Governance Guidelines

The business and affairs of the Company are overseen by the Board of Directors (the Board). The Board’s responsibility is to provide direction and oversight. The Board oversees the strategic direction of the Company and the performance of the Company’s business and management. The management of the Company is responsible for presenting strategic plans to the Board for review and approval and for implementing the Company’s strategic direction.

In addition to its general oversight of management, the Board also performs a number of specific functions, including:

1. Understanding and approving the Company’s long-term, key strategies;
2. Understanding the issues and risks that are central to the Company’s success, including cybersecurity matters;
3. Selecting, evaluating and compensating the Chief Executive Officer (CEO) and overseeing CEO succession planning;
4. Overseeing the performance of management;
5. Reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions;
6. Ensuring processes are in place for maintaining an ethical corporate culture; and
7. Overseeing the quality and integrity of the Company’s financial statements and reports and the Company’s compliance with legal and regulatory requirements.

The Board, with the assistance of the applicable committee, shall adopt a charter for each of the Nominating and Corporate Governance Committee, the Human Resources and Compensation Committee and the Audit Committee, and such charters shall comply with and include, at a minimum, those responsibilities required to be set forth therein by the rules of the New York Stock Exchange (the NYSE), by law or by the rules or regulations of any other regulatory body or self-regulatory body applicable to the Company.

In all actions taken by the Board, the directors are expected to exercise their business judgment in what they reasonably believe to be in the best interests of the Company. In discharging that obligation, directors may rely on the honesty and integrity of the Company’s senior executives and its outside advisors and auditors.

From January 1, 2021, the Board will have both an Executive Chairperson (Executive Chair) and a Lead Director. The Lead Director’s responsibilities include:

• Ensuring the Board functions independently of management and other non-independent directors.
• Providing independent leadership to the Board.
• Calling, setting the agenda for, and chairing periodic executive sessions and meetings of the independent directors.
• Chairing Board meetings in the absence of the Executive Chair or when it is deemed appropriate.
• Providing feedback to the Executive Chair and the CEO on corporate and Board policies and strategies.
• In concert with the Executive Chair and the CEO, providing input on the agenda, schedule and materials for Board meetings based on input from independent directors.
• Leading the annual Board self-evaluation with the support of the Executive Chair and responding to evaluation recommendations.
• Coordinating with the Chair of the HRCC, leading and facilitating the independent directors’ evaluation of the Executive Chair and the CEO performance and compensation.
• Carrying out such other duties as are requested by the independent directors, the Board or any of its Committees from time to time.
• Working with the Executive Chair and the CEO to ensure that the Board is provided with the resources, including external advisers and consultants to the Board as considered appropriate, to permit it to carry out its responsibilities and bringing to the attention of the Executive Chair and the CEO any issues that are preventing the Board from being able to carry out its responsibilities.

The Board will periodically evaluate this leadership structure based on various factors, including the position and direction of the Company and the composition of the Board. If the Board Chair is not an independent director, the independent directors will elect annually an independent director to serve as the Lead Director. 

The Board consists of not less than three and not more than fifteen directors, the exact number of directors to be determined by resolution adopted by the affirmative vote of the majority of the Board.  The Nominating and Corporate Governance Committee shall consider and make recommendations to the Board concerning the appropriate size of the Board.  Industry Directors (as defined in the Company’s certificate of incorporation) and directors who are officers or employees of the Company or any of the Company’s subsidiaries may serve on the Board subject to the limitations set forth in the Company’s By-Laws.

Candidates for nomination for election to the Board to fill new positions or vacancies are selected by the Nominating and Corporate Governance Committee, and recommended to the Board or stockholders for approval in accordance with the guidelines recommended by such Committee.

Each director holds office until a successor is elected and qualified, or until the director’s earlier death, resignation, removal or automatic termination.  In no case shall a decrease in the number of directors remove or shorten the term of any incumbent director. 

