Unisys Board Guidelines on Significant Corporate Governance Issues
(As Amended Through November 8, 2019)
1) BOARD COMPOSITION AND SELECTION
Size. The Company's Bylaws provide for the Board to have no fewer than seven and no more than 15 members.
Independence. The Board shall have a majority of directors who qualify as independent under the listing standards of the New York Stock Exchange. The Nominating and Corporate Governance Committee shall review annually with the Board the relationships that each director has with the Company (either directly or as a partner, stockholder, employee or officer of an organization that has a relationship with the Company). Following such annual review, only those directors who the Board affirmatively determines have no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and who meet the additional qualifications prescribed under the listing standards of the New York Stock Exchange will be considered independent.
The Board has established the following guidelines to assist it in determining whether a director has a material relationship with the Company:
The following commercial or charitable relationships will not be considered to be material relationships that would impair a director's independence (a) if the director is an executive officer or partner of, or owns more than ten percent of the equity in, another company that does business with the Company and the annual sales to, or purchases from, the Company are less than one percent of the annual revenues of that other company and (b) if the director serves as an officer, director or trustee of a charitable organization, and the Company's discretionary charitable contributions to the organization are less than one percent of that organization's total annual charitable receipts.
The Board is willing to have members of management, in addition to the Chief Executive Officer, as directors. However, the Board believes that management should encourage senior managers to understand that Board membership is not necessary or a prerequisite to any higher management position in the Company. Managers other than the Chief Executive Officer currently attend Board meetings on a regular basis even though they are not members of the Board.
Selection of New Director Candidates. The Board itself should be responsible, in fact as well as procedure, for selecting its own members. The Board delegates the screening process involved to the Chairman of the Nominating and Corporate Governance Committee with input from the Chairman of the Board as well as the Chief Executive Officer (if the Chairman is not the Chief Executive Officer). The Nominating and Corporate Governance Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board. This determination should take into account all factors the Nominating and Corporate Governance Committee considers appropriate, such as independence, experience, expertise, strength of character, mature judgment, leadership ability, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board. An invitation to join the Board should be extended by the Chairman of the Nominating and Corporate Governance Committee, the Chairman of the Board and the Chief Executive Officer of the Company.
Selection of Chairman and CEO. The Board will be free to make this choice any way that seems best to assure the success of the Company so as to provide appropriate leadership at a given point in time. Therefore, the Board does not have a policy, one way or the other, on whether or not the role of the Chief Executive and Chairman should be separate and, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. If the Chairman is not an employee of the Company, the Chairman should qualify as independent under the listing standards of the New York Stock Exchange.
Term Limits. Directors are elected on an annual basis, as such, the Board does not believe it should establish term limits. While term limits could help insure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole. As an alternative to term limits, the Nominating and Corporate Governance Committee, in consultation with the Chief Executive Officer and the Chairman of the Board, will review each director's continuation on the Board as a regular part of the annual nominating process.
Retirement Age. In accordance with the Company’s bylaws, no wing attainment of age 72 and no person shall be elected a director after having attained the age of 72 years unless requested by the Nominating and Corporate Governance Committee with the approval of 2/3 of the directors then in office (excluding such director). Notwithstanding the foregoing, in no event shall a person stand for election as s director after having attained the age of 74 years.
Former Chief Executive Officer's Board Membership. It is expected that when the Chief Executive Officer resigns from that position, he/she will offer his/her resignation from the Board at the same time.
Directors Who Change Their Present Job Responsibility. It is the sense of the Board that individual directors who change their primary job responsibility should volunteer to resign from the Board. It is not the sense of the Board that the directors who retire or change job responsibilities should necessarily leave the Board. However, the Nominating and Corporate Governance Committee should review the continued appropriateness of Board membership under these circumstances. Based on this review, the Nominating and Corporate Governance Committee will recommend, and the Board will determine, whether or not to accept the director's resignation.
Service on Other Boards. Directors are expected to ensure that other existing and planned future commitments do not materially interfere with the director's service as a Board member. Non-management directors are encouraged to limit the number of public company boards on which they serve to no more than four in addition to the Company's and should advise the Chairman of the Board and the General Counsel of the Company before accepting an invitation to serve on another board.
