2018 Guide to Effective Proxies

2.14 Board and director evaluation | 207 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES RR DONNELLEY SEMTECH CORPORATION STATE STREET CORPORATION T-MOBILE US, INC. COMPANYINFORMATION BoardLeadership TheBoardhasdeterminedthathavinganindependentdirectorserveaschairoftheBoardisinthebestinterestofstockholdersatthis time.ThestructureensuresagreaterrolefortheindependentdirectorsintheoversightoftheCompanyandactiveparticipationofthe independentdirectorsinsettingagendasandestablishingprioritiesandproceduresfortheworkoftheBoard.Nosingleleadershipmodel isrightforallcompaniesatalltimes,however,andtheBoardrecognizesthat,dependingonthecircumstances,otherleadershipmodels mightbeappropriate.Accordingly,theBoardperiodicallyreviewsitsleadershipstructure.TheBoard’s PrinciplesofCorporateGovernance providethat,generally,nodirectormayserveaschairoftheBoardoranycommitteeformorethanthreeyears,providedthatthe CorporateResponsibility&GovernanceCommitteemayrecommendtotheBoard,andtheBoardmayapprove,asingleextensionofthe termofachairoftheBoardoranycommitteeforanadditionalthreeyearsoncethechair’sinitialthree-yeartermhasendedandthe CorporateResponsibility&GovernanceCommitteemayrecommendtotheBoard,andtheBoardmayapprove,extendingthetermofthe chairoftheBoardoranycommitteebeyondsixyearsifitdeemssuchanextensiontobeinthebestinterestofthestockholdersandthe Company.Inaddition,serviceasachairoftheBoardoranycommitteepriortothe2014AnnualMeetingshallnotbeconsideredfor purposesofthislimitation. BoardandCommitteeEvaluations TheBoardundertakesathreepartannualevaluationprocessthatiscoordinatedbythechairoftheCorporateResponsibility& GovernanceCommitteewhichincludes:(1)Boardandcommitteeself-evaluations;(2)evaluationscompletedbyapplicablemembersof managementoftheBoardanditscommittees;and(3)interviewsofeachdirectorconductedbyathird-partygovernanceexpert.Results oftheindividualwrittenevaluationsaresharedwiththechairoftheCorporateResponsibility&GovernanceCommittee,thechairofthe BoardandtheChiefExecutiveOfficer,afterwhichitisdeterminedwhetherdiscussionswithanyindividualdirectorconcerning performancearenecessary.ResultsarethensharedwiththechairsoftheapplicablecommitteesbeforebeingsenttotheBoardandeach committeefortheirreview.ThechairoftheCorporateResponsibility&GovernanceCommitteediscussestheresultsfromtheinterviews withthethird-partyexpertandsummarizessuchresultsandpresentsthemtotheBoard.TheBoardhasusedinformationprovided throughtheevaluationprocesstocontinuouslyimproveitsfunctioning. Board’sRoleinRiskOversight TheBoardisactivelyinvolvedinoversightofrisksinherentintheoperationoftheCompany’sbusinessesandtheimplementationofits strategicplan.TheBoardperformsthisoversightrolebyusingseveraldifferentlevelsofreview.Inconnectionwithitsreviewsofthe operationsoftheCompany’sbusinessunitsandcorporatefunctions,theBoardaddressestheprimaryrisksassociatedwiththoseunits andfunctions,includingITandcybersecurityrisks.Inaddition,theBoardreviewsthekeyrisksassociatedwiththeCompany’sstrategic planannuallyandregularlythroughouttheyearaspartofitsconsiderationofthestrategicdirectionoftheCompanyaswellasreviewing theoutputoftheCompany’sriskmanagementprocesseachyear. TheBoardhasdelegatedtotheAuditCommitteeoversightoftheCompany’sriskmanagementprocess.Amongitsduties,theAudit Committeereviewswithmanagement(a)Companypolicieswithrespecttoriskassessmentandmanagementofrisksthatmaybematerial totheCompany,(b)theCompany’ssystemofdisclosurecontrolsandsystemofinternalcontrolsoverfinancialreporting,and(c)the Company’scompliancewithlegalandregulatoryrequirements. EachoftheotherBoardcommitteesalsooverseesthemanagementofCompanyrisksthatfallwithinsuchcommittee’sareasof responsibility.Inperformingthisfunction,eachcommitteehasfullaccesstomanagement,aswellastheabilitytoengageadvisors,and eachcommitteereportsbacktothefullBoard.TheAuditCommitteeoverseesrisksrelatedtotheCompany’sfinancialstatements,the financialreportingprocess,otherfinancialmatters,certaincomplianceissuesandaccountingandlegalmatters.TheAuditCommittee, alongwiththeCorporateResponsibility&GovernanceCommittee,isalsoresponsibleforreviewingcertainmajorlegislativeand regulatorydevelopmentsthatcouldmateriallyimpacttheCompany’scontingentliabilitiesandrisks.TheCorporateResponsibility& GovernanceCommitteealsooverseesrisksrelatedtotheCompany’sgovernancestructureandprocesses,relatedpersontransactions, certaincomplianceissuesandBoardandcommitteestructuretoensureappropriateoversightofrisk.TheHRCommitteeconsidersrisks