With the exception of Industry Directors or any director who is an officer or employee of the Company or any of its subsidiaries, any person who is or has been during the prior 18 months a director, officer, employee or agent of, or represents or has represented, or is or has been during the prior 18 months otherwise affiliated with or otherwise has any business relationship that is material to such person with, a Member or Similar Person (as such terms are defined in the Certificate of Incorporation), may not serve as a director of the Company.

At least two-thirds of the members of any Executive Committee of the Board, the Audit Committee, the Human Resources and Compensation Committee or the Nominating and Corporate Governance Committee shall be Directors who are not Industry Directors, and no more than one Industry Director may serve on the Nominating and Corporate Governance Committee. No Industry Director shall participate in the process of nominating any person to serve as a director of the Company or selecting any person to serve as a director of the Mastercard Foundation. No Industry Director may serve as Chairperson of the Board. No officer or employee of the Company may serve as Chairperson of the Board unless the election or appointment of such officer to serve as Chairperson of the Board is approved by the affirmative vote of at least 75% of the entire Board.

In addition, no director shall be a trustee, officer, employee or agent of, or represent or otherwise be affiliated with, the Mastercard Foundation, or have been a director, officer, employee or agent of, or represented or been affiliated with, the Mastercard Foundation during the prior three years or otherwise have any business relationship with the Mastercard Foundation that is material to such person. No director shall be a director, regional board director, officer, employee or agent of or represent (1) an entity that owns and/or operates a payment card program competitive with the Company’s comparable card programs, as determined by the Board (a Competitor), or (2) an institution that is represented on any board of a Competitor.

Each director of the Company shall also serve as a director on the board of Mastercard International Incorporated.

To maintain the quality of the Board’s oversight and to protect against the possibility of damaging conflicts of interest, the Board shall have a majority of “independent” directors. No director will be considered “independent” unless the Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). When making “independence” determinations, the Board shall broadly consider all relevant facts and circumstances, as well as any other facts and considerations specified by the NYSE, by law or by any rule or regulation of any other regulatory body or self-regulatory body applicable to the Company. When assessing the materiality of a director’s relationship with the Company, the Board shall consider the issue not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships (among others).

The Board has established the following guidelines to assist it in determining director “independence”:

1. A director will not be independent if: (i) the director is, or has been within the last three years, employed by the Company, or an immediate family member of the director is, or has been within the last three years, employed by the Company as an executive officer; (ii) the director or an immediate family member of the director has received more than $120,000 during any twelve-month period within the last three years in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided that such compensation is not contingent in any way on continued service); (iii) (a) the director or an immediate family member is a current partner of a firm that is the Company’s internal or external auditor, (b) the director is currently employed by such a firm, (c) the director has an immediate family member who is currently employed by such a firm and personally works on the Company’s audit, or (d) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on the Company’s audit within that time; (iv) the director or an immediate family member of the director 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 (v) the director is a current employee, or an immediate family member of the director is a current executive officer, of another company that has made payments to, or receives payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or two percent of the consolidated gross revenues of such other company.
2. The following commercial or charitable relationships will not be considered to be material relationships that would impair a director’s independence: (i) relationships involving the provision of products or services either by or to the Company or its subsidiaries or affiliates and involving a director, his or her immediate family members, or a company or charitable organization of which the director or an immediate family member is (or, at the time of the transaction, was) a partner, stockholder, officer, employee or director so long as the following condition is satisfied: the products and services are being provided in the ordinary course of business and on substantially the same terms and conditions, including price, as would be available to similarly situated customers; (ii) if a director is an executive officer or an employee, or whose immediate family member is an executive officer, of another company that makes payments to, or receives payment from, the Company for property or services in an amount which, in any single fiscal year, are less than the greater of $1,000,000 or two percent of the consolidated gross revenues of such other company; (iii) if a director beneficially owns, or is an employee of another company that beneficially owns, less than 10% of the Company’s common equity; (iv) if a director is an executive officer or an employee of another company to which the Company is indebted, and the total amount of the indebtedness is less than one percent of the total consolidated assets of the company for which he or she serves as an executive officer or an employee; and (v) if a 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 the greater of $1,000,000 or two percent of that organization’s consolidated gross revenues. Notwithstanding the foregoing, no relationship required to be disclosed by the Company pursuant to Item 404 of Regulation S-K shall be treated as categorically immaterial. The Board will annually review all commercial, charitable and other relationships of directors.

