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The NYSE rules require that Tenneco's Board of Directors be composed of a
majority of members that are independent directors. In addition, all members of
the Audit and Compensation/Nominating/Governance Committees must meet the NYSE
standards of independence and Audit Committee members must meet the additional
standards of independence under applicable SEC rules.
The Tenneco Board of Directors currently comprises nine members, eight of whom
are not officers of the Company (the "Outside Directors") and one of whom is an
officer of the Company (the "Inside Directors"). The Board of Directors
believes that the Company's ratio of Outside Directors to Inside Directors
represents a commitment to the independence of the Board and a focus on matters
of importance to its stockholders.
The Board of Directors has determined that all eight of the Outside Directors
are "independent" as that term is defined under the listing standards of the
NYSE. The Board of Directors has also determined that all members of the Audit
Committee meet the additional "independence" requirements of the applicable SEC
rules regarding audit committee membership.
As part of its analysis, the Board determined that none of the Outside
Directors has a direct or indirect material relationship with the Company.
Under written guidelines adopted by the Board, the following commercial or
charitable relationships are not considered to be material relationships that
would impair a director's independence: (i) the director is an executive
officer of another company that (directly or indirectly through its
subsidiaries or affiliates) does business with the Company and the annual sales
to, or purchases from, the Company are less than 1% of the annual consolidated
revenues of both the Company and the other company he or she serves as an
executive officer; (ii) the director is an executive officer of another company
that (directly or indirectly through its subsidiaries or affiliates) is
indebted to the Company, or to which the Company is indebted, and the total
amount of either company's consolidated indebtedness to the other is less than
1% of the total consolidated assets of the indebted company; (iii) the director
is an executive officer of another company in which the Company owns a common
equity interest, and the amount of the Company's interest is less than 5% of
the total voting power of the other company; or (iv) 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 1% of
that organization's total annual charitable receipts. The Outside Directors do
not have relationships with the Company that are not within these guidelines.
Each of the Company's standing Board committees consists entirely of Outside
Directors, and thus includes only independent directors.
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