relatedtotheattractionandretentionofkeymanagementandemployeesandrisksrelatingtothedesignofcompensationprogramsand arrangements,aswellasdevelopmentalandsuccessionplanningforpossiblesuccessorstothepositionofchiefexecutiveofficerand planningforotherkeyseniormanagementpositions. NominationofDirectors ItisthepolicyoftheCorporateResponsibility&GovernanceCommitteetoconsidercandidatesfordirectorrecommendedby stockholders.Inordertorecommendacandidate,stockholdersmustsubmittheindividual’snameandqualificationsinwritingtothe committee(incareoftheSecretaryattheCompany’sprincipalexecutiveofficesat35WestWackerDrive,36 th Floor,Chicago,Illinois 60601)andotherwiseinaccordancewiththeproceduresoutlinedunder SubmittingStockholderProposalsandNominationsfor2019Annual Meeting onpage45ofthisproxystatement.Thecommitteeevaluatescandidatesrecommendedfordirectorbystockholdersinthesame waythatitevaluatesanyothercandidate.Thecommitteealsoconsiderscandidatesrecommendedbymanagementandmembersofthe Boardaswellasnomineesrecommendedbystockholders. 14 RRD 2018NoticeofMeetingandProxyStatement CORPORATEGOVERNANCE Policy on HedgingandPledging TheCompanyrecognizesthathedgingagainstlossesinCompanystockisnotappropriateoracceptable tradingactivityforindividualsemployedbyorservingtheCompany.TheCompanyhasadoptedstock ownershipguidelines(asdescribedbelowinthesectiontitled“CompensationDiscussionandAnalysis”)that, amongotherthings,areintendedtoaligntheinterestsofstockholders,andtheCompany’sdirectorsand officers.Inkeepingwiththeintentofthestockownershipguidelines,aswellasforthepurposeofclearly outliningtheCompany’spositiononacceptabletradingactivity,theCompanyhasincorporatedprohibitionson varioushedgingactivitieswithinitsstocktradingguidelines,whichguidelinesapplytodirectors,officersand employees.TheguidelinesprohibitallshortsalesofCompanystockandanytradinginderivatives(suchas putandcalloptions)thatrelatetoCompanysecurities.TheguidelinesalsoprohibitpledginganyCompany stockorequityawardsascollateralforanymarginaccount,orotherformofcreditarrangement. Risk Assessmentof CompensationPrograms In compliancewithSECdisclosurerequirements, wehaveevaluatedour compensationpoliciesand practices to determine if any of our programs create risks that are reasonablylikelyto havea material adverse effect on the Company. We haveconcludedthat our compensationpoliciesandpractices do not create such risks. We evaluatedour executiveprogram, as wellas our broad-basedcompensationand benefits programs on a worldwidebasis. We focused on lookingat whether any program’s elements, criteria, purposesor objectivescreate undesiredor unintendedrisk of a material nature. Whileallprograms were evaluated,primary reviewandattention wasplacedon programs havingpotentialfor variablepayouts where an individualparticipantor smallgroups of participantsmight havethe abilityto directly affect, control or impact payout results. We are satisfiedthat allcompensationprograms are structured withappropriate controls, objectivemeasurement variables,reviewauthoritiesandpayment methodologiesthat, inthe aggregate, are designedandadministeredso that there is not any reasonablelikelihoodof material adverse risks to the Companyarisingfrom or causedby any of our compensationprograms. In addition,“claw-back” rights andprovisionsinapplicableexecutivecompensationplansas discussedbelowinour “Compensation DiscussionandAnalysis”are additionalsafeguards that encourageexecutivesto refrain from makingrisky decisionsor takingactionsthat couldharm the Company. In particular, basesalariesare fixed inamount andare, therefore, not susceptibleto encouraging unnecessaryor excessiverisk taking. Althoughthe performance-based, short-term annualcash incentives focus on achievementof short-term individualperformance andbusiness-relatedgoals,whichcould encouragetakingof short-term risks at the expenseof long-term goals,this element of compensationis offset andbalancedby the Company’suse of long-term, multi-year incentiveprograms that are designedto alignour executives’interests withthose of the Company’sstockholders. We believethat long-term, multi-year incentiveprograms do not encourageunnecessaryor excessiverisk takingbecausethe ultimate valueof these programs is tied to the valueof the Company’sstock andthe grant dates andvestingdates are staggered over multipleyears to ensure that executiveshavea significantstake inthe long-term performance of the Company’sstock. Evaluation of Chief ExecutiveOfficer Performance In concert withour