The Company will disclose in its annual proxy statement its independence determination, including the basis for determining that a relationship is not material and any other pertinent information, with respect to each director standing for election.

An “immediate family member” includes a person’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 person’s home.

No director may serve on the Audit Committee or Human Resources and Compensation Committee of the Board unless such director meets all of the criteria established for audit committee or compensation committee service, as applicable, by the NYSE and/or (as applicable) the Sarbanes-Oxley Act, any other law and any other rule or regulation of any other regulatory body or self-regulatory body applicable to the Company.

To the extent practicable and subject to the Board’s fiduciary duties, the Nominating and Corporate Governance Committee shall seek to foster diversity on the Board when nominating directors for election (other than the CEO, to the extent such officer shall be nominated) by taking into account geographic diversity to reflect the geographic regions in which the Company operates in a manner approximately proportional to its business activity, as well as diversity of viewpoints, age, gender, sexual orientation, race, ethnicity, nationality, and cultural background, and shall endeavor to have a Board representing a range of leadership and other experiences relevant to the Company’s global activities.

In order for any incumbent director to become a nominee of the Board for further service on the Board, such person must submit an irrevocable resignation, contingent on (i) that person not receiving a majority of the votes cast in an election that is not a Contested Election (as defined in the By-Laws) and (ii) acceptance of that proffered resignation by the Board. In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the Nominating and Corporate Governance Committee or such other committee designated by the Board pursuant to the By-Laws, shall make a recommendation to the Board as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board shall act on the proffered resignation, taking into account the committee’s recommendation within ninety (90) days following certification of the election results. The committee in making its recommendation and the Board in making its decision each may consider any factors and other information that they consider appropriate and relevant.

An incumbent director who fails to receive a majority of the votes cast in an election that is not a Contested Election and who tenders his or her resignation pursuant to the By-Laws shall remain active and engaged in Board activities while the Nominating and Corporate Governance Committee and the Board decide whether to accept or reject such resignation, or whether other action should be taken; provided, however, it is expected that such incumbent director will not participate in any proceedings by the Board or any committee thereof regarding whether to accept or reject such director’s resignation, or whether to take other action with respect to such director.

The Board’s policy is that each non-employee director must retire from the Board by not standing for re-election at the next annual meeting of stockholders following the earlier of his or her: (i) 15^th anniversary of service on the Board or (ii) 72^nd birthday, unless the Board determines that due to unique or extenuating circumstances it is in the best interests of the Company and its stockholders to extend the director’s service for an additional period of time; provided, however, that for directors who were elected to the Board at any time during 2006-2008, no more than two (2) directors shall retire pursuant to this provision at any one time, and if more than two (2) directors are impacted at any one (1) annual meeting of stockholders by this provision, the director(s) with the shortest tenure on the Board and otherwise impacted by this provision shall be deferred until a subsequent annual meeting of stockholders for retirement.

In accordance with its charter, the Nominating and Corporate Governance Committee oversees an annual review of the performance of the Board and each committee of the Board. This review includes an examination of the composition of the Board as a whole and of each of its committees; an assessment of directors’ skills and areas of expertise; consideration of any changes in a director’s responsibilities since the director was last elected to the Board; and such other factors as may be determined by the Committee to be appropriate. The results of the Committee’s review of the Board and each committee are reported to the Board.

Directors are expected to attend, and actively participate in, Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities as directors. Information and materials that are important to a director’s understanding of the business to be conducted at a Board or committee meeting shall be distributed to the directors prior to the meeting, in order to provide time for review beforehand. The CEO, in consultation with the Chairperson of the Board (if not the same person) and Corporate Secretary, determines the business to be conducted at each Board meeting. Each director is free to suggest items for inclusion on the agenda or to raise subjects that are not on the agenda for that meeting but that are appropriate for the Board to address. The independent and non-management directors are afforded a regular opportunity to meet in executive session (and, in the case of independent directors, at least annually), or more frequently upon request of any independent or non-management director.

