It is the policy of the Board of Directors of Tenneco Inc. (the "Company") that all Interested Transactions with Related Persons (each as defined in this Policy) will be subject to the procedures set forth below.
An "Interested Transaction" is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved will or may reasonably be expected to exceed $120,000 in any calendar year, (2) the Company or its subsidiaries or affiliates is a participant, and (3) any Related Person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity).
A "Related Person" is any (1) director, nominee for director or executive officer of the Company and any Immediate Family Member of such person, and (2) any holder of 5% or more of any class of outstanding equity securities of the Company and any Immediate Family Member of such person.
"Immediate Family Member" means (a) any child, stepchild, parent, stepparent, spouse, sibling, mother in law, father in law, son in law, daughter in law, brother in law or sister in law of the person in question and (b) any person (other than a tenant or employee) sharing the household of the person in question.
As a general matter, prior to entering into Interested Transactions, the Audit Committee (the "Committee") will review the material facts of all Interested Transactions that require the Committee's approval and either approve or disapprove of the entry into the Interested Transaction, subject to the exceptions described below.
If advance Committee approval of an Interested Transaction is not feasible or obtained:
- If the transaction is pending or ongoing, it will be submitted to the Committee promptly, and the Committee will consider the transaction and evaluate all options, including but not limited to approval, ratification, amendment or termination of the Interested Transaction; and
- If the transaction is completed, the Committee will consider the transaction to determine if ratification or rescission of the transaction and/or any further action is appropriate, and will request that the General Counsel evaluate the Company’s controls and procedures to ascertain whether any changes to these procedures are recommended.
In determining whether to approve, disapprove or ratify an Interested Transaction, the Committee will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person's interest in the transaction.
The Committee has determined that each of the Interested Transactions described below in "Standing Pre-Approval for Certain Interested Transactions" shall be deemed to be pre-approved by the Committee under the terms of this policy. In addition, the Board of Directors has delegated to the Chair of the Committee the authority to approve, disapprove or ratify (as applicable) any Interested Transaction with a Related Person in which the aggregate amount involved is expected to be less than $1,000,000.
No director will participate in any discussion or approval of an Interested Transaction for which he or she is a Related Person, except that the director will provide all material information concerning the Interested Transaction to the Committee.
If an Interested Transaction will be ongoing, the Committee may establish guidelines for the Company's management to follow in its ongoing dealings with the Related Person. Thereafter, the Committee, on at least an annual basis, shall review and assess ongoing relationships with the Related Person to see that the Company is in compliance with the Committee's guidelines and whether the Interested Transaction should continue.
Standing Pre-Approval for Certain Interested Transactions
The Committee has determined that each of the following Interested Transactions shall be deemed to be pre-approved by the Committee, even if the aggregate amount involved will exceed $120,000:
- Employment of executive officers. Any employment by the Company of an executive officer of the Company if:
- the related compensation is required to be reported in the Company’s proxy statement under Item 402 of Regulation S-K (generally applicable to “named executive officers”); or
- the executive officer is not an immediate family member of another executive officer or director of the Company, the related compensation would be reported in the Company’s proxy statement under Item 402 of Regulation S-K if the executive officer was a “named executive officer”, and the Compensation Committee (or any subcommittee thereof) approved (or recommended that the Board of Directors approve) such compensation;
- Director compensation. Any compensation paid to a director if the compensation is required to be reported in the Company’s proxy statement under Item 402 of Regulation S-K;
- Certain transactions with other companies. A transaction with another company (the “Other Company”) at which a Related Person’s only relationship is as an employee, director or beneficial owner of less than 10% of that Other Company’s shares, if:
- the transaction involves the sale or purchase or goods or services and the annual sales to, or purchases from, the Company (or its subsidiaries or affiliates) are less than 1% of the annual consolidated revenue of both the Company and the Other Company, and
- the transaction involves lending or borrowing 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;
- Certain Company charitable contributions. Any charitable contribution, grant or endowment to a charitable organization, foundation or university at which a Related Person’s only relationship is as an employee, director or trustee, if the aggregate amount involved does not exceed 1% of the charitable organization’s total annual receipts, even if such charitable contribution, grant or endowment would not require approval under Item 2 above;
- Transactions where all shareholders receive proportional benefits. Any transaction where the Related Person’s interest arises solely from the ownership of the Company’s common stock and all holders of the Company’s common stock received the same benefit on a pro rata basis (e.g., dividends);
- Transactions involving competitive bids. Any transaction involving a Related Person where the rates or charges involved are determined by competitive bids;
- Regulated transactions. Any transaction with a Related Person involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; and
- Certain banking-related services. Any transaction with a Related Person involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services.