PRINCIPLES AND PRACTICES OF
The Board of Director's primary mission is to oversee management of the Company, perpetuate a successful commercial enterprise, optimize corporate profits and enhance shareholder value on a long-term basis.
To fulfill this mission, the Board is responsible for:
While management is responsible for formulating, proposing and implementing corporate strategy, the Board approves the strategic direction proposed by management and evaluates performance results. The Board should engage in an ongoing dialogue with senior management regarding strategic direction and may invite members of senior management to attend and participate in corporate strategy discussions at Board meetings. Likewise, the CEO may invite members of senior management to attend and participate in Board meetings where appropriate.
At least once each year, the Board will adopt and/or revise the long-range financial and strategic plan developed by management with Board input, and approve budget and performance targets for the upcoming fiscal year. The Board may adjust these targets during the year as necessary.
During the year, the Board will review and approve: changes to long-range strategy, including resource allocation; capital expenditures in excess of the annual budget; changes in long-term capital structure and financing; entry into a new line of business; all acquisitions and divestitures above thresholds delegated to management from time-to-time; issuances of securities; all other material transactions and arrangements; and all matters as are required by applicable law.
The Company's Bylaws currently provide for 11 directors. The Board can change this number by amending the Bylaws, as it deems appropriate.
The Board will have a majority of directors who meet the criteria for independence requirements established by the New York Stock Exchange ("NYSE") and the Securities and Exchange Commission ("SEC"). The Board will make an annual determination regarding the independence of its existing Board members and proposed Board members, and will make necessary adjustments to ensure that a majority of the Board is independent at all times. Subject to existing contractual obligations on the part of the Company, any previously independent director may be required to tender his or her resignation from the Board if he or she is no longer independent under these Principles and Practices, or any applicable rules or regulations governing the independence of directors. The purpose of this policy is to allow the Governance/Nominating Committee, mindful of these independence requirements and the Company's other contractual obligations, to determine whether the change in independence brings the Company out of compliance with this independence requirement, or creates a conflict of interest or other issues that render the incumbent director's continued service to the Company undesirable.
The Company does not set specific criteria for directors and believes that it will manage the Board membership through its Board evaluations which are conducted by the Governance/Nominating Committee. This Committee is responsible for identifying, screening and recommending to the Board candidates for Board membership. In carrying out this function, the Committee will consider the diversity, age, skills and experience of candidates. The overriding objective is to select candidates whose combined experience and expertise will enable them to best carry out the Board's responsibilities. Board members should be highly skilled and experienced individuals with diverse talents and backgrounds, whose knowledge and judgment will assist the Board in fulfilling its responsibilities.
Board members should possess integrity and accountability, informed judgment, financial literacy, mature confidence and high performance standards. Board members must have enough available time to devote sufficient attention to their obligations to the Board. The Company does not impose a retirement age or term limits on its directors.
The Governance/Nominating Committee considers potential Board nominees from many sources, including shareholders. Any such nominations, together with appropriate biographical information, should be submitted to the Chairman of the Governance/Nominating Committee, c/o Corporate Secretary, Gartner, Inc., 56 Top Gallant Road, Stamford, CT, 06904.
The Board may appoint a director or former director who has served the Company with distinction as a Director Emeritus for a term of through the next annual meeting of shareholders, subject to re-appointment. This individual is not a member of the Board, but a consultant. The Board may also appoint the former Chairman of the Board as a Chairman Emeritus, who also is not a member of the Board, but a consultant.
A director must tender his or her resignation from the Board if his or her primary employment changes. The purpose of this policy is to allow the Governance/Nominating Committee to determine whether the change in employment or other relationship creates an actual or potential conflict of interest, lack of independence, or other issues that render the incumbent director's continued service to the Company undesirable and, accordingly, gives the Board the option to accept the resignation and avoid a removal process or to reject the resignation.
At each Annual Meeting of the Board, the Board will select a Chairman of the Board. If the CEO is designated as Chairman, the non-management directors will select a director who will assume the responsibility of chairing "executive sessions" (discussed below) and meetings of the Board or other Board responsibilities that the Chairman is unable to lead for conflict of interest or other reasons. The Company will disclose in its proxy statement the name of the presiding director and the manner by which shareholders may communicate directly with the presiding director or with non-management directors as a group.
The non-management members of the Board will conduct regularly scheduled executive sessions (meetings in which the CEO and other members of management do not participate). Generally, an executive session will be held immediately following each regularly scheduled Board meeting. All such sessions will be considered a part of the Board's deliberations and activities. Following each executive session, the Chairman of the Board, or, in his or her absence, the presiding director of the executive session, will communicate the results of executive session deliberations and any recommendations to the full Board. To the extent the non-management directors include directors who are not independent under the NYSE criteria, then the independent directors must conduct at least one executive session a year at which only independent directors are in attendance.
