VARIAN SEMICONDUCTOR EQUIPMENT ASSOCIATES,
The Board of Directors (the “Board”) of Varian Semiconductor Equipment Associates, Inc.(the “Company”) has adopted the following Corporate Governance Guidelines (the “Guidelines”) to assist the Board in the exercise of its duties and responsibilities and to serve the best interests of the Company and its stockholders. The Guidelines should be applied in a manner consistent with all applicable laws and stock exchange rules and the Company’s charter and bylaws, each as amended and in effect from time to time. The Guidelines provide a framework for the conduct of the Board’s business. The Board may modify or make exceptions to the Guidelines from time to time in its discretion and consistent with its duties and responsibilities to the Company and its stockholders.
A. Director Responsibilities:
1. Oversee Management of the Company. The principal responsibility of the directors is to oversee the management of the Company and, in so doing, serve the best interests of the Company and its stockholders. This responsibility includes:
· Reviewing and overseeing principal operating, financial and other corporate plans, strategies and objectives.
· Evaluating the performance of the Company and its senior executives and taking appropriate action, including removal, when warranted.
· Evaluating the Company’s compensation programs on a regular basis and determining the compensation of its senior executives.
· Reviewing material transactions and commitments entered into in the ordinary course of business.
· Developing a corporate governance structure that allows and encourages the Board to fulfill its responsibilities.
· Providing advice and assistance to the Company’s senior executives.
2. Exercise Business Judgment. In discharging their fiduciary duties of care, loyalty and candor, directors are expected to exercise their business judgment to act in what they reasonably believe to be the best interests of the Company and its stockholders.
3. Understand the Company and its Business. Directors have an obligation to become and remain informed about the Company and its business, including the following:
· The principal operational and financial objectives, strategies and plans of the Company.
· The factors that determine the Company’s success.
· The risks and problems that affect the Company’s business and prospects.
4. Effective Systems. Directors are responsible for determining through discussions with management that management has effective systems in place for the periodic and timely reporting to the Board on important matters concerning the Company.
5. Board and Committee Meetings. Directors are responsible for attending Board meetings and meetings of committees on which they serve, and devoting the time needed, and meeting as frequently as necessary, to discharge their responsibilities properly.
6. Reliance on Management and Advisors. The directors shall have full and free access to and may rely on the Company’s senior executives and its outside advisors, auditors and legal counsel.
B. Director Qualification Standards
1. Independence. A majority of the members of the Board shall be independent directors. To be considered independent: (1) a director must be independent as determined under NASDAQ rules and (2) in the Board’s judgment, the director must not have a material relationship with the Company
2. Other Directorships. A director shall limit the number of other public company boards on which he or she serves so that he or she is able to devote adequate time to his or her duties to the Company, including preparing for and attending meetings.
3. Selection of New Director Candidates. Except where the Company is legally required by contract or otherwise to provide third parties with the ability to nominate directors, the Nominating and Corporate Governance Committee shall be responsible for recommending to the Board the persons to be nominated by the Board for election as directors at the annual meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board. Director nominees shall be selected in accordance with these Guidelines and the criteria set forth in Attachment A to these Guidelines. It is expected that the Nominating and Corporate Governance Committee will have direct input from the Chairman of the Board and the Chief Executive Officer. The Nominating and Corporate Governance Committee shall be responsible for reviewing with the Board, from time to time as it deems appropriate, the requisite skills and criteria for new Board members as well as the composition of the Board as a whole.
4. Extending the Invitation to a New Director Candidate to Join the Board. The invitation to join the Board should be extended by the Chairman of the Board, on behalf of the Board, and the Chairman of the Nominating and Corporate Governance Committee, on behalf of such Committee.
5. Former Chief Executive Officer’s Board Membership. The Board believes that the continuation of a former Chief Executive Officer of the Company on the Board is a matter to be decided in each individual instance by the Board, upon recommendation of the Nominating and Corporate Governance Committee.
C. Board Meetings
1. Selection of Agenda Items. The Chairman of the Board shall establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of agenda items and is free to raise at any Board meeting subjects that are not on the agenda for that meeting.
