Governance Policies prn

Corporate Governance Policy

Lead Independent Director

Stock Ownership Guidelines

Director Candidate Selection and Evaluation Process

Stockholder Communications

Director Attendance at Annual Meetings

National Semiconductor is dedicated to enhancing shareholder value by maintaining integrity in our corporate governance practices. We have a policy on corporate governance which defines our corporate governance principles. You can review our corporate governance policies, including our board committee charters, stock ownership guidelines, and stockholder communication policy on this part of our website.

Corporate Governance Policy 

Board Functions

Directors serve the following functions: (i) assure that the Company is managed in the interests of its stockholders and that information respecting its operations and finances is fully and accurately disclosed as required by law; (ii) fulfill the obligations of the Board in respect to the appointment and review of the Chief Executive Officer and other executive officers of the Company; (iii) review and contribute to the development of Company strategy; (iv) provide an independent perspective on Company opportunities and risks; and (v) contribute to solid, long-term results for the Company.

Selection and Orientation of New Directors

The Board shall be responsible for selecting its own members and recommending them for election by the stockholders. The Board delegates the screening process involved to the Governance Committee. Board members will be chosen with a view to bringing to the Board the best qualified individuals having the desired experience and background and who are willing to devote the time required to serve. The Board and the Company shall establish an orientation process for new Directors. In addition, the Company shall support and fund continuing education in Board-related matters for all Directors in accordance with guidelines established by the Governance Committee.

Selection of Chairman and CEO

The Board appoints both its own Chairman and the Chief Executive Officer of the Company. The Board shall be free to make the choice of Chairman and CEO by majority vote as it deems best for the Company at a given time.

Regular Board Meetings

Regular meetings of the Board of Directors shall be held not less than once each fiscal quarter. The dates for Board meetings generally shall be planned one year in advance.

Agendas and Minutes

A preliminary agenda packet shall be sent to all Directors in advance of each scheduled Board meeting for each Director’s review prior to the meeting. The agenda typically shall include approval of minutes from the previous Board meeting, reports from each Board committee and a report on operations. The packet may include supporting materials and background information on agenda items.

Duties

Directors are expected to devote the time required to attend meetings, review meeting materials in advance, and serve all Board functions in a professional manner.

Committees

The Company currently has three standing committees of the Board:(i) Audit; (ii) Governance; and (iii) Compensation. These three committees are comprised solely of independent Directors. The Governance Committee reviews the membership of the committees annually and makes recommendations on committee composition. The Board makes the final decision on committee membership and Chairmanships. The responsibilities of each committee are described in its charter. The Board may designate additional committees in accordance with the provisions of the Company’s By-Laws.

Committee Meetings

Committee meetings shall be held in accordance with the terms of each Committee’s Charter.

Meetings of Non-Management Directors

The non-management Directors (those Directors who are not also employees of the Company) shall meet regularly without the presence of Company management. The Board shall appoint a Lead Independent Director, who shall preside over each such meeting. The name of the Lead Independent Director shall be disclosed on the Company's website.

Size of the Board

The specific number of Directors shall be determined from time to time as provided in the Company's By-Laws.

Mix of Management and Independent Directors; Independence

There will be a majority of independent Directors on the Board. For purposes of this policy, no employee of the Company or person employed within the last three years by the Company will be considered "independent". A non-employee Director will not be considered "independent" unless he or she meets the independence requirements of the SEC and New York Stock Exchange and the Board has affirmatively determined that the Director has no material relationship with the Company.

Directors Who Change Their Present Job Responsibility

The Board does not believe that Directors who retire or change the position held upon initial appointment to the Board should necessarily leave the Board. Directors who retire from or change such positions are required to submit a letter of resignation. The Governance Committee will review the continued appropriateness of Board membership and recommend to the whole Board whether the resignation shall be accepted. The affected Director shall not be a participant in the discussions of either the Governance Committee or the Board or vote on this matter. A majority vote of the Board shall determine whether the resignation shall be accepted.

