Tenneco Inc. recognizes that sound principles of corporate governance are essential to obtaining and retaining the trust and respect of investors and other persons and groups interested in the company and its activities, including employees, customers, suppliers, communities in which it does business, government officials and the public generally.
The Board of Directors has approved the following Charter of the Compensation/ Nominating/Governance Committee that, together with the company's Corporate Governance Principles and charter of the Executive Compensation Subcommittee, is intended to provide a framework for the governance of the company with respect to the matters involving compensation, director and executive officer selection and succession and general corporate governance.
I. Compensation/Nominating/Governance Committee Designation
There is a committee of the Board of Directors called the Compensation/ Nominating/Governance Committee (the "CNG Committee").
II. CNG Committee Purpose
The purpose of the CNG Committee is to:
- Assist the Board of Directors in discharging the Board of Directors' responsibilities relating to compensation of the company's executives and other employees;
- Review and discuss with management the company's Compensation Discussion and Analysis required to be disclosed by federal securities law and, based on this review and discussion, recommend to the Board of Directors whether the Compensation Discussion and Analysis should be included in the company's annual report on Form 10-K, proxy statement on Schedule 14A or information statement on Schedule 14C;
- Identify individuals qualified to become Board of Directors members, recommend to the Board of Directors the slate of nominees to be recommended by the Board for election at applicable meetings of stockholders and recommend to the Board of Directors the composition of its several committees; and
- Develop and recommend to the Board of Directors, review and, as appropriate, from time to time recommend to the Board of Directors revisions to Corporate Governance Principles applicable to the company.
III. CNG Membership and Procedure
The CNG Committee consists of at least three members, all of whom shall be independent as described below. The Board of Directors appoints the members of the CNG Committee annually, considering the recommendation of the CNG Committee, and further considering the views of the Chairman of the Board and the Chief Executive Officer, as appropriate. The members of the CNG Committee serve until their successors are appointed and qualify. The Board of Directors has the power at any time to change the membership of the CNG Committee and to fill vacancies in it, subject to such new member(s) satisfying the requirements described herein.
Each member of the CNG Committee must be (i) independent for purposes of Section 10C of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder; and (ii) an independent director as determined under the applicable rules of the New York Stock Exchange (NYSE), including the additional independence requirements for members of compensation committees under NYSE Rule 303A.02 (a) (ii). In accordance therewith, in determining the independence of directors for purposes of service on the CNG Committee the CNG Committee and the Board of Directors shall consider all factors specifically relevant to determining whether a director has a relationship to the company which is material to that director's ability to be independent from management in connection with the duties of a compensation committee member including, but not limited to:
- Whether the director receives compensation from any person or entity that would impair his or her ability to make independent judgements about the company's executive compensation; and
- Whether any affiliate relationship a director has with the company, a subsidiary of the company or an affiliate of a subsidiary of the company places him or her under the direct or indirect control of the company or its senior management, or creates a direct relationship between the director and members of the company's senior management, in each case of a nature that would impair his or her ability to make independent judgements about the company's executive compensation.
If a CNG Committee Chair is not designated by the Board of Directors or present, the members of the CNG Committee may designate a Chair by majority vote of the CNG Committee membership.
The CNG Committee holds regular meetings each year as often as the committee deems appropriate. The CNG Committee Chair approves an agenda in advance of each meeting.
Except as expressly provided in this Charter, the by-laws of the company or the Corporate Governance Principles of the company, the CNG Committee may fix its own rules of procedure.
IV. CNG Committee Authority and Responsibilities
In performing its functions, the CNG Committee undertakes those tasks and responsibilities that, in its judgment, would most effectively contribute to and implement the purposes of the CNG Committee. The following functions are some of the common recurring activities of the CNG Committee in carrying out its duties:
- The CNG Committee reviews the company's overall compensation philosophy to ensure that the philosophy appropriately links management's interests with those of stockholders, rewards executives for their contributions, and provides appropriate retention incentives.
- Except as expressly delegated to and performed by the Executive Compensation Subcommittee, the CNG Committee reviews and approves corporate goals and objectives relevant to CEO compensation, evaluates the CEO's performance in light of those goals and objectives and, as a Committee (or, if so directed by the Board, together with the company's other independent directors) determines and approves the CEO's compensation level based on this evaluation.
