One Liberty Properties, Inc.
Corporate Governance Guidelines
The Board of Directors (the “Board”) of One Liberty Properties, Inc. (the “Company”) has adopted the following Corporate Governance Guidelines (the “Guidelines”) to assist the Board in the exercise of its responsibilities and to serve the best interests of the Company and its shareholders. These Guidelines should be interpreted in the context of all applicable laws and the Company’s Restated Articles of Incorporation, By-laws, as amended, and other corporate governance documents. The Guidelines are subject to modification from time to time by the Board as the Board may deem appropriate in the best interests of the Company and its shareholders or as required by applicable laws and regulations.
These Guidelines shall be made available on the Company’s website at www.onelibertyproperties.com and to any shareholder who requests a copy.
Size of the Board
Pursuant to the Company’s Restated Articles of Incorporation, the Board will consist of between 3 and 11 directors, as determined by the Board. The Board has decided that the number of directors should be eleven. The Board believes that eleven directors is an appropriate size based on the Company’s present circumstances. The Board will periodically review the size of the Board, and determine the size that is most effective in relation to the Company’s operations.
Independence of the Board
The Board will be comprised of a majority of directors who qualify as independent directors (the “independent directors”) under the listing standards of the New York Stock Exchange (the “NYSE”) and the requirements of any other applicable regulatory authority.
The Nominating and Corporate Governance Committee of the Company will review annually the relationships that each director has with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). Following such annual review, only those directors the Nominating and Corporate Governance Committee affirmatively determines have 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) will be considered independent directors, subject to additional qualifications prescribed under the listing standards of the NYSE and the requirements of any other applicable regulatory authority. The basis for any independence determination, including that a relationship is not material, will be described in the Company’s annual proxy statement.
Separate Sessions of Non-Management Directors
The directors that are not members of the Company’s management (“Non-Management directors”) will meet in executive session without the other members of the Board or management present on a regularly scheduled basis. Additionally, at least once in each fiscal year, the independent directors (as determined from Non-Management directors) will meet in executive session. The leader of these sessions will rotate among the Chairpersons of the committees of the Board. The leader will chair the regularly scheduled meeting and bear such further responsibilities that the Non-Management directors, as a whole, might designate to such leader from time to time. The Non-Management directors will review the Company’s implementation of, and compliance with, these Guidelines and consider such matters as they may deem appropriate at such meetings.
Company Qualification Standards
The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the appropriate characteristics, skills and experience required for the Board as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current Board members), the Nominating and Corporate Governance Committee, in recommending candidates for election, and the Board, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including such candidate’s ability to make independent analytical inquiries, general understanding of finance and accounting, understanding of the Company’s business, and educational and professional background. Each candidate must also possess fundamental qualities of intelligence, honesty, good judgment and high standards of ethics, integrity, fairness and responsibility. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent shareholder interests through the exercise of sound judgment. In determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee also considers the director’s past attendance at meetings and participation in, and contributions to, the activities of the Board.
Selection of New Directors
Subject to the Articles of Incorporation, as amended, directors serve three year staggered terms. There is currently no limitation on the number of terms a director may serve. Each year, at the annual meeting, the Board will recommend a slate of directors for election by the shareholders. The Board will also be responsible for filling vacancies and/or newly-created seats on the Board that may occur between annual meetings of shareholders. The Nominating and Corporate Governance Committee is responsible for identifying, screening and recommending candidates to the entire Board for Board approval.
Selection of Chairman of the Board
The Board will select the Chairman of the Board by a majority of the directors then in office.
No Specific Limitation on Other Board Service
The Board does not believe that its members should be prohibited from serving on boards of other organizations and has not adopted any guidelines limiting such activities. However, the Nominating and Corporate Governance Committee and the Board will take into account the nature of and time involved in a director’s service on other boards and/or committees in evaluating the suitability of individual candidates and current directors and making its recommendations to the Company’s shareholders.
Due to the demanding nature of service on the Audit Committee, the members of the Audit Committee may not serve on the audit committees of the boards of directors of more than three other public companies at the same time as they are serving on the Company’s Audit Committee.
