The Storage Technology Corporation (the "Company") Board of Directors represents the stockholders' interest in optimizing long-term financial returns. The Board's responsibility is to meet all its legal obligations, including monitoring regularly the effectiveness of Management policies and decisions and the execution of its strategies. In connection with fulfilling that responsibility, the Board performs, among others, the following primary functions: (1) promoting the best interests of the Company and the stockholders in terms of corporate governance, fiduciary responsibilities and compliance with applicable laws and regulations; (2) ensuring legal and high ethical conduct by the Board, management and employees by approving corporate governance policies and corporate conduct policies, and reviewing reports of the adequacy of the Company's compliance systems and controls; (3) selecting, compensating, evaluating, and, when necessary, replacing the chief executive officer and other senior executives and ensuring that a succession plan is in place to facilitate execution of these responsibilities; (4) promoting a work environment that will attract and retain highly-motivated, world class employees; (5) approving corporate strategy and major policy initiatives; (6) approving the Company's annual operating plan and monitoring the Company's performance against that plan; (7) selecting, compensating and evaluating the directors; and (8) evaluating the processes and performance of the Board.
Corporate Governance Guidelines
These Corporate Governance Guidelines are designed to be a working structure for principled actions, effective decision-making and appropriate monitoring of both compliance and performance.
The Board may amend or revise these Corporate Governance Guidelines from time to time, based upon the recommendation of the Governance and Nominating Committee.
Any action to be taken by the Board "based upon the recommendation of a Committee" may be taken directly by the Board on its own initiative, regardless of Committee recommendation.
of the Board
– Board Membership Criteria
– Independent Directors on the Board
– Former Chief Executive Officer's Board Membership
– Selection of New Director Candidates
– Executive Sessions
– Board Composition
Size of the Board
Change in Job Responsibility
– Other Commitments
Responsibilities and Operations
– Preparation and Participation
– Director Access to Officers and Employees
– Authority to Retain Independent Advisors
– Board Interaction with the Institutional Investors, the Press and Customers
– Meeting Agenda
– Meeting Materials
– Assignment and Rotation of Committee Members
– Frequency and Length of Committee Meetings; Committee Meeting Agendas
– CEO Evaluation
– Board Evaluation
– Management Succession
– Director Compensation
– Director Stock Ownership
Board Membership Criteria
The Governance and Nominating Committee is responsible for regularly reviewing with the Board, on at least an annual basis, the appropriate skills and characteristics required of Board members, as well as the composition of the Board as a whole. Directors should have the education, experience, intelligence, independence, fairness, reasoning and judgment to lead the Company. Nominees for director should have the following qualifications:
In evaluating a candidate, the Governance and Nominating Committee will assess a nominee's qualifications as independent and evaluate whether the nominee's skills are complementary to the existing directors' skills and the Board's needs for operational, management, financial, marketing, manufacturing and other expertise. Additionally, the Governance and Nominating Committee considers diversity, skills, and such other factors as it deems appropriate given current needs. Exceptional candidates who do not meet all of these criteria may still be considered.
Independent Directors on the Board
Definition -- Other than the Chief Executive Officer the Board shall be composed of directors who are independent, as that term is defined by applicable laws, rules and regulations. The Board shall affirmatively determine annually whether a director qualifies as independent.
Former Chief Executive Officer's Board Membership
It is assumed that when the Chief Executive Officer ceases to hold that position, he/she should submit his/her resignation from the Board position at the same time.
Selection of New Director Candidates
The Board is responsible for selecting Board members. The Board delegates the initial screening process to the Governance and Nominating Committee, with direct input from the Chief Executive Officer.
The decision to extend an invitation to join the Board or stand for election for the Board shall be made by the Board.
The Board's policy is to regularly schedule separate meeting time for the non-management directors. Such meetings should occur on at least a quarterly basis.
The Chairs of the standing Board Committees shall rotate the responsibility of moderating the regularly scheduled meetings of the non-management directors.
Each Board member must ensure that other existing and anticipated future commitments do not adversely impact the member's service as director. Directors should clear their service on the Board of any other public company with the Chair of the Governance and Nominating Committee and the office of the General Counsel prior to accepting another directorship to forestall conflict of interest issues.
Director Responsibilities and Operations
Preparation and Participation
The fundamental role of the directors is to exercise their business judgment to act in what they reasonably believe to be the best interests of the Company. In fulfilling that responsibility, the directors should be able to rely on the honesty and integrity of the Company's senior management and expert legal, accounting, financial and other advisors.
Board members are expected to conscientiously prepare for, attend and participate in all Board and applicable Committee meetings, and to spend the time needed and meet as often as necessary to properly discharge their obligations.
Board members are expected to attend the Annual Meeting of Stockholders.
Director Access to Officers and Employees
The Board and its members have unfettered access to all Company officers and employees. Any meetings or contacts that a director desires to initiate may be arranged directly by the director or through the Chief Executive Officer or the Company's Secretary. The directors should use their judgment to ensure that any such contact or communication is not disruptive to the business operations of the Company.
