Attached files
Exhibit
99.1
CEC
ENTERTAINMENT, INC.
CORPORATE
GOVERNANCE GUIDELINES
Effective
as of February 23, 2010
The Board of Directors (the “Board”) of
CEC Entertainment, Inc. (the “Company”), acting on the recommendation of its
Nominating/Corporate Governance Committee, has developed and adopted the
following Corporate Governance Guidelines to promote a common set of
expectations as to how the Board and its committees should perform their
functions. These guidelines may be updated from time to time and may
be accessed through the Company’s website at www.chuckecheese.com.
Composition
and Qualifications of the Board
A
majority of the Board shall consist of independent, non-management directors who
meet the independence criteria required by the listing standards of the New York
Stock Exchange, which are described below. The Nominating/Corporate
Governance Committee shall be responsible for reviewing the qualifications and
independence of the members of the Board to ensure compliance with the listing
standards of the New York Stock Exchange.
The Board
of the Company should be diverse, engaged and independent. Directors
should be persons who have achieved prominence in their field and who possess
significant experience in areas of importance to the Company.
Directors
should possess integrity, independence, energy, forthrightness, analytical
skills and commitment to devote the necessary time and attention to the
Company’s affairs. Directors should possess a willingness to
challenge and stimulate management and the ability to work as part of a team in
an environment of trust.
Directors
should be committed to representing the interests of all stockholders and not to
advancing the interests of special interest groups or constituencies of
stockholders.
Independence
of Directors
Under New
York Stock Exchange listing standards, a director is considered independent if
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; provided, that a director is not considered independent if (1)
the director is or has been within the last three years, an employee of the
Company, or an immediate family member is, or has been within the last three
years, an executive officer of the Company, (2) the director has received, or
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 and committee fees and pension or other forms of
deferred compensation for prior service (provided such compensation is not
contingent in any way on continued service), (3) (a) the director is a current
partner or employee of a firm that is the Company’s internal or
external
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auditor,
(b) the director has an immediate family member who is a current partner of such
firm, (c) the director has an immediate family member who is a current employee
of such firm and personally works on the Company’s audit or (d) the director or
an immediate family member was within the last three years a partner or employee
of such a firm and personally worked on the Company’s audit within that time,
(4) the director or an immediate family member is, or has been within the last
three years, employed as an executive officer of another company where any of
the Company’s present executive officers at the same time serves or served on
that company’s compensation committee or (5) the director is a current employee,
or an immediate family member is a current executive officer, of a company 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 $1
million, or 2% of the other company’s consolidated gross
revenues. The Company will also not consider as independent any
director who is employed by a non-profit organization, a substantial portion of
whose funding comes from the Company.
An
“immediate family member” includes a director’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
director’s home.
Each
member of the Audit Committee may not, other than in his or her capacity as a
member of the audit committee, the Board or any other Board committee (1) be
affiliated with the Company or any of its subsidiaries or (2) accept directly or
indirectly any consulting, advisory or other compensatory fee from the Company
or any of its subsidiaries. Compensatory fees do not include the
receipt of fixed amounts of compensation under a retirement plan (including
deferred compensation) for prior service with the Company (provided that such
compensation is not contingent in any way on continued service).
Directors
are expected to notify the Executive Chairman and the Corporate Secretary before
accepting an invitation to serve on another Board, including a non-profit or
charitable organization, in order to avoid potential conflicts of
interest.
Director
Responsibilities
The basic
responsibility of the directors is to exercise their business judgment in good
faith, with due care, and to act in what they reasonably believe to be in the
best interests of the Company and its stockholders. In discharging
that obligation, directors should be entitled to rely on the honesty and
integrity of their fellow directors and the Company’s executive officers and
outside advisors and auditors. The directors shall also be entitled
to have the Company purchase reasonable directors’ and officers’ liability
insurance on their behalf, to the benefits of indemnification to the fullest
extent permitted by law and the Company’s Articles of Incorporation and Bylaws
and to exculpation as provided by state law and the Company’s Articles of
Incorporation.