2) BOARD MEETINGS
Frequency of Meetings. The Board should have at least four regularly scheduled meetings per year. In addition, special meetings may be called from time to time as determined by the needs of the business. Directors are expected to attend Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities.
Selection of Agenda Items for Board Meetings. The Chairman of the Board and the Chief Executive Officer (if the Chairman is not the Chief Executive Officer) will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of items on the agenda. 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 the Company's long-term strategic plans during at least one Board meeting each year.
Board Material Distributed in Advance. 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. Management should ensure that the materials being distributed are as concise as possible while giving directors sufficient information to make informed decisions.
Executive Sessions of Outside Directors; Lead Director. The non-management directors shall meet in executive session at all regularly scheduled Board meetings and will have the opportunity to meet in executive session at any time upon request. If the Chairman of the Board is an employee of the Company, the Board shall elect from the independent directors a lead director who shall preside at such executive sessions. If the Chairman is not an employee of the Company, the Chairman shall preside at such executive sessions. If the non-management directors include any directors who are not independent under the listing standards of the New York Stock Exchange, the Company shall, at least once a year, schedule an executive session including only independent directors. In addition, annually, the non-management directors will meet in executive session to review the performance of the Chief Executive Officer. The chairman of the Compensation Committee shall lead this review.
If the Board or any committee meets in a session of non-management directors only, the lead director or chairman of the committee is required to meet with the Chief Executive Officer to relate the matters discussed.
Number and Type of Committees. The current four Unisys Board committees are Audit and Finance, Compensation, and Nominating and Corporate Governance, and Security and Risk. There will, from time to time, be occasions in which the Board may want to form a new committee or disband a current committee depending upon the circumstances. In addition, the Chairman may appoint ad hoc special purpose committees as and when the need arises.
Assignment and Rotation of Committee Members. Membership on the Audit and Finance, Compensation, Nominating and Corporate Governance, and Security and Risk. Committees will be limited to directors who meet the independence criteria of the New York Stock Exchange and any applicable independence criteria for members of those committees prescribed by the Securities and Exchange Commission.
The Chairman of the Board and the Chief Executive Officer (if the Chairman is not the Chief Executive Officer), with consideration of the desires of individual Board members, will be responsible for recommending Board member committee assignments to the Nominating and Corporate Governance Committee, which will review and recommend assignments to the Board for approval.
It is the sense of the Board that consideration should be given to changing committee members as well as committee chairs periodically, but the Board does not feel that such a change should be mandated as a policy since there may be reasons at a given point in time to maintain an individual director's committee membership.
Frequency and Length of Committee Meetings and Agendas. Each committee chairman, in consultation with committee members, will determine the frequency and length of the meetings of the committee. The chairman of the committee, in consultation with the appropriate members of Unisys management and staff, will approve the committee's agenda.
4) ACCESS TO SENIOR MANAGEMENT AND INDEPENDENT ADVISORS
Regular Attendance of Non-Directors at Board Meetings. The Board is comfortable with the regular attendance at each Board meeting of non-Board members who are members of senior management. Should the Chief Executive Officer want to add additional people as attendees on a regular basis, it is expected that this suggestion would be made to the Board for its concurrence.
Board Access to Senior Management. Board members have complete access to Unisys management. It is assumed that Board members will use judgment to be sure that this contact is not distracting to the business operations of the Company and that such contact, if in writing, be copied to the Chief Executive Officer and the Chairman. Furthermore, the Board encourages senior management to, from time to time, bring other managers into Board Meetings who: (a) can provide additional insights into the items being discussed because of personal involvement in these areas, or (b) represent managers with future potential that the senior management believes should be given exposure to the Board.
Board Access to Independent Advisors. The Board and its committees shall have the right at any time to retain independent outside financial, legal or other advisors.