On an annual basis, the Governance Committee will evaluate the effectiveness of the Board as a whole, and of each Committee of the Board, by soliciting feedback from each director utilizing a Board and Committee performance evaluation forms, and will share the results and recommendations with the entire Board. This process should identify, among other things, recommendations for improved Board and Committee practices and processes. All directors are encouraged to make suggestions to improve these practices at any time. (See the discussion of the Governance/Nominating Committee below for more information concerning the evaluation processes.)
The Company's Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Governance/Nominating Committee. Each committee has adopted a Charter. These Charters are posted on the Company's website. The Company will notify shareholders in its annual report to shareholders that these Charters are available on its website and are also available in print to any shareholder who requests them. Subject to the full discussion set forth in these Charters, the responsibilities of each committee is summarized below.
Audit Committee: The Audit Committee is comprised of not less than three directors, each of whom meets the independence requirements set forth in the NYSE corporate governance listing standards and the requirements of Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"). Additionally, each member must be financially literate, as determined by the Board in its business judgment, and at least one member must have accounting or related financial management expertise, as determined by the Board in its business judgment. The Audit Committee will prepare the Audit Committee Report for inclusion in the Company's annual proxy statement pursuant to the 1934 Act.
The Audit Committee's purpose is to assist in Board of Director oversight of the integrity of the Company's financial statements, the Company's compliance with legal and regulatory requirements, the independent auditor's qualifications and independence and the performance of the Company's internal audit function and independent auditors. The Audit Committee will maintain an open avenue of communication between itself and each of the independent auditors, the internal audit function, management and the Board, and will report regularly to the Board. In particular, the Audit Committee will be directly responsible for (i) appointing, compensating and overseeing the Company's independent auditors, (ii) establishing procedures for receipt and treatment of accounting-related complaints and (iii) approval of non-audit services performed by the independent auditors.
Compensation Committee: The Compensation Committee is comprised of not less than three directors, each of whom meets the independence requirements set forth in the NYSE corporate governance listing standards, the definition of non-employee director found in Rule 16b-3 promulgated under the 1934 Act, and the definition of outside director found in regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended. This Committee is primarily responsible for (1) discharging the Board's responsibilities relating to compensation of the Company's executives, (2) reviewing and approving corporate goals and objectives relevant to CEO compensation, for evaluating the CEO's performance in light of those goals and objectives, and for setting the CEO's compensation based upon this evaluation, (3) developing and administering compensation policies, programs and plans for other members of senior management, and (4) making recommendations to the Board with respect to incentive-compensation plans and equity-based plans (plans are subject to shareholder approval).
Together with the Governance Committee which acts in an oversight capacity, the Compensation Committee undertakes the annual CEO evaluation process, and prepares a report of the CEO's performance to the entire Board in executive session. Thereafter, the Chair of the Compensation Committee and/or the Governance Committee will meet with the CEO to discuss the report. The Governance Committee may direct the Compensation Committee to collaborate with other independent directors with respect to any or all aspects of CEO evaluation.
The Compensation Committee will review and discuss with management its Compensation Discussion and Analysis ("CD&A") and, after such review and discussion, will recommend to management the inclusion of the CD&A in the Company's annual report on Form 10-K or proxy statement. Additionally, the Committee will prepare the related Compensation Committee Report for inclusion in the Company's annual report on Form 10-K or proxy statement pursuant to Item 407(e) of Regulation S-K promulgated under the 1934 Act.
The Committee reviews and approves all equity awards that are not within the CEO delegated authority guidelines adopted by the Committee and the Board, and recommends the compensation package for directors for approval by the full Board.
Governance/Nominating Committee : The Governance/Nominating Committee (referred to in this discussion as the "Governance Committee") is comprised not less than three directors, each of whom meets the independence requirements set forth in the NYSE corporate governance listing standards. This Committee is responsible for ensuring that the Board of Directors functions in an effective, professional manner consistent with its fiduciary duties to shareholders and its mission and responsibilities stated above. New director and Board committee nominations and shaping the corporate governance of the Company to comply with NYSE and other prevailing standards are this Committee's paramount concerns.
The Governance Committee is responsible for assessing the Board's size and composition; setting the Board's agenda and calendar; the information directors receive; and the Board's other processes and procedures.
