Revised effective as of December 3, 2020
The Board of Directors of Halliburton Company (the “Company”) has adopted these Guidelines to assist in the exercise of its responsibilities. These Guidelines will be reviewed annually by the Nominating and Corporate Governance Committee and revised as appropriate.
The Board’s primary responsibility is to provide effective governance over the Company’s business for the benefit of its shareholders. In furtherance of that responsibility, the Board will:
A. Evaluate the performance of the Chief Executive Officer and take appropriate action, including removal, when warranted. Specifically:
1. The Lead Independent Director will facilitate in executive session an annual evaluation of the performance of the Chief Executive Officer by the non-management Directors. The non-management Directors shall consider the Chief Executive Officer’s performance in both qualitative and quantitative areas, including:
a) Leadership and vision;
c) Informing the Board on matters affecting the Company;
d) Performance of the business (including measurements of total shareholder return, health, safety, and environmental performance, and achievement of financial objectives and goals);
e) Development and implementation of initiatives to provide long-term economic benefits to the Company;
f) Accomplishment of strategic objectives; and
g) Development of management.
The Compensation Committee will review the performance evaluation of the Chief Executive Officer and the market study conducted by an independent, external compensation consultant. Based upon the review, the Compensation Committee will make a recommendation on the Chief Executive Officer’s compensation for the upcoming year. The Compensation Committee will present its recommendation to the non-management Directors in executive session.
2. The non-management Directors will set the Chief Executive Officer’s compensation for the next year considering the recommendation of the Compensation Committee.
3. The Lead Independent Director will communicate the annual evaluation to the Chief Executive Officer.
B. Select, evaluate, and set the compensation of executive officers of the Company.
C. Annually review and evaluate the succession plans and management development programs for all members of executive management, including the Chief Executive Officer. Specifically, the Board will oversee a Chief Executive Officer succession management process, which will:
1. Develop criteria for the position that reflects the Company’s business strategy;
2. Utilize a formal assessment process to evaluate candidates;
3. Identify and develop internal candidates for the position;
4. Ensure non-emergency planning at least three (3) years before an expected transition; and
5. Develop and maintain an emergency succession plan.
D. Conduct periodic reviews of and approve strategic and business plans, and monitor corporate performance against the plans.
1. Periodic updates from management to the Health, Safety and Environment Committee regarding health, safety, environmental, and sustainability performance, including processes to ensure compliance with internal policies and goals and applicable laws and regulations;
2. Annual updates from management regarding any political contributions made by the Company to U.S. local, state, and federal government officials who oversee or regulate the Company’s operations, including any expenditures on lobbyists and political action committees, and any contributions to U.S. trade organizations;
3. Maintenance of accounting, financial, disclosure and other controls;
4. Adequacy of compliance systems and controls;
5. Policies to govern corporate conduct and compliance: and
6. Matters of corporate governance.
F. Conduct an annual evaluation of the performance and effectiveness of the Board, its Committees and each non-management Director.
A. Chairman of the Board and Chief Executive Officer: Under normal circumstances, the Chief Executive Officer should also serve as the Chairman of the Board. The Chairman of the Board is responsible for leadership of the Board to maximize its effectiveness. The Chief Executive Officer is responsible to shareholders for the overall management and functioning of the Company. On an annual basis the Board will consider whether it is appropriate that the Chairman of the Board and the Chief Executive Officer be the same individual and, if it determines that it is no longer appropriate, will take the necessary steps to have a different individual appointed to each position.
B. Lead Independent Director: If the offices of Chairman of the Board and Chief Executive Officer are held by the same person, the independent members of the Board will, after considering the recommendation of the Nominating and Corporate Governance Committee, annually elect an independent Director to serve in a lead capacity. Although elected annually, the Lead Independent Director is generally expected to serve for more than one year. The Lead Independent Director’s role and responsibilities are set forth in the Lead Independent Director Charter adopted by the Board. These include the following:
1. Liaises between the independent Directors and the Chairman of the Board;
2. Approves agendas for Board meetings;
3. Presides over meetings and executive sessions of the independent Directors;
4. Leads the Board’s annual evaluation of the Chief Executive Officer;
5. Advises management on and approves information sent to the Board;
6. Approves schedules for meetings of the Board;
7. Authorizes the retention of outside advisors and consultants who report directly to the Board; and
8. Schedules meetings of the independent Directors as appropriate.
C. Director Independence: The Nominating and Corporate Governance Committee will review the definition of independence and compliance with these guidelines periodically.
