As of: February 2016
The Federal Reserve System is the primary federal banking agency responsible for regulating State Street and its subsidiaries (together, the “Company”), including State Street Bank and Trust Company (the “Bank”). State Street's U.S. banking subsidiaries are also subject to regulation by the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Company and the Comptroller of the Currency. The Company is a global company and is subject to the regulatory authorities of those countries in which a branch or subsidiary of the Bank, or subsidiary of State Street, is located or conducts business.
State Street is a public company and its common stock is registered with the U.S. Securities and Exchange Commission and is listed on the New York Stock Exchange (ticker, STT). State Street maintains a website at www.statestreet.com containing information about our corporate governance, including printable versions of our Board Committee Charters, these Guidelines, our Standards of Conduct and our Code of Ethics for Senior Financial Officers.
- overseeing the business and financial strategies of the Company; evaluating, providing counsel on and authorizing major corporate actions; and monitoring risk management
- promoting honest and ethical conduct and sound corporate governance, full, fair and timely public disclosure, and avoidance of conflicts of interest;
- approving the financial statements and the program for compliance with law;
- evaluating the performance of the Chief Executive Officer (“CEO”) and overseeing CEO succession planning;
- approving the incentive compensation arrangements for senior executives; and
- providing advice on the selection of senior management and overseeing management development.
It is the policy of the Board that any director who changes his or her principal business affiliation, shall offer to tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall evaluate the offer, and shall recommend to the Board whether to accept the offer. This mere offer to tender a director’s resignation shall not create a presumption that the Nominating and Corporate Governance Committee shall recommend the acceptance of the resignation.
Directors are required to advise the chair of the Nominating and Corporate Governance Committee in advance of accepting any invitation to serve on another public company board and to provide sufficient opportunity and information to determine if the director who proposes to accept a new directorship remains independent under the Guidelines. Service on boards and/or committees of other organizations shall comply with the Company’s conflict of interest policies. Directors may serve on no more than four other public company boards in addition to service on the Board.
The Board has not established term limits. While term limits could help ensure 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 will review each director’s continuation on the Board and committee membership every year. This will allow each director the opportunity to confirm his or her desire to continue as a member of the Board and of any committees. This review allows the Committee to assess the continuing contributions of each director and, if appropriate, to recommend that a particular director step down from the Board. Any director who reaches the age of 75 while serving as a director will retire from the Board effective no later than at the end of his or her then current term.
Any incumbent director again nominated for election, other than at a Contested Election Meeting, who does not receive more votes cast “for” his or her election than votes cast “against” his or her election, shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall evaluate the tendered resignation, and shall recommend to the Board action to be taken with respect to such tendered resignation. The Board (with the subject nominee not voting) shall vote to take such action as it deems in its discretion appropriate with respect to such resignation, taking into account the best interests of the Company and its shareholders. No such tendered resignation shall be deemed effective unless and until it is accepted by action of the Board.
- A director will not be independent if he or she does not satisfy any of the bright-line tests set forth in Section 303A.02(b) of the NYSE Listed Company Manual.
- The following commercial or charitable relationships will not be considered to be material relationships that would impair a director's independence: (i) if the State Street director or a member of such director’s immediate family (as defined in Section 303A of the NYSE Listed Company Manual) is a director or owner of less than a 10% ownership interest of another company (including a tax-exempt organization) that does business with the Company; provided such State Street director is not involved in negotiating the transaction; (ii) if the State Street director or a member of such director’s immediate family is a current employee, consultant or executive officer of another company (including a tax-exempt organization) that does business with the Company; provided that, (x) where the State Street director is an employee, consultant or executive officer of the other company, neither the director nor any of his or her immediate family members receives any special benefits as a result of the transaction and (y) the annual payments to, or payments from, the Company from, or to, the other company, for property or services in any completed fiscal year in the last three fiscal years are equal to or less than the greater of $1 million, or two percent of the consolidated gross annual revenues of the other company during the last completed fiscal year of the other company; and (iii) if the State Street director or member of such director’s immediate family is a director, trustee, employee or executive officer of a tax-exempt organization that receives discretionary charitable contributions from the Company; provided such State Street director and his or her Immediate Family Members do not receive any special benefits as a result of the transaction; and further provided that, where the director or immediate family member is an executive officer of the tax-exempt organization, the amount of discretionary charitable contributions in any completed fiscal year in the last three fiscal years are not more than the greater of $1 million, or two percent of that organization's consolidated gross revenues in the last completed fiscal year of that organization (in applying this test, State Street’s automatic matching of employee charitable contributions to a charitable organization will not be included in the amount of State Street’s discretionary contributions).
