Corporate Governance Guidelines
(As adopted by the Board of Directors on December 2, 2015)
This document replaces and supersedes in its entirety the previous Corporate Governance Guidelines of Post Properties, Inc. (the “Company”) adopted by the Board of Directors of the Company (the “Board”) on February 14, 2012.
Director Independence Standards
- THE ROLE OF THE BOARD OF DIRECTORS
- Direct the Affairs of the Company for the Benefit of Shareholders
The Board believes that the primary responsibility of directors is to oversee the affairs of the Company for the benefit of shareholders. The Board agrees that day-to-day management of the Company is the responsibility of management and that the role of the Board is to oversee management’s performance of that function. The responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareholders.
- Ethical Business Environment
The Board believes that the long-term success of the Company is dependent upon the maintenance of an ethical business environment that focuses on adherence to both the letter and the spirit of regulatory and legal mandates. The Board expects management will conduct operations in the manner supportive of the Board’s view.
- CEO Performance Evaluation
The Board believes that CEO performance should be evaluated annually related to his or her progress toward long term goals and strategies as well as current year results as a regular part of any decision with respect to the CEO’s compensation. The Board, after approval of the Company’s annual goals, has delegated responsibility to the Executive Compensation and Management Development Committee to determine the CEO’s annual goals and to evaluate the CEO’s performance in light of Company and individual goals and to approve the CEO’s salary, bonus and long-term incentives such as stock and option awards.
The Board believes that evaluation of the CEO should be an objective process, based on both qualitative and quantitative factors, including performance of the business, accomplishment of long-term objectives, positioning of the Company for the future, development of management and leadership in the industry.
- Succession Planning
The Board has delegated responsibility to the Executive Compensation and Management Development Committee to review and advise on certain aspects of management succession. However, the full Board retains responsibility for CEO succession issues, including selection of a new CEO.
- Compensation of Other Executive Officers
The Board has delegated oversight of compensation and benefit plans to the Executive Compensation and Management Development Committee. The Executive Compensation and Management Development Committee establishes the compensation and benefits programs for key executive officers, subject in some cases to shareholder approval.
- Risk Management Oversight
The Board provides oversight of the Company’s risk management processes. In accordance with New York Stock Exchange requirements, the Audit Committee is primarily responsible for reviewing policies with respect to risk and fraud assessment and risk and fraud management and meeting periodically with management to review the results of risk and fraud assessments conducted by management. In addition, the other committees of the Board consider the risks within their areas of responsibility.
- MEETINGS OF THE BOARD OF DIRECTORS
- Selection of Chairman of the Board
The Chairman of the Board shall be an independent director, under the rules of the Company’s Director Independence Standards and the New York Stock Exchange, elected by and from the members of the Board. The Chairman presides at all meetings of shareholders of the Company, all meetings of the Board and all meetings of independent directors (including executive sessions) and sees that all orders, resolutions and policies adopted or established by the Board are carried into effect. The Chairman also provides leadership to ensure that the Board functions in an independent, cohesive fashion. The Chairman will fulfill the other duties set forth in these Corporate Governance Guidelines, the Company’s Articles of Incorporation and Bylaws, or as otherwise assigned from time-to-time by the Board.
- Frequency of Meetings
The Board believes that the number of scheduled Board meetings should vary with circumstances. While the Board recognizes that directors discharge their duties in a variety of ways, including personal meetings and telephone contact with management and others regarding the business and affairs of the Company, the Board feels it is the responsibility of individual directors to make themselves available to attend both scheduled and special Board and committee meetings on a consistent basis. There will be a minimum of four Board meetings annually.
- Executive Sessions of Non-Management Directors
The Board believes that non-management directors should have the opportunity to meet in executive session during Board meetings. The Agenda for each Board meeting shall provide for an executive session. It is the policy of the Board for non-management directors to meet in executive session at least four times annually. The Chairman of the Board will preside during executive sessions.
- Access to Management
Board members shall have reasonable access to management. It is assumed however, that Board members will use judgment to ensure that contact is not distracting to the business operations of the Company and that such contact, if in writing, be copied to the CEO and the Chairman. In the ordinary course, the Chairman will facilitate communication and information flow between the Board and management. The Board and each committee shall have the power to hire independent legal, financial or other advisors as they may deem necessary, at the expense of the Company and without consulting or obtaining the approval of any officer of the Company in advance.
The Chairman shall have access to management and financial and other information of the Company, as he or she shall deem appropriate under the circumstances to assist him or her and the Board in the proper discharge of their responsibilities.
- Attendance of Non-Directors at Meetings
The Board believes that the Chairman or the CEO should have discretion to invite such members of management as the Chairman or the CEO deems appropriate to attend the Board meetings, subject to the Board’s right to request that such attendance be limited or discontinued.