- Except as expressly delegated to and performed by the Executive Compensation Subcommittee, in determining the long-term incentive component of CEO compensation, the CNG Committee should, as it determines appropriate, consider the company's performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the company's CEO in past years.
- Except as expressly delegated to and performed by the Executive Compensation Subcommittee, the CNG Committee establishes the salary rates and compensation structure for other executive officers of the company and its affiliated companies, subject to the right of the CNG Committee to delegate to the Chief Executive Officer the fixing of compensation below certain levels determined by the CNG Committee, and may periodically examine the compensation structure of the company and its affiliated companies for other employees.
- The CNG Committee has, to the extent permitted by law and the applicable rules of the NYSE and except as expressly delegated to and performed by the Executive Compensation Subcommittee, the authority to:
- Approve, administer, establish, terminate or amend and to otherwise act for and on behalf of the Board of Directors with respect to any employee benefit plan, agreement (including any employee agreement) or other arrangement of the company and its affiliated companies, including both welfare and pension plans (i) pursuant to which any director or executive officer of the Company is a party or participant (other than broad-based plans that are generally available to all salaried employees of the Company and do not discriminate in favor of directors or executive officers); (ii) which by its express terms requires approval of or action by the Board of Directors, including without limitation, any supplemental Benefit Plans, change of control plans, severance plans and/or (iii) any other similar plans that are of a significant magnitude such that the CNG Committee deems that it is desirable and appropriate for its approval to establish, terminate or amend such plans from time to time;
- Administer, establish, terminate or amend and to otherwise act for and on behalf of the Board of Directors with respect to executive and director compensation, incentive compensation, deferred compensation and stock option and restricted stock plans and programs of the company and its affiliated companies (hereinafter referred to as the "Compensation Plans"), including other similar compensation plans the CNG Committee deems desirable to establish, terminate or amend from time to time, such authority hereby granted to the CNG Committee to include, without limitation, the power and authority to authorize the issuance of stock pursuant to such Compensation Plans, in such manner as the CNG Committee will deem best for the interests of the company, in all cases in which specific directions have not been given by the Board.
- Establish, approve and monitor compliance with insider-trading policies, stock ownership policies, clawback policies, anti-hedging policies, anti-pledging policies and other similar policies the CNG Committee deems desirable to establish, terminate or amend from time to time, applicable to any director or executive officer of the Company.
- Except as expressly delegated to and performed by the Executive Compensation Subcommittee, the CNG Committee ensures that qualified firms are advising the company on compensation matters, managing diversity and related matters. The CNG Committee should meet privately in executive session as often as it deems necessary, but at least annually, with any compensation or similar advisers to the company to discuss any matters that the CNG Committee or these advisers believe should be discussed. Matters to be discussed may include, without limitation, matters pertaining to the Chief Executive Officer's compensation.
- The CNG Committee reviews and approves the list of a peer group of companies to which the company compares itself for compensation purposes, either alone or together with the Executive Compensation Subcommittee.
- The CNG Committee reviews the compensation policies and practices of the company for its employees to determine whether these policies or practices are reasonably likely to have a material adverse effect on the company.
- The CNG Committee reviews and recommends to the full Board of Directors any company proposal regarding the advisory vote on executive compensation and any company proposal regarding the frequency of the advisory vote on executive compensation.
- Subject to the qualification requirements for the Board of Directors set forth in the company's Corporate Governance Principles, the CNG Committee is responsible for reviewing and proposing to the Board of Directors additional qualifications for directors as determined to be necessary or appropriate, taking into account the desirable balance of experience, qualifications and expertise among members of the Board of Directors.
- The CNG Committee reviews possible candidates for membership on the Board, and assists in attracting qualified candidates to fill vacant or newly created directorships.
- It is the responsibility of the CNG Committee to review and recommend to the Board of Directors a management slate of directors to be proposed for election at the annual stockholders' meeting and included in the proxy statement for such meeting, as well as to review and recommend to the Board of Directors any directors to fill vacancies that may exist on the Board of Directors.
- It is the responsibility of the CNG Committee to review the function and composition of the several committees of the Board of Directors and to recommend to the Board of Directors qualified persons for membership on such committees.