The Committee will develop criteria for the selection of new directors and continuing qualification requirements. In carrying out this function, the Committee will consider the diversity, age, skills and experience of candidates. The Committee will identify individuals qualified to become Board members, and select, or recommend that the Board select, the director nominees for election at the next annual meeting of shareholders.
The Committee is also responsible for recommending and determining: committee member qualifications; the appointment and removal of Board committee members and committee chairs; committee structure and operations (including authority to delegate to subcommittees); and committee reporting to the Board. Additionally, this Committee assists the CEO and the Compensation Committee with developing and reviewing proposed management succession plans. Finally, this Committee must continuously review and update these Board Principles and Practices as appropriate.
The Governance Committee oversees the CEO evaluation performance process with the Compensation Committee and any other independent directors it may designate for this purpose. Additionally, the Governance Committee manages and undertakes an annual Board and Committee self-evaluation by developing Board effectiveness evaluation processes (which may include the use of evaluation forms) and by preparing a report of the Board's and each Committee's performance to the entire Board. Based upon this annual evaluation process, the Committee will recommend to the full Board any needed changes in the principles and practices of the Board, and will utilize information obtained in determining whether a director should be nominated for re-election to the Board.
The Governance Committee is responsible for developing and proposing management (especially CEO) succession plans and policies, and coordinating the discussion and adoption of these policies with the full Board. The Governance Committee will work with the CEO to keep current with all management succession issues and management development activities and will keep the full Board informed as to any significant developments in this area. At least annually, the Governance Committee, together with the CEO, will review the performance and potential of the entire executive and senior management team, including the CEO, and the succession plans currently in place for these employees. The Committee will recommend to the Board adoption of adjustments to existing succession plans or the implementation of additional plans.
Generally: The Board may constitute ad hoc committees or additional standing committees from time to time. Each committee will be chaired by, and comprised of, independent directors, except that non-independent directors and members of senior management may be appointed as ex officio members of any committee. So long as the Company remains in compliance with applicable rules and regulations, including NYSE listing standards, committee memberships and chairmanships will be rotated periodically to ensure continuity in membership and leadership of each committee while at the same time broadening each director's exposure to the Board's responsibilities and functions. At each regular Board meeting, each committee chair will make a presentation to the full Board of that committee's current and proposed activities. Committee chairs may invite the CEO and Chairman to attend any committee meeting, provided the presence of such individual does not constitute a conflict of interest or otherwise impair the committee's ability to act.
The committees typically meet immediately prior to, or within two weeks prior to, the regularly scheduled Board meetings and more frequently as appropriate. The committee chair, in consultation with committee members, determines the frequency and length of committee meetings.
The Board will provide the Audit Committee with sufficient funding to permit it to carry out its functions and responsibilities set forth in its Charter.
Each Committee must review its charter on an annual basis and update or revise it, if necessary. The charters of each committee are posted on the Company's website. The Company will notify its shareholders in its annual report to shareholders that these charters are available on its website and are also available in print to any shareholder who requests them. Additionally, each Committee must evaluate its performance at least annually.
The Chairman and the CEO are charged with ensuring adequate and complete information flow to all directors, including draft copies of all financial statements and filings with the SEC, earnings and press releases, minutes of previous Board meetings, and other documents and information necessary for effective Board deliberations.
Management should work with the Chairman and CEO to create and distribute "Board Books" prior to each meeting of the Board and each committee, containing an agenda and written information important to understanding presentations, discussions and issues to be covered at such meeting. The Chairman and CEO will ensure that directors receive the right kind and amount of information from management in sufficient time to prepare for meetings. Directors may request that items be added to the agenda, or suggest changes to the type or format of the information provided, and the Chairman will make reasonable efforts to comply with these requests.
Directors may have access to management to discuss particular matters from time to time so long as the director first informs the CEO in advance of such meeting. Care must be taken not to undermine the normal lines of management authority or to occupy significant amounts of management time. The Board of Directors may engage outside consultants and advisors as it deems necessary and appropriate.
The Board will establish an effective orientation program to familiarize new directors with the Company's strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its conflict policies and other controls, its principal officers and its internal and independent auditors.
The Board of Directors will hold four regular meetings in January, April, July and October of each year to review the Company's results, approve major decisions requiring Board action, discuss corporate strategy with members of senior management, receive reports of the Board committees, provide advice to management and consider other matters relevant to its responsibilities. Board and committee meetings usually will be held at the Company's headquarters in Stamford, Connecticut beginning in the early morning and ending by mid-afternoon, or at such other times and places as the Board may determine. The Annual Meeting of the Board of Directors is the next regularly scheduled Board meeting held immediately following the Annual Meeting of Shareholders, which is typically held in the spring. Special meetings of the Board of Directors will be held when appropriate and, pursuant to the Bylaws, may be called by or at the request of the Chairman, the CEO or any two directors upon at least 48 hours notice to each director.
