The NYSE rules require that Tenneco's Board of Directors be composed of a majority of members that are independent directors. In addition, all members of the Audit Committee, Compensation Committee and Nominating and Governance Committee must meet the NYSE standards of independence, and Audit Committee members must meet the additional standards of independence under applicable SEC rules.
The Tenneco Board of Directors is currently comprised of 13 members, 12 of whom are not officers of the Company (the "Outside Directors") and one of whom is an officer of the Company (the "Inside Director"). The Board of Directors believes that the Company's ratio of Outside Directors to Inside Directors represents a commitment to the independence of the Board and a focus on matters of importance to its stockholders.
The Board of Directors has determined that 11 of the Outside Directors are "independent" as that term is defined under the listing standards of the NYSE. The Board of Directors has also determined that all members of the Audit Committee meet the additional "independence" requirements of the applicable SEC rules regarding audit committee membership.
As part of its analysis, the Board determined that one of the Outside Directors has a direct or indirect material relationship with the Company, but the relationship does not impair such director's independence. Under written guidelines adopted by the Board, the following commercial or charitable relationships are not considered to be material relationships that would impair a director's independence: (i) the director is an executive officer of another company that (directly or indirectly through its subsidiaries or affiliates) does business with the Company and the annual sales to, or purchases from, the Company are less than 1% of the annual consolidated revenues of both the Company and the other company he or she serves as an executive officer; (ii) the director is an executive officer of another company that (directly or indirectly through its subsidiaries or affiliates) is indebted to the Company, or to which the Company is indebted, and the total amount of either company's consolidated indebtedness to the other is less than 1% of the total consolidated assets of the indebted company; (iii) the director is an executive officer of another company in which the Company owns a common equity interest, and the amount of the Company's interest is less than 5% of the total voting power of the other company; or (iv) the director serves as an officer, director or trustee of a charitable organization, and the Company's discretionary charitable contributions to the organization are less than 1% of that organization's total annual charitable receipts.
Each of the Company's standing Board committees consists entirely of Outside Directors, and thus includes only independent directors.