CompensationCommittee inaccordancewiththat Committee’s charter, the Boardof Directors oversees andevaluatesthe performance of the ChiefExecutiveOfficer on an ongoingbasis, includinga formal annualperformance review. Suchevaluationincludesregular assessment of his performance againstgoalsandobjectivesestablishedinconnectionwithhiscompensationprograms, as wellas hisoverallperformance inleadingandmanagingthe Company. AnnualBoardEvaluation Pursuant to our Corporate Governance Guidelinesandthe charter of the NominatingandGovernance Committee, the NominatingandGovernance Committee at least annuallyreviews, discussesandassesses SemtechCorporation 2017Proxy Statement | 15 Total of 02 pages in section CORPORATEGOVERNANCEATT-MOBILE ANNUAL BOARD AND COMMITTEE EVALUATIONS TheNominatingandCorporateGovernanceCommitteeoverseestheannualBoardandcommitteeself-evaluationprocess.In2017,theCommittee engagedanoutsideconsultanttocoordinateandprovideinsightontheannualself-evaluationprocess. TheBoardiscommittedtoacomprehensiveself-evaluationprocess toreviewtheBoardandeachcommittee’soveralleffectiveness. Notedbelowarethehigh-levelstepsoftheBoardandCommitteeself-evaluationprocess. Board Evaluation Process Begin Evaluation Process The Chair of the Nominating and Corporate Governance Committee initiates, with the assistance of the Corporate Secretary, the annual evaluation process by engaging an outside evaluation consultant STEP 1 STEP 3 Analysis The outside consultant reviews the responses and prepares an executive summary for the Board and each Committee, which includes an overview of director responses and guidance on anymaterial issues. The Chair of the Nominating and Corporate Governance Committee reviews the reports together withmanagement andworks directly with the consultant to evaluate the findings. STEP 4 Results and Findings The Nominating and Corporate Governance chair, with assistance from the outside consultant, presents the results and findings to the Board. Each committee reviews the committee results and findings. STEP 5 FollowUp Results requiring additional consideration are addressed at subsequent board and committee meetings and reported back to the Board,where appropriate. STEP 2 Evaluation Working closely withmanagement, the outside consultant distributes comprehensive questionnaires to each director soliciting feedback on the Board's and each relevant Committee's effectiveness, covering topics such as: ■ StrategicOversight ■ Scope&Content ofPresentations ■ RiskManagement ■ Succession Planning HOW TO COMMUNICATE WITH OUR BOARD YoumaycontacttheChairmanoftheBoard,theBoardasawhole,theleadindependentdirector,oranyindividualdirectorasfollows: ByMail: T-MobileUS,Inc. TheBoardofDirectors c/oCorporateSecretary 12920SE38thStreet Bellevue,Washington98006 Afterreceipt,communicationswillgenerallybeforwardedtotheChairmanoftheBoard,thewholeBoard,theleadindependentdirectororspecific directorsastheCorporateSecretarydeemsappropriatebasedonthecontentof,andthemattersraisedin,thecommunication.Communicationsthatare unrelatedtothedutiesandresponsibilitiesoftheBoardorareundulyhostile,threatening,potentiallyillegalorsimilarlyunsuitablewillnotbeforwarded. ResponsestolettersandanycommunicationsthatareexcludedaremaintainedbytheCompanyandareavailabletoanydirectoruponrequest. 6 T-Mobile2018ProxyStatement CorporateGovernance (continued) 2018NOTICEOFMEETINGANDPROXYSTATEMENT recommendstotheBoardthedirectornomineesthatshouldstandforelectionatthenextannualmeeting.Basedonthisevalua- tion, the Board believes that individually each of the nominees has had substantial achievement in his or her personal and pro- fessional pursuits and has talents, experience and integrity that will contribute to the best interests of State Street and to long- term shareholder value, and the nominees as a group possess the skill sets, specific business background and global or international experience that the Board desires. The director nominee biographies set forth in this proxy statement under the heading “Item 1—Election of Directors” indicate each nominee’s qualifications, skills, experience and attributes that led the BoardtoconcludeheorsheshouldserveasadirectorofStateStreet. In carrying out its responsibility to find the best qualified candidates for directors, the Nominating and Corporate Governance Committee will consider proposals for nominees from a number of sources, including recommendations from shareholders