The Board of Directors (the “Board”) of Magellan GP, LLC (the “Company”) will have at least three directors who meet the independence requirements of the New York Stock Exchange (“NYSE”). A director will not qualify as independent unless the Board affirmatively determines that the director has no material relationship with Magellan Midstream Partners, L.P. (“MMP”) or the Company either directly or as a partner, unitholder or officer of an organization that has a relationship with MMP or the Company. In order to make this determination, the Board will broadly consider all relevant facts and circumstances and will apply the following categorical standards:
A director will not be considered independent if the director
is, or has been within the last three years, an employee of MMP or the Company,
or if an immediate family member of a director is, or has been within the last
three years, an executive officer, of MMP or the Company; provided, however,
that employment as an interim Chairman or Chief Executive Officer (“CEO”) or
other executive officer will not disqualify a director from being considered
independent following that employment.
A director who has received, or has an immediate family member
who has received, during any twelve-month period within the last three years,
more than $120,000 in direct compensation from MMP or the Company, other
than director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not contingent in
any way on continued service), will not be considered independent; provided,
however, that the following need not be considered in determining independence
under this test: (i) compensation received by a director for former service as
an interim Chairman or CEO or other executive officer and (ii) compensation
received by an immediate family member for service as an employee (other than
an executive officer) of MMP or the Company.
A director will not be considered independent if (i) the
director or an immediate family member is a current partner of a firm that is
MMP’s internal or external auditor; (ii) the director is a current employee of
such a firm, (iii) the director has an immediate family member who is a current
employee of such a firm and personally works on MMP’s audit; or (iv) the
director or an immediate family member was within the last three years (but is
no longer) a partner or employee of such a firm and personally worked on MMP’s
audit within that time.
A director or immediate family member who is, or has been within
the last three years, employed as an executive officer of another company where
any of MMP’s or the Company’s present executive officers at the same time
serves or served on that company’s compensation committee will not be
e. A director who is a current employee, or whose immediate family member is a current executive officer, of a company that has made payments to, or received payments from, MMP or the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, will not be considered independent; provided, however, that charitable organizations will not be considered “companies” for purposes of this test.
Directors are expected to exercise their business judgment and to act in what they reasonably believe to be in the best interests of the Company and MMP and MMP’s unitholders. In order to perform this responsibility, directors may rely on the honesty and integrity of the Company’s executive officers and its outside advisors and auditors. The directors are entitled (a) to have the Company or MMP purchase reasonable directors’ and officers’ liability insurance on their behalf and (b) to the benefits of indemnification to the fullest extent permitted by law, the Limited Liability Company Agreement of the Company and the Agreement of Limited Partnership of MMP.
Directors are expected to attend Board meetings and Committee meetings, for Committees on which they serve, and to spend the time needed and to meet as frequently as necessary to properly discharge their responsibilities. To the extent feasible, information and data important to the Board’s understanding of the business to be conducted at a Board or Committee meeting should be distributed in writing to the directors before the meeting and directors should be prepared to contribute substantively at the meeting by reviewing these materials in advance of the meeting.
Directors should advise the Chairman of the Board in advance of accepting an invitation to serve on another public company board or if the principal responsibility they held when they were elected to the Board changes.
The executive officers of the Company will recommend to the Board the long-term strategic plan for MMP, major acquisitions and divestitures and major changes to MMP’s capital structure. With respect to all other matters, the Chairman of the Board will arrange the agenda for Board meetings and shall report to the Board and arrange for other executives and advisors to report to the Board. Each Board member is free to suggest the inclusion of items on the agenda of any Board meetings. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will review MMP’s long-term strategic plans, including succession plans, and the principal issues that MMP will face in the future during at least one Board meeting each year.
The non-management directors will meet in executive session at each regularly scheduled board meeting. The lead director, as elected by the Board annually, shall preside at these meetings and his name will be disclosed in MMP’s annual proxy statement.
The independent directors will meet in
executive session at least annually.
The Board will at all times have an Audit Committee. The members of the Audit Committee shall meet the independence and experience requirements of the NYSE rules, the Sarbanes-Oxley Act of 2002 and any other applicable statutes, rules or regulations.
Because MMP is a publicly traded limited partnership, the NYSE does not require the Board to have a Compensation Committee or Nominating and Governance Committee. Despite this exemption, the Board has chosen to have a Compensation Committee. The Board has chosen not to have a Nominating and Governance Committee, but instead prefers for the full Board to provide that function.
The Audit and Compensation Committees have their own charters. The Board appoints committee members, including the chairman of each committee. The chairman of each committee, in consultation with the committee members and management, determines the frequency and length of the committee meetings and the agenda for each meeting consistent with any requirements set forth in the committee’s charter.
The Board may, from time to time, establish or
maintain additional committees as it deems necessary or appropriate.
Director Access to
Management and, as Necessary and Appropriate, Independent Advisors
Directors have full, free and direct access to the management of the Company and MMP for any and all matters related to the Company and/or MMP. The directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company or MMP and will, to the extent not inappropriate, copy the CEO on any written communications between a director and an officer or employee of the Company. Such communications will not be directive other than as relates to routine administrative matters. In addition, the Board expects the executive officers of the Company to attend and participate at each regularly scheduled board meeting.
The Board and each Committee of the Board have
the authority to hire independent legal, financial or other advisors as they
may deem necessary.
Management and non-independent directors of the Board receive no compensation for serving as a director. The form and amount of compensation for independent directors will be determined from time to time by the Board. In making this determination, the Board will consider that directors’ independence may be jeopardized when directors’ compensation exceeds what is customary or if the Company or MMP makes substantial charitable contributions to organizations in which a director is affiliated, or enters into consulting contracts with (or provides other indirect forms of compensation to) a director.
Director Orientation and
All new directors will be oriented to the Company and MMP in a manner to be determined by the CEO. The Board will consider whether or not continuing education for all, or certain directors, may be warranted. The Company will pay reasonable expenses for a director’s participation in continuing education programs approved by the Board.
The non-management directors will oversee CEO selection, after consultation with the presiding CEO, and review the performance of the CEO on an annual basis. Additionally, the non-management directors will set policies regarding succession in the event of an emergency or the retirement of the CEO.
Evaluation of the Board
The Board will conduct an annual self-evaluation to determine whether it is functioning effectively.