that management speaks for Mohawk. From time to time, it may be desirable for individual Board members, at the request of management, to meet or otherwise communicate with various constituencies that are involved with Mohawk. If comments from the Board are appropriate, they should, in most circumstances, come from the Chairman.

14) Assessing the Board’s Performance

Following the end of each fiscal year and at the same time as the report on Board membership criteria, the Nominating and Corporate Governance Committee shall report to the Board an assessment of the Board’s performance.

This assessment should review the Board’s contribution as a whole and areas in which the Board and/or management believes a better contribution is possible. Its purpose is to assess and, where possible, increase the effectiveness of the Board and its committees.

BOARD RELATIONSHIP TO SENIOR MANAGEMENT

15) Board Access to Senior Management

Board members have complete access to Mohawk’s management. Board members should use judgment to be sure that any contacts are not distracting to the business operation of the Company. Furthermore, the Board encourages senior management, from time to time, to bring managers into Board meetings who: (a) can provide additional insight into the items being discussed because of personal involvement in these areas, and/or (b) represent managers with future potential that the senior management believes should be given exposure to the Board.

MEETING PROCEDURES

16) Selection of Agenda Items for Board Meetings

The Chief Executive Officer will establish the agenda for each Board meeting. The Chairman of the Board and/or the Chairman of the Nominating and Corporate Governance Committee will act as the Board’s liaison with the Chief Executive Officer in the development of the agendas. Each Board member is free to suggest the inclusion of item(s) on the agenda. Each Director is free to raise at any Board meeting subjects that are not on the agenda for that meeting.

17) Board Materials Distributed in Advance

Each Director is expected to attend all meetings of the Board and Committees on which the Director serves. In advance of each Board or Committee meeting, a proposed agenda and, to the extent feasible or appropriate, information and data that is important to an understanding of the business to be discussed, will be distributed. The management will make every attempt to see that this material is as brief as possible while still providing the desired information. When appropriate, the information distributed will include summaries or outlines of presentations to be given at the meeting. In this way, meeting time may be conserved and discussion time focused on questions that the Board has about the material.

BOARD COMMITTEES

18) Number, Structure and Independence of Committees

Currently, Mohawk has three standing Committees, which are Audit, Compensation and Nominating and Corporate Governance. All members of these three standing committees shall be “independent” Directors within the meaning of Section 6 of these corporate governance guidelines.

19) Assignment of Committee Members

The Nominating and Corporate Governance Committee shall, after consultation with the Chief Executive Officer and the Chairman of the Board, and with consideration of the desires of individual Board members, recommend to the full Board the assignment of Board members to the Committees.

20) Frequency and Length of Committee Meetings

Committee Chairmen, in consultation with Committee members, will determine the frequency and length of Committee meetings. Each Committee shall meet at least as frequently as is required by the terms of such Committee’s charter.

21) Committee Agenda

Committee Chairmen, in consultation with the appropriate members of senior management and staff, will develop the Committee’s agenda.

LEADERSHIP DEVELOPMENT

22) Formal Evaluation of the Chief Executive Officer

Each year, the Compensation Committee shall evaluate the performance of the Chief Executive Officer. In evaluating the Chief Executive Officer, such Committee shall take into consideration the executive’s performance in both qualitative and quantitative areas, such as: leadership and vision; integrity; keeping the Board informed on matters affecting Mohawk and its affiliated subsidiaries; performance of the business (including such measurements as total stockholder return and achievement of financial objectives and goals); development and implementation of initiatives to provide long-term economic benefit to Mohawk, including acquisitions; accomplishment of strategic objectives and development of management.

The evaluation will be communicated to the Chief Executive Officer by the Chairman of the Compensation Committee and used by the Compensation Committee in the course of its deliberations when considering the compensation of the Chief Executive Officer for the ensuing year.

23) Succession Planning

There should be an annual report by the Chief Executive Officer to the Board on succession planning. The Chief Executive Officer’s recommendation for his or her successor (as the result of an unexpected event) should be communicated to the Chairman of the Nominating and Corporate Governance Committee in a letter to be opened only in case of such an event. The Chief Executive Officer should update the recommendation periodically.