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I. Board Composition
A. Size of the Board
The Company’s Bylaws currently provide that the Board will be not less than
five (5) nor more than ten (10) directors. The Board will periodically
review the appropriate size of the Board.
B. Majority of Independent Directors
It is the policy of the Board that a majority of the directors will not be
current employees of the Company and will otherwise meet appropriate standards
of independence. In determining independence, the Board will consider
the definition of “independent director” in the listing standards of The
Nasdaq Stock Market (“Nasdaq”) as well as other factors that will contribute
to effective oversight and decision-making by the Board.
C. Management Directors
The Board anticipates that the Company’s Chief Executive Officer (“CEO”) will
be nominated annually to serve on the Board. The Board may also appoint
or nominate other members of the Company’s management whose experience and
role at the Company would be expected to help the Board fulfill its
responsibilities.
D. Chair; Presiding Director
The Board will annually appoint a chairperson (“Chair”). Both
independent and management directors, including the CEO, are eligible for
appointment as the Chair. The Board determines whether the positions of
Chair and CEO will be held by one individual or be separated and held by two
individuals. The Chair, or if the Chair is not an independent director,
one of the independent directors, shall be designated by the independent
directors to be the “Presiding Director.” The Presiding Director will be
elected by and from the independent directors on an annual basis. Each
term of service in the Presiding Independent Director position is limited to
four years. The Presiding Director shall have the following roles and
responsibilities: scheduling meetings of the independent directors;
chairing the separate, executive session meetings of the independent directors
to be held after each Board meeting; serving as principal liaison between the
independent directors and the CEO; communicating from time to time with the
CEO, and disseminating information to the rest of the Board as appropriate;
providing leadership to the Board if circumstances arise in which the role of
the Chair may be, or may be perceived to be, in conflict; being available, as
appropriate, for consultation and direct communication with major
stockholders; overseeing, with the Chair of the Nominating and Corporate
Governance Committee (“NCG”), the annual self-evaluation of the Board; and
performing various other duties.
E. Selection of Board Nominees
The Board will be responsible for the selection of nominees for election or
appointment to the Board. The NCG shall recommend candidates for
election to the Board. The NCG considers nominees recommended by
directors, officers, stockholders and others using the same criteria to
evaluate all candidates. The NCG reviews each candidate’s
qualifications, including whether a candidate possesses any of the specific
qualities and skills desirable in certain members of the Board.
Evaluations of candidates generally involve a review of background materials,
internal discussions and interviews with selected candidates as
appropriate. Upon selection of a qualified candidate, the NCG will
recommend the candidate for consideration by the full Board. The NCG may
engage consultants or third-party search firms to assist in identifying and
evaluating potential nominees. To recommend a prospective nominee for
the NCG’s consideration, the candidate’s name and qualifications must be
submitted to the Company’s Secretary in writing to the following address:
Tetra Tech, Inc., Attn: Secretary, 3475 E. Foothill Blvd., Pasadena, CA 91107.
When submitting candidates for nomination to be elected at the Company’s
annual meeting of stockholders, stockholders must follow the notice procedures
and provide the information required by the Company’s Bylaws.
F. Board Membership Criteria
Nominees for the Board should be committed to enhancing long-term stockholder
value. The NCG works with the Board to determine the appropriate
characteristics, skills and experiences for the Board as a whole and its
individual members with the objective of having a Board with diverse
backgrounds and experience and inclusive of individuals from underrepresented
communities. Characteristics expected of all directors include
independence, integrity, high personal and professional ethics, sound business
judgment, and the ability and willingness to commit sufficient time to the
Board. In evaluating the suitability of individual Board members, the
NCG will take into account many factors, including general understanding of
business development and strategy, risk management, finance, financial
reporting and other disciplines relevant to the success of a publicly-traded
company in the then-current business environment; understanding of the
Company’s business and the issues affecting that business; education and
professional background; personal accomplishment; and diversity. Board
members are expected to prepare for, attend and participate in meetings of the
Board and committees on which they serve, and are strongly encouraged to
attend the Company’s annual meetings of stockholders.
G. Majority Voting in Board Elections
If, in an uncontested election, an incumbent director fails to receive at
least the affirmative vote of a majority of the shares represented and voting
at a duly held meeting (which shares voting affirmatively also constitute at
least a majority of the required quorum), the Company’s Bylaws provide that
such incumbent director shall promptly tender his or her resignation to the
Board, which shall be irrevocable until either accepted or rejected by the
Board. The NCG shall make a recommendation to the Board as to whether to
accept or reject the tendered resignation, or whether other action should be
taken. The Board shall act on the tendered resignation, taking into
account the NCG’s recommendation, and publicly disclose its decision regarding
the tendered resignation and the rationale behind the decision within 90 days
from the date of the certification of the election results.