1. At least three-fourths of the members of the Board shall be independent. In order to be independent, a Director cannot have a material relationship with the Company. A Director will not be considered independent if he or she:
a) Is or has been employed by the Company or any of its affiliates in the preceding five calendar years, or any member of the Director’s immediate family has been employed as an Executive Officer of the Company or any of its affiliates in the preceding five calendar years;
b) Has received during any twelve-month period within the last three years more than $120,000 in direct compensation from the Company, other than director’s fees, committee fees, and pension or other forms of deferred compensation for prior service as a Director (provided such compensation is not contingent in any way on continued service);
c) Has an immediate family member who has received during any twelve-month period within the last three years more than $120,000 in direct compensation from the Company, other than director’s fees, committee fees, and pension or other forms of deferred compensation for prior service as a Director (provided such compensation is not contingent in any way on continued service);
d) (i) is a current partner or employee of the Company’s external auditor or (ii) during the past three years, was a partner or employee of the Company’s external auditor and personally worked on the Company’s audit within that time;
e) Has an immediate family member who (i) is a current partner of the Company’s external auditor, (ii) is a current employee of the Company’s external auditor and personally works on the Company’s audit or (iii) during the past three years, was a partner or employee of the Company’s external auditor and personally worked on the Company’s audit within that time;
f) Is a partner, member or officer of, or employed in a similar position with, any entity that provides accounting, consulting, legal, investment banking or financial advisory services to the Company for which such entity receives payments from the Company in excess of $120,000 per year; provided that this provision does not apply to a Director who is a limited partner or non-managing member of, or is employed in a similar position with, such entity and has no active role in providing such services to the Company;
g) Is a current employee, or has an immediate family member who is a current Executive Officer, of an entity that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other entity’s consolidated gross revenues;
h) Is or has been within the preceding three years part of an interlocking directorate in which an Executive Officer of the Company serves on the compensation committee of another entity that employs the Director, or an immediate family member of the Director, as an Executive Officer; or
i) Is or has an immediate family member who is currently a party to one or more personal services contract(s) with the Company or any Executive Officer of the Company that provides in the aggregate for payments to the Director or immediate family member in excess of $120,000 per year.
2. All Directors will complete independence questionnaires annually and the Board will make determinations of the independence of its members.
3. For purposes of this Section C:
a) “affiliate” means any individual or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the Company;
b) “Company” means Halliburton Company and includes any parent or subsidiary in a consolidated group with Halliburton Company;
c) “Executive Officer” has the meaning given to “officer” in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended; and
d) “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home. For purposes of the look-back provision in this Section C, “immediate family member” will not include individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated.
D. Management Directors: The number of management Directors should not exceed two (2). While this is not an absolute limitation, other than the Chief Executive Officer, who should at all times be a member of the Board, management Directors should be limited to those officers whose positions or potential make it appropriate for them to be a Board member. Management Directors shall retire from the Board at the time of their retirement from employment with the Company unless continued service as a Director is requested and approved by the Board.
E. Size of the Board: Optimally, the Board should number between ten (10) and fourteen (14) members. The Company’s By-laws provide that the number of Directors will not be less than eight (8) nor more than twenty (20).
F. Annual Election of All Directors: As provided in the Company’s By-laws, all Directors will be elected annually by the majority of votes cast, unless the number of nominees exceeds the number of Directors to be elected, in which event the Directors will be elected by a plurality vote. Should a Director’s principal occupation change, the Director shall submit a letter of resignation to the Chair of the Nominating and Corporate Governance Committee, which Committee shall have the discretion to accept or reject the resignation.