At least annually, and/or in the course of its ordinary Board meeting agendas, the Board reviews the Company’s long-term strategic plans and the principal issues that it expects the Company may face in the future.

At present, the standing committees of the Board are the Audit Committee, the Human Resources and Compensation Committee and the Nominating and Corporate Governance Committee. Committee members are elected by the Board following nominations by the Nominating and Corporate Governance Committee. Committee membership and chairs may be changed from time to time, as deemed appropriate or necessary. Each committee has a written charter which sets forth the mission and responsibilities of the committee, as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations.

The chair of each committee, generally in consultation with the committee members and management, determines the frequency and length of committee meetings consistent with any requirements set forth in the committee’s charter. The chair of each committee, in consultation with other members of the committee and/or senior management of the Company, determines the business to be conducted at committee meetings. The agenda for each committee meeting is distributed to all committee members prior to the meeting.

The Board may, from time to time, establish additional committees, such as an Executive Committee, or subcommittees, to serve at the pleasure of the Board.

Directors are afforded full and free access to senior management and other employees and advisors of the Company. Generally, any meeting or contact that a director wishes to initiate with a Company employee may be arranged through the Company’s CEO or other member of senior management. At the request of the Chairperson of the Board or the CEO, members of senior management of the Company and others may be invited to attend meetings of the Board.

The Board and each committee have the power to hire, at the Company’s expense, and fire independent legal, financial and other advisors as each may deem necessary or appropriate, without consulting or obtaining the approval of any officer of the Company in advance, and consistent with any applicable charter.

The form and amount of director compensation is determined by the Board, based upon the recommendation of the Human Resources and Compensation Committee. The Board believes that the amount and kind of director compensation should be guided by three goals: compensation should fairly pay directors for work required in an organization of the Company’s size and scope; compensation should align directors’ interests with the long-term interests of stockholders; and the structure of compensation should be simple, transparent, and easy for stockholders to understand. The Human Resources and Compensation Committee periodically reviews director compensation. Directors who are employees of the Company or any of its subsidiaries or affiliates do not receive compensation for their services as directors. Directors who are not employees of the Company or any of its subsidiaries or affiliates are not permitted to enter into any consulting arrangement with the Company.

The Board has adopted stock ownership guidelines for non-employee directors for the purpose of aligning their interest with the interests of stockholders. The Company’s Code of Conduct (Code) includes an anti-hedging policy applicable to non-employee directors that includes various prohibitions against inappropriate trading activities with respect to Mastercard securities. In addition, non-employee directors are not permitted to buy Mastercard securities on margin unless arrangements are made to cover any margin calls in cash, nor are they allowed to pledge (or hypothecate) Mastercard securities as collateral for a loan. 

The Company offers an orientation program for new directors and a periodic continuing education program available for all directors. This program generally includes presentations by senior management on the Company’s strategic plans; significant financial, legal, accounting and risk management issues; compliance programs; Code; management structure and executive officers; and, as appropriate, its internal auditor and independent registered public accounting firm. All directors are expected to participate in the orientation program, as well as director education programs offered internally and by third parties. These orientation and continuing education programs will be overseen by the Nominating and Corporate Governance Committee of the Board.

The Board expects any director who has a material change in his or her other responsibilities, including retiring from his or her present employment, changing job responsibility in any significant way, becoming employed, retained or affiliated with any competitor of the Company or experiencing a significant change in his or her personal circumstances that reasonably may have an adverse effect on the director’s reputation or the reputation of the Company, to offer to the CEO, Chairperson of the Board, General Counsel or Corporate Secretary, to resign from the Board. Upon receipt of such offer, the Nominating and Corporate Governance Committee will promptly evaluate whether the Board should accept the resignation. The evaluation will be based upon a review of the appropriateness of such director’s continued service taking into account the changed responsibility. The Nominating and Corporate Governance Committee will also review whether the director continues to satisfy the Board’s qualifications for service and, as applicable, director independence standards.

