Corporate Governance Guidelines

The text of the Corporation’s Corporate Governance Guidelines follows.

The Board of Directors (the “Board”) of MBNA Corporation (the “Corporation”) has adopted these corporate governance guidelines to provide the framework for the corporate governance of the Corporation. The Governance Committee reviews these guidelines and other aspects of the Corporation’s governance at least annually and proposes modifications to the Board as appropriate.

Corporate Governance Mission
Director Qualifications
Director Independence
Categorical Standards for Independence
Director Responsibilities
Ethics and Conflicts of Interest
Size of Board
Additional Board Service
Change of Status
One -Year Terms
Term Limits
Attendance at Meetings
Information Flow and Distribution of Meeting Materials
Agendas
Strategic Planning
Executive Sessions and Presiding Director
Chairman and Chief Executive Officer
Communications on Behalf of the Corporation
Board Committees
Independent Advisors
Director Access to Officers and Employees
Director Compensation
Director Orientation and Continuing Education
CEO Evaluation and Management Succession
Annual Board Performance Evaluation
Shareholder Communications with Directors

Corporate Governance Mission

The Corporation aspires to maintain the highest standards of ethical conduct; act in the best interests of shareholders; report results with accuracy and transparency; and maintain full compliance with the laws, rules and regulations that govern the Corporation’s businesses.

Back to top 

Director Qualifications

The Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of Board candidates and members as well as the composition of the Board as a whole. This assessment will include a candidate’s or a member’s qualification as independent.

Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of shareholders.

The Board of Directors should have a diversity of views and experience with businesses and other organizations of comparable size. Board members should be engaged and independent minded.

Directors should be persons who possess significant skill, judgment and experience in areas of importance to the Corporation, such as general management, finance, marketing, technology, law, international business or public sector activities.

Directors should possess energy, forthrightness, analytical skills and commitment to devote the necessary time and attention to the Corporation’s affairs. Directors should possess a willingness to challenge and stimulate management, and the ability to work as part of a team in an environment of trust.

In considering candidates for the Board, the Governance Committee should also consider the interplay of the candidate’s or member’s experience with the experience of other Board members, and the extent to which a candidate would be a desirable addition to the Board and any committees of the Board.

Nominees for directorship will be selected by the Governance Committee in accordance with the policies and principles in its charter.

Back to top 

Director Independence

The Board will have a majority of directors who meet the criteria for independence required by the New York Stock Exchange. In order for a director to qualify as independent, the Board must affirmatively determine that the director has no material relationship with the Corporation (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Corporation) and the director may not have any prohibited relationships, such as certain employment relationships with the Corporation, the independent auditor or another company doing business with the Corporation. The Board adopted categorical standards to assist it in making determinations of independence. Set forth below, the categorical standards are also disclosed in the Corporation’s proxy statement. The Board shall review any transactions between the Corporation and a director or an organization with which the director is affiliated that could impact the director’s independence.

Back to top 

MBNA Corporation Categorical Standards

To be considered independent under the New York Stock Exchange rules on corporate governance, the Board must determine that a director has no direct or indirect material relationship with MBNA. The Board has established categorical standards set forth below to assist it in making independence determinations and may make a general disclosure if a director meets these standards. Any determination of independence for a director who does not meet these standards will be specifically disclosed.

Employment and Compensatory Relationships:

The following employment and compensatory relationships constitute material relationships between a director and MBNA:

  • the director is employed by MBNA, or an immediate family member of the director is employed by MBNA as an executive officer, in each case within the last three years; and
  • the director or an immediate family member of the director has received, during any twelve-month period within the last three years, more than $100,000 in direct compensation from MBNA, other than director and committee fees, pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), and other than compensation received by an immediate family member for services as a non-executive officer.

Other employment, consulting and compensatory relationships are not material relationships.

Relationships with Auditor:

The following auditor and accounting relationships constitute material relationships between a director and MBNA:

  • the director or an immediate family member of the director is a current partner of a firm that is MBNA’s internal or external auditor;
  • the director is a current employee of a firm that is MBNA’s internal or external auditor;
  • an immediate family member of the director is a current employee of a firm that is MBNA’s internal or external auditor and such immediate family member participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; and
  • the director or an immediate family member of the director is, within the past three years (but is no longer), a partner or employee of a firm that is MBNA’s internal or external auditor and personally worked on an audit of MBNA during that time.

