The Board of Directors (the “Board”) of LoopNet, Inc. (the “Company”) has adopted these Corporate Governance Guidelines (the “Guidelines”) to promote the effective functioning of the Board and to assist the Board in fulfilling its responsibilities. These Guidelines provide a framework for the conduct of the Board’s business. The Board retains the flexibility to focus on the most critical issues facing the Company on a case-by-case basis. The Guidelines are in addition to, and are not intended to change or interpret any federal or state laws or regulations applicable to the Company, including the Delaware General Corporation Law, the Certificate of Incorporation or Bylaws of the Company or any rule or regulation of The Nasdaq Stock Market, Inc. (“Nasdaq”) applicable to the Company. These Guidelines are subject to review and modification by the Board from time to time as it deems necessary or advisable.
It is the policy of the Board that a majority of directors
will not be current employees of the Company and will otherwise meet
appropriate standards on independence. In determining independence, the Board
will consider the definition of “independent director” in the listing standards
of Nasdaq (currently set forth in Listing Rule 5605(a)(2)), others laws and
regulations applicable to the Company as well as other factors that will
contribute to effective oversight and decision-making by the Board. 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).
Directors, other than the Series A Director (as defined below), will be reviewed and nominated by the Corporate Governance and Nominating Committee of the Board in accordance with the charter and principles of that committee. The director (“Series A Director”) elected by a majority of the outstanding shares of Series A Preferred Stock of the Company (“Series A Stockholders”), will be reviewed and nominated in accordance with the Company’s charter and Section 2 of the Investors’ Rights Agreement dated as of March 29, 2009 (the “Investors’ Rights Agreement”), by and among the Company, Calera Capital Partners (“Calera”) and certain other investors. The current Series A Director has been designated by Calera.
The Corporate Governance and Nominating Committee is responsible for reviewing with the Board, on an annual basis, the skills and characteristics of Board members, as well as the composition of the Board as a whole. This assessment will include reviewing the members’ qualification as independent, as well as their skills and experience in the context of the needs of the Board and shall include consideration of the diversity of the members’ skills and experience in areas that are relevant to the Company’s business and activities, including operations, finance, marketing and sales.
The Board will periodically evaluate the appropriate size of the Board and may make changes it deems appropriate, subject to Section 2.1 (Board Size) of the Investors’ Rights Agreement, which currently requires the board size to be fixed at seven (7), with any increases in the board size to be approved by Calera. The Board may increase the size of the Board to eight (8) to add an additional non-employee director if such director is mutually agreed upon by the Company and Calera. The Board believes that term or age limits are on balance not the best way to maximize the effectiveness of the Board. While terms limits would likely introduce fresh perspectives and make new viewpoints available to the Board, they may have the countervailing effect of causing the loss of the benefit gained from the contributions of directors who have developed, over time, increasing insight into the Company. As an alternative to term limits the Corporate Governance and Nominating Committee will review the appropriateness of each Board member’s continued service every three years in connection with evaluating the appropriateness of their recommendation to renominate a director. Likewise the Board does not believe that a mandatory retirement age is appropriate but will assess a director’s ability to continue serving on the Board every three years in connection with evaluating the appropriateness of their recommendation to renominate a director. The renomination of existing directors should not be viewed as automatic, but should be based on the continuing qualification under the criteria identified above. In addition, the Corporate Governance and Nominating Committee shall consider the existing directors' performance on the Board and any committee.
Each Board member must ensure that other existing and anticipated future commitments do not materially interfere with the member’s service as a director. Directors are encouraged to limit the number of other boards (excluding non-profit) on which they serve, taking into account potential board attendance, participation and effectiveness on these boards. Being particularly concerned with any potential conflicts of interests and otherwise, directors should advise the Chairman of the Board and the Chair of the Corporate Governance and Nominating Committee in advance of accepting an invitation to serve on the board of any other public company or as an executive officer of another company.
A director who changes the business or professional responsibility they held when they were elected to the Board, or whose personal circumstances have changed to the extent that it affects his or her ability to the contribute to the Company’s continued development, should consult with the Chair of the Board and the Chair of the Corporate Governance and Nominating Committee and shall tender his or her resignation to the Board. The Corporate Governance and Nominating Committee will recommend to the Board the action, if any, to be taken with respect to the resignation. Any executive officer of the Company, who serves on the Board, shall submit his or her resignation to the Board at the time such officer ceases to be an executive officer of the Company.
Any director who has been appointed to fill a vacancy on the Board in a given year shall stand for election at the Company’s annual meeting of stockholders in the following year, irrespective of the class to which the director is appointed.
