Mission and Purpose
Elected by the shareholders of FactSet Research Systems Inc., the board of directors is mandated to oversee management and act as stewards of the shareholders' long-term interests in the corporation. The mission of the board is to provide guidance to the senior officers of the corporation in their management of the business in order to promote its success and enhance its ultimate value. The board must actively make a good faith effort to be informed and to exercise appropriate judgment in matters before it. In assessing management's methods of optimizing shareholder value, the board must also take into consideration other interested parties, including employees, clients and vendors, as well as compliance with applicable law. The directors should also serve as a sounding board for management in matters where a director's experience or expertise is pertinent.
A. Size and Selection Process
The directors are elected by shareholders each year at the annual meeting. Nominations to the board are made by the Nominating and Corporate Governance Committee and may be made by shareholders by submitting all pertinent information to: Secretary, FactSet Research Systems Inc., 601 Merritt 7, 3rd Floor, Norwalk, Connecticut, 06851. The board determines the number of directors, in accordance with the Corporation's By-laws, which require between three and fifteen directors. In recent history, the Corporation has had about nine directors, a number that the board believes is effective. Vacancies on the board will be filled by new directors. At the discretion of the board, emeritus directors may be permitted to attend meetings although they are not empowered to vote.
B. Membership Criteria
- Experience and Personal Qualifications
The board seeks to include directors with diverse and solid experience in areas relevant to the corporation's business. The corporation also seeks directors with the highest standards of ethics and integrity, sound business judgment and the willingness to make a strong commitment to the corporation and its success.
C. Independent Directors
- Criteria for Independence
The board will be comprised of a majority of independent directors. The definition of "independent" will be based on the New York Stock Exchange's rules as of the date of these Guidelines. The board will make a determination that a director is independent at the beginning of the director's first term and on an annual basis, in accordance with the stated definition.
- Meetings of Independent Directors
Independent directors will have at least one regularly scheduled meeting each fiscal year without insider directors present. In addition, the independent directors will meet in executive session at the end of each regularly scheduled meeting of the board. The Chairman of the Nominating and Corporate Governance Committee will be the presiding director and will also fulfill the role of lead independent director. The independent directors may meet at such other times as the lead independent determines. The independent directors may invite non-management directors, management or both to participate at any meeting.
D. Management Directors
The board does not have a policy requiring the separation of the roles of chairman of the board and chief executive officer. The board believes that the interests of the shareholders are well served by a board chairman who has intimate familiarity with the day to day management of the corporation.
- Change of Responsibility
Any director who changes his principal occupation or business association should notify the board and offer his resignation to be effective at the end of his term or immediately. The board may determine, after receiving the recommendation of the Nominating and Corporate Governance Committee, to reject the offer of resignation.
A. Attendance, Participation, Preparedness
Directors owe a duty of care to the corporation. They must act on an informed basis, in good faith and in the honest belief that the action they take is in the best interests of the corporation.
Directors are expected to attend all board meetings and participate actively, offering their candid views and their well-informed, deliberate judgment. Directors should inform themselves using all material information reasonably available to them prior to making a business decision with regard to the corporation. There is no place for fraud, bad faith, or self-dealing in any director's relationship with the corporation.
Whenever a director is unable to attend a meeting, he should contact the Chairman, Secretary or Assistant Secretary promptly after the meeting to become informed on the subjects discussed, views expressed and actions taken, if any. The director should also provide the Secretary with the reason for the director's absence.
Directors should have a full working understanding of the corporation's business and the issues relevant to it. Directors are expected to be prepared to discuss matters listed on the agenda for each meeting. Directors, acting through the lead independent director, will also propose matters to be included on the agenda. They should review materials sent in advance of the meetings and, when appropriate, ask questions of management in advance of the meeting.
B. Time Commitments
A director is expected to give freely and generously of his or her time in providing the best guidance to the corporation. A director who is also a manager of the corporation may not sit on more than one other board of a public company. A director who is a member of senior management of another public company may not sit on a total of more than three public company boards. All other directors may not serve on more than four boards of public companies without the prior written approval of the board. Each independent director is expected to participate in committees suited to his skills and for the best interest of the corporation. Each independent director will be expected to participate in at least two committees, as necessary, to serve the needs of the corporation. Directors are also expected to make themselves available for non-regularly scheduled meetings as well as consultation with management on an as-needed basis.
Directors should familiarize themselves beyond their orientation with the structure and focus of the corporation's business. On a regular basis they should access the corporation's services and review new product developments.
A. Informing the Board
Senior management will use its best efforts to keep the board well informed of developments at the corporation and the issues facing it through the regularly scheduled board meetings. Whenever significant issues arise between regularly scheduled meetings, management will inform the board as appropriate.
Management will prepare an agenda in advance of each board meeting along with relevant background material to enable informed discussion at each upcoming meeting. Items not on the agenda may be discussed at the discretion of the chairman of the board. As necessary, management will prepare material in advance of committee meetings to ensure effective meetings. Matters may be discussed at various meetings although no advance material has been prepared. Management will deliver materials to the board well enough in advance of each meeting to allow sufficient time for the directors properly to review the materials.