G. Process for the Selection of New Directors: The Board is responsible for filling Board vacancies that may occur between annual meetings of shareholders and for proposing new nominees for election by shareholders. The Board has delegated to the Nominating and Corporate Governance Committee the duty of selecting and recommending candidates to the Board for approval. The Nominating and Corporate Governance Committee will consider candidates for Board membership recommended by Board members, executive management, and shareholders. The Committee may also retain an independent executive search firm to identify candidates for consideration and to gather additional information about candidate’s background, experience and reputation.
The Nominating and Corporate Governance Committee, in consultation with the Board, will determine the specific criteria for a new Director candidate. After the Nominating and Corporate Governance Committee identifies a candidate, the Committee will determine the appropriate method to evaluate the candidate. The preliminary determination regarding a candidate is based on the likelihood that the candidate will meet the Board membership criteria listed in Section H below. The Committee will determine, after discussion with the Chairman of the Board and other Board members, whether a candidate should continue to be considered. If a candidate warrants additional consideration, the Committee will interview the candidate. One or more members of the Committee and others, as appropriate, will perform candidate interviews. Once the evaluation and interviews are completed, the Committee will recommend to the Board whether the candidate should be appointed to the Board or proposed for election by shareholders and the Board will act on such recommendation.
A shareholder who wishes to recommend a candidate should notify the Company’s Corporate Secretary, as described in the Company’s annual proxy statement. The Nominating and Corporate Governance Committee will consider persons nominated by a shareholder owning at least 1% of the issued and outstanding voting stock of the Company pursuant to the Company’s By-laws relating to shareholder nominations. For each individual nominated in accordance with the Company’s By-laws, the Corporate Secretary will (i) obtain from the nominee any additional relevant information the nominee wishes to provide in consideration of his or her nomination, (ii) report on the nominee to the Nominating and Corporate Governance Committee, and (iii) facilitate a meeting between the nominee and the Nominating and Corporate Governance Committee as the Committee deems appropriate.
H. Board Membership Criteria: Directors and nominees should possess the following qualifications:
1. Personal characteristics:
a) Highest personal and professional ethics, integrity, and values;
b) An inquiring and independent mind; and
c) Practical wisdom and mature judgment.
2. Broad training and experience at the policy-making level in business, government, education or technology.
3. Expertise that is useful to the Company and complementary to the background and experience of other Board members, so that an optimum balance of experience and expertise of members of the Board can be achieved and maintained.
4. Willingness to devote the required amount of time to carry out the duties and responsibilities of Board membership.
5. Commitment to serve on the Board for several years to develop knowledge about the Company’s business.
6. Willingness to represent the best interests of all Company shareholders and objectively evaluate management performance.
7. Involvement only in activities or interests that do not create a conflict with the Director’s responsibilities to the Company and its shareholders.
The Board will evaluate nominees annually for election and reelection, and as necessary to fill vacancies, to ensure they meet the above criteria. The findings of the reviews and assessments conducted in accordance with Sections I and J below will be taken into consideration by the Nominating and Corporate Governance Committee and the Board in connection with that evaluation.
I. Annual Performance Review: The Nominating and Corporate Governance Committee will conduct annual performance reviews of each non-management Director. While the Nominating and Corporate Governance Committee determines the evaluation process, each evaluation will include a review of the non-management Director’s:
1. Attendance and participation;
3. Expertise and experience;
4. Changes in principal occupation; and
5. Other contributions to the Board and its Committees.
The Nominating and Corporate Governance Committee will review each evaluation and, if appropriate, discuss the evaluation with the applicable non-management Director.
