Corporate Governance Guidelines
principles have been adopted by the Board of Directors (the “Board”) of Prime Hospitality
Corp. (the “Company”)
as the Company’s corporate governance guidelines (these “Guidelines”). These Guidelines, along with the
Company’s Restated Certificate of Incorporation and Bylaws and the charters
of the Board committees, provide the framework for the governance of the
Company. These Guidelines are
intended to assist the Board in the exercise of its responsibilities. As the operation of the Board is a
dynamic process, these Guidelines will be reviewed periodically and may be
changed by the Board from time to time as the Board deems appropriate in
the best interests of the Company or as required by any applicable laws or
The Board demands high
standards of conduct from the Company’s employees, officers and
directors. Implicit in this
philosophy is the importance of sound corporate governance. It is the duty of the Board to serve as
a prudent fiduciary for stockholders and to oversee the management of the
Company’s businesses. To fulfill
its responsibilities and to discharge its duty, the Board follows the
procedures and standards that are set forth in these Guidelines.
Board Functions and
The primary functions of the
Board are to oversee management performance on behalf of the stockholders,
to ensure that the interests of the stockholders are being served, to
monitor adherence to Company standards and policies, to promote the
exercise of responsible corporate citizenship, and generally to perform the
duties and responsibilities assigned to the Board by applicable laws and
To fulfill these functions,
the Board shall, with the assistance of its several committees, among other
Review and approve strategic plans to
enhance stockholder value;
Review corporate performance;
Oversee and evaluate management’s systems
for internal control, financial reporting and public disclosure;
Establish and oversee corporate governance
Promptly disclose waivers of the Company’s
Code of Business Conduct and Ethics (the “Code of Ethics”) for directors and executive officers;
Oversee and evaluate senior management
performance and compensation;
Consider effective succession of the Chief
Be apprised of relations with
Set a tone for a climate of corporate
trust and confidence;
Set standards for director qualification;
Undertake an annual performance evaluation
of the Board.
Board is responsible for reviewing, on an annual basis, the requisite
skills and characteristics of members of the Board. This assessment will include an
evaluation of the independence, business, strategic and financial skills of
each director and how each director’s overall experience relates to the
needs of the Board as a whole (see “Annual Performance Evaluation” below).
Except as set forth in the
Company’s Nominating and Corporate Governance Committee Charter, nominees
for director will be recommended to the Board by the Nominating and
Corporate Governance Committee. The
Nominating and Corporate Governance Committee does not solicit director
nominations but will consider stockholder recommendations sent to the
Secretary, Prime Hospitality Corp., 700 Route 46 East, Fairfield, New
Jersey 07004. The Corporate
Secretary will forward such recommendations to the Nominating and Corporate
Governance Committee. The
stockholder recommendations should be in accordance with the requirements
set forth in Rule 14a-8 of the U.S. Securities and Exchange Commission (the
A majority of the members
of the Board must be “independent” directors, as that term is defined by
the rules of the New York Stock Exchange (the “NYSE”). No
director shall qualify as independent unless the Board concludes by the
affirmative vote of a majority of its members that the director satisfies
the requirements for independence in effect from time to time.
Additional Requirements for the
Members of the Compensation and Audit Committee
The members of the
Compensation and Audit Committee, or the Audit Committee, shall satisfy the
additional independence requirements set forth by the SEC and the
The Company does not limit
the number of audit committees on which its members may serve. Therefore, if any Audit Committee member
simultaneously serves on the audit committee of more than three public
companies, the Board must conclude by the affirmative vote of a majority of
its members that such simultaneous service does not impair the ability of
such member to effectively serve on the Audit Committee.
role of a director and the time commitment attendant to such membership is
demanding. Each nominee must
carefully evaluate his or her existing demands before accepting a position
on the Board and each director must evaluate his or her existing demands
before accepting a position on any of the Board’s committees. The number of public boards on which a
director may sit may be reviewed on a case-by-case basis by the Nominating
and Corporate Governance Committee.