Service on other boards and/or committees should be consistent with the Company’s conflict of interest policies.
Directors Who Change Their Present Job Responsibility
When a director, including any director who is currently an officer or employee of the Company, resigns or materially changes his or her position with his or her employer other than the retirement in the ordinary course of such director from his or her employment, such director must submit his or her resignation from the Board, which the Board may accept or reject based on the recommendation of the Nominating and Corporate Governance Committee.
The business and affairs of the Company will be managed by, or under the direction of, the Board, including through one or more of its committees as set forth in the committee charters. Each director is expected to spend the time and effort necessary to properly discharge his or her responsibilities. These include:
(1) overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed;
(2) reviewing and, where appropriate, approving the Company’s major financial objectives, plans and actions;
(3) reviewing and, where appropriate, approving major changes in, and determinations of other major issues respecting, the appropriate auditing and accounting principles and practices to be used in the preparation of the Company’s financial statements;
(4) reviewing and, where appropriate, approving major changes in, and determinations under the Company’s Guidelines, Code of Business Conduct and Ethics and other company policies;
(5) regularly evaluating the performance and approving the compensation of the Chief Executive Officer;
(6) with the input of the Chief Executive Officer, regularly evaluating the performance of principal senior executives;
(7) planning for succession with respect to the position of Chief Executive Officer; and
(8) ensuring that the Company’s business is conducted with the highest standards of ethical conduct and in conformity with applicable laws and regulations.
The Company’s executive officers shall not receive additional compensation for their service as directors. Director fees (including any equity incentive compensation granted or awarded to all directors) and fees for serving on any committee of the Board are the sole form of compensation that members of the Board, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee may receive from the Company. The Compensation Committee shall have the responsibility for recommending to the Board compensation for non-employee directors. The Board believes that the amount of director compensation should be fair and competitive in relation to director compensation at other companies with businesses similar in size and scope to the Company; the type and amount of compensation should align directors’ interest with the long-term interests of shareholders; and the structure of the compensation program should be simple, transparent and easy for shareholders to understand. The Compensation Committee shall review the annual retainer fee as well as other compensation for non-employee directors with the full Board every other year, or more frequently if necessary.
Interaction with Institutional Investors, the Press and Customers
The Board believes that management speaks for the Company. Each director should refer all inquiries from institutional investors, the press and customers to management. Individual Board members may, from time to time at the request of the management, 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 of the Board.
Board Access to Senior Management
The Board will have complete access to the Company’s management in order to ensure that directors can ask any questions and receive all information necessary to perform their duties. Directors should exercise judgment to ensure that their contact with management does not disturb the business operations of the Company. Such contact, if in writing, should be copied to the Chief Executive Officer of the Company.
Board Access to Independent Advisors
The Board committees may hire independent advisors as set forth in their applicable charters. The Board as a whole shall have access to such advisors and such other independent advisors that the Company retains or that the Board considers necessary to discharge its responsibilities.
Following the end of each fiscal year, the Nominating and Corporate Governance Committee will oversee an annual assessment by the Board of the Board’s performance. The Nominating and Corporate Governance Committee will be responsible for establishing the criteria and implementing the process for such evaluation, as well as considering other corporate governance principles that may, from time to time, merit consideration by the Board. The purpose of the review will be to improve the performance of the Board as a unit, and not to target the performance of any individual Board member.
Frequency of Meetings
The Board will meet at least four times annually. In addition, special meetings may be called from time to time as determined by the needs of the business. It is the responsibility of directors to attend meetings.
A director is expected to spend the time and effort necessary to properly discharge his or her responsibilities. Accordingly, a director is expected to regularly prepare for and attend meetings of the Board and all committees on which the director sits (including separate meetings of non-management directors), with the understanding that, on occasion, a director may be unable to attend a meeting. A director who is unable to attend a meeting in person is expected to notify the Chairman of the Board or the Chairman of the appropriate committee in advance of such meeting, and, whenever possible, participate in such meeting via teleconference.