The Board
shall oversee management’s conduct of the Company’s business, including
oversight of business strategy, risk management and the allocation of resources
needed to implement appropriate business strategies. The Board and
management will engage in a comprehensive
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review
and discussion of the Company’s strategic goals, as well as management’s plans
to achieve them.
Selection
of the Lead Independent Director
The Board
of the Company, after considering the recommendation of the Nominating/Corporate
Governance Committee, will select each year one independent director to serve as
the lead independent director (the “Lead Independent
Director”). Although elected annually, the Lead Independent Director
may serve for more than one year.
Authority,
Responsibilities and Duties of the Lead Independent Director
The
authority, responsibilities and duties of the Lead Independent Director are as
set forth below:
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1.
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has
the separate authority to call for and conduct executive sessions of the
Board at which only outside, independent directors are permitted to be
present, along with other persons invited to attend such sessions by the
Lead Independent Director or a majority of the outside, independent
directors;
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2.
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presides
at all meetings of the Board at which the Executive Chairman of the Board
(“Executive Chairman”) is not present, including executive sessions of the
independent directors;
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3.
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serves
as a liaison between the Executive Chairman and the independent
directors;
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4.
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approves
materials sent to the Board that are initially prepared by or under the
direction of the Executive
Chairman;
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5.
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approves
meeting agendas for the Board that are initially prepared by or under the
direction of the Executive
Chairman;
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6.
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approves
meeting schedules that are initially prepared by or under the direction of
the Executive Chairman in order to assure that there is sufficient time
for discussion of all agenda items;
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7.
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recommends
to the Executive Chairman or the Board matters for consideration by the
Board; and
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8.
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if
requested by major stockholders, is available for consultation and direct
communication.
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Frequency
of Board Meetings
The Board
shall meet at regularly scheduled meetings, one or more of which may be by means
of conference telephone arrangements, and shall be on-call to meet more
frequently if emergencies or unusual circumstances arise.
The Board
will schedule periodic executive sessions of independent
directors. Any director may request additional executive sessions of
independent directors to discuss any matter of concern.
Director
Service on Other Public Boards
Directors
are expected to devote sufficient time to fulfilling their responsibilities as
directors. Accordingly, directors must not serve on more than four
other boards of public companies in addition to the Company’s
Board.
Change
in Director Occupation
When a
director’s principal occupation, business association or position changes
substantially during his or her tenure as a director, that director shall tender
his or her resignation for consideration by the Nominating/Corporate Governance
Committee. The Nominating/Corporate Governance Committee, in
consultation with the Executive Chairman, will evaluate the facts and
circumstances and make a recommendation to the Board whether to accept the
resignation or request that the director continue to serve on the
Board.
Ownership
Requirements
All
non-employee directors are required to hold at least 5,000 shares of the
Company’s common stock while serving as a director of the
Company. New directors will have five years to attain this ownership
threshold.
The Chief
Executive Officer, President and Executive Chairman are required to hold at
least 50,000 shares of the Company’s common stock while serving as an officer of
the Company. All Executive Vice Presidents are required to hold at
least 10,000 shares of the Company’s common stock while serving as an officer of
the Company. Each such new officer will have five years to attain
this ownership threshold after his or her appointment.
These
ownership requirements shall be administered and interpreted by the
Nominating/Corporate Governance Committee of the Board including, without
limitation, matters related to the calculation of individual ownership
requirements and the granting of exemptions from the
requirements. For purposes of calculating stock ownership, the
following sources may be included: (1) shares of common stock owned
outright by the director or officer, as well as stock owned by his or her
immediate family members residing in the same household; (2) shares of common
stock held in trust for the benefit of the director or officer, as well as his
or her family; (3) unvested restricted stock or restricted stock units; (4) if
applicable, shares of common stock held pursuant to deferred compensation
arrangements; and (5) if applicable,
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shares
purchased with amounts invested in the Company’s retirement plans, including,
without limitation, the 401(k) plan and any employee stock purchase
plan. Unexercised options will not be counted toward such stock
ownership requirements. While the Nominating/Corporate Governance Committee
expects every participant to comply with this policy, it also intends that the
policy will be implemented in a flexible manner taking into consideration
individual circumstances and recognizing that exceptions to this policy may be
necessary or appropriate from time to time depending on individual
circumstances. The Nominating/Corporate Governance Committee may
approve such exceptions from time to time as it deems appropriate, particularly
if compliance with the ownership requirements would result in an undue hardship
to an officer or director.