J. Annual Review of Board Composition; Board Assessment: The Nominating and Corporate Governance Committee will conduct an annual review of the overall composition of the Board to determine whether the current non-management Directors collectively represent an appropriate mix of experience, diversity and expertise, including significant experience with an energy-focused company, with a manufacturing, engineering or technology company, or in matters relating to health, safety and the environment. In addition, the non-management Directors will conduct an annual evaluation of the Board, including:
1. General makeup and composition of the Board;
2. Sufficiency of materials and information provided to the Board;
3. Board meeting mechanics and structure;
4. Board responsibilities and accountability; and
5. Board meeting content and conduct.
K. Service on Other Public Company Boards: The Chief Executive Officer will not serve on the boards of directors of more than two publicly traded companies in addition to the Company. The other Directors will not serve on the boards of directors of more than three publicly traded companies in addition to the Company; provided, however, that any other Director may serve on boards of directors of additional companies if that Director served on those boards of directors at the time the Director joined the Company’s Board and that Director undertakes not to stand for reelection or appointment to the boards of directors of in excess of three publicly traded companies in addition to the Company. Directors shall consult with the Chairman of the Board and the Chair of the Nominating and Corporate Governance Committee before accepting an invitation or nomination to serve on the board of directors of another publicly traded company. In evaluating prospective nominees for the Board and the continued service of current Directors, the Nominating and Corporate Governance Committee will consider whether service on other boards of directors impairs a Director’s ability to serve effectively as a Company Director.
L. Diversity: The Nominating and Corporate Governance Committee is responsible for assessing the appropriate mix of skills and characteristics required of Board members given the present needs of the Board and shall periodically review and update the criteria as deemed appropriate. Experience, expertise, background, race, gender, age and nationality will be reviewed for the Board as a whole, and diversity in these factors may be considered in evaluating Board candidates.
M. Director Tenure; Conditional Resignation in Certain Circumstances: The Nominating and Corporate Governance Committee, in consultation with the Chairman of the Board, will perform an annual review of each Director in making its recommendation to the Board concerning his or her nomination for election as a Director. As a condition to being nominated by the Board, each incumbent Director shall sign and deliver to the Board irrevocable letters of resignation, in forms satisfactory to the Board. The first resignation letter will be limited to and conditioned on that Director failing to achieve a majority of the votes cast at an election where Directors are elected by majority vote. For any Director who fails to be elected by a majority of votes cast, where Directors are elected by majority vote, his or her irrevocable letter of resignation will be deemed tendered on the date the election results are certified. The resignation shall only be effective upon acceptance by the Board. The second resignation letter is limited to and conditioned on the Director being found to have Participated in a Significant Violation or to have Recklessly disregarded his or her duty to exercise reasonable oversight, as more fully described in the Company’s By-laws. The resignation shall only be effective upon acceptance by the disinterested members of the Board. Each non-incumbent Director nominee shall sign and deliver to the Board the irrevocable letters of resignation described above to be eligible for election as a Director. Further, the Board shall fill vacancies and new directorships only with candidates who agree to tender the letters of resignation described above promptly following their appointment as a Director. Any Director whose resignation has been tendered as described in this section will abstain from participation in both the Nominating and Corporate Governance Committee’s consideration of the resignation, if they are a member of that Committee, and the Board’s decision regarding the resignation. There are no term limits on Directors’ service, other than mandatory retirement.
N. Non-Management Director Retirement: Each non-management Director shall retire from the Board immediately prior to the annual meeting of shareholders following his or her seventy-second (72nd) birthday.
O. Form and Amount of Director Compensation: The Nominating and Corporate Governance Committee will annually review the competitiveness of the Company’s Director compensation practices. The Committee, with the assistance of executive management and an independent, external compensation consultant, will compare the Company’s practices with those of its comparator group, which includes both peer and general industry companies. The Committee will also consider external market survey data. Specific components reviewed include cash compensation, equity compensation, benefits and perquisites. Changes in Director compensation, if any, shall be recommended by the Nominating and Corporate Governance Committee and approved by the Board.
P. Annual Meeting Attendance: All Directors will be expected to attend the annual meeting of shareholders, and the Company’s annual proxy statement shall state the number of Directors who attended the prior year’s annual meeting.
Board and Committee Meetings
A. Executive Sessions: During each regular Board meeting, the non-management Directors will meet in executive session presided over by the Lead Independent Director. If any non-management Director is not independent, the independent Directors will meet at least annually in executive session presided over by the Lead Independent Director.