Attendance of Non-Directors
The Board encourages the Board and any committee of the Board to bring management and outside advisors or consultants from time to time into Board and/or committee meetings (i) to provide insight into items being discussed by the Board or such committee which involve the manager, advisor or consultant and (ii) to make presentations to the Board or such committee on matters which involve the manager, advisor or consultant. Attendance of non-directors at Board meetings is at the discretion of the Board.
The Chairman establishes the agenda for each Board meeting with input from the management and, as necessary or desired, from the other directors.
Advance Receipt of Meeting Materials
Information regarding the topics to be considered at a meeting is essential to the Board’s understanding of the business and the preparation of the directors for a productive meeting. To the extent feasible, the meeting agenda and any written materials relating to each Board meeting will be distributed to the directors in advance of each meeting to allow for meaningful review of such agenda and materials by the directors. Directors are expected to have reviewed and be prepared to discuss all materials distributed in advance of any meeting.
Number, Name, and Responsibilities of Committees
The Board currently has three committees. From time to time, the Board may form a new committee or disband a current committee, depending upon the circumstances. Each committee will perform its duties as assigned by the Board in compliance with the committee’s charter. The current committees are:
Audit Committee. The Audit Committee consists of at least three members and reviews the work of the Company’s internal accounting and audit processes and independent auditors. The committee has sole authority to appoint and fire the Company’s independent auditors and to approve any significant non-audit relationship with the independent auditors.
Compensation Committee. The Compensation Committee consists of at least three members and stays informed as to market levels of compensation and, based on evaluations submitted by management, recommends to the Board compensation levels and programs for the Board and the Chief Executive Officer that correspond to the Company’s goals and objectives. The committee also produces an annual report on compensation for inclusion in the proxy statement, in accordance with applicable rules and regulations.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee consists of at least three members and is responsible for recommending to the Board individuals to be nominated as directors and committee members. This includes evaluation of new candidates as well as evaluation of current directors. This committee is also responsible for developing and recommending to the Board these Guidelines, as well as reviewing these Guidelines on a regular basis and, if necessary, recommending revisions to these Guidelines. This committee also performs other duties as are described in these Guidelines.
Assignment and Rotation of Committee Members
Based on the recommendations of the Nominating and Corporate Governance Committee, the Board appoints committee members and committee chairs according to criteria set forth in the applicable committee charter and such other criteria that the Board determines to be appropriate in light of the responsibilities of each committee. Committee membership and the position of committee chair will not be rotated on a mandatory basis unless the Board determines that rotation is in the best interests of the Company.
The Board affirmatively states that each member of the Audit Committee must be financially literate, as determined by the Board in its business judgment, and that at least one member of the Audit Committee must have accounting or related financial management expertise as determined by the Board in its business judgment.
Frequency of Committee Meetings
Except for the Audit Committee, each committee will meet at least once annually. The Audit Committee will meet at least four times annually. In addition, special meetings may be called by the Chairman of any committee from time to time as determined by the needs of the business. It is the responsibility of the directors to attend the meetings of the committees on which they serve.
The Chairman of each committee, in consultation with the appropriate members of the
committee, will develop his or her committee’s agenda.
Following the end of each fiscal year, each committee will review its performance and charter and recommend to the Board any changes it deems necessary.
Annual Review of Chief Executive Officer
The Compensation Committee should submit to the independent directors annually at the close of each fiscal year an evaluation of the Chief Executive Officer. After review, amendment and agreement by the independent directors, the evaluation should be communicated to the Chief Executive Officer by the independent directors. The evaluation should be based on objective criteria including performance of the business, accomplishment of long term objectives and development of management. The independent director’s final evaluation will be used by the Compensation Committee when considering and recommending to the Board the compensation of the Chief Executive Officer.
There should be available, on a continuing basis, the Chief Executive Officer’s recommendation as to his successor should the Chief Executive Officer be unexpectedly disabled or shall retire. The Chief Executive Officer shall report annually to the Board on succession planning.
Orientation and Continuing Education
The Board shall provide directors with access to internal and external orientation programs and continuing education programs to ensure that they have sufficient information about the Company and their duties.