SEAGATE TECHNOLOGY PLC: Corporate Governance Guidelines
The Board of Directors (the “Board”) of Seagate Technology plc (the “Company”) has adopted the following guidelines to clarify how it exercises its responsibilities. Additionally, these guidelines demonstrate that the Board has the necessary authority and practices in place to review and evaluate the Company’s business operations as appropriate and to make decisions that are independent of the Company’s management.
These guidelines, along with the charters of the committees of the Board, describe the Board’s framework for the governance of the Company. The Board will continue to assess the appropriateness and efficacy of these guidelines, which are subject to change as the Board deems appropriate in the best interests of the Company or as required by applicable laws and regulations. The Nominating and Corporate Governance Committee reviews these guidelines periodically and recommends changes to the Board as appropriate.
Jump to the following sections:
Board Composition/Membership Criteria
. Directors with Significant Job Changes
Committees of the Board
Board and Committee Operations
Board Compensation Programme
I. Board Overview The Board, elected by shareholders, directs and oversees the management of the business and affairs of the Company in a manner consistent with the best interests of the Company and its shareholders. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved for the shareholders. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company. Both the Board and management recognise that the long–term interests of the Company are advanced by addressing responsibly the concerns of other constituencies, including employees, customers, suppliers and the communities in which the Company operates.
II. Board Composition/Membership Criteria The following describes how the Company determines the size of its Board and membership criteria.
- A. Board Size and Independence Consistent with the Company’s Articles of Association, the number of Directors which constitutes the whole Board may be not less than two, nor, subject to the shareholders increasing or reducing the upper limit, more than 12, with the actual number determined by resolution of the Board. The Company’s shareholders elect each of the directors annually for a one–year term. Directors may also be appointed by the Board between shareholder meetings.
The Board believes that as a matter of good corporate governance, and consistent with applicable laws, rules and regulations, the Board should consist of at least a majority of independent directors, and in no event will the Board consist of less than a majority of independent directors. A director qualifies as independent for purposes of service on the Board and its committees if the Board has determined that the director meets the definition of “independent director” in the listing standards of the NASDAQ Marketplace Rules (“NASDAQ”). The NASDAQ independence definition includes a series of objective tests, such as, the director is not an employee of the Company or any parent or subsidiary of the Company, and has not engaged in various types of business dealings with the Company between shareholder meetings. The Board is also responsible for determining affirmatively, for each independent director, that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgement in carrying out the responsibilities of a director.
B. Board Membership Criteria The Nominating and Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board. The Nominating and Governance Committee will consider candidates’ professional experience, recognised achievement in his or her respective field and the willingness to make the required commitment of time and effort. Each director candidate should possess good judgement, strength of character and an independent mind. Each director must also possess a reputation for integrity and personal and professional ethics. The Board has not established term limits. While term limits offer some advantages, the Board believes that any benefit is outweighed by the disadvantage of losing experienced directors who have developed valuable insight into the Company, its operations, strategies, plans and potential. As an alternative to term limits, the Nominating and Corporate Governance Committee reviews the qualifications and contributions of directors in considering whether they should be nominated for re–election to the Board and makes recommendations to the Board regarding whether they should stand for re–election by the shareholders. Shareholders may also nominate directors for election at the Company’s annual general meeting, and the Nominating and Governance Committee will consider these nominations. In addition, under Irish law, shareholders holding not less than 10% of the voting rights may call a shareholder meeting for the purpose of, among other things, considering director nominations.
C. Board Leadership
Chairman of the Board The Board believes that the offices of Chairman and CEO should be held by separate persons, to aid in the oversight of management, unless it is in the best interests of the Company that the same person holds both offices.