2. Frequency and Length of Meetings. The Chairman of the Board, in consultation with the members of the Board, shall determine the frequency and length of the Board meetings. Special meetings may be called from time to time as determined by the needs of the business.
3. Advance Distribution of Materials. Information and data that are 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 before the meeting, and directors should review these materials in advance of the meeting. The Board acknowledges that certain items to be discussed at a Board or committee meeting may be of an extremely confidential or time sensitive nature and that the distribution of materials on these matters prior to meetings may not be appropriate or practicable.
4. Executive Sessions. In general, the agenda for every regularly scheduled Board meeting shall include a meeting of the independent directors, as defined by the rules of NASDAQ, in executive session. Absent unusual circumstances, these sessions shall be held in conjunction with regular Board meetings.
5. Attendance of Non-Directors at Board Meetings. The Board welcomes attendance at Board meetings of senior executives of the Company. Furthermore, the Board encourages the senior executives of the Company to, from time to time, bring Company personnel into Board meetings who (i) can provide additional insight into the items being discussed because of personal involvement in these areas or (ii) appear to be persons with future potential who should be given exposure to the Board.
D. Board Committees
1. Key Committees. The Board shall have at all times an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each such approved by the Board. The Board may, from time to time, establish additional committees as necessary or appropriate.
2. Committee Charters. The Board shall, from time to time as it deems appropriate, review and reassess the adequacy of each charter and make appropriate changes.
3. Frequency and Length of Committee Meetings. The chairman of each committee, in consultation with the committee members, shall determine the frequency and length of committee meetings. Special meetings may be called from time to time as determined by the needs of the business and the responsibilities of the committees.
4. Non-Audit Fees. The Audit Committee shall not approve any services by the Company’s independent registered public accounting firm if as a result non-audit fees in any fiscal year would exceed the sum of audit fees, audit related fees and tax compliance/preparation fees for that year.
E. Director Access to Management and Independent Advisors
1. Access to Officers and Employees. Directors shall have full and free access to officers and employees of the Company. Any meetings or contacts that a director wishes to initiate may be arranged through the Chief Executive Officer or President.
2. Access to Independent Advisors. The Board and each committee shall have the power to hire and consult with independent legal, financial or other advisors for the benefit of the Board or such committee, as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance. Such independent advisors may be the regular advisors to the Company. The Board or any such committee is empowered, without further action by the Company, to cause the Company to pay the compensation of such advisors as established by the Board or any such committee.
F. Director Compensation
1. Role of Board and Compensation Committee. The form and amount of director compensation shall be determined by the Board in accordance with the policies and principles set forth below. The Compensation Committee shall review from time to time as it deems appropriate, director compensation.
2. Form of Compensation. The Board believes that directors should be incentivized to focus on long-term stockholder value. Including equity as part of director compensation helps align the interest of directors with those of the Company’s stockholders.
3. Amount of Consideration. The Company seeks to attract exceptional talent to its Board. Therefore, the Company’s policy is to compensate directors at least competitively relative to comparable companies.
4. Employee Directors. Directors who are also employees of the Company shall receive no additional compensation for Board or committee service.
G. Director Continuing Education
1. Continuing Education. In accordance with NASDAQ rules, each director is expected to be involved in continuing director education on an ongoing basis to enable him or her to better perform his or her duties and to recognize and deal appropriately with issues that arise. The Company shall pay all reasonable expenses related to continuing director education.
H. Management Evaluation
1. Evaluation of the Chief Executive Officer. The Board evaluates the Company’s Chief Executive Officer in the manner that it determines to be in the best interests of the Company’s stockholders.
2. Evaluation of Senior Executives. The Compensation Committee shall be responsible for overseeing the evaluation of the Company’s senior executives.
I. Performance Evaluation of the Board
1. The Nominating and Corporate Governance Committee shall oversee all self-evaluations of the Board to determine whether it and its committees are functioning effectively.
J. Periodic Review of the Corporate Governance Guidelines
1. The Nominating and Corporate Governance Committee shall, from time to time as it deems appropriate, review and reassess the adequacy of these Guidelines and recommend any proposed changes to the Board for approval.