B. Frequency of Board Meetings: The Board has five regularly scheduled meetings per year. The schedule for regular meetings will be approved in advance and maintained on a calendar. Special meetings are called as necessary. It is the responsibility of the Directors to attend the meetings.
C. Attendance of Non-Directors at Board Meetings: The Chief Financial Officer and the Chief Legal Officer will attend Board meetings, except where there is a specific reason for one or both of them to be excluded. In addition, the Chairman of the Board may invite one or more members of management to be in regular attendance at Board meetings and may include other officers and employees from time to time as appropriate.
D. Board Access to Management: Directors have open access to the Company’s management. The Company’s executive management routinely attends Board and Committee meetings and they and other managers frequently brief the Board and the Committees on particular topics. The Board encourages executive management to bring managers into Board or Committee meetings and other scheduled events who (i) can provide additional insight into matters being considered or (ii) have future potential and executive management believes should be given exposure to the Board.
E. Board Access to Independent Advisors: The Board has the authority to retain, set terms of engagement, and dismiss independent advisors, including legal counsel or other experts, as it deems appropriate, and to approve the fees and expenses of the advisors.
F. Conflicts of Interest: It is the responsibility of each Director to comply with the Company’s Conflicts of Interest Policy. If an actual or potential conflict of interest involving the Company exists, the Director should report the matter immediately to the Chairman of the Board, the Chair of the Audit Committee, and the Chief Legal Officer for evaluation by the Board. Any significant conflict must be resolved or the Director should resign. If a Director has a personal interest in a matter before the Board, the Director shall disclose the interest to the Board, excuse him or herself from participation in the discussion, and not vote on the matter.
G. Strategic and Business Planning: Strategic and business plans will be reviewed annually by the Board.
H. Agenda Items: The Chairman of the Board and the Chief Executive Officer will prepare a draft agenda for each Board meeting and the agenda and meeting schedule will be submitted to the Lead Independent Director. In advance of each Board or Committee meeting, the agenda will be distributed to each Director. Each Director may suggest items for inclusion on the agenda, and raise at any Board or Committee meeting subjects that are not on the agenda.
I. Checklists: A checklist of matters requiring recurring attention by the Board and each Committee will be prepared and distributed prior to the beginning of each year to ensure that the required actions are taken in a timely manner after adequate consideration. The Board and Committees shall annually review the checklists and may change or revise them as deemed appropriate.
J. Advance Review of Meeting Materials: To the extent feasible or appropriate, information and data important to the Directors’ understanding of the matters to be considered, including background summaries and presentations to be made at the meeting, will be distributed in advance of each Board or Committee meeting. The Lead Independent Director will advise management on and approve information distributed to the Directors. Directors also routinely receive monthly financial statements, earnings reports, press releases, analyst reports and other information designed to keep them informed of the material aspects of the Company’s business. It is each Director’s responsibility to review the meeting materials and other information provided by management.
K. Director Confidentiality: The information provided to the Directors by management (including information disclosed at Board and Committee meetings and in other Board communications or discussions) and any other information about the Company obtained by the Directors, from whatever source, in his or her capacity as a Director shall be kept confidential by each Director. Except as authorized by the Board or required by law, each Director shall not disclose any confidential information to any person or entity (including members of the media, shareholders or any other third party) other than other Directors, executive management of the Company, the independent accountants, and legal counsel and financial and other advisors retained by the Company. No Director shall use confidential information for his or her personal benefit or to benefit persons or entities other than the Company and its shareholders. For purposes of these guidelines, “confidential information” includes all non-public information relating to the Company, including information regarding Board deliberations and discussions and the status thereof.
Committees of the Board
A. Number and Types of Committees: A substantial portion of the analysis and work of the Board will be done by standing Board Committees. A Director is expected to participate actively in the meetings of each Committee to which he or she is appointed.
B. Standing Committees: The Board has established the following standing Committees: Audit, Compensation, Health, Safety and Environment, and Nominating and Corporate Governance. Each Committee’s charter shall be reviewed annually by the Committee and the Board.