The Board believes it is important for directors to have exposure to the Company’s key senior officers and believes their limited attendance at and participation in Board meetings may be helpful.
- Agendas and Presentations
The Board believes the Chairman and the CEO should establish the agenda for each Board meeting, taking into account suggestions of Board members.
- Information Flow
The Board should receive information important to understanding presentations, discussions and issues at each meeting, in writing and sufficiently in advance of the meeting when possible to permit appropriate review.
The Corporate Secretary is responsible for coordinating the information flow to the directors as directed by the Chairman and to periodically discuss director satisfaction with Board materials with individual directors and encourage directors to offer suggestions on materials.
- BOARD STRUCTURE
- Non-Management Directors
Non-management director means a director who is not a member of management and has not been a member of management for the past five years, has no close family or similar relationship with a member of key management and is not affiliated with a company or firm which has any material financial relationship with the Company. There should be as few management directors as possible.
- Size of the Board
The Board believes that the Board should not be too large, but understands that the size of the Board will fluctuate from time to time depending on circumstances. The Board presently has nine members. The Company’s Bylaws permit the Board to vary in size from three to fifteen. The Board and the Nominating and Corporate Governance Committee periodically review the appropriate size of the Board, which may vary to accommodate the availability of outstanding director candidates or the Board’s changing needs and circumstances.
- Director Retirement Age and Term Limits
The Board has established a retirement policy for directors which it feels is appropriate for current circumstances. Under that policy, a director may not stand for election or re-election after his or her 72nd birthday. The Nominating and Corporate Governance Committee will periodically review the retirement policy to ensure that it remains appropriate in light of the Company’s needs.
The Board believes that consistent quality in the directorship can be achieved effectively without term limits. The Nominating and Corporate Governance Committee will review incumbent directors and the strengths and weaknesses of the Board as a whole at least annually.
- Director Appointments
The Board believes that directors should be nominated for Board approval by the Nominating and Corporate Governance Committee of the Board, which consists entirely of independent directors. The Board expects the Nominating and Corporate Governance Committee to consider the views of the Chairman and the CEO in making appointments, but it is the Nominating and Corporate Governance Committee’s responsibility to make director recommendations to the full Board for appointments to fill vacancies of any unexpired term on the Board and to recommend nominees for submission to shareholders for approval at the time of the Annual Meeting. It is the joint responsibility of the Nominating and Corporate Governance Committee and the Chairman to extend the offer to a new director candidate to serve on the Board.
The Company does not set specific criteria for directors but believes that candidates should show evidence of leadership in their particular field, have broad experience and the ability to exercise sound business judgment, possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders. The Board believes that its membership should reflect a diversity of experience, gender, ethnicity and age. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time. Prior to becoming a director of or standing for election at another public company or any private company in the real estate industry, a director shall notify the Chairman of the Board in order to avoid potential conflicts of interest and to address whether the aggregate number of directorships held by such director would interfere with his or her ability to carry out his or her responsibilities as a director of the Company. In the event that the Board determines that that the additional directorship constitutes a conflict of interest or interferes with such director’s ability to carry out his or her responsibilities as a director of the Company, such director, upon the request of the Board, shall either offer his or her resignation or not accept the other directorship. In addition, no member of the Board may sit on more than a total of five public company boards (including the Board of the Company); provided, that, the CEO may not sit on more than a total of three public company boards (including the Board of the Company).
- Director Independence
A majority of the directors will be independent directors under the New York Stock Exchange (NYSE) rules as in effect from time to time.
The Board has adopted categorical Director Independence Standards to assist it in making a determination of independence. A copy of the Director Independence Standards is attached as Exhibit A. The Board will periodically review the Director Independence Standards.
In addition to the requirement that a majority of the board satisfy the independence standards discussed above, members of the Audit Committee and the Executive Compensation and Management Development Committee must also satisfy additional requirements discussed in their charters.
- Director Orientation and Continuing Education
In order to promote director effectiveness, management is responsible for an orientation process for new directors to include a Board manual and comprehensive written materials concerning the Company, its operation and the policies and procedures of the Board, meetings with key members of management, and visits to Company offices and facilities as appropriate.
The Company shall also consider providing an ongoing education program to ensure awareness of areas relevant to the Company’s business, including corporate governance, executive compensation and industry developments.
- Director, Board and Committee Evaluations
The Board believes that the Nominating and Corporate Governance Committee should review the performance of incumbent directors prior to their re-election. The Board expects the Nominating and Corporate Governance Committee to recommend appropriate action to effect changes in incumbent directors if, in the opinion of the Nominating and Corporate Governance Committee after discussion with the Chairman and the CEO, it would be in the best interest of the Company and its shareholders to effect such change.