Other auditor and accounting relationships are not material relationships.

Other Board Relationships:

The following relationships constitute material relationships between a director and MBNA:

  • the director or an immediate family member of a director is, or has been within the last three years, employed as an executive officer of another company where any of MBNA’s executive officers at the same time serves or served on that company’s board of directors’ compensation committee.

Other board and committee relationships are not material. For example, if a director were employed in a non-executive capacity at a company on whose board one of MBNA’s executives serves, this would not be considered a material relationship.

Commercial and Charitable Relationships:

The following commercial and charitable relationships constitute material relationships between a director and MBNA:

  • the director is currently employed by (or an immediate family member of a director is currently employed as an executive officer by) a company (other than tax-exempt organizations, but including organizations with which MBNA has endorsing, affinity, co-branding or similar relationships) that has made payments to, or received payments from, MBNA 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 for the fiscal year in which such payment is made;
  • the director (or an immediate family member of a director) is an affiliate or executive officer of another company which is indebted to MBNA, or to which MBNA is indebted, where the amount of indebtedness to the other in any of the last three fiscal years is five percent (5%) or more of the total consolidated assets at the end of such fiscal year of the company he or she served as an affiliate or executive officer; and
  • the director is an executive officer of a tax-exempt organization (including, without limitation, an educational institution) where MBNA’s (or its affiliated charitable foundation’s) annual charitable contributions to the tax-exempt organization in any single fiscal year within the preceding three years are two percent (2%) or more of that organization’s total annual charitable receipts for the fiscal year in which such contributions are made.

Other commercial relationships (including industrial, banking, accounting, consulting and legal relationships) and other charitable relationships are not material relationships.

Other Matters:

Direct or indirect ownership of even a significant amount of MBNA stock by a director who otherwise does not have a material relationship with MBNA as a result of the application of the foregoing standards will not, by itself, bar an independence finding as to such director.

For purposes of these categorical standards, (i) “immediate family member” includes a director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-inlaw, and anyone (other than domestic employees) who share such director’s home; provided that when applying the three year look-back provisions, those who are no longer immediate family members as a result of legal separation or divorce, or because they have died or become incapacitated need not be considered; and (ii) “affiliate” includes a general partner of a partnership, a managing member of a limited liability company or a greater than 10% shareholder of a corporation.

Back to top 

Director Responsibilities

The basic responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Corporation and its stockholders. In discharging that obligation, directors are entitled to rely on the honesty and integrity of the Corporation’s senior executives and its outside advisors and auditors. The directors are also entitled to reasonable directors’ and officers’ liability insurance (at the Corporation’s expense), to indemnification by the Corporation to the fullest extent permitted by law and the Corporation’s charter, by-laws and any indemnification agreements, and to exculpation as provided by state law and the Corporation’s charter.

Back to top 

Ethics and Conflicts of Interest

Directors, as well as officers and employees, are expected to observe the highest standards of professional conduct at all times. Officers and employees must comply with the Corporation’s Code of Conduct and Ethical Responsibility. Directors of the Corporation owe fiduciary duties to the Corporation and its stockholders, including the duties of loyalty and fair dealing. In fulfilling their duties, nonemployee directors should use the provisions of the Corporation’s Code of Conduct and Ethical Responsibility as guiding principles. When applying their fiduciary duties, nonemployee directors may consult with the Corporation’s Ethics Office. Every director, officer and employee is expected to conduct business and outside activities in a way that avoids actual or perceived conflicts with the interests of the Corporation or its Customers.

Back to top 

Size of Board

The Board presently has 10 members. This size offers a sufficiently large and diverse group to address the important issues facing the Corporation while being small enough to encourage personal involvement and discussion. The Board will review annually the appropriate size of the Board and any recommendations of the Governance Committee concerning changes to the size of the Board, taking into consideration the overall responsibilities of the Board and its committees and other factors described above.