H. Board Compensation
The Board, through the Compensation Committee, will review, with the
assistance of management or outside consultants if desired, appropriate
compensation policies for the directors serving on the Board and its
committees. This review may consider board compensation practices of other
public companies, contributions to Board functions, service as committee
chairs, and other appropriate factors.
I. Directors Who Change Job Responsibility; Term Limits; Age Limits
The Board does not believe directors who retire or change their principal
occupation or business association should necessarily leave the Board.
However, promptly following any such event, the director shall offer to tender
their resignation to the Chairperson of the NCG, so that there is an
opportunity for the Board, through the NCG, to review the continued
appropriateness of Board membership under the new circumstances. In the event
the director who retires or changes their principal occupation or business
association is the Chairperson of the NCG, such director shall offer to tender
their resignation to the Chair of the Board and the Presiding Director. The
maximum tenure of a non-employee director shall be twelve (12) years. The
Board has fixed the retirement age for directors at 75 (determined as of the
Annual Meeting following the director’s birthday). However, upon
recommendation by the NCG, the Board may waive the mandatory tenure and
retirement requirements for a director due to special circumstances for a
period of no more than (1) year.
J. Other Board Memberships
Without specific approval from the Board, no director may serve on more than
three other public company boards. Directors should advise the Chair if
they are contemplating, and seek approval before accepting, an invitation to
serve on another board so that any potential conflicts of interest or legal
issues first may be assessed.
K. Board Evaluations
Working with the NCG, the Board shall conduct a self-evaluation annually.
II. Board Meetings and Materials
A. Scheduling of Full Board Meetings
Board meetings will be scheduled in advance, ordinarily once each quarter at
the Company’s principal executive office or at such other location or through
such other telephonic or virtual medium as the Board deems appropriate.
B. Agenda and Materials
The Chair will have primary responsibility for preparing the agenda for each
meeting and sending it in advance of the meeting to the directors, along with
appropriate written materials, so that Board discussion time may be focused on
questions that the Board has about the materials. Each Board committee,
and each individual director, is encouraged to suggest items for inclusion on
the agenda. The Board reserves authority to meet in executive sessions
to discuss sensitive matters without distribution of written materials.
The Chair will consult with the Presiding Director on agendas for Board
meetings and other matters pertinent to the Company and the Board.
C. Independent Directors Discussions
It is the policy of the Board that the independent members of the Board meet
separately without management directors at the conclusion of each regular
Board meeting to discuss such matters as the independent directors consider
appropriate. The Presiding Director will chair such meetings of the
independent directors. The Company’s independent auditors, finance staff and
other employees may be invited to attend these meetings.
D. Board Presentations and Access to Information
The Board encourages the presentation at meetings by managers who can provide
additional insight into matters being discussed or who should be given
exposure to the Board based on their leadership potential. The Board
encourages management to arrange presentations at Board meetings by the
Company’s managers and provide other reports that will enhance the flow
of meaningful financial and business information to the Board.
E. Director Orientation and Continuing Education
Upon appointment, the Company’s Secretary shall provide new board members with
director orientation materials, including presentations from senior executives
and Company policies. The Secretary shall work with the Chair of the NCG
as necessary to periodically provide materials that would assist directors
with the identification and understanding of best practices and new
trends. All appropriate and approved continuing education expenses will
be reimbursed by the Company.
III. Board Responsibilities
A. Company Strategy
Oversee the Company’s strategic planning process and work with management to
plan, schedule and discuss the components of the annual Strategic Plan. Review
certain strategic decisions regarding exit from existing lines of business and
entry into new lines of business, acquisitions, joint ventures, investments or
dispositions of businesses and assets, and the financing of related
transactions, and review and approval of management’s capital allocation
strategy.
B. Company Performance and Planning
Review and oversight of Company performance including annual operating plans,
mid-year forecasts, and quarterly results.
C. Human Capital and Management Succession Planning
The Board, with support from the Nominating and Governance Committee and
Compensation Committee, will provide oversight of human capital programs and
metrics, and takes an active role in ensuring that the Company is developing
management talent and that plans for both emergency and long-term succession
to the position of CEO as well as certain other senior management positions,
are in place. The CEO annually will review with the Board succession and
development plans for senior executive officers.
