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Corporate Governance

Related Party Transactions

RELATED PARTY TRANSACTIONS POLICY

(As of July 22, 2015)

Definition of Related Parties

Blue Buffalo Pet Products, Inc. and its subsidiaries (the “Company”) consider the following to be “related parties”:

  1. Any director or executive officer of the Company;
  2. Any nominee for election as a director;
  3. Any security holder who is known to the Company to beneficially own more than five percent of any class of the Company’s voting securities; and
  4. Any member of the immediate family of any of the parties listed above, including such party’s spouse, parents, step-parents, children, step-children, siblings, mothers and fathers-in-law, sons and daughters-in-law, and brothers and sisters-in-law.

Definition of Related Party Transactions
A “related party transaction” is any transaction that is reportable by the Company under paragraph (a) of Item 404 of Regulation S-K in which the Company was or is to be a participant and the amount involved exceeds $120,000 and in which any related party had or will have a direct or indirect material interest. A transaction includes, but is not limited to, any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangement or relationships. In addition, a “related party transaction” shall include any transaction that would otherwise be reportable by the Company under paragraph (a) of Item 404 of Regulation S-K, but for the fact that the amount involved does not exceed $120,000. The amount involved in any related party transaction shall be determined in accordance with paragraph (a) of Item 404 of Regulation S-K.

Policy
A related party must promptly disclose to the General Counsel, or such other person designated by the Board of Directors, any related party transaction in which such related person had or will have a direct or indirect material interest and all material facts with respect thereto. The General Counsel, or such other person, will promptly communicate such information to the Board of Directors, as applicable.

Related party transactions where the amount involved is less than or equal to $120,000 and that involve executive officers of the Company (other than the Chief Financial Officer and the Chief Executive Officer) shall be reviewed and approved or ratified by the Chief Financial Officer. All other related party transactions, including any related party transaction where the amount involved exceeds $120,000 or that involves the Chief Executive Officer, the Chief Financial Officer or any member of the Board of Directors, shall be reviewed and approved or ratified by the disinterested members of the Board of Directors or any Committee of the Board of Directors, provided that, in each case, a majority of the members of the Board of Directors or any Committee of the Board of Directors, as applicable, are disinterested. The Chief Financial Officer shall review all related party transactions that he or she approves with the Audit Committee annually. The Company will disclose to the Audit Committee any employment of a related party by a customer or vendor of the Company.

In addition, in connection with any approval or ratification of a related party transaction involving a non-employee director or nominee for director, consideration shall be given to whether such transaction would compromise such director’s status:

  1. as an independent director under the rules of the NASDAQ Stock Exchange;
  2. if such non-employee director serves on the Compensation Committee as an “outside director” under Section 162(m) of the Internal Revenue Code or as a “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); or
  3. if such non-employee director serves on the Audit Committee as an independent director under Rule 10A-3 of the Exchange Act.