B. Director Access to Officers and Employees
Members of management are expected to make themselves available to directors to answer questions and provide information whenever requested.
Each committee will have a charter setting forth the basic elements of its responsibilities and activities. The following items summarize the salient points of each committee's purpose and function. All committees are empowered, as necessary, to seek the assistance of management or to employ outside advisors in discharging the committees' responsibilities. Each committee will develop, approve and follow its own charter, which will include details on the responsibilities listed here. Each committee shall evaluate its own effectiveness at least once a year and the suitability of its charter on a regular basis. The board may establish new committees as the need for them arises.
B. Nominating and Corporate Governance Committee
The Nominating and Corporate Governance is charged with identifying individuals who may be nominated to the board. This committee will interview and investigate the candidates and make recommendations to the board as whole. Once a new director joins the board, this committee will supervise the new director's orientation with appropriate materials about and visits to the corporation. The committee will also assist the board in determining committee assignments for the board's members during their terms. The committee will further identify appropriate educational programs directors may wish to attend.
This committee will oversee the board's efforts to maintain high standards of corporate governance. The committee will review and recommend the adoption of these guidelines and any subsequent changes to them to the board as a whole whenever necessary. The committee will review and approve a code of ethics for the board and the corporation. The committee will review and adopt any statements of policy necessary from the board. Additionally, the committee will review any ethical questions that may arise out of a director's activities or proposed activities.
- Lead Independent Director
As stated above, the chairman of Corporate Governance and Nominating Committee will serve as lead independent director. The lead independent director will schedule at least one meeting of independent directors and without management per year; the independent directors will meet in executive sessions throughout the year at the end of regularly scheduled board meetings.
- Term Limits and Retirement Policy
The board does not currently believe that term limits are in the best interest of the corporation. Rather, the Corporate Governance and Nominating Committee will evaluate the appropriateness of re-nominating directors as their terms approach expiration.
- Evaluation of Board Function
Under the committee's guidance, each director will evaluate his performance as a director over the course of the fiscal year. The committee will also assist the board as a whole in reviewing its effectiveness over the preceding fiscal year. The committee will assess the overall quality of the material provided to the board and the presentations made to the board at least once in each year. The board and the committees may use questionnaires to aid in these types of evaluations.
- Succession Planning
As appropriate, the committee will assist in succession planning for senior management of the corporation, including the chief executive officer.
C. Audit Committee
The Audit Committee is charged with assisting the board in its review of the financial information generated by management, outside auditors and the internal audit function (whether internal or outsourced). The Committee will have at least three independent director members, at least one of which will be a "financial expert" as required by Section 407 of the Sarbanes Oxley Act and Item 401(h) of Regulation S-K.
- Management of Audit Relationship
The Audit Committee is charged with managing the relationship with the corporation's outside auditors. The Audit Committee may choose to develop and follow a set of procedures in dealing with that relationship.
- Requirements and Charter
The Audit Committee will adhere to the policy requirements of the New York Stock Exchange. These requirements and any others instituted by the board or the SEC will be included in the committee's charter. The committee will follow the mandate of its charter.
The Audit Committee is responsible for addressing complaints regarding the corporation. The Audit Committee will work with the General Counsel and the Chief Financial Officer of the corporation in determining the appropriate response to any complaint. The committee may also seek the assistance of outside advisors in investigating a complaint as appropriate.
- Auditor Rotation
The Audit Committee will develop and adhere to a policy on auditor rotation.
D. Compensation Committee
- Membership and duties
The Compensation Committee will be comprised of at least two outside directors. The Compensation Committee will meet at least once a year to review and approve the compensation of management and the issuance of options under the corporations various stock option plans. The committee will assist the board in its review of the performance of senior management. The committee will also assist the board in determining appropriate director compensation. The committee may also be called upon by the board to review other compensation-related issue as necessary.
Conduct Specific to Board Members
The board is expected to adhere to the corporations code of ethics. Any breach of this code by a director will be addressed at a meeting of the Nominating and Corporate Governance Committee, which may choose to refer the issue to the board as a whole, depending on the nature of the breach.
Board members are expected to maintain appropriate confidentiality regarding matters discussed in board and committee meetings. Management will act as spokespersons of the corporation and the board may direct outside questions about the corporation to management for response.
Each director, with the exception of management directors, receives an annual retainer of $25,000 in addition to non-qualified stock options having an intended value of $65,000 to be granted on or around January 15th of each year. Also, committee chairmen and members of the Audit Committee receive an annual fee of $2,500. The exercise price of each non-qualified stock option is the closing price of FactSet's common shares on the date of grant. Each director who is not an employee, upon election as a non-employee director, typically receives a one-time grant of options. Non-qualified stock options granted to directors vest ratably at 20% per year over five years upon the anniversary date of each grant and expire seven years from the date the options were granted.
Approved by the Board of Directors of FactSet Research Systems Inc. May 19, 2006.