Lead Independent Director If the Chairman of the Board is not an independent director, the Nominating and Corporate Governance Committee shall nominate, and the independent directors shall elect, a Lead Independent Director from the Company’s independent directors at their first executive session after each annual meeting of the shareholders. The Lead Independent Director coordinates the activities of the other non-management directors, presides over meetings of the Board at which the Chairman of the Board is not present and each executive session, serves as liaison between the Chairman of the Board and the independent directors, approves meeting schedules and agendas for the Board, has authority to call meetings of the independent directors, and is available for consultation and direct communication if requested by major shareholders. Service as Lead Independent Director will rotate as the Board deems appropriate.
D. Service by Directors on other Boards and other Audit Committees.
Other Public Company Boards: Directors are required to inform the Chairman of the Nominating and Corporate Governance Committee prior to joining the board of another public company, so that any potential conflicts or other issues are carefully considered. Directors are limited to service on four (4) public company boards, in addition to service on the Company’s Board, unless specific approval is obtained from the Board of Directors. Additionally, no member of the Audit Committee may serve on the audit committee of more than three (3) public companies (including the Company) unless the Board of Directors determines that this simultaneous service would not impair the ability of the member to effectively serve on the Committee. The Nominating and Corporate Governance Committee will consider specifically the impact on a director’s ability to discharge his or her duties to the Company and advise the Board. The Company expects all directors to devote sufficient time and effort to their duties as a Company Board member. This factor is considered in the individual director evaluation process.
Service by the CEO on other Boards: Our CEO is limited to service on one public company board, in addition to service on the Company’s Board. The CEO is required to advise the Nominating and Corporate Governance Committee prior to accepting an invitation to serve on the board of another public company. The CEO may not serve on the board of a company at which a director of the Company serves as an officer.
III. Board Responsibilities Shareholders elect the Board to oversee management and to see that the interests of the shareholders are being served. Specifically, the Board performs several valuable functions described below.
- A. Review and Approve the Company’s Strategic Direction, Annual Operating Plan and Major Corporate Actions The Board and the senior management team discuss and, where appropriate, the Board approves major long-term strategies, financial and other objectives and plans, and major corporate actions. The Board reviews and approves an operating plan for the Company and is also expected to review significant political, regulatory and economic trends and developments that may have an impact on the Company.
- B. Monitor the Company’s Performance The Board monitors the Company’s performance against its operating plan and against the performance of its peers. On a periodic basis, the Board reviews the Company’s financial performance with a particular focus on peer and competitive comparisons. These reviews include the views of management, as well as those of key investors and securities analysts.
C. Evaluate the Performance of the Company and the CEO The CEO meets with the Nominating and Corporate Governance Committee periodically to discuss the overall performance and direction of the Company.
The non-managerial directors periodically meet separately to evaluate the Company’s direction and performance and to discuss the individual performance and compensation of the CEO, following an evaluation by the Compensation Committee. The results of this evaluation are provided to the CEO.
D. Review and Approve CEO and Senior Management Succession Planning The Board understands the importance of orderly succession planning within the Company. In an executive session with the full board, the Compensation Committee performs an annual assessment of the CEO’s and senior management's succession planning and the development plans in place to prepare potential successors. The Board also evaluates the contingency plans for interim succession for the CEO and CFO in the event of an unexpected occurrence.
E. Advise and Counsel Management Advice and counsel to management occurs both through formal Board and Board committee meetings and through informal, individual directors’ contacts with the CEO and other members of the management team at various levels throughout the Company.
F. Oversee Ethical and Legal Compliance The Board, directly and through its Committees, oversees ethical and legal compliance by seeing that the processes are in place for maintaining integrity throughout the Company – including the integrity of the financial statements and the integrity of compliance with laws and ethics and with the Company’s Code of Ethics.
G. Loyalty and Ethics In their roles as directors, all directors owe fiduciary duties to the Company including a duty to act in the best interest of the Company. The Company has adopted a Code of Ethics and directors are expected to adhere to the Code of Ethics.
H. Oversee Risk Management The Board, directly and through its Committees, oversees the Company’s enterprise risk management processes and programmes, including those for financial and operational risks, assesses risks facing the Company, reviews strategies for risk mitigation and reviews, at biannually, the steps the Company’s management is taking or has taken to monitor and control risk within risk appetite guidelines.