- It is the responsibility of the CNG Committee to review the qualifications of candidates for election as officers of the company and to recommend those candidates for election by the Board of Directors at least annually.
- It is the responsibility of the CNG Committee to review annually the availability of qualified replacements for key executive positions in the company and its subsidiaries and the nature and adequacy of the company's plans for developing and providing necessary replacements both on a current and on a long-term basis, so as to ensure continuity and orderly succession of capable and qualified management for the company.
- The CNG Committee oversees the evaluation of the executive management of the company and makes recommendations to the Board of Directors as it determines appropriate.
- The CNG Committee reviews and reassesses at least annually the adequacy of the Corporate Governance Principles of the company and recommends any proposed changes to the Board of Directors for approval.
- The CNG Committee serves in an advisory capacity to the Board of Directors and Chairman of the Board on matters of organizational and governance structure of the company and the conduct of the Board of Directors.
- The CNG Committee receives comments from all directors and, as directed by the Board of Directors, reports orally annually to the Board of Directors with an assessment of the Board of Director's performance, to be discussed with the full Board of Directors following the end of each fiscal year.
- It is the responsibility of the CNG Committee to maintain minutes of its meetings and report, through its Chair, to the Board of Directors on significant results of each meeting.
- The CNG Committee may, in its sole discretion, retain (or terminate) or obtain the advice of any compensation consultant, independent legal consel or other adviser. The CNG Committee shall be directly responsible for the appointment, compensation and oversight of the work of any adviser retained by the CNG Committee.
- Except as noted in clause (c) below, the CNG Committee may select a compensation consultant, independent legal compensation consel or other compensation adviser (each, a "compensation adviser") only after taking into consideration all factors relevant to such compensation adviser's independence from management, including:
- The provision of other services to the company by the person that employs the compensation adviser;
- The amount of fees received from the company by the person that employs the compensation adviser, as a percentage of the total revenue of the person that employs the compensation adviser.
- The policies and procedures of the person that employs the compensation adviser that are designed to prevent conflicts of interest.
- Any business or personal relationship of the compensation adviser with a member of the committee.
- Any stock of the company owned by the compensation adviser; and
- Any business or personal relationship of the compensation adviser (or the personemploying the compensation adviser) with an executive officer of the company.
- The assessment described in clause (b) above need not be considered with respect to (i) in-house legal counsel or (ii) any compensation adviser whose role is limited to either consulting on any broad-based plan that does not discriminate (in scope, terms or operation) in favor of executive officers or directors of the company and is available generally to all salaried employees; or providing information that either is not customized for a particular company or is customized based on parameters that are not developed by the compensation adviser, and about which such compensation adviser does not provide advice.
- Nothing herein requires the CNG Committee to implement or act consistently with the advice or recommendations of any adviser or affects the ability or obligation of the CNG Committee to exercise its own judgment in fulfillment of its duties. Nothing herein requires any compensation adviser to be independent, only that the CNG Committee consider the independence factors described in clause (b) above before selecting or receiving advice from any compensation adviser. The CNG Committee may select or receive advice from any compensation adviser it prefers including ones that are not independent, after considering the independence factors described in clause (b) above.
- The company shall provide appropriate funding, as determined by the CNG Committee, for payment of reasonable compensation to any adviser retained by the CNG Committee.
- It is the responsibility of the CNG Committee to review and reassess the adequacy of this Charter at least annually and to recommend any proposed changes to the Board of Directors for approval. It is the responsibility of the CNG Committee to cause the Charter to be published in accordance with applicable NYSE regulations.
- It is the responsibility of the CNG Committee to annually review its own performance.
- The CNG Committee may form and delegate authority to subcommittees when appropriate and to the extent permitted by applicable law and the rules of the NYSE. Once a subcommittee of this Committee is so formed, the CNG Committee may exercise any authority in its discretion that is granted to such subcommittee.
- In performing its duties, the CNG Committee is not providing any expert, professional or special assurances as to the matters addressed herein. CNG Committee members are not deemed to have accepted a duty of care greater than the duty of other directors. Nothing contained in this Charter is intended to alter the operation of the "business judgment rule" as interpreted under Delaware law.