The Board of Directors (the “Board”) of State Street Corporation (“State Street”; or the “Company”) has
adopted the following Corporate Governance Guidelines to assist the Board in the exercise of its duties and
responsibilities and to serve the best interests of State Street and its shareholders. The Guidelines are
intended to be applied in a manner consistent with applicable laws, the rules of any stock exchange on which
State Street’s common stock is listed and State Street’s Articles of Organization and By-laws, each as
amended and in effect from time to time. The Guidelines are a flexible framework for the conduct of the
Board’s business and are not intended as a set of legally binding obligations. The Board may interpret,
modify or make exceptions to the Guidelines from time to time in its sole discretion and consistent with its
duties and responsibilities to State Street and its shareholders.
State Street is a financial holding company organized under the laws of the Commonwealth of Massachusetts
and is one of the leading specialists in serving sophisticated investors worldwide.
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.
State Street’s directors, in their role of overseeing the sound management of the Company, have the
responsibility to exercise their business judgment in what they believe to be in the best interests of the
Company and the shareholders, taking into account the Company’s regulatory obligations, the interests of the
employees,
customers and the community at large, and in so doing enhancing the long-term value of the Company.
The Board of Directors holds regularly scheduled meetings throughout the year during which the Board and
management
participate in discussions of a broad array of issues, including the Company’s performance, plans and
objectives. The
Board, including through its committees, also attends to specific functions, including
- overseeing the business and financial strategies, objectives and risk appetite of the Company; and
evaluating,
providing counsel on and authorizing major corporate actions;
- promoting honest and ethical business practices and conduct, sound corporate governance, an effective
risk
management framework and system of internal controls, 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 executive officers1
- providing advice on the selection of senior management and overseeing management development and
effectiveness;
- periodically reviewing the alignment of the Company’s culture with the Company’s strategy
and
long-term objectives; and
1 “Executive Officer” when used in these Guidelines refers to the officers who have been
designated
as officers of the Company for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended.
- overseeing the Company’s sustainability and impact obligations, initiatives and strategies. In
doing so,
the Board delegates certain matters to the Examining and Audit, Human Resources, Nominating and
Corporate
Governance, Technology and Operations, and Risk Committees.
The Board and its committees may meet simultaneously with the board and committees of the Bank. In
determining whether
to hold specific meetings, the Boards and the committees of the Corporation and Bank should always act in a
manner that
they determine to comply with policies of State Street and the Bank with respect to conflict of interests
and with
applicable laws and regulations.
The Nominating and Corporate Governance Committee is responsible for reviewing with the Board the requisite
skills
and characteristics of new Board members, as well as the composition and size of the Board as a whole in the
context
of the needs of the full Board. This assessment will include members’ qualification as independent, as well
as
consideration of diverse perspectives and experiences, and other characteristics, such as race/ethnicity,
gender
identity, sexual orientation, disability, military service, and nationality,. Nominees for directorship will
be
recommended to the Board by the Nominating and Corporate Governance Committee which will consider
recommendations
for nominees submitted by shareholders and addressed to the Chairman of the Nominating and Corporate
Governance
Committee, c/o the Office of the Secretary of the Company, One Congress Street, Boston, Massachusetts 02114
(facsimile number 617-664-8209). The Board may appoint directors to fill newly created directorships
resulting from
an increase in the size of the Board or vacancies resulting from death, resignation or disqualification of a
director.
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
important contribution and perspective to the Board as a whole.
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 important contribution and perspective 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 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.
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 also required to notify the Chairman, Lead Director and chair of the Nominating and Corporate
Governance Committee, with a copy to the General Counsel, in advance of accepting an invitation to serve as a
member of the board of directors of any for-profit organization, or to serve in a governmental position, and to provide
sufficient opportunity for State Street to review potential independence issues, evaluate any conflicts of interest or
assess if the new directorship or position would otherwise present concerns regarding the ability, including due to
time commitments, of such director to effectively continue to serve on the Company’s Board. 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; provided, that,
the Chairman and Lead Director may serve on no more than three other public company boards and that in no
event may an executive officer that also serves as a director (including as Chairman) serve on more than one other
public company board. For these purposes, certain types of public company boards (e.g., mutual fund boards) merit
exception from these standards due to the nature and scope of responsibilities commonly associated with service
on those boards.