The compensation package for directors may include a mix of cash, equity and other benefits. The level of director compensation generally should be competitive with that paid to directors of other corporations of similar size in the United States; however the actual compensation and the mix of the compensation package will vary depending upon the time commitment required of the directors, the compensation awarded to directors of other companies similarly situated, the need to align the directors' interests with those of the shareholders and the long-term prospects of the Company. The Compensation Committee is responsible for recommending the director compensation package, or any changes to the package, to the full Board for its approval. Director's fees are the only compensation a director may receive from the Company. Directors who are also employees and directors who are appointed at the request of another entity because of a relationship between the Company and that entity receive no compensation for their services as directors.
The Board believes that directors should have a financial stake in the Company. Accordingly, each director is required to own at least 10,000 shares of the Company's stock. New directors will have three years from election or appointment to come into with the policy-25% within one year of election or appointment; 50% within two years of election or appointment and 100% within three years of election or appointment.
The fundamental role of the directors is to exercise their business judgment to act in what they reasonably believe to be the best interests of the Company and its shareholders. In fulfilling that responsibility directors should be able to rely on the honesty and integrity of the Company's senior management and expert legal, accounting, financial and other advisors. The directors should have the benefit of directors' and officers' insurance, paid by the Company, for indemnification to the fullest extent allowed under Delaware law and the Company's certificate of incorporation, and to exculpation as provided by Delaware law and the Company's certificate of incorporation.
Board members are expected to rigorously prepare for, attend and participate in all Board and applicable committee meetings, and to spend the time needed and meet as often as necessary to properly discharge their obligations. Board members are expected to review all information that is distributed prior to meetings, so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the materials.
In general, the Company's management should speak for the Company in all communications with institutional investors, the press, customers, securities analysts, shareholders and the public at large. Directors should not speak on behalf of the Company without the approval of the CEO or other designated member of management.
The Board values shareholder input. Shareholders can contact any director, including the presiding Chairman, by writing to the director c/o Corporate Secretary, Gartner, Inc., 56 Top Gallant Road, Stamford, CT 06904.
On an on-going basis, if an actual or potential conflict of interest exists between a member of the Board of Directors regarding a matter being considered by the Board or any of its committees, then (consistent with applicable law and the practices of the Board) the conflict should be disclosed to the Board, the Governance/Nominating Committee or the committee involved in the issue, as the case may be. The member with the conflict should be recused from that portion of the meeting of the Board or committee at which the matter is addressed to permit independent discussion and the member with the conflict should abstain from voting on any such matter.
Each director must bring any actual or potential conflict of interest issues or other potentially "sensitive" issues concerning management or the Board immediately and directly to the attention of the Board of Directors. The Governance/Nominating Committee will act promptly to resolve any conflict of interest issue brought to its attention and will have the power to request the Board of Directors to take any appropriate action, up to an including a request for the involved director to resign from the Board. The Audit Committee will review any related party transaction and ascertain the appropriateness of disclosure, on advice of counsel if requested.
Federal law prohibits corporate insiders from trading securities (including options) while in possession of material nonpublic information. Violations of these laws can lead to severe civil and criminal penalties. Each director, at least annually, will complete an Acknowledgement Concerning Insider Trading Policy. Additionally, prior to entering into any transaction involving any Company securities, each director will obtain clearance from the General Counsel prior to completing the transaction.
At least annually, each director and each member of senior management will complete an Affirmation of Compliance with the Code of Conduct. Any waiver of the Code for executive officers or directors may be made only by the Board or by the Governance/Nominating Committee and must be promptly disclosed to shareholders. The Code of Conduct is posted on the Company's website. The Company will notify shareholders in its annual report to shareholders that the Code of Conduct is available on its website and is also available in print to any shareholder who requests it.
At least annually basis, the Company will review its compliance with NYSE listing requirements and take any corrective action to come into compliance. Further, the Company and the CEO must make written annual certifications, as well as interim certifications under certain circumstances, to the NYSE with respect to the Company's compliance with the NYSE corporate governance listing standards. The Board must assist the Company and the CEO in their respective responsibilities with respect to these certifications.
The Board will review and modify these Principles and Practices periodically, upon the recommendation of the Governance/Nominating Committee and in any case as the Board deems appropriate. These Principles and Practices are posted on the Company's website. The Company will notify its shareholders in its annual report to shareholders that these Principles and Practices are available on its website and are also available in print to any shareholder who requests them.