Back to top 

Additional Board Service

Each director is expected to ensure that other commitments do not interfere with his or her ability to devote sufficient time to perform the duties of a director.

While experience serving on other public company boards may be helpful to a director in serving on the Corporation’s board and also to the board, that service could interfere with a director’s ability to serve on the Corporation’s board. Accordingly, no director may serve on more than four other public company boards. Directors should advise the Chairman of the Board and the Chairman of the Governance Committee in advance of accepting any invitation to serve on another public company board and should consult with them concerning the effect of such additional board service on the performance of the director’s service to the Corporation. The Governance Committee shall consider a director’s or potential director’s service on other boards in connection with its evaluation of the director’s qualifications to serve as a director of the Corporation.

The Governance Committee and the Board will take into account the nature and extent of an individual’s other commitments when determining whether it is appropriate to nominate such individual for election or re-election as a director.

Service on boards and committees of other organizations should be consistent with the Corporation’s conflict of interest policies.

Back to top 

Change of Status

Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the board for an extended period of time. Directors should inform the Chief Executive Officer and the Chairman in the event of any significant change in their personal circumstances, including a change in their principal job responsibilities.

Back to top 

One-Year Terms

Directors shall be elected at the annual meeting of shareholders for a one-year term, to serve until the next annual meeting of shareholders.

If a director is elected between annual meetings of shareholders, the initial term of any such director shall expire at the next annual meeting of shareholders.

Back to top 

Term Limits

The Board does not believe in term limits or a retirement age for non-management directors. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, they have the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Corporation and its operations and, therefore, provide an increasing contribution to the Board as a whole. The Governance Committee will consider past service of directors and any benefits of new persons coming on the Board when reviewing the composition of the Board.

Back to top 

Attendance at Meetings

Directors are expected to attend the Corporation’s Annual Meeting of Stockholders, Board meetings and meetings of committees and subcommittees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities.

Back to top 

Information Flow and Distribution of Meeting Materials

Various materials are distributed to the Board on a continuing basis throughout the year and reports and presentations are made at Board and Committee meetings to keep the Board informed on an ongoing basis of the performance of the Corporation and its businesses, their future plans, the various issues that they face, and new developments. The materials for each Board meeting are distributed in advance of the meetings to give directors an opportunity to review them in order to facilitate active and informed discussion at the meeting. Directors should review these materials in advance of the meeting. Sensitive matters may be discussed at the meeting without written materials being distributed before the meeting.

Back to top 

Agendas

The Chairman, in consultation with the Chief Executive Officer, will establish the agenda for each Board meeting. Each Board member is free to suggest at any time the inclusion of items on an agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. Board members shall endeavor to provide advance notice of subjects that require development of materials or other advance preparation.

Back to top 

Strategic Planning

The Board will review the Corporation’s long-term strategic plans and the principal issues that the Corporation will face in the future during at least one Board meeting each year.

Back to top 

Executive Sessions and Presiding Director

The non-management directors will meet in executive session regularly, and preferably at every Board meeting. The lead director, if one is appointed by the Board and present, will preside at these meetings, otherwise the director presiding at these meetings will be chosen by the non-management directors. The lead director will be disclosed in the annual proxy statement, or if no single director is chosen to preside at all executive sessions, the procedure by which a presiding director is selected for each session will be disclosed in the annual proxy statement. The Corporation will also describe a method for interested parties to communicate directly with the lead director or with non-management directors as a group.

Back to top 

Chairman and Chief Executive Officer

The Board’s policy is to separate the offices of Chairman and the Chief Executive Officer. The Board believes that separation of the two positions promotes management accountability to shareholders and a free flow of information to the Board.

Back to top 

Communications on Behalf of the Corporation

The Board believes that management speaks for the Corporation and that the Chairman speaks for the Board of Directors.

Back to top 

Board Committees

The Board will have at all times an Audit Committee, a Compensation Committee and a Governance Committee. All of the members of these committees will be independent directors under the criteria established by the New York Stock Exchange. Committee members will be appointed by the Board upon recommendation of the Governance Committee with consideration of the qualifications and desires of individual directors.

Each committee will have its own charter. The charters will set forth the purposes and responsibilities of the committees as well as specific qualifications, if any, for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board. The charters will also provide that each committee will annually evaluate its performance.

