Corporate Governance Guidelines

Adopted: March 2004
Revised: March 2005

Perot Systems’ Board of Directors has adopted these Corporate Governance Guidelines to express its current thinking with respect to certain corporate governance issues.  The Board will review, and may modify, these Guidelines from time to time.  Except where required by applicable law or the rules of the New York Stock Exchange, these Guidelines are not rigid rules that govern the Board’s performance of its duties or the exercise of its responsibilities.  In addition, these Guidelines are not intended to modify or constitute an interpretation of Perot Systems’ Certificate of Incorporation or Bylaws or any applicable law or regulation. 

I.       Board of Directors – Organization

A.      Director Qualification Guidelines and Independence Standards

The Board is responsible for nominating candidates for election and re-election as Directors. The Board has delegated to its Nominating and Governance Committee the responsibility to identify and evaluate the character, experience and independence of potential candidates for consideration by the Board.  From time to time, the Nominating and Governance Committee will adopt qualification guidelines and independence standards for potential candidates in accordance with applicable law and the rules of the New York Stock Exchange.  Perot Systems’ Director Qualification Guidelines and Director Independence Standard are attached to these guidelines as Exhibits A and B, respectively.

The Board does not restrict Directors from serving on boards or committees of other organizations, provided that such service is consistent with Perot Systems’ Standards & Ethical Principles.  However, the charter of the Board’s Audit Committee and the director qualification guidelines adopted by the Nominating and Governance Committee may provide guidelines on such service. 

Directors shall not enter into consulting or other agreements with Perot Systems or any of its subsidiaries, except with the approval of the Board of Directors and the Audit Committee.

The Board has not established mandatory retirement age or term limits for Directors.  However, the Nominating and Governance Committee may consider age and length of service as factors when recommending that a candidate be nominated for election or re-election as a director. 

The Board encourages, but does not require, Directors to own an equity interest in Perot Systems.   

B.      Board and Committee Structure

In accordance with Perot Systems’ Bylaws, the Board determines from time to time the number of Directors to comprise the Board.  The Board’s policy is that a majority of the Directors should be “independent,” as determined in accordance with the independence standards adopted by the Nominating and Governance Committee, beginning on May 1, 2004. 

From time to time, the Board will determine whether the Chairman of the Board should also be an officer or employee of Perot Systems, subject to any restrictions imposed by applicable law or the rules of the New York Stock Exchange.  When these guidelines were revised, the Chairman of the Board was an officer and employee of Perot Systems. 

In accordance with Perot Systems’ Bylaws, the Board may establish such committees as the Board deems appropriate.  Unless the Board decides otherwise, these committees will include Audit, Human Resources and Compensation, and Nominating and Governance Committees.  Only Directors who are “independent,” as determined in accordance with the independence standards adopted by the Nominating and Governance Committee, will serve on the Audit, Human Resources and Compensation and Nominating and Governance Committees.  The operation and responsibilities of each committee will be governed by a charter or a resolution approved by the Board.

II.      Director Responsibilities

A.      Collective Responsibilities

The Board is responsible for the review and approval of the strategic direction and significant policies of Perot Systems proposed by management, and the oversight and governance of Perot Systems.  Directors carry out this responsibility through individual preparation, group discussion, and the exercise of their collective business judgment. 

As part of its responsibility, the Board or a Committee of the Board to which the task is delegated should review and, where required by applicable law, approve the following matters:

• The selection, terms of employment, and evaluation of the performance of Perot Systems’ Chief Executive Officer and the Chairman of the Board (if the Chairman of the Board is also an executive officer of the Company);
• Perot Systems’ quarterly and annual financial reports, proxy statement and other matters submitted to a vote of its stockholders;
• Material acquisitions, divestitures, investments, mergers and other strategic transactions involving Perot Systems that (i) are not in the ordinary course of business and (ii) involve financial or other significant terms that are outside the guidelines approved by the Board for transactions that may be approved by Perot Systems’ management; and
• The evaluation of the performance of the Board and its Committees. 

 

In addition, the Board or a Committee of the Board to which the task is delegated should monitor:

• Perot Systems’ compliance with its Standards & Ethical Principles, which includes compliance with applicable laws and regulations;
• Perot Systems’ performance against the strategic and business plans and related financial objectives developed by management; and
• Perot Systems’ financial reporting, disclosure processes, internal controls and risk management practices.