IV. Directors with Significant Job Changes Any director who retires from his or her present employment, or who materially changes his or her position, must submit an offer of resignation from the Board to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee would then evaluate whether the individual continues to satisfy the Board’s membership criteria in light of his or her new occupational status, and make a recommendation to the Board for its decision as to whether or not to accept the director’s resignation.
V. Committees of the BoardThe Board oversees all decisions of major importance to the Company. To assist it in governing issues in greater depth, the Board has established four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Finance Committee. Members of the Audit, Compensation, Nominating and Corporate Governance and Finance Committees must meet the independence standards set forth in the NASDAQ Marketplace Rules, as determined by the Board. Additionally, members of the Audit Committee must meet the heightened standards of independence applicable to audit committee members under SEC and NASDAQ rules. Each committee reports to the Board. The Board may add or disband additional committees from time to time, as it deems advisable, for purposes of fulfilling its primary responsibilities.
The Board also considers periodic rotation of committee members and chairs, taking into account the benefits of continuity and experience, and applicable legal, regulatory and stock exchange listing requirements. A director may serve on more than one committee.
Additionally, each committee periodically conducts a review and evaluation of the performance of such committee and its members, including the committee’s compliance with its charter. The Company publishes the committee charters on its website.
VI. Board and Committee Operations
- A. Board Meetings and Director Attendance The Company’s Board meets at least four times per year in regularly scheduled meetings, but meets more often if necessary. The Chairman of the Board presides over meetings of the Board, if present, or in his/her absence, the role is taken on by the Lead Independent Director. Each director is expected to attend both scheduled and special meetings, except if unusual circumstances make attendance impractical. Directors are also expected to make an effort to attend the annual general meeting.
B. Strategic Planning Periodically, the Board conducts a meeting with senior management to review the Company’s strategic plan, goals and objectives.
C. Board Meeting Agendas The Chairman establishes a preliminary agenda for each Board meeting. Any director may request items to be included on the agenda. The Lead Independent Director approves the final draft agenda prior to each quarterly Board meeting.
While the Board believes that a carefully planned agenda is important for effective Board meetings, the agenda is flexible enough to accommodate new developments. Ample time is scheduled at each Board meeting for full discussion of important matters. Agendas, in addition to including financial and operating reports, also include other reports, such as current issues that could affect the Company’s short–term and/or long–term strategy and business, critical measures and comparisons and other types of presentations that could enhance a director’s perspective on various matters. Management presentations are scheduled to permit a substantial portion of Board meeting time to be available for discussion and comments.
D. Executive Sessions To promote free and open discussion and communication among the independent directors, the Board reserves time at each regular Board meeting for the independent directors to meet in executive sessions without management present. If the Chairman of the Board is not an independent director, the Lead Independent Director chairs executive sessions.
E. Information Flow to the Board Board members receive agendas and other information in advance of Board meetings so that they have an opportunity to prepare for discussion of the items at the meeting, unless timing considerations or the sensitive nature of an issue require that materials be presented only at the Board meeting. Each director is expected to review this information in advance of the meeting to facilitate the efficient use of meeting time. In preparing this information, management strives to ensure that the materials distributed are as concise as possible yet give directors sufficient information to make informed decisions. Management will make appropriate personnel available to answer any questions a director may have about any aspect of the Company’s business.
Information provided to the Board comes from a variety of sources, including management reports, a comparison of performance to operating and financial plans, reports on the Company’s stock performance and operations prepared by third parties, and articles from various business publications.
As appropriate, significant items requiring Board approval may be reviewed in one or more meetings and voted on in subsequent meetings, with the intervening time being used for clarification and discussion of relevant issues.
F. Regular Attendance of Non-Directors at Board Meetings Company senior executives report to the Board on their respective areas of responsibility as requested by the Board. At times, other Company personnel are asked to make specific presentations to the Board.
