As of: January 2008
The Board of Directors (the "Board") of Orbital Sciences Corporation (the "Company") has adopted the following guidelines to assist the Board in exercising its responsibilities and in furtherance of its continuing efforts to enhance its corporate governance. They reflect the Board's commitment to monitoring the effectiveness of policy and decision-making at the Board and management level and ensuring adherence to good corporate governance principles, with the goal of enhancing stockholder value over the long term. The guidelines also assure that the Board will have the necessary practices in place to review and evaluate the Company's business operations as needed and to make decisions that are independent of the Company's management. These guidelines may be modified by the Board from time to time as the Board deems necessary or advisable.
Mission of the Board of Directors. The Board is elected by the stockholders to oversee their interest in the Company's long-term financial strength and overall success. The Board is responsible for exercising its business judgment and acting in a manner which it reasonably believes to be in the best interests of the Company and its stockholders, consistent with its fiduciary duties and in compliance with all applicable laws and regulations. The Board is the ultimate decision-making body of the Company in all areas, except for those matters reserved to the stockholders.
Board Size. The Board believes that it should generally have between 10 to 15 directors, with the exact number to be determined by Board resolution in accordance with the Company's Bylaws. This range permits diversity of experience without hindering effective discussion or diminishing individual accountability.
Selection of Board Members. The Board places a high priority on the experience and judgment of its members. The Board is responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of stockholders. The Corporate Governance and Nominating Committee (the "Governance Committee") is responsible for identifying, screening and recommending candidates to the entire Board for Board membership. Director candidates may also be identified and submitted by stockholders in accordance with the Company's Bylaws. The Board will then determine the director candidates that are submitted for election by the stockholders at the annual meetings of stockholders.
Board Membership Criteria. The Governance Committee works with the Board to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members. In evaluating whether to recommend a particular candidate for Board membership, the Board takes into account various factors including: (1) professional experience (such as, if applicable, whether or not the person qualifies as an "audit committee financial expert" as defined by the relevant securities regulations); (2) understanding of, or specific expertise in, the Company's business and the industry sector(s) in which it competes; (3) educational background; (4) integrity; (5) ability to make independent analytical inquiries and to exercise sound judgment; (6) willingness and ability to devote adequate time and resources to diligently perform Board duties; (7) whether the person would qualify as "independent" under the New York Stock Exchange ("NYSE") rules; (8) the importance of continuity of the existing composition of the Board, and (9) the importance of a diversified Board membership, in terms of both the individuals involved and their various experiences and areas of expertise.
Directors are required to inform the Governance Committee of any changes in employment responsibility in order for the Governance Committee to determine whether it is appropriate to renominate the Board member for continuing Board service. Employee directors are expected to offer their resignation upon retirement, resignation from the Company or other significant change in their professional role. In these cases, the Governance Committee will recommend to the Board whether continued service of such director is advisable.
Director Orientation and Continuing Education. The Company provides new directors orientation materials designed to familiarize the new director with the Company's business operations, strategy and objectives, financial structure and corporate governance principles as well as the role of the Board and its responsibilities and the structure of the Board and its committees. The orientation also includes an opportunity for the new director to meet with members of the Company's senior management. Directors are also encouraged to take advantage of continuing director education programs from time to time.
Term Limits. In accordance with the Company's charter, directors are elected to serve three-year terms. The Board does not believe it should establish term limits. While term limits could help ensure that there are fresh ideas and viewpoints available to the Board, they hold the disadvantage of losing the contribution of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole. As an alternative to term limits, the Governance Committee will evaluate the qualifications and performance of each incumbent director before recommending his or her nomination for an additional term.
Other Board Memberships. The Board believes that it is important that each director have the requisite time to devote to the oversight of the Company's business. Accordingly, as a general matter, directors should not serve on more than three other public company boards, and members of the Audit and Finance Committee should not serve on more than two other public company audit committees.
Retirement Policy. The Company has a retirement policy whereby directors are generally ineligible to stand for election if they will have attained age 76 by July 1 of the year in which such election will be held.
Independence of Directors. Independent directors shall constitute a substantial majority of the Board. The Board is responsible for determining on an annual basis whether a director is an "independent director" pursuant to the criteria established by the NYSE. No director will qualify as "independent" unless the Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and otherwise meets the criteria for independence required by the NYSE.
For purposes of these guidelines, the Company realizes that it is not possible to anticipate, or to explicitly provide for, all circumstances that might bear on the materiality of a director's relationship with the Company. Accordingly, the Board will consider all facts and circumstances when making independence determinations.
Selection of Chairman. The Board may elect the Chairman of the Board in accordance with the Company's Bylaws and in the manner that it determines to be in the best interests of the Company's shareholders. The Board does not have a policy that the offices of Chairman of the Board and Chief Executive Officer be separate or that the Chairman of the Board be selected from the non-employee directors.
Lead Independent Director. In addition to the Chairman, the Board has a lead independent director (the "Lead Director"). The Lead Director will rotate on a bi-annual basis unless the Board determines that the reappointment of the Lead Director at the end of the two-year term is in the best interests of the Company. The role of the Lead Director is to serve as liaison between the Board and management, including the Chief Executive Officer. The Lead Director is expected to serve as the focal point of communication between the Board and management for issues that either constituency believes should be brought to the other's attention. In addition, the Lead Director will serve as the communication conduit for third parties who wish to communicate with the Board, or the non-employee directors as a group. Any person who wishes to contact the Lead Director may do so by sending a letter to "Lead Director, Orbital Sciences Corporation, 21839 Atlantic Blvd., Dulles, VA 20166, Attn: General Counsel." The Lead Director will review all communications and report on them to the Board or the non-employee directors, as appropriate.