The Board will have a majority of directors who meet the criteria for independence required by the New York
Stock Exchange (NYSE) corporate governance standards. The Board has adopted the following guidelines to assist it
in determining director independence in accordance with the NYSE standards. To be considered independent, the
Board must determine, after review and recommendation by the Nominating and Corporate Governance Committee, that the
director has no direct or indirect material relationship with the Company. The Board has established the following
categorical guidelines to assist it in determining independence:
-
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 equity holder 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 Chairman, in consultation with the CEO (if a separate individual from Chairman) and the Lead Director, will
establish the agenda for each Board meeting. At the beginning of the year the Chairman will establish a schedule of
agenda subjects to be discussed during the year to the degree this can be foreseen. The Board will participate in at
least one meeting annually with senior management devoted primarily to the Company’s long-term strategic plans. Each
Board member is free to suggest the inclusion of items on a meeting agenda and to raise at any Board meeting subjects
that are not on the agenda for that meeting. Information and data that are important to the Board’s understanding of the
business to be conducted at a Board or committee meeting should generally be distributed to the directors before the
meeting. Board members are expected to dedicate the time and resources sufficient to ensure the diligent performance of
their duties, including advance review of meeting materials for each Board or committee meeting attended and attending
all Board meetings and committee meetings of which the individual is a member except when prevented by good cause.
The non-management directors (directors other than Company officers) will meet in executive session at least quarterly or more frequently as needed. At least once a year or more frequently as needed, an executive session of only independent directors shall meet.
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 (1) the Chairman and the CEO (if a separate individual from the Chairman) and (2) 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;
- participate in, and is expected to attend, meetings of all of the Board’s committees to enable optimal
agenda coordination, insight and consistency across all committees;
- communicate with the CEO (and the Chairman if individual is separate from the CEO) to provide feedback and
implement the decisions and recommendations of the 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 the agendas for Board
meetings (and approve those agendas), as well as 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;
- conduct an annual process for reviewing the CEO’s performance and report the results of the process to the
other independent directors;
- meet at least annually with such members of the Executive Committee and senior management as the Lead Director
shall determine from time to time;
- receive communications from interested parties regarding concerns about State Street and otherwise be available,
where appropriate, for direct communications with stakeholders; 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 stakeholders. 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 have at all times an Examining and Audit Committee, a Human Resources Committee and a Nominating and
Corporate Governance Committee. All of the members of these committees will be independent directors of the Board
and independent under any criteria also applicable to the relevant Board committee, in each case as established by
the SEC and the NYSE.
The Board will also have a Risk Committee, a Technology and Operations Committee and an Executive 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.
Directors have full and free access to officers and employees of the Company. Any meetings or contacts that a
director wishes to initiate may be arranged through the CEO or the Secretary or directly by the director. The
directors will use their judgment to ensure that any such contact is not disruptive to the business operations of
the Company and will, if appropriate, copy the CEO or the Secretary on any written communications between a director
and an officer or employee of the Company.
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.
The form and amount of director compensation will be recommended to the Board by the
Nominating and Corporate Governance Committee in accordance with the policies and
principles set forth in its charter, and the Nominating and Corporate Governance
Committee will conduct an annual review of director compensation. The Nominating and
Corporate Governance Committee will consider that directors' independence may be
jeopardized if director compensation exceeds customary levels as well as when the
Company makes substantial charitable contributions to organizations with which a
director is affiliated or enters into contracts with or provides other indirect forms of
compensation to a director.