C. Composition of Committees: Only non-management Directors may serve on Board Committees. Further, only independent Directors may serve on the Audit, the Compensation, the Nominating and Corporate Governance, and the Health, Safety and Environment Committees; provided that the Directors may appoint one non-independent Director as a member (but not the Chair) of the Health, Safety and Environment Committee as they deem appropriate. The composition of the Board Committees will be reviewed annually to ensure that each of its members meet the criteria set forth in applicable SEC, NYSE, and IRS rules and regulations.
D. Committee Rotation: The Nominating and Corporate Governance Committee, in consultation with the Chairman of the Board and the Chief Executive Officer, will recommend annually to the Board the membership of the various Committees and their Chairs, and the Board will approve the Committee assignments. In making its recommendations to the Board, the Nominating and Corporate Governance Committee will consider the need for continuity, subject matter expertise, applicable SEC, NYSE or IRS rules and regulations, tenure and the preferences of individual Board members.
E. Frequency of Committee Meetings: Each Committee shall meet as frequently and for the length of time as may be required to carry out its assigned duties and responsibilities. The schedule for regular meetings of the Committees will be approved in advance and maintained on a calendar. In addition, a quorum of members of a Committee may call a special meeting at any time as deemed appropriate.
F. Committee Agendas/Reports to the Board: Management will prepare draft agendas and related background information for each Committee meeting which, to the extent desired by the relevant Committee Chair, will be approved by the Committee Chair in advance of distribution to the other members of the Committee. Committee members may suggest items for inclusion on the agenda and raise at any Committee meeting subjects that are not on the agenda. Reports on each Committee meeting are made to the Board. All Directors will be furnished copies of each Committee’s minutes.
Other Board Practices
A. Non-Management Director Orientation and Continuing Education: An orientation program is provided to new non-management Directors which includes: comprehensive information about the Company’s business; general information about the Board and its Committees, including a summary of Director compensation and benefits; and a review of Director duties and responsibilities. Non-management Directors also receive education and training in areas of importance to the Company, including the Company’s business, heath, safety, environmental, and sustainability matters, compliance matters, corporate governance, and duties and responsibilities of directors.
B. Board Interaction with Institutional Investors and Other Stakeholders: Executive management is responsible for speaking for the Company. Individual Directors may, from time to time, meet or otherwise communicate with outside constituencies that are involved with the Company. In those instances, however, it is expected that Directors will do so only with the knowledge of executive management and, absent unusual circumstances, only at the request of executive management.
C. Shareholder Communications with Directors: To foster better communication with the Company’s shareholders, the Company established a process for shareholders to communicate with the Audit Committee and the Board. The process has been approved by both the Audit Committee and the Board, and meets the requirements of the NYSE and the SEC. The methods of communication with the Board include mail (Board of Directors c/o Director of Business Conduct, Halliburton Company, P.O. Box 42806, Houston, Texas 77242), a dedicated telephone number (888-312-2692 or 770-613-6348) and an e-mail address (BoardofDirectors@halliburton.com). Information regarding these methods of communication is also on the Company’s website, www.halliburton.com, under “Corporate Governance.”
The Company’s Director of Business Conduct, a Company employee, will review all shareholder communications directed to the Audit Committee and the Board. The Chair of the Audit Committee will be promptly notified of any significant communication involving accounting, internal accounting controls, or auditing matters. The Lead Independent Director will be promptly notified of any other significant shareholder communications. Communications addressed to a named Director will be promptly sent to the Director. A report summarizing all communications is provided to the Directors at each Board meeting and copies of communications will be available for review by any Director.
D. Core Values: The Board is committed to promoting the Company’s core values.
E. Periodic Review of these Guidelines: The operation of the Board is a dynamic and evolving process. Accordingly, the Nominating and Corporate Governance Committee will review these Guidelines periodically and any recommended revisions will be submitted to the Board for consideration and approval.
Approved as revised:
Board of Directors
December 3, 2020
Supersedes previous version dated
December 6, 2018