The Board of Directors of BNY Mellon Government Securities Services Corp.
Corporate Governance Guidelines
Together with BNY Mellon Government Securities Services Corp.’s (the “Corporation”) Certificate of Incorporation and By-laws and the charter of the Audit and Risk Committee of the Board of Directors (the “Board”), these Guidelines set forth the governance policies and procedures of the Corporation and the Board.
The business and affairs of the Corporation are subject to the general oversight of the Board. The Board’s duties and responsibilities are described below. The Board’s primary responsibility is to oversee the management of the Corporation in the best interests of the Corporation and its stockholders. Directors will perform their duties in good faith and with that degree of care that a prudent person would normally use under similar circumstances. In addition, each director and director nominee will be asked to read the Board Code of Ethics (the “Code”) and provide a certificate attesting to his/her compliance with the Code on an annual basis.
Directors’ oversight duties and responsibilities, which, as appropriate, may be discharged through Board committees, include:
The Corporation values the experience directors bring from other boards on which they serve but recognizes that such service may also entail significant time commitments, conflicts or legal issues. Directors should advise The Bank of New York Mellon (the “Bank”) General Counsel or a designee before accepting a position on the board of directors of another company (excluding not-for-profits) or making any other significant commitment to any business or governmental body beyond the primary occupations in which they were engaged at the time of their most recent election to the Board. They should accept such a position or make such a commitment only after obtaining the consent of the Bank General Counsel or designee. It is suggested that directors not serve on the boards of more than three companies (excluding not-for-profits) in addition to the Corporation.
All new Directors will receive an orientation, including materials and discussions with management. Continuing directors shall receive additional education materials, as appropriate, through their regular meetings.
A director who also serves as an officer of the Corporation or any of its affiliates will tender his or her resignation as a director when the director discontinues such service.
An independent director who retires from, or otherwise discontinues his or her active employment or substantially changes his or her position or responsibilities with, the business or other enterprise with which the director was primarily affiliated at the time of the director’s most recent election to the Board should promptly notify the Bank General Counsel or designee of such retirement, discontinuance or substantial change. The Board will review the director’s continued service on the Board in light of all the circumstances and determine whether the director should be requested to tender his or her resignation to the Board. If such a request is made, the director shall promptly tender such resignation.
Each director is elected by the vote of the majority of the votes cast by stockholders (which means the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election, with abstentions not counted as votes cast) with respect to that director’s election at any meeting for the election of directors at which a quorum is present. Any incumbent director who fails to receive a majority of the votes cast will tender his or her resignation to the Bank General Counsel or designee promptly after the certification of the stockholder vote, and such resignation will be immediately effective.
In the event that a seat on the Board is left vacant, as a result of a director resignation or other cause, the Corporation’s stockholders may fill the vacancy pursuant to the By-laws.
Under the Corporation’s By-laws, the number of directors on the Board is to be three or more members, with the actual number set from time to time by Board resolution. All Board members are elected annually for one-year terms.
The Corporation’s stockholders will take into consideration, among other factors, the following criteria approved by the Board for selecting nominees for election as directors of the Corporation. The Corporation’s stockholders will consider for nomination persons who:
When considering a person for re-nomination as a director of the Corporation, the stockholders will consider, among other factors: the criteria for the nomination of directors; attendance, preparedness and overall contributions to the Board; and the needs of the Corporation. A person who is 75 years of age or older will not be nominated for election or re-election.
The Board will contain at least two directors who are independent in accordance with the independence standards set forth below and applicable laws and regulations. A director will be considered independent only if the Board has affirmatively determined that the director has no direct or indirect material relationship with the Corporation that would impair his or her independent judgment.
The Board will review factors affecting independence at the time a director is nominated for election or re-election, and upon a change in circumstances as appropriate. In making independence determinations, the Board will apply the following guidelines.
A director is not independent if:
For purposes of these standards, a “family member” includes a director’s spouse, parents, children, siblings, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law and anyone (other than domestic employees) who shares the director’s home.
A director will be deemed not to be independent if the Board finds that the director has material business arrangements with BNY Mellon that would jeopardize his or her judgment. In making independence determinations, the Board will review business arrangements between (a) BNY Mellon and the director, and (b) BNY Mellon and an entity for which the director serves as an officer or general partner, or of which the director directly or indirectly owns 10 percent or more of the equity. Such arrangements will not be considered material if:
in the event that the arrangement had not been made or were terminated in the normal course of business, it is not reasonably likely that there would be a material adverse effect on the financial condition, results of operations, or business of the recipient. In applying the factors listed in (a) and (b), above, the Board may consider such other factors as it may deem necessary to arrive at sound determinations as to the independence of each director, and such factors may override the conclusion of independence or non-independence that would be reached simply by reference to the enumerated facts.