 

B.      Individual Responsibilities

Among other things, the Board expects each Director:

• to adhere to Perot Systems’ Standards & Ethical Principles, and to inform the Chair of the Audit Committee about any actual or potential conflicts of interest involving the Director that may arise;
• to understand Perot Systems’ businesses and the market and regulatory environments in which they operate;
• to regularly attend meetings of the Board and each Committee on which he serves;
• to review and understand the agenda and related materials provided to the Director in connection with Board and Committee meetings;
• to engage in active, objective, and open-minded discussion and inquiry during Board and Committee meetings; and
• to be reasonably available to advise the Chief Executive Officer and senior management on specific issues not requiring the attention of the full Board. 

 

C.      Board Operations

Regular meetings of the Board will be held four times per year in accordance with a pre-approved schedule of meeting dates.  Special meetings of the Board will be held as often as the Chairman of the Board or a majority of the independent Directors deems appropriate.  The Chairman of the Board, in consultation with the company’s management, will propose an agenda for each Board meeting.  The length of each Board meeting will depend upon the agenda items to be discussed and resolved at the meeting.  Each Director may request items to be added to the agenda for any Board meeting.

Regular meetings of each Committee will be held in accordance with a pre-approved schedule of meeting dates approved by the Committee’s Chair.  Special meetings of a Committee will be held as often as the Chair of the Committee or a majority of the independent Directors serving on the Committee deems appropriate.  The Chair of each Committee, in consultation with the company’s management, will propose an agenda for each Committee meeting.  The length of each Committee meeting will depend upon the agenda items to be discussed and resolved at the meeting.  Each Director may request items to be added to the agenda for any Committee meeting.

The Chairman of the Board, the Chief Executive Officer, the Chair of each Committee, as applicable, or his designee will provide to each Director reasonably detailed information about each item appearing on the agenda for each Board or Committee meeting, respectively, in advance of such meeting whenever practical. 

III.     Access to Independent Directors, Management and Independent Advisors

The Board will meet at least annually in executive session without the Chief Executive Officer or any inside Directors present. 

Each Director will have reasonable access to the company’s senior managers, including the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, principal accounting officer and General Counsel.  The company’s senior managers will arrange for the Board’s access to other employees upon request.

The Board and each of the Audit, Human Resources and Compensation and Nominating and Governance Committees may, in their discretion, retain the services of independent financial, legal or other independent advisors at Perot Systems’ expense. 

IV.     Compensation of Directors and the Chief Executive Officer

From time to time, the Human Resources and Compensation Committee of the Board will evaluate the compensation paid to Directors, the Chief Executive Officer and the Chairman of the Board (if the Chairman of the Board is also an executive officer of the Company) in accordance with its guidelines.  The Human Resources and Compensation Committee shall recommend to the Board for its approval any changes in compensation it determines appropriate, unless otherwise provided in the charter of the Human Resources and Compensation Committee. 

V.      Director Orientation and Continuing Education

Perot Systems’ Vice President of Human Resources will arrange for the initial orientation of new Directors through background materials and meetings with senior management.  Directors will receive periodic updates on matters relevant to their responsibilities at Board and Committee meetings and are encouraged to attend appropriate continuing education courses at Perot Systems’ expense.

VI.     Management Succession

From time to time, the Board will conduct a management succession review with the Chief Executive Officer, which should include a recommendation for the Chief Executive Officer’s successor in the event of his resignation, retirement or unexpected disability or death. 

VII.    Performance Evaluation of the Board and the Chief Executive Officer

Each year, the Board will evaluate the effectiveness of the Board and its Audit, Human Resources and Compensation and Nominating and Governance Committees.  The evaluation will be based, in part, on criteria determined appropriate by the Nominating and Governance Committee.  The Nominating and Governance Committee is responsible for overseeing the evaluation process and recommending changes, if necessary, in Board or Committee functions, structure or operation. 

Each year, the Human Resources and Compensation Committee will evaluate the performance of the Chief Executive Officer and the Chairman of the Board (if the Chairman of the Board is also an executive officer of the Company). 

VIII.  Director Interaction with Stockholders and the Media

As a general rule, the Board believes that the Chairman of the Board, the Chief Executive Officer and other senior managers of Perot Systems should speak for Perot Systems.  Individual Directors may, from time to time, meet with or otherwise communicate with Perot Systems’ stockholders or customers or the media.  However, it is expected that Directors other than the Chairman of the Board will speak for Perot Systems only with the knowledge of, and, in most instances, at the request of, the Chairman of the Board or the Chief Executive Officer. 

Exhibit A: Director Qualification Guidelines

Exhibit B: Director Independence Standard