Board Meetings - Agenda. The Chairman of the Board, or in the absence of a Chairman of the Board, a Vice Chairman, or if there is no Vice Chairman, the Lead Director, presides at meetings of the Board. The Board will hold at least four regularly scheduled meetings in a calendar year. In addition to regularly scheduled meetings, additional unscheduled Board meetings may be called upon appropriate notice at any time to address specific needs of the Company. Directors are expected to attend in person or by telephone (preferably in person) all Board meetings and meetings of committees on which they serve. The Chairman of the Board, working with the Lead Director and taking into account suggestions from other Board members, sets the agenda for each regularly scheduled Board meeting.
Attendance at Annual Meetings of Stockholders. Directors are expected to attend the Company's annual meetings of stockholders.
Advance Distribution of Materials. Materials relating to specific agenda items will be provided to Board members sufficiently in advance of the Board meeting to allow the directors to prepare for discussion of such items at the meeting, and it is expected that all directors will review such materials in advance of each meeting. In the event the Board must meet on short notice, sufficient time for discussion will be allocated to allow the Board to become adequately informed as to the matters under discussion. Generally, presentations of matters to be considered by the Board will be made by senior management responsible for that area of the Company's operations.
Access to Employees. Board members shall have complete access to management and employees of the Company. The Board encourages management to include key managers in Board meetings who can share their expertise with respect to matters before the Board. This also enables the Board to gain exposure to key managers with future potential in the Company.
Executive Sessions of Nonemployee Directors. Generally, a portion of each regularly scheduled Board meeting will be devoted to executive sessions without management participation. In addition, the Lead Director may call executive sessions as deemed necessary. If the group of non-employee directors includes directors who are not independent, as defined in the NYSE's listing standards, it is the Company's policy that at least one such executive session convened per year shall include only independent directors. The Lead Director sets the agenda for the executive sessions of the Board and presides at such sessions.
CEO Evaluation. The Human Resources and Compensation Committee annually evaluates the performance of the Chief Executive Officer ("CEO"), and provides counsel and oversight on the selection, annual evaluation and compensation of the Company's senior executives.
Succession Planning. On an annual basis, the Governance Committee works with the CEO to plan for CEO succession, as well as to develop plans for interim succession for the CEO in the event of an unexpected occurrence. Succession planning may be reviewed more frequently by the Board as it deems necessary or appropriate.
Board Compensation. Non-employee directors will be compensated for their service to the Company in cash and/or stock options or equity of the Company. The Governance Committee is responsible for reviewing matters of compensation, benefits and other forms of remuneration for non-employee directors and recommending to the Board compensation for non-employee directors. Board compensation is reviewed from time to time to ensure that it is commensurate with the commitment by such directors to serve the Company, and taking into account the form and amount of compensation paid to directors by other similarly situated public companies. Directors who also are employees of the Company do not receive additional compensation for their service as directors.
Board Committees. The Company has four standing committees: Audit and Finance Committee, Governance Committee, Human Resources and Compensation Committee, and Markets and Technology Committee. The members of each committee other than the Markets and Technology Committee shall meet the independence requirements for directors as prescribed by the NYSE or any other applicable laws or regulations. Each committee has a written charter addressing the purposes and responsibilities of the committee. These charters are posted on the Company's website. The Board may from time to time form such other committees as it determines to be appropriate to facilitate and assist in the execution of the Board's responsibilities.
Committee members and chairs are appointed by the Board on an annual basis, based upon the recommendations by the Governance Committee. Each committee chair establishes the frequency, length and, in consultation with senior management, the agenda of committee meetings. Materials relating to specific agenda items will be provided to committee members sufficiently in advance of the committee meeting to allow the members to prepare for discussion of such items at the meeting, and it is expected that all members will review such materials in advance of each meeting. In the event the committee must meet on short notice, sufficient time for discussion will be allocated to allow the members to become adequately informed as to the matters under discussion.
Ethics and Conflict of Interest. The Board expects all directors, as well as officers and employees, to act ethically at all times and in accordance with the Company's Code of Business Conduct and Ethics. The Board will not permit any waiver of any ethics policy for any director or executive officer. In the event a director or an entity with which the director is affiliated engages or intends to engage in a transaction involving the Company, the director will promptly notify the Chairman, Lead Director or General Counsel. If a conflict exists and cannot be resolved, then the director shall resign. All directors will recuse themselves from any discussion or decision affecting their personal, business or professional interests or any other instances in which there may be a conflict of interest.
Whether a director has a material personal or financial interest in a transaction or arrangement will be determined by the Governance Committee on a case-by-case basis, but at a minimum a director will be considered to have a material personal or financial interest in a transaction or arrangement if the Company will be required to disclose the transaction pursuant to securities law regulations.
Board Access to Independent Advisers. The Board and each of its committees have the authority to retain and engage independent legal, financial and other advisers as it may deem necessary or appropriate.
Board Self-Evaluation. The Board and all of its committees will conduct an annual review and self-evaluation to determine whether they are functioning effectively.
Review of Corporate Governance Guidelines. These Corporate Governance Guidelines will be reviewed on an annual basis, or more frequently as necessary, by the Governance Committee. If such committee determines that modifications are in order, it will make recommendations of proposed changes to the Board for approval.
Disclosure. These Corporate Governance Guidelines shall be posted on the Company's website.
(Adopted July 24, 2003; amended April 30, 2004; amended January 24, 2008)
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