sub- mitteduponwrittennoticetotheChairoftheNominatingandCorporateGovernanceCommittee,c/otheOfficeoftheSecretaryof State Street Corporation,OneLincolnStreet,Boston,Massachusetts02111(facsimile number(617)664-8209).TheCommittee seekstoidentifyindividualsqualifiedtobecomedirectors,consistentwiththeabovecriteriausedbytheBoardfordirectorcandi- dates. By following the procedures set forth under “General Information About the Annual Meeting—Proposals and Nominations by Shareholders,” shareholders also have the right under our by-laws to directly nominate director candidates and, in certain circumstances,tohavetheirnomineesincludedinStateStreet’sproxystatement. TheNominatingandCorporateGovernanceCommittee’sprocessforidentifyingandevaluatingcandidatesincludesactivelyseek- ingtoidentifyqualifiedindividualsbyreviewinglistsofpossiblecandidatesandconsideringproposalsfromanumberofsources, such as members of the Board, members of management, employees, shareholders and industry contacts. The Committee’s charter grants it the authority to retain search firms to assist in conducting this search. Upon identifying a possible candidate, from whatever source, the Committee makes an initial evaluation as to whether the individual would qualify under the criteria usedbytheBoardfordirectorcandidates.Acandidatewhopassestheinitialevaluationisthenfurtherevaluatedthroughaproc- ess which may include obtaining and examining the individual’s resume, speaking with the person who has recommended the individual,speakingwithotherswhomaybefamiliarwiththeindividual,interviewsbymembersoftheBoardandtheNominating and Corporate Governance Committee with the individual, discussion at the Committee level of the individual’s possible con- tribution to State Street and, if appropriate, voting on the individual as a candidate. The Committee evaluates possible nominees fordirectorwithoutregardtowhetheranindividualisrecommendedbyashareholderorotherwise. Ms.SaraMathewandMr.WilliamL.Meaneyarefirst-timenomineesforelectionasdirectorsbyshareholdersatthisannualmeet- ing. Ms. Mathew and Mr. Meaney were first identified by a third-party search firm that was retained to identify potential director candidates. At the request of the Nominating and Corporate Governance Committee, the search firm first discussed with the members of the Committee the priority characteristics of a new director candidate, in light of the preferred individual and Board qualities described above. The search firm developed preliminary criteria for a directorcandidateandreviewedthemwithmem- bers of the Committee. The search firm identified potential candidates that met the criteria and submitted a list of potential candidates for consideration. The Committee met to discuss and prioritize the list of candidates and subsequently reviewed this processandtheresultinglistwiththeLeadDirectorandtheBoard.Afterapreliminarychecktodeterminepotentialconflictswas performed, the search firm was asked to approach the candidates to determine their interest and availability to serve on the Board.ThesearchfirmgavetheCommitteealistofcandidateswhowereinterested,andtheChairmanoftheBoard,Chairofthe Nominating and Corporate Governance Committee and members of the Committee and Board personally interviewed them. The Board is nominating Ms. Mathew and Mr. Meaney as they meet several of the criteria identified by the Board for new directors, including, but not limited to, Ms. Mathew’s valuable experience in corporate strategy, technology and finance, with a particular emphasisoninternalcontrolsandprocesses,andMr.Meaney’sbroad,globalbackgroundinleadingbothdomesticandinterna- tional companies combined with his understanding and practical knowledge of business transformation. Both the Nominating and Corporate Governance Committee and the Board of Directors believes that Ms. Mathew and Mr. Meaney have the back- ground and requisite experience to make significant contributions on many levels to State Street through their continued service asdirectors.BothnomineesweredeemedindependentbytheBoardundertheCorporateGovernanceGuidelines. AnnualBoardandCommitteeEvaluations Onanannualbasis,theBoardofDirectorsandeachcommitteeconductsanannualself-evaluationofitsperformanceandeffec- tiveness. Directors complete a questionnaire evaluating the Board and each committee they serve on, specifically focusing on areas of potential improvement. The overall performance of the Board—including its contributions to the Company—and a STATESTREETCORPORATION 3 Total of 03 pages in section