Directors, other than the Series A Director, will be nominated by the Corporate Governance and Nominating Committee, and nominees may consist of current directors whose term may expire, new director candidates identified by other directors or management or by utilizing the services of a third party search firm. The Series A Director, who has been designated by Calera, shall be nominated and elected by the Series A Stockholders in accordance with the Company’s charter and the Investors’ Rights Agreement. The committee may take such measures that it considers appropriate in connection with the evaluation of a candidate, including candidate interviews, inquiries of the person recommending the candidate, engagement of an outside search or personnel firm to gather additional information, or reliance on the knowledge of the members of the committee, the Board or management. The committee will also review any director candidates recommended by the Company’s stockholders, provided that the stockholder recommendations are timely submitted in writing to the Company’s Secretary, along with all required documentation, in accordance with the stockholder nomination provisions of the Company’s Bylaws and under applicable rules adopted by the Securities and Exchange Commission ("SEC") or Nasdaq. Any candidates properly recommended will be considered in such manner as the members of the committee deem appropriate.
The fundamental role of the directors is to exercise their
business judgment to act in what they reasonably believe to be the best
interests of the Company and its stockholders. In fulfilling that
responsibility the directors should be able to rely on the honesty and integrity
of the Company’s senior management and expert legal, accounting, financial and
other advisors. All directors owe a duty of loyalty to the Company. This duty
of loyalty mandates that the best interest of the Company take precedence over
any interests possessed by a director. Directors also have a duty of care and
are expected to exercise appropriate diligence in good faith in making informed
decisions. Directors are expected to adhere to the Company’s Code of Business
Conduct and Ethics. The directors should have the benefit of directors’ and
officers’ insurance, paid by the Company, to indemnification to the fullest
extent allowed under the Company’s charter and Delaware law, and to exculpation
as provided by Delaware law and the Company’s charter.
Board members are expected to rigorously prepare for, attend and participate in all Board and applicable committee meetings, and to spend the time needed and meet as often as necessary to properly discharge their obligations. Information and data that is important to the Board’s understanding of the business to be conducted at a Board or committee meeting should generally be distributed in writing to the directors prior to the meeting. Particularly sensitive subject matters may be discussed at the meeting without advance distribution of written materials.
The proceedings and deliberations of the Board and its committees are to remain confidential. Each director shall maintain the confidentiality of information received in connection with his or her service as a director.
The Board is free to select its Chairman of the Board and the Company’s Chief Executive Officer (“CEO”) in a manner it considers to be in the best interests of the Company at the time of selection. The positions of Chairman of the Board and CEO may be filled by one individual or by two different individuals. However, when the Chairman of the Board also serves as the CEO or is not otherwise an independent director, the Board will designate an independent director to act as a Lead Independent Director and has currently done so. The Lead Independent Director is responsible for coordinating the activities of the independent directors and shall have the authority to call meetings of such independent directors. The specific responsibilities of the Lead Independent Director shall include the following:
Subject to the input of the Lead Independent Director, the Chairman will have primary responsibility for preparing the agenda for each Board meeting and arranging for it to be sent in advance of the meeting to directors along with appropriate written information and background materials so that Board meeting time may be conserved and discussion time focused on questions that the Board has about the materials. Each Board committee, and each individual director, is encouraged to suggest items for inclusion on the agenda. The Board will review the Company’s long-term strategic plans during at least one Board meeting each year.
Those directors who are not employees shall hold regular executive sessions at which management, including the CEO, is not present. These sessions may be scheduled in connection with regularly scheduled meetings or at other times and shall occur at least semi-annually. The Lead Independent Director, if one has been designated, shall preside over such sessions.
The Board currently maintains three committees: Audit,
Compensation and Corporate Governance and Nominating. From time to time, the
Board may establish a new committee or disband a current committee depending on
circumstances. The full authority and responsibilities of each committee is
fixed by resolution of the full Board and the committee’s charter, if any.
Committee charters for the standing committees are available on the Company’s
website at www.loopnet.com in the “Investor Relations” section, and a brief
description of the committee functions is available in the Company’s most
recent annual proxy statement.
All standing Board committees shall be chaired by independent directors. The Audit Committee, Corporate Governance and Nominating Committee and Compensation Committee shall be composed entirely of independent directors, which directors shall also meet applicable criteria for independence under Nasdaq, SEC and/or tax rules applicable to such committees. In addition, the Audit Committee shall be composed of independent directors that possess such accounting and financial expertise as Nasdaq or the SEC shall require.