Term

Directors serve one year terms with elections held annually in conjunction with the Annual Meeting of Stockholders.

Retirement

The mandatory retirement age for Directors is 70, and Directors are expected to retire from the Board at the end of the term during which they reach age 70.

Retirement Plan

There is currently no retirement plan for Directors. (One current Director remains eligible for benefits under an earlier retirement plan that has since been terminated).

Board Compensation

The current compensation for Directors is as follows: (i) Cash - Each non-employee Director receives an annual retainer fee and an attendance fee for each committee meeting attended. Committee Chairmen and the Lead Independent Director receive an additional annual retainer; (ii) Stock - Each non-employee Director automatically receives shares of National common stock upon initial appointment to the Board and annually thereafter upon re-election at the Annual Meeting of Stockholders. The stock is granted under the terms of the Director Stock Plan which has been approved by the Company's stockholders; (iii) Travel Reimbursement - All travel and related expenses incurred by Directors to attend Board meetings, committee meetings and other National activities are reimbursed by National in accordance with established Company policies. The form and amount of such compensation is intended to generally correspond to director compensation at other comparable U.S. companies and may be modified from time to time by the Board (subject when required to stockholder approval), based upon recommendations made by the Governance Committee.

Assessing the Board's Performance

The Governance Committee is responsible for reporting annually to the Board an assessment of the Board's performance. This report will be discussed with the full Board. The report should be made following the end of each fiscal year. This assessment should be of the Board's contribution as a whole, as well as the functioning of the Board and each committee, and should specifically review areas in which the Board and/or the management believes a better contribution could be made. Its purpose is to increase the effectiveness of the Board, not to single out individual Board members. Each standing Committee shall also assess its own performance not less than once a year, and report the results of such assessment to the full Board.
Board Access to Senior Management and Independent Advisors

Board members have complete access to Company management, employees and independent advisors. It is assumed that Board members will use judgment to be sure that contact with Company management and employees is not distracting to the business operation of the Company. Contact with Company management, employees and independent advisors, if in writing, will be copied to the Chairman and Chief Executive Officer unless the Board or the Board members making the contact consider it inappropriate for the Chairman and Chief Executive Officer to be so copied. Furthermore, the Board encourages the management to bring employees into Board meetings who: (a) can provide additional insight into the items being discussed because of personal involvement in these areas; and/or (b) have future potential that the senior management believes should be given exposure to the Board. The Board and Board Committees have complete access to and are empowered to retain independent advisors as they deem necessary.

Formal Evaluation of the Chief Executive Officer

The Compensation Committee shall make a formal evaluation annually, in consultation with other non-management members of the Board. The results of this evaluation shall be communicated to the Chief Executive Officer by the Chairman of the Compensation Committee. The evaluation is to be considered by the Compensation Committee in the course of its deliberations when fixing the compensation of the Chief Executive Officer.

Succession Planning

The Chief Executive Officer shall make an annual report to the Board on succession planning. The Board shall have available to it, on a continuing basis, the Chairman and the Chief Executive Officer's succession recommendation(s) should he/she be unexpectedly disabled or otherwise unavailable. The recommendation(s) shall be reviewed annually at the time of the report on successor planning.

Last Posted on April 17, 2008

Lead Independent Director 

The Board has selected Edward R. McCracken to serve as the Lead Independent Director.

Last Posted on August 2, 2006

Stock Ownership Guidelines 

The Board of Directors believes that ownership of Company stock by Directors and senior executive officers demonstrates a commitment to the long-term profitability of the Company. Accordingly, the Board has adopted Stock Ownership Guidelines for members of its Board of Directors and executive officers which require such individuals to acquire and maintain a minimum level of ownership in National common stock. The total number of minimum shares has been revised to reflect the 2-for-1 stock split paid in May 2004.

