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BADGER METER, INC.
(Approved 9/4/09)
POLICY REGARDING RELATED PERSON TRANSACTIONS
It is the policy of the Board of Directors of Badger Meter, Inc. (the “Company”) that all Related Person Transactions, as that term is defined below, shall be subject to approval or ratification in accordance with the procedures set forth below. Annually the Company will disclose the information regarding Related Person Transactions that is required by regulations of the Securities and Exchange Commission (“SEC”) to be disclosed, or incorporated by reference, in the Company’s Annual Report on Form 10-K.
PROCEDURES REGARDING RELATED PERSON TRANSACTIONS
1. A “Related Person” includes any (a) person who is or was (since the beginning of the last fiscal year for which the Company has filed a Form 10-K and proxy statement, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director, (b) greater than 5 percent beneficial owner of the Company’s common stock, or (c) immediate family member of the foregoing. An “immediate family member” includes any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such person, and any person (other than a tenant or employee) sharing the household of such person.
2. A “Related Person Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (a) the aggregate amount involved will or may be expected to exceed $100,000 in any calendar year, (b) the Company is a participant, and (c) any Related Person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). The following Related Person Transactions shall be deemed to be pre-approved:
• any employment by the Company of an executive officer of the Company if: (a) the related compensation is required to be reported in the Company’s proxy statement under Item 402 of Regulation S-K, or (b) the executive officer is not an immediate family member of another executive officer or director of the Company, the related compensation would be reported in the Company’s proxy statement under Item 402 of Regulation S-K if the executive officer was a “named executive officer,” and the Company’s Corporate Governance Committee approved (or recommended that the Board of Directors approve) such compensation;
• any compensation paid to a director if the compensation is required to be reported in the Company’s proxy statement under Item 402 of Regulation S-K;
• any transaction with another company at which a Related Person’s only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that company’s shares, if the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of that company’s total annual revenues;
• any charitable contribution, grant or endowment by the Company to a charitable organization, foundation or university at which a Related Person’s only relationship is as an employee (other than an executive officer) or a director, if the aggregate amount involved does not exceed the lesser of $1,000,000 or 2% of the charitable organization’s total annual receipts;
• any transaction where the Related Person’s interest arises solely from the ownership of the Company’s common stock and all holders of the Company’s common stock received the same benefit on a pro rata basis; and
• any transaction involving a Related Person where the rates or charges involved are determined by competitive bids.
3. The Corporate Governance Committee (the “Governance Committee”) shall review the material facts of all Related Person Transactions that require the Governance Committee’s approval and either approve (or ratify, as applicable) or disapprove of the Related Person Transaction. Specifically, each executive officer, director or nominee for director of the Company shall disclose to the Board of Directors the information called for by section 4 below relating to a Related Person Transaction. Such disclosure to the Governance Committee should occur on a timely basis after the executive officer, director or nominee for director becomes aware of the Related Person Transaction, but in no case later than the time of the next following circulation of the questionnaire described in the following sentence. The questionnaire sent annually by the Company to directors and executive officers will solicit information regarding Related Person Transactions that are currently proposed or occurred since the beginning of the Company’s last fiscal year.
4. The information regarding a Related Person Transaction that should be reported to the Governance Committee by the executive officer, director or nominee for director pursuant to Section 3 above should include (a) the name of the Related Person, and if he or she is an immediate family member of an executive officer, director or nominee for director, the nature of such relationship; (b) the Related Person’s interest in the transaction, (c) the approximate dollar value of the amount involved in the transaction, (d) the approximate dollar value of the amount of the Related Person’s interest in the transaction; and (e) in the case of indebtedness, the largest total amount of principal outstanding since the beginning of the Company’s last fiscal year, the amount of principal outstanding as of the latest practicable date, the amount of principal paid since the beginning of the Company’s last fiscal year, and the rate or amount of interest payable on the indebtedness.
5. The Governance Committee’s decision whether or not to approve or ratify the Related Party Transaction should be made in light of the Governance Committee’s determination as to whether consummation of the transaction is believed by the Governance Committee to not be or have been contrary to the best interests of the Company. The Governance Committee may take into account the effect of a director’s Related Person Transaction on such person’s status as an independent member of the Company’s board of directors and eligibility to serve on board committees under SEC and New York Stock Exchange rules.
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