The Chairman of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee’s charter. The Chairman of each committee, in consultation with the appropriate members of the committee and management, will develop the committee’s agenda. The schedule for each committee will be furnished to all directors.

The Board may, from time to time, establish or maintain additional committees as necessary or appropriate. Members of these committees need not be independent directors.

Back to top 

Independent Advisors

The Board and each committee, consistent with the terms of the committee charters, have the power to retain independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Corporation in advance. The Corporation shall provide appropriate funding, as determined by the board or any committee, to compensate such independent outside auditors or advisors as well as to cover the ordinary administrative expenses incurred by the Board and its committees in carrying out their duties.

Back to top 

Director Access to Officers and Employees

Directors have full and free access to officers and employees of the Corporation. Any meetings or contacts that a director wishes to initiate may be arranged through the CEO or another executive designated by the CEO for this purpose or directly by the director. The directors will use their judgment to ensure that any meetings or contacts is not disruptive to the business operations of the Corporation and will, to the extent not inappropriate, copy the CEO on any written communication between a director and an officer or employee of the Corporation.

The Board welcomes regular attendance at each Board meeting of senior officers of the Corporation. Furthermore, the Board encourages management to bring other Corporation personnel management believes can provide additional insight into the items being discussed.

Back to top 

Director Compensation

Management will report periodically to the Board on the status of director compensation in relation to other large U.S. companies. The Governance Committee shall have the responsibility for recommending to the board compensation and benefits for non-employee Directors. In discharging this duty, the committee shall be guided by three goals: compensation should fairly pay directors for work required in a company of MBNA’s size and scope; compensation should align directors’ interests with the long-term interests of shareholders; and the structure of the compensation should be simple, transparent and easy for shareholders to understand. At the beginning of each year, the Governance Committee shall review nonemployee director compensation and benefits.

The form and amount of director compensation will be determined by the Board, and will include cash compensation (e.g., annual retainer and meeting fees) and stock-based compensation (e.g. stock options or restricted shares). The Board will consider that directors’ independence may be jeopardized if director compensation and perquisites exceed customary levels.

Back to top 

Director Orientation and Continuing Education

Management shall provide orientation for all new directors promptly after they are elected to the Board. This orientation will include presentations by senior management to familiarize new directors with the Corporation’s business, including the Corporation’s business plans, its significant financial, accounting and risk management issues, its compliance program, its Code of Business Conduct and Ethics, its principal officers, its internal and independent auditors, and other matters requested by new directors to assist them in their new role. Management shall provide continuing education in the form of periodic updates to directors of this information, or other presentations as requested by the directors.

Back to top 

CEO Evaluation and Management Succession

The Compensation Committee will conduct an annual review of the CEO’s performance. The Board of Directors will review the Compensation Committee’s report in order to ensure that the CEO is providing the best leadership for the Corporation in the long and short term.

The CEO should review the Corporation’s management development and CEO succession planning with the Board periodically. When appropriate the entire Board will work with the Governance Committee to nominate and evaluate potential successors to the CEO.

Back to top 

Annual Board Performance Evaluation

The Board of Directors will conduct an annual self-evaluation of the Board and its committees. The assessment will include a review of the Board’s overall performance. The purpose of the evaluation is to maintain the continued effectiveness of the Board.

The Governance Committee will receive comments from all directors and report annually to the Board with an assessment of the Board’s performance. This report will be discussed with the full Board following the end of each fiscal year. The assessment will focus on the Board’s contribution to the Corporation and specifically focus on areas in which the Board or management believes that the Board could improve.

The Governance Committee will also utilize the results of this evaluation process in determining the characteristics and assessing critical skills required of prospective candidates for election to the Board and making recommendations to the Board with respect to assignments of Board members to various committees.

Back to top 

Shareholder Communications with Directors

Shareholders interested in communicating with the full Board, the non-management directors or the lead director may do so by writing to Lead Director, MBNA Corporation,
1100 North King Street, Wilmington, Delaware 19884-0156. These communications will be forwarded to the appropriate director or directors.

Back to top 


Last updated
February 24, 2005