The Corporate Governance and Nominating Committee shall be responsible, after consultation with the Chairman of the Board and the CEO (or the Chairman of the Board and the and the Lead Independent Director if the Chairman of the Board and the CEO are the same individual), for making recommendations to the Board with respect to the assignment of Board members to various committees. After reviewing the Corporate Governance and Nominating Committee’s recommendations, the Board shall be responsible for appointing the Chairs and members to the committees on an annual basis.
The Corporate Governance and Nominating Committee shall review committee assignments from time to time and shall consider the rotation of Chairs and members with a view toward balancing the benefits derived from the diversity of experience and viewpoints of the various directors.
Each committee will meet as often as may be deemed necessary or appropriate, in its judgment, either in person or telephonically, and at such times and places as the committee shall determine. Each committee shall give a periodic report of its activities to the Board.
Board members shall have complete access to the Company’s
management in order to become and remain informed about the Company’s business
and for such other purposes as may be helpful to the Board in fulfilling its
responsibilities. It is assumed that Board members will use sound business
judgment to ensure that this contact does not interfere with the business
operations of the Company. The Board encourages management to, from time to
time, bring managers into Board meetings who can provide additional insight
into the matters being discussed and to provide such managers exposure to the
The Board has complete authority to retain and terminate such independent consultants, counselors or advisors to the Board as it shall deem necessary or appropriate, at the expense of the Company, including determining the fees and other terms of such retentions or terminations.
The Board believes that it is desirable for its directors to attend the annual meeting of stockholders. The Company will make every effort to schedule its annual meeting of stockholders at a time and date to maximize attendance by directors taking into account the directors’ schedules. All directors are strongly encouraged to make every effort to attend the Company’s annual meeting of stockholders absent an unavoidable and irreconcilable conflict.
It is the responsibility of the of the Company’s executive
management to speak for the Company with the press and other outside parties.
Each director should refer inquiries from institutional investors, analysts,
the press or customers to the executive management or the authorized
spokespersons of the Company. Individual Board members may occasionally meet or
otherwise communicate with various constituencies that are involved with the
Company, but it is expected that Board members would do this with the knowledge
of management and, in most instances, absent unusual circumstances or as contemplated
by the committee charters, at the request of management.
Stockholders may communicate with any and all directors by writing to them, addressed as follows:
[Individual Director][Lead Independent Director][Chairman of the Board][Board of Directors]
185 Berry Street, Suite 4000
San Francisco, CA 94107
Communications received in writing will be collected, organized and processed by the Secretary, who will distribute the communications to members of the Board as appropriate depending on the facts and circumstances outlined in the communication received. Comments or questions regarding the Company’s accounting, internal controls or auditing matters will generally be referred to the Chair of the Audit Committee. Comments or questions regarding the nomination of directors and other corporate governance matters will generally be referred to the Chair of the Corporate Governance and Nominating Committee.
The Compensation Committee conducts a review at least
annually of the performance of the CEO. The Compensation Committee shall
establish the evaluation process and determine the specific criteria on which
the performance of the CEO is evaluated. The results of the review and
evaluation shall be communicated to the CEO by the Chairman of the Board (or by
the Lead Independent Director, if one the Chairman of the Board and the CEO are
the same individual), and the Chair of the Compensation Committee.
The CEO reviews succession planning and management development with the Board on an annual basis.
The Company’s executive officers shall not receive additional compensation for their service as directors. Compensation for non-employee directors should allow the Company to recruit and retain qualified directors with the background and skills necessary for membership on the Company’s Board. It is the general policy of the Board that Board compensation should be a mix of cash and equity-based compensation. The Board, through the Compensation Committee, will review, with the assistance or management or outside consultants if desired, appropriate compensation policies for the directors serving on the Board and its committees, taking into account board compensation practices of other public companies, contributions to Board functions, service as committee chairs, and other appropriate factors.
The Board shall conduct a self-evaluation from time to time of its performance and the performance of individual directors, and the performance of each of the Board committees. The evaluation may utilize an oral or written assessment questionnaire developed by the Corporate Governance and Nominating Committee. The individual assessments will be summarized and reported for discussion to the full Board. The Corporate Governance and Nominating Committee is responsible for establishing the evaluation criteria and overseeing the evaluations.
connection with their appointment to the Board, management shall provide new
board members with director orientation materials, including presentations from
senior executives and Company policies. Each director is expected to
participate in continuing education programs in order to maintain the necessary
level of expertise to perform his or her responsibilities.
Last Updated May 11, 2010