The Board also believes that the Nominating and Corporate Governance Committee should periodically review the Board’s performance and effectiveness as a body, including its corporate governance policies and practices, and that a similar review should be undertaken with respect to each of the Board’s committees. The assessment of the Board and each committee should address the body’s contribution as a whole and specifically review areas in which the Board or management believes a better contribution could be made. This assessment should also include issues of diversity, age and skills, all in the context of an assessment of the perceived needs of the Board or the relevant committee at that point in time. The Nominating and Corporate Governance Committee will coordinate these assessments, which may consist of surveys and self-evaluations, and report to the Board the results of its analysis and any recommendations following each such review. The Nominating and Corporate Governance Committee shall coordinate such reviews at least annually.
- Director Compensation
The Board believes that the level of director compensation generally should be competitive with that paid to directors of other corporations of similar size and complexity. The Board also believes that director compensation should be tied, in part, to corporate performance.
- Service of Former Company CEO on the Board
When the CEO resigns, retires, is terminated or otherwise ceases to serve as the CEO of the Company, he or she will also resign from the Board, effective as of the date he or she ceases to serve as CEO.
- COMMITTEES OF THE BOARD
- Number and Types of Committees
The Board believes that committees should be created and disbanded depending on the particular interests of the Board, issues facing the Company and legal requirements. The current standing committees of the Board (that is, committees expected to operate over an extended period) are the Audit Committee, the Executive Compensation and Management Development Committee, the Nominating and Corporate Governance Committee and the Strategic Planning and Investment Committee. The Nominating and Corporate Governance Committee is primarily responsible for making recommendations to the full Board on the committee structure, but directors are free to make suggestions regarding committees at any time and are encouraged to do so. The Board also expects that the committee structure would be one of the matters considered by the Nominating and Corporate Governance Committee from time to time as part of its review of overall Board effectiveness.
- Assignment and Rotation of Committee Members
The Chairman will annually review Committee chairs and membership and recommend any changes to the Nominating and Corporate Governance Committee. Based on these recommendations, the Nominating and Corporate Governance Committee will, in turn, conduct its own review of Committee chairs and membership and recommend any changes to the full Board. The Board expects that assignments would be made within the following guidelines: assignments may be rotated periodically, though not necessarily within any specified time frame; the Audit Committee, the Executive Compensation and Management Development Committee and the Nominating and Corporate Governance Committee should be comprised solely of independent directors; and committee assignments must comply with any NYSE qualifications.
- Committee Reports
Reports of committee meetings are submitted to the full Board following each committee meeting. Committee chairs are offered the opportunity to comment on committee activities at each Board meeting.
- OTHER CORPORATE GOVERNANCE ISSUES
- Communications with the Public
The CEO is responsible for establishing effective communications with the Company’s stakeholder groups, i.e., shareholders, residents, associates, communities, suppliers, creditors, governments and corporate partners. It is the policy of the Company that management speaks for the Company, and the Chairman speaks for the Board. However, from time-to-time, it may be desirable for individual Board members, at the request of management, to meet or otherwise communicate with various constituencies that are involved with the Company. If comments from the Board are appropriate, they should, in most circumstances, come from the Chairman. All corporate communications should be in accordance with the Company’s Disclosure Policy.
- Periodic Review
These guidelines shall be reviewed by the Nominating and Corporate Governance Committee from time to time (not less than annually).
The Company’s goal is that at least a majority of the Board of Directors will be independent. Each year, the Board will affirmatively determine whether a director is “independent” and will disclose these determinations in its annual proxy statement.
A director will not be considered independent if:
a) 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 or any of its affiliates;
b) 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 or any of its affiliates, other than excluded compensation;
c) (1) the director or an immediate family member is a current partner of a firm that is the company’s internal or external auditor; (2) the director is a current employee of such a firm; (3) the director has an immediate family member who is a current employee of such a firm and personally works on the Company’s audit; or (4) 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 or any of its affiliates’ audit within that time;
d) 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 or any of its affiliates’ present executive officers at the same time serves or served on that company's compensation committee;
e) the director is a current employee, or an immediate family member is a current executive officer, of any organization 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 the greater of $1 million, or 2% of such other company's consolidated gross revenues (such payments and consolidated gross revenues to be measured based on reported figures for the last completed fiscal year); and
For purposes of these guidelines, the terms:
“affiliate” means any entity that controls, is controlled by or is under common control with the Company, as evidenced by the power to elect a majority of the board of directors or comparable governing body of that entity;
“excluded compensation” means director and committee fees (including fees paid to the Chairman of the Board of Directors and the chairman of any committee of the Board of Directors) and pension or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service; and
“immediate family” has the meaning set forth in Rule 303A.02 of the New York Stock Exchange, as amended from time to time.