Access
to Management and to Outside Experts
Non-management
directors shall have access to individual members of management or to other
employees of the Company on a confidential basis. Directors are
authorized to conduct independent investigations and to hire outside consultants
or experts at the Company’s expense. Directors shall also have access
to Company records and files and directors may contact other directors without
informing Company management regarding the purpose or even the fact of such
contact.
Board
Committees
A
substantial portion of the Board’s oversight and governance responsibilities are
carried out by the Committees of the Board. The agenda for each
Committee will be the responsibility of the Committee chair.
The
Nominating/Corporate Governance Committee, the Audit Committee and the
Compensation Committee shall all be composed exclusively of independent
directors as required by the listing standards of the New York Stock
Exchange. All of the members of the Audit Committee shall be
financially literate and at least one member of the committee must have
accounting and related financial management expertise. In addition,
at least one member of the Audit Committee shall be an “audit committee
financial expert” as required by the regulations promulgated by the Securities
and Exchange Commission. In addition to meeting the independence
requirements for directors, members of the Audit Committee must also satisfy the
New York Stock Exchange independence requirements for Audit Committee
members.
Each
Committee has the authority to hire at the expense of the Company independent
legal, financial or other advisors as they deem necessary.
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Annual
Evaluations
Directors
The
Nominating/Corporate Governance Committee shall oversee an annual evaluation of
the effectiveness of the Board of Directors. The evaluation shall
assess the Board’s contribution to the Company and identify areas that the Board
believes could be improved.
Committees
Each
Committee will perform an annual evaluation of its effectiveness. The
results of these evaluations will be discussed with the full Board.
Succession
Planning
Succession
planning for the Company’s senior management positions is critical to the
Company’s long-term success. The Nominating/Corporate Governance
Committee shall annually review the Company’s succession plans and report on
them to the non-management members of the Board, with the participation of the
Chief Executive Officer and the Executive Chairman. The
Nominating/Corporate Governance Committee shall also identify potential
successors for the Chief Executive Officer position, although this does not mean
that it must at all times have selected a particular individual as the
designated successor Chief Executive Officer. The Chief Executive
Officer and the Executive Chairman shall participate in this process by
providing the Nominating/Corporate Governance Committee with recommendations or
evaluations of potential successors and identifying any development plans that
the Chief Executive Officer and the Executive Chairman recommend for such
individuals. The Chief Executive Officer and the Executive Chairman
are expected to recommend to the Board on an ongoing basis one or more
successors in the event of an unexpected inability of the Chief Executive
Officer to continue to serve.
Director
Compensation
The
Compensation Committee shall be responsible for recommending to the Board
compensation and benefit programs for non-employee directors.
The
Compensation Committee shall recommend to the Board compensation for
non-employee directors which is appropriate for a corporation with the
complexity, size and risk profile of the Company. A portion of the
directors’ compensation may be in the form of cash retainers and a portion may
be in the form of restricted stock or restricted stock units.
Director
Orientation and Continuing Education
All new
directors shall be provided an orientation program, including personal briefing
sessions from members of senior management on the Company’s accounting policies,
financial reporting, business strategies and key regulatory
issues. Each director is expected to attend a
director
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continuing
education and training program at the Company’s expense (subject to pre-approval
by the Executive Chairman), at least once every two years.
Annual
Review of the Guidelines
The
Nominating/Corporate Governance Committee is responsible for overseeing the
Corporate Governance Guidelines. The Nominating/Corporate Governance
Committee shall assess and review the adequacy of the Corporate Governance
Guidelines periodically and recommend any proposed changes to the Board for
approval, as appropriate.
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