- The following commercial relationships will not be considered to be a material relationship that would impair a director’s independence: lending relationships, deposit relationships or other banking relationships (such as depository, transfer, registrar, indenture trustee, trusts and estates, private banking, investment management, custodial, securities brokerage, cash management and similar services) between State Street and its subsidiaries, on the one hand, and a company with which the director or such director’s immediate family member is affiliated by reason of being a director, employee, consultant, executive officer, general partner or an equityholder thereof, on the other, provided that: (i) such relationships are in the ordinary course of the Company’s business and are on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons; (ii) with respect to a loan by the Company to such company or its subsidiaries, such loan has been made in compliance with applicable law, including Regulation O of the Board of Governors of the Federal Reserve and Section 13(k) of the Securities Exchange Act of 1934, such loan did not involve more than the normal risk of collectability or present other unfavorable features, and no event of default has occurred under the loan; and (iii) payments to the Company for property or services (including fees and interest on loans but not including principal repayments) from such company does not exceed the limit provided in (b)(ii) above.
If a relationship is described by the categorical guidelines contained in both paragraphs b and c above, it will not be considered to be a material relationship that would impair a director’s independence if it satisfies all of the applicable requirements of either paragraph b or c. For relationships not covered by the categorical guidelines (either because they involve a different type of relationship or a different dollar amount), the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be made by the directors who satisfy the independence guidelines set forth above. The Company will explain in the next proxy statement the basis for any Board determination that a relationship was immaterial despite the fact that it did not meet the categorical guidelines of immateriality set forth above.
The independent directors shall annually, at the first executive session following the annual meeting of shareholders, elect an independent director to be the Lead Director for the year. There shall be no limit on the number of terms that one individual may serve as Lead Director. The Lead Director shall: serve as a liaison between the Chairman, the CEO (if a separate individual from the Chairman) and the independent directors; preside at all meetings of the Board at which the Chairman is not present, including at executive sessions of non-management and independent directors; establish the agenda for the executive sessions; consult with the Chairman and the CEO (if individual is separate from the Chairman) as to, and approve, the agendas for Board meetings, consult on the information sent to the Board and the schedule of Board meetings to help assure that there is sufficient time for discussion of all agenda items; receive communications from interested parties regarding concerns about State Street and otherwise be available, where appropriate, for direct communications with major shareholders; and perform such other functions as may be designated from time to time by the independent directors. The Lead Director is authorized to call meetings of the non-management or independent directors and shall have the authority from time to time to designate an independent Board member to act on behalf of the Lead Director if absent from the meeting or otherwise unable to perform his or her responsibilities. The name of the then-current Lead Director will be disclosed in the annual proxy statement.
The Board believes that management speaks for the Company. Individual Board members may, from time to time, meet or otherwise communicate with various constituencies that are involved with the Company. In particular, as noted above, the Lead Director is available, where appropriate, for direct engagement with major shareholders. However, it is expected that the Lead Director or other Board members would do this, absent unusual circumstances or as contemplated by the committee charters, with the knowledge of management.
The Board will also have a Risk Committee, an Executive Committee and Technology Committee, each of which may include directors who are not considered independent, including directors who also serve as executive officers of State Street; although, the membership of the Risk Committee shall comply with the applicable rules of the Federal Reserve System. From time to time Committee members will be appointed by the Board upon recommendation of the Nominating and Corporate Governance Committee with consideration of the desires of individual directors.
Each of the committees named above will have its own charter. The charters will set forth the purposes and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board.
The Executive Committee of the Board may exercise all of the powers of the Board with limitations as noted in the committee charter, By-laws or as specifically limited by the Board from time to time.
The Board may, from time to time, establish or maintain additional committees, as it deems necessary or appropriate.
The Board welcomes attendance at each Board meeting, other than during an executive session, of senior management as may be invited by the CEO of the Company.
The Board and each committee, whether or not specifically provided by charter or by the Board, has the power to independently retain outside legal, financial, accounting (consistent with any applicable audit committee policies) or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance. The Company will provide appropriate funding, as determined by the Board or applicable committee, for the payment of (i) compensation of any such outside advisors, and (ii) ordinary administrative expenses of the Board and its committees necessary or appropriate in carrying out its duties.
As provided in its charter, the Nominating and Governance Committee will periodically report to the Board on succession planning. The Board will work with the committee, as specified, to evaluate potential successors to the CEO, including in the event of an emergency. The CEO should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
- Shareholders have approved the adoption of the plan; or
- The Board, including at least a majority of the independent directors, in the exercise of its fiduciary responsibilities, determines that it is in the best interests of State Street’s shareholders under the circumstances to adopt a plan without the delay in adoption that would result from seeking shareholder approval; provided that, in such case, the Board will put the plan to a shareholder ratification vote within 12 months of its adoption or the plan will expire. If the plan is put to a shareholder vote by the Board and ratification of the plan is not approved by a majority of the votes cast on the issue, the plan will be terminated immediately after the vote has been certified by the inspector of elections.