The Board believes that it is desirable for directors to own a reasonable amount of
equity in the Company to align director and shareholder interests and to support a
director's long-term perspective. Accordingly, the Board requires each non-employee
director to have an equity ownership in the Company in a multiple of eight times the
annual stock retainer amount then in effect, with a holding requirement until the
guideline is met. Qualifying stock ownership includes, (1) all shares held in beneficial
ownership as defined in Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, and
(2) all shares awarded as director compensation (whether or not the receipt of, or
voting or investment power with respect to, such shares is deferred, delayed or subject
to vesting or other restrictions). This equity ownership interest should generally be
achieved within a five-year period.
Anyone who has a concern about State Street or its conduct, including concerns about the
Company's accounting, internal accounting controls or auditing matters, may communicate
that concern directly to the Lead Director. Such communications may be confidential or
anonymous, and may be e-mailed, submitted in writing or through a web-based portal, or
reported by phone to a special address or a toll- free telephone number that is
published on the Company's website. The Lead Director may, in his or her discretion,
provide for handling of time-sensitive or emergency concerns, forward to the Examining
and Audit Committee or to another appropriate group or department any concern for their
review, and will report to the non-management directors as a group on a quarterly basis
regarding concerns received during the preceding quarter. The Lead Director, the
non-management directors, or the Examining and Audit Committee may direct special
treatment, including the retention of outside advisors or counsel, for any concern
addressed to them.
Shareholders and interested parties who wish to contact the Board of Directors or Lead
Director of the Board should address correspondence to: Lead Director of State Street
Corporation, c/o Office of the Secretary, State Street Financial Center, One Lincoln
Street, Boston, MA 02111. The Corporate Secretary will review and forward correspondence
to the appropriate person or persons for response.
Building upon State Street's long-standing Standard of Conduct for employees and its
Code of Ethics for Senior Financial Officers, the Board has adopted a Standard of
Conduct for Directors to promote honest and ethical conduct and the avoidance of
conflicts of interest. The Board expects that directors, officers and employees will
adhere to the code of conduct applicable to them and act ethically and with honesty and
integrity at all times.
All new directors are required to participate in State Street's Director Orientation
Program, which will include presentations by senior management to familiarize directors
with the Company's strategic plans, its significant financial, accounting and risk
management issues, its compliance programs, its Standards of Conduct, its principal
officers, and its internal and independent auditors. The Company encourages director
continuing education and will offer internal training and information to directors
regarding external education sessions.
The Lead Director will conduct an annual process for reviewing the CEO's performance,
and will report the results of the process to the other independent directors of the
Board of Directors. The other independent directors will review the results of the Lead
Director's evaluation process with regard to the CEO's leadership of the Company in the
long- and short-term. The Human Resources Committee, acting with the other independent
directors, shall use the results of the Lead Director evaluation process to annually
determine the CEO's compensation level, based in part upon this evaluation report and
other factors, consistent with the Human Resources Committee charter.
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.
The Board of Directors will conduct an annual self-evaluation to assess whether it and
its committees are functioning effectively. The Nominating and Corporate Governance
Committee will receive comments from all directors, and will report annually to the
Board with an assessment of the Board's performance. This report will be discussed with
the full Board following the end of each fiscal year. The assessment will focus on the
Board's contribution to the Company, and specifically focus on areas in which the Board
believes that the Board or committees could improve. The Nominating and Corporate
Governance Committee will assess annually whether each of the Examining and Audit
Committee, Human Resources Committee, Nominating and Corporate Governance Committee,
Risk Committee and Technology and Operations Committee has a functioning self-evaluation
process, and will report its assessment to the Board of Directors. In addition, the
Nominating and Corporate Governance Committee will annually assess each director's
individual contributions, skills, committee assignments and tenure on the Board to
evaluate the overall composition of the Board and its effectiveness. The Nominating and
Corporate Governance Committee, in consultation with the Committee Chair and the Lead
Director, may in its discretion, retain an external advisor to assist in these
evaluations.
State Street will submit the Examining and Audit Committee's selection of a registered
public accounting firm to shareholder ratification at each year's annual meeting.
The Board will only adopt a shareholder rights plan if either:
- 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.
The Corporate Governance Guidelines are reviewed and approved by the Board on an annual
basis.