While resignation may not be appropriate in all the foregoing instances, the Board believes that it would be desirable at that time to consider, through the Nominating and Corporate Governance Committee, the appropriateness of the Director’s continued service.

In the event that a director elects to join another SEC-registered company board of directors, such director will notify the CEO, Chairperson of the Board, General Counsel or Corporate Secretary in advance of accepting such appointment. In addition, no director may serve on the audit committee of more than three SEC-registered companies, including the Company. In either event, the number of other SEC-registered company boards and the number of other SEC-registered company board audit committees on which a director may serve shall be subject to a case-by-case review by the Nominating and Corporate Governance Committee in order to ensure that each director is able to devote sufficient time to carry out his or her duties as a director or committee member. 

As set forth in its charter, the Human Resources and Compensation Committee conducts an annual review of the CEO’s performance and reports the results of the annual review to the Board.

The Human Resources and Compensation Committee is responsible for ensuring that the Company has a thorough succession planning process. This succession planning process includes the input of other Board members and also includes identifying and evaluating potential successors to the CEO and other senior executive officers of the Company. The CEO meets periodically with the Board to discuss potential successors and to review succession planning and any development plans recommended for individuals.

The Company has adopted a Code and other internal policies and guidelines intended to support the Company’s mission statement and to comply with the laws, rules and regulations that govern the Company’s business operations. The Code applies to all directors, officers and employees of the Company. In addition, the Company has adopted a Supplemental Code of Ethics applicable only to the President and CEO, the Chief Financial Officer, the Controller, and certain other senior officers of the Company, including those who serve in financial accounting, treasury, tax and legal advisory roles. Based on management reports, the Audit Committee monitors compliance with the Code, the Supplemental Code of Ethics and other internal policies and guidelines of the Company.

The Company does not make personal loans to any director or executive officer of the Company, or to immediate family members of any director or executive officer of the Company.

Each director is expected to keep confidential any confidential or proprietary information relating to the Company that has been furnished to or acquired by the director in connection with his or her service as a director. No director may disclose any material, non-public information concerning the Company, unless required to do so by law or as authorized by the Board.

The Board has established the following procedures in order to facilitate communications between the Board and the stockholders of the Company and other interested parties. These procedures will be summarized on the Company’s public website and otherwise publicly disclosed as required pursuant to the rules and regulations of the NYSE and other applicable law.

Communications with the Board

Stockholders and other interested parties may contact any member (or all members) of the Board (including, without limitation, the director that presides over the executive sessions of non-management directors, or the non-management directors as a group), any Board committee or any chair of any such committee by mail or electronically. To communicate with the Board, any individual directors or any group or committee of directors, correspondence should be addressed to the Board or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent by e-mail to corporate.secretary@mastercard.com or by mail to Mastercard Incorporated, Board of Directors c/o the Office of the Corporate Secretary, 2000 Purchase Street, Purchase, NY 10577.

The Company’s Corporate Secretary, or in his or her absence, another member of the Company’s Law Department, will open all communications received for the sole purpose of determining whether the contents represent a message to the directors. All correspondence that is not in the nature of advertising, promotions of a product or service, or is not trivial, irrelevant, unduly hostile, threatening, illegal, patently offensive or similarly inappropriate will be forwarded promptly to the addressee.

If correspondence reflects a complaint or concern that involves (1) accounting, internal accounting controls and auditing matters, (2) possible violations of, or non-compliance with, applicable legal and regulatory requirements, (3) possible violations of the Company’s Supplemental Code of Ethics for the CEO and senior officers or (4) retaliatory acts against anyone who makes such a complaint or assists in the investigation of such a complaint, the correspondence will be forwarded to the chair of the Audit Committee. If no particular director is named, such communication will be forwarded, depending on the subject matter, to the chair of the Audit, Human Resources and Compensation or Nominating and Corporate Governance Committee, as appropriate.

Communications Related to Whistleblower Procedures

Communications related to whistleblower procedures are set forth in the Whistleblower Policy, which is posted on the Company’s public website.