5) BOARD COMPENSATION AND STOCK OWNERSHIP REQUIREMENTS
It is appropriate for the staff of the Company to report once a year to the Compensation Committee on the status of Unisys Board compensation in relation to other large U.S. companies. Changes in Board compensation, if any, should come at the suggestion of the Compensation Committee, but with full discussion and concurrence by the Board. Particular attention will be paid to structuring Board compensation in a manner aligned with shareholder interests. In this regard, the Board believes that a meaningful portion of a director's compensation should be provided and held in stock options and/or stock units. Members of management shall not receive additional compensation for their service as directors.
The Board believes that, only in rare circumstances approved by the Board, should directors draw, directly or indirectly, consulting, legal or other fees from the Company. In no event shall any member of the Audit and Finance Committee receive any compensation from the Company other than directors' fees.
Each non-management member of the Board is required to own stock, stock units or other equity equivalents of the Company in accordance with the Company's stock ownership guidelines for directors.
6) BOARD ORIENTATION AND CONTINUING EDUCATION
The Company shall provide a director orientation program for new directors to familiarize them with, among other things, the Company's business, strategic plans, significant financial, accounting and risk management issues, its compliance programs, its code of ethics and business conduct, its principal officers, and its internal and independent auditors. The Company will provide directors with presentations from time to time on topics designed by the Company or third-party experts to assist directors in carrying out their responsibilities. Directors may also attend appropriate continuing education programs. The Company will bear all reasonable expenses in connection with attending accredited third-party continuing education programs.
7) ASSESSING THE BOARD'S PERFORMANCE
The Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Nominating and Corporate Governance Committee, acting through its chairman, will facilitate this self-evaluation. In addition, each committee will conduct an annual self-evaluation of its performance and will make a report annually to the Board. In connection with these assessments, the Board and each committee should specifically review areas in which the Board, committee members or the management believes improvements could be made to increase the effectiveness of the Board and its committees.
8) EVALUATION OF THE CHIEF EXECUTIVE OFFICER AND SUCCESSION PLANNING
All non-management directors will participate in the annual evaluation of the Chief Executive Officer, led by the Compensation Committee. The evaluation should be communicated in writing to the Chief Executive Officer by the chairman of the Compensation Committee. The evaluation should be based on objective criteria including performance of the business, accomplishment of long-term strategic objectives, development of management, etc. Based on this evaluation, the Compensation Committee will recommend, and the members of the Board who meet the independence criteria of the New York Stock Exchange will determine and approve, the compensation of the Chief Executive Officer.
The Board shall have overall responsibility to plan for CEO succession. To assist the Board in this, the Chief Executive Officer should present an annual report on succession planning to the Board. There should also be available, on a continuing basis, the Chief Executive Officer's recommendation as to a successor should he/she be unexpectedly unable to perform his/her duties. These succession plans should be reported to and discussed with the Board each year.
9) CONFIDENTIALITY; PUBLIC STATEMENTS REGARDING COMPANY MATTERS; BOARD INTERACTION WITH INVESTORS, CUSTOMERS, AND OTHER THIRD PARTIES
Members of the Board should, at all times, act in accordance with the Company's confidentiality policy for directors. The Board believes that the management speaks for Unisys. It is the sense of the Board that no outside director should respond to media inquiries regarding Unisys, and all such inquiries should be referred to management for appropriate handling. While individual Board members may, from time to time, meet or otherwise communicate with various constituencies that are involved with Unisys, it is expected that Board members would do this with the prior knowledge of management and, in most instances, at the request of management and that all such communications will be strictly in accordance with the confidentiality policy for directors.
STOCKHOLDER RIGHTS PLAN
The Company's stockholder rights plan expired on March 17, 2006, and it has no present intention to adopt a new one. Subject to its continuing fiduciary duties, which may dictate otherwise depending on the circumstances, the Board shall submit the adoption of any future rights plan to a vote of the stockholders. Any stockholder rights plan adopted or extended without stockholder approval shall be approved by a majority of the independent members of the Board and shall be in response to specific, articulable circumstances that are deemed to warrant such action without the delay that might result from seeking prior stockholder approval. If the Board adopts or extends a rights plan without prior stockholder approval, the Board shall, within one year, either submit the plan to a vote of the stockholders or redeem the plan or cause it to expire.