G. New Director Orientation The Company’s new directors are required to attend an orientation session, which includes receiving and reviewing extensive materials relative to the Company's business and operations including, but not limited to, financial statements and corporate structure and governance. Incumbent directors are invited to attend such orientation meetings. To familiarise themselves with the Company’s manufacturing processes, new directors are encouraged to visit a Company design centre and manufacturing facility, as reasonably practicable and within a reasonable amount of time after joining the Board. The Company reimburses new director orientation travel expenses.
H. Ongoing Director Education The Company is supportive of its directors attending outside director education programmes, and will, upon authorisation from the Chairman of the Nominating and Corporate Governance Committee, reimburse directors for their reasonable expenses relating to attendance at appropriate outside director education programmes.
I. Evaluations The Board, through the Nominating and Corporate Governance Committee and the Compensation Committee, oversees the process for the evaluation of the Board and the CEO on an annual basis. Each Board committee conducts a periodic self-evaluation, and the responses are reviewed with the Nominating and Corporate Governance Committee and the Board. The Nominating and Corporate Governance Committee also periodically considers the mix of skills and experience that directors bring to the Board and assesses whether the Board has the necessary tools to perform its oversight function effectively.
J. Other Committee Qualifications The qualifications of individual committee members are reviewed annually for compliance with the regulatory requirements mandated for the members of each particular committee. The Nominating and Corporate Governance Committee recommends the members of the committees to the Board.
K. Committee Agendas The committee secretary, in consultation with the committee chairman, prepares committee agendas. Annual recurring events for each committee are circulated each year and used as preliminary agenda items. All committee members are free to include additional items on an agenda.
L. Outside Advisors and Access to Management The Board and its committees have the right, at any time, to retain outside financial, legal, accounting or other advisers or consultants at the Company’s expense to assist in their duties to the Company and its shareholders. Board members also have free access to all members of management and employees of the Company, as necessary and appropriate.
M. Communications with Directors The Annual General Meeting provides an annual opportunity for the shareholders to ask questions of, or otherwise communicate directly with, members of the Board on matters relevant to the Company. In addition, shareholders and other interested parties may communicate with any or all of our directors, including the Lead Independent Director and/or the non–managerial or independent directors as a group, by transmitting correspondence by mail or by facsimile as follows:
Board of Directors (or named Director)
c/o Corporate Secretary
Seagate Technology PLC
38/39 Fitzwilliam Square
Dublin 2 Ireland
Fax: + 353 (0) 1 661 2040
The Corporate Secretary shall transmit communications as soon as practicable to the identified director addressee(s), unless there are legal or other considerations that mitigate against further transmission of the communication, as determined by the Corporate Secretary. In that regard, certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded by the Corporate Secretary, such as:
- business solicitations or advertisements;
- junk mail and mass mailings;
- new product suggestions;
- product complaints;
- product enquiries;
- cvs and other forms of job enquiries;
- spam; and
In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that the Board or individual directors so addressed are advised of any communication withheld for legal or other considerations as soon as practicable.
N. Reporting of Concerns Regarding Accounting, Internal Controls or Auditing Matters The Audit Committee has procedures in place to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by anyone of concerns regarding questionable accounting or auditing matters. These procedures, including the contact information for the Ethics Helpline may be found on the Company’s website at http://www.seagate.com/about/investors/, under the “Ethics Helpline” tab.
VII. Board Compensation Programme The Company attempts to maintain a fair and straightforward compensation programme at Board level, which is designed to be competitive with the compensation programmes of comparable companies.
As amended by the Board of Directors on 26 April 2012.
- A. Director Compensation
The Company’s Compensation Committee recommends and administers the policies that govern the level and form of director compensation, with oversight from the independent directors.
The Company’s Compensation Committee believes that a substantial portion of the total director compensation package should be in the form of Company ordinary shares and share equivalents, in order to better align the interests of the Company's directors with the long–term interests of its shareholders.
B. Share Ownership
The Board encourages directors to own Company shares. The Company may establish a policy requiring ownership by directors of a specific number of shares.