In considering diversity of the Board (in all aspects of that term), the stockholders will take into account various factors and perspectives, including differences of viewpoint, professional experience, education, skill and other demographics, such as race, gender, ethnicity, and sexual orientation, as well as the variety of attributes that contribute to the Board’s collective strength.
A Board Chair shall be selected annually by a majority of the shareholders.
In addition to the other duties and responsibilities of the Board Chair set forth in these Guidelines or the By-laws of the Corporation, the Board Chair shall have the following duties and responsibilities:
The Board normally holds four regular meetings per year. The Board Chair establishes the agenda for each Board meeting in consultation with the CEO. Board members may suggest any item for inclusion on the agenda. At a minimum, agendas for Board meetings shall provide for discussion on risk and regulatory issues at each regularly-scheduled meeting and such other matters as shall be appropriate for the Board to consider. Information and data that is important to the Board’s understanding of the business and consideration of such issues as may be scheduled for discussion is distributed to the Board generally in advance of the meeting. Board members are expected to review meeting materials that are provided in advance.
A slate of directors will be nominated by the Board, and submitted to a stockholder vote each year. Stockholders may propose nominees for consideration by the Board in accordance with procedures and other requirements set forth in these Guidelines.
The Board shall establish any standing committees that it deems necessary or appropriate to discharge its responsibilities. The Board currently has one standing committee: the Audit and Risk Committee.
For each such committee the Board shall establish a written charter which shall set forth the responsibilities of that committee, as well as committee structure and operations, and any required reporting to the full Board. Directors shall be appointed by the Board to individual Committees. Directors are expected to attend all meetings of Committees to which they are appointed, review all materials in advance and be prepared to participate fully in the meeting.
The Chair of each committee shall determine the frequency and length of committee meetings consistent with the requirements set forth in the committee’s charter. The Chair of the committee, in consultation with appropriate members of management, will develop the committee’s agenda. Management will be responsible for assuring that information and data important to the committee’s understanding of the matters to be considered and acted upon by the committee are distributed to each member of the committee in advance of the meeting to allow a reasonable time for review and evaluation of such information and data.
Management will communicate regularly with directors, who may also consult with other employees.
In performing his or her duties, a director is entitled to rely in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Board by any of the Corporation’s officers or employees or committees of the Board, or by any such other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Annually, the Board and each of the standing committees of the Board will conduct a self-evaluation to continually enhance performance.
The Board Chair, in consultation with Bank management, will determine the process, scope and content of the Board’s annual performance evaluation. Areas of consideration in the Board self-evaluations include Director contribution and performance, Board structure and size, Board dynamics, the range of business, professional and other backgrounds of Directors necessary to serve the Corporation and the range and type of information provided to the Board by management. Based on Bank management’s determination of the evaluation process and scope, each committee self-evaluation is conducted in an executive session led by the Chair of the committee. The results of the self-evaluation of each standing committee is reported to the Board.
The Board and the Bank’s management will work together to enhance Board and committee effectiveness in light of the results of the self-evaluation.
IX. DIRECTOR COMPENSATION
Compensation for independent directors’ services may include annual cash retainers, fees for serving as Board Chair and fees for serving as a committee chair. The Corporation will also reimburse directors for their reasonable out-of-pocket expenses. Directors are reimbursed for their travel expenses not exceeding, in the case of air fare, the first-class commercial rate. Directors will also be reimbursed for reasonable out-of-pocket expenses (including tuition and registration fees) relating to attendance at seminars and training sessions relevant to their service on the Board and in connection with meetings or conferences which they attend at the Corporation’s request.
From time to time the stockholders shall review and approve the form and amount of director compensation for independent directors.
Unless and until amended by the stockholders, the compensation of independent directors for service on the Board and on standing committees of the Board shall be as follows:
Management may exercise any and all authorities as set forth in the By-laws. Management is authorized to implement plans, make expenditures, and acquire or dispose of assets consistent with the annual operating plan and the annual capital expenditures plan approved by the Board.
All expenditures for fixed assets should be authorized in the annual capital expenditures plan approved by the Board. Any such expenditure that would, either individually or when aggregated with related transactions, exceed fifteen percent of the total shareholders’ equity of the Corporation as shown on the most recent balance sheet must be approved by the Board.
All acquisitions and dispositions of assets — other than acquisitions and dispositions of assets in the normal course of business — that would, either individually or when aggregated with related transactions, exceed fifteen percent of the total shareholders’ equity of the Corporation as shown on the most recent balance sheet, and all acquisitions or other capital commitments that would represent the Corporation’s entry into a significant new line of business, must be approved by the Board.
Acquisitions of the stock or assets of other entities must obtain prior Board approval. Expenditures, consideration, payments and other amounts referred to in this section include the total of all payments to be made or received and the liabilities to be assumed, directly or indirectly.
Management may exercise any and all additional authorities as the Board may from time to time approve by resolutions duly adopted.
The Board shall periodically review these Guidelines and make any amendments necessary.
Approved: June 4, 2018