D. Ethical Conduct, Financial Reporting, and Legal Compliance
Board will provide oversight and executive management shall maintain systems,
procedures and a corporate culture that promote compliance with legal and
regulatory requirements and the ethical conduct of the Company’s business. The
Board will review and recommend relevant revisions to the Company’s Code of
Business Ethics and Conduct on an annual basis or more frequently. The Board’s
governance and oversight functions do not relieve the Company’s executive
management of the primary responsibility for preparing financial statements
which accurately and fairly present the Company’s financial results and
condition.
E. Enterprise Risk Management
Review and oversight of the Company’s enterprise risk management policy and
strategy.
IV. Board Committees
A. Committees
The current three standing committees of the Board are: Audit Committee;
Compensation Committee; and Nominating and Corporate Governance Committee.
From time to time the Board may establish a new committee or disband a current
committee depending upon the circumstances. Each committee shall conduct a
self-evaluation at least annually.
B. Committee Member Selection
Upon the recommendation of the NCG, the Board will designate the members and
Chair of each committee, endeavoring to match the committee’s function and
needs for expertise with individual skills and experience of the appointees to
the committee. The membership of the Audit, Compensation and Nominating
and Corporate Governance Committees shall consist solely of independent
directors, which directors shall meet the applicable criteria for independence
under Nasdaq, Securities and Exchange Commission, and/or tax rules applicable
to such committees.
C. Committee Functions
The number and content of committee meetings and other matters of committee
governance will be determined by each committee in light of the authority
delegated by the full Board to the committee, the committee’s charter, and
applicable regulations or principles. The Company will provide to each
committee access to employees and other resources to enable committee members
to carry out their responsibilities. The full authority and
responsibilities of each committee is fixed by resolution of the full Board
and the committee’s charter. Committee charters are available on the
Company’s website at
www.tetratech.com , and a brief
description of committee functions is available in the Company’s most recent
annual proxy statement.
V. Stock Ownership Guidelines
A. Director Stock Ownership
To further align the interests of non-employee directors and stockholders,
each non-employee director is required to own shares of the Company’s common
stock having a value equal to at least five times the non-employee director’s
annual base cash retainer, with a five-year period to attain that ownership
level. Until a director’s stock ownership requirement is met, the director
must retain at least 75% of “gain shares” resulting from the exercise of a
stock option or vesting of a restricted stock or performance share award. With
respect to stock options, “gain shares” means the total number of shares of
common stock that are being exercised. With respect to restricted stock
awards, “gain shares” means the total number of shares of common stock subject
to any such equity award that vest. “Gain shares” exclude shares that would
have been used to satisfy minimum tax withholding obligations had the director
been employed as a common law employee. In addition to shares of common stock,
, vested shares of restricted stock or restricted stock units (RSUs), and
unvested restricted stock and RSUs count in determining stock ownership for
purposes of the guidelines. The failure to comply with the stock ownership
guidelines will result in the director being required to use one-third of any
net annual retainer to purchase shares of the Company’s common stock. The
Company’s stock ownership guidelines are available on its website at
www.tetratech.com .
B. Executive Stock Ownership
To further align the interests of executive officers and stockholders, the CEO
is required to own shares of the Company’s common stock having a value equal
to at least six times the CEO’s base salary; for the President and each
Executive Vice President to own shares having a value equal to at least three
times base salary; and for each Senior Vice President to own shares having a
value equal to at least two times the base salary. Until an executive
officer’s stock ownership requirement is met, the executive officer must
retain at least 75% of “gain shares” resulting from the exercise of a stock
option or vesting of a restricted stock or performance share award. With
respect to stock options, “gain shares” means the total number of shares of
common stock that are being exercised less the number of shares, if any, used
in the case of a cashless exercise to pay for the exercise price. With
respect to restricted stock awards, “gain shares” means the total number of
shares of common stock subject to any such equity award that vest. Gain
shares do not include shares of common stock that are used to satisfy tax
withholding obligations. Each executive officer has five years from the
later of the date of such officer’s appointment or the date of adoption of the
guidelines to attain the required ownership level. In addition to shares
of common stock, vested shares of restricted stock or RSUs, and unvested
restricted stock and RSUs count in determining stock ownership for purposes of
the guidelines. An executive officer who fails to comply with the stock
ownership guidelines will be required to use one-third of any net annual cash
bonus to purchase shares of the Company’s common stock. The Company’s
stock ownership guidelines are available on its website at
www.tetratech.com.