Ownership shall be measured at the end of each fiscal year. To the extent that a Director or officer does not already satisfy the applicable ownership requirement, he/she is expected to meet the target over the next four years. Newly appointed officers and Directors will also have four years to come into compliance.

Shares that count include all shares directly or beneficially owned by the Director/officer, except for unvested shares of restricted stock and shares held in National's Retirement & Savings Program.

Compliance with the Guidelines shall be monitored by the Compensation Committee for the Company's executive officers and the Governance Committee for Directors. Each Committee shall make an annual report on the Guidelines to the full Board. Each Committee shall also have the authority to grant waivers to the Guidelines in the event of financial hardship or other good cause. These Guidelines may be modified from time to time by the Board of Directors.

Last posted on August 17, 2006

Director Candidate Selection and Evaluation Process 

The Governance Committee has the responsibility for identifying individuals qualified to become Board members and recommending qualified candidates for election to the Board.

The Committee may identify candidates through any of the following means: (i) referrals by Board members, Company management or outside third parties; (ii) candidates proposed by search firms employed by the Committee; (iii) candidates proposed by stockholders.

All proposed candidates are evaluated by the Committee. The same criteria will be used in evaluating all candidates, including candidates proposed by stockholders.

Candidates will be evaluated with a goal to bringing to the Board the best qualified individuals. Evaluation criteria considered are:

(i) education;

(ii) background and experience, including experience in business, finance, technology, or administration;

(iii) familiarity with the Company, the semiconductor industry and international business matters;

(iv) appreciation of the relationship of the Company's business to changing needs in our society;

(v) willingness to devote the time required to serve, including attending meetings, reviewing meeting materials in advance and serving all Board functions in a professional manner.

Search firms used by the Committee to identify candidates are paid fees consistent with the terms of the arrangements approved by the Committee.

Last Posted on August 17, 2006

Stockholder Communications 

National Semiconductor Corporation encourages stockholders to communicate with the Company and its directors.

Communications intended for the Company should be addressed to:

  Investor Relations
  Mail Stop G2-397
  National Semiconductor Corporation
  P.O. Box 58090
  2900 Semiconductor Drive
  Santa Clara, CA 95052-8090

Stockholder communications intended for directors should be addressed as follows:

1. Communications relating to any topic other than nomination of director candidates or proposals to be presented at stockholder meetings:

  Lead Independent Director
  c/o Brian L. Halla
  Chairman, President and CEO
  National Semiconductor Corporation
  P.O. Box 58090
  2900 Semiconductor Drive, M/S G3-100
  Santa Clara, CA 95052-8090

2. Communications proposing director candidates for review and evaluation by the Governance Committee:
  
  Chairman, Governance Committee
  c/o Brian L. Halla
  Chairman, President and CEO
  National Semiconductor Corporation
  P.O. Box 58090
  2900 Semiconductor Drive, M/S G3-100
  Santa Clara, CA 95052-8090

3. Communications formally nominating director candidates and formally presenting proposals for consideration at stockholder meetings:

Todd M. DuChene, Secretary
National Semiconductor Corporation
P.O. Box 58090
2900 Semiconductor Drive, M/S G3-135
Santa Clara, CA 95052-8090

All stockholder communications should identify the amount and nature of the stockholder's ownership of National stock. Formal nominations of director candidates and formal presentation of other proposals for consideration at stockholder meetings must also comply with National's By-Laws relating to Notice of Stockholder Business and Nominations.

The Company Secretary will review all communications prior to delivery and all communications will be delivered to the designated recipient except in those instances where the Secretary determines in his or her discretion that the communication is not from a bona-fide stockholder of the Company or constitutes a threat of physical harm or violence to the Company, its officers, employees or directors.

Last Posted on August 17, 2006

Director Attendance at Annual Meetings 

Directors are invited to and expected to attend the Annual Stockholders' Meeting.

Last Posted on March 26, 2004