The Board welcomes the attendance of senior officers at any Board meeting where appropriate. The Board also encourages management to schedule managers to present at Board meetings where they add value to the meeting or their participation will aid in succession planning.
Authority to Retain Independent Advisors
The Board and each standing Committee shall have the authority, at Company expense, to obtain advice, reports or opinions from internal and external counsel and expert advisors and shall have the power to hire independent legal, financial and other advisors as they may deem necessary, without consulting with, or obtaining approval from, any officer of the Company in advance. Unless the situation suggests otherwise, the CEO would be advised of any such action.
Board Interaction with the Institutional Investors, the Press and
The Board believes that management speaks for the Company. Individual Board members should not meet or otherwise communicate with various constituencies on behalf of the Company unless authorized to do so by management or by the Board.
Stockholder Communications with Non-Management Directors
Any stockholder or interested party who wishes to communicate with the Non-Management Directors or any specific Director may do by writing to in care of the Corporate Secretary, Storage Technology Corporation, One StorageTek Drive, Louisville, Colorado 80028-4309. The Corporate Secretary will review, sort and summarize the communications received and will deliver such communications and the summary to the Non-Management Directors at their next scheduled meeting conducted in-person or earlier as necessary, based upon the nature of the communication. The Corporate Secretary may not filter out any communications unless:
Unless impractical, the Chairman of the Board will establish the agenda for each Board meeting, which will be distributed in advance to the Board. At the beginning of each year, the Chairman will, to the extent foreseeable and practicable, set a schedule of agenda items to be discussed during the year. Each Board member is free to suggest the inclusion of items on the agenda and to raise, at any Board meeting, subjects that are not on the agenda for that meeting. The Board will review the Company's long-term strategic plans and challenges faced by the Company in executing on these plans during at least one Board meeting per year.
Information and data that is important to the Board's understanding of the business to be conducted at a Board or Committee meeting should generally be distributed in writing to the directors prior to the meeting, so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the materials. Particularly sensitive subject matters may be discussed at the meeting without advance distribution of written materials.
The Board shall have three standing Committees that shall exist at all times, the Governance and Nominating Committee, the Audit Committee and the Human Resources and Compensation Committee. Each standing Committee shall have its own charter. The charter will set forth the purposes, goals and responsibilities of the Committees in addition to the qualifications for Committee membership. The charters will provide that each Committee will review its performance at least once a year.
The Board may, from time to time, create additional Committees, on its own initiative or based upon the recommendation of the Governance and Nominating Committee.
All of the members of the Company's standing Committees will meet the criteria established by applicable laws, rules and regulations and will also meet the other membership criteria specified in the respective charters for these Committees.
Assignment and Rotation of Committee Members
Committee members and chairs will be appointed by the Board on its own initiative or based upon recommendation by the Governance and Nominating Committee. The Board welcomes input on members preferences for Committee assignments, but all Board members are expected to be willing to serve on any standing Committee. Committee membership and Chairs will be rotated as appropriate based upon the recommendation of the Governance and Nominating Committee.
Frequency and Length of Committee Meetings; Committee Meeting Agendas
The Chair of each Committee will, in consultation with the appropriate Committee members and members of management, determine the frequency and length of Committee meetings and develop the Committee's agenda. Each Committee will issue and share with the full Board, in advance, an agenda listing subjects to be discussed at its next meeting to the degree these can be foreseen.
At the beginning of the year, each Committee will establish a schedule of Committee meetings and agenda subjects to be discussed during the year to the extent these can be foreseen. Additional meetings may be scheduled as necessary. Management staff of the Committee, with the Committee Chairs, will assure, at least annually, that the Committee has fulfilled reviews or actions called for by Committee Charter and external governing rules.
Director Orientation and Education
The Company will provide an orientation program for new directors. It is expected that all new directors will participate in the orientation process. The orientation program will include familiarization with the Company's business strategies, its financial and accounting systems and risk management controls, its code of business conduct and methods and compliance programs, and its internal and independent auditor. The Orientation should include an introduction to the Company's senior management and a visit to the corporate headquarters.
Board members are encouraged to attend programs and conferences which will enhance their ability to be Board members for the Company.
Incumbent directors are also invited to attend the orientation program.
Evaluations and Succession
The Human Resources and Compensation Committee will conduct an annual review of the Chief Executive Officer's performance, in accordance with its charter. The Board will review and provide input into the Committee's report.
The Governance and Nominating Committee will oversee the annual Board and Committee evaluation process.
The Chief Executive Officer shall present to the full Board, at least annually, his/her recommendations for succession for the senior management of the Corporation. The Governance and Nominating Committee should annually review the succession planning process and report to the Board on its review. The entire Board, along with the Committee, will nominate and evaluate potential successors to the Chief Executive Officer.
The form and amount of director compensation shall be determined by the Board, upon the recommendation of the Human Resources and Compensation Committee. The Human Resources and Compensation Committee shall periodically review director compensation.
Director Stock Ownership
Each outside director should beneficially own at least 2,500 shares of the Company's Common Stock, or stock equivalents, as soon as practicable after election to the Board.