In connection therewith, each director shall advise the Board and
the Chairman, if any, or all members (in the absence of a Chairman) of the
Nominating and Corporate Governance Committee if he or she intends to
accept invitation to serve on the board of another public company.
Tenure and Retirement Policy
Each of the Company’s
incumbent directors has been elected for a three-year term. Because the Board has not established a limit
on the number of terms directors may serve, it is possible for a director
to serve the Company for several consecutive years. Additionally, directors are not required
to retire from the Board at any specific age. The Board has determined that the knowledge, expertise and continuity
provided by experienced directors is more valuable than the effect of
setting such limits. Before recommending the nomination of each incumbent
director for an additional term, the
Board, with the assistance of the Nominating and Corporate Governance
Committee, will review each director’s overall performance by assessing
each director’s independence, attendance, experience, qualifications,
contributions to and insight in the Company. This process will take into account the specific needs of the
Company and ensure an appropriate composition of the Board.
The Company’s Bylaws
discuss the resignation of members from the Board and from any committee.
Director Qualities and Criteria
The following is a list of
the general qualities directors should demonstrate and the criteria that
the Board considers at in determining candidates for election to the
Each director should bring to the Company
a range of skill, experience, knowledge and judgment. It is not the duty of a director to
represent a particular constituency, but to act in the interests of the
Company and all of its stockholders.
Directors should demonstrate competence in
one or more of the following areas: accounting or finance; business or
management experience or knowledge; industry knowledge or experience;
crisis management; or leadership and strategic planning.
Directors should be active. They should maintain an attitude of
constructive skepticism and participate in corporate affairs by asking
questions that require accurate honest responses. They should thoroughly evaluate and respond to communications
As discussed further in “Director
Qualifications—Commitment” and “Director Responsibilities,”
directors should have sufficient time available to devote to the affairs of
the Company and to maintain an acceptable level of attendance, preparedness
and participation with respect to meetings of the Board and its committees.
As discussed further in “Director
Responsibilities,” directors should have sound business judgment.
Directors should have reputations, both
personal and professional, consistent with the image and reputation of the
Directors must act with integrity and be
committed to the Company, its business plans and long-term stockholder
Only independent directors may serve on
the Compensation and Audit Committee and the Nominating and Corporate
must exercise sound business judgment and act in what they believe, in good
faith, to be the best interests of the Company and its stockholders. In discharging their obligations,
directors may reasonably rely on the honesty and integrity of the Company’s
management as well as that of its independent auditors. Directors and management shall be
entitled to indemnification as set forth in the Company’s Restated
Certificate of Incorporation, its Bylaws and in any other agreements with
order to oversee effectively the management of the Company, all directors
are expected to attend meetings of the Board and meetings of Board
committees of the Board of which they are members. Information and data important to the
understanding of the business to be conducted at Board and Board committee
meetings will generally be distributed in advance of the meeting. Each member of the Board should review
such materials in advance of the meetings.
Executive Sessions of the
& Independent Members of the Board
non-management directors of the Board shall meet regularly in sessions in
order to serve as a more effective check on management. The non-management directors may meet
before or after the regularly scheduled meetings of the full Board or they
may organize regularly scheduled meetings via telephone or in person. The Committee Chairmen shall rotate as
the presiding director of the non-management meetings of the Board.
directors are those members of the Board who are not officers of the
Company. Therefore, this group
could include non-independent directors of the Board. Independent directors shall also hold at
least one meeting per year.
with the BOARD
contact any member of the Board, please direct the communication to the
Company’s Secretary c/o Secretary, Prime Hospitality Corp., 700 Route 46
East, Fairfield, New Jersey 07004.
The Secretary will forward your communication to the relevant Board
director(s). If you have a
particular concern regarding (1) accounting, internal accounting
controls or auditing matters, (2) compliance with legal and regulatory
requirements or (3) retaliation by the Company against anyone who makes
allegations regarding these matters, please follow the procedures set forth
in the Code of Ethics.
of the Board
Board will maintain a Compensation and Audit Committee and a Nominating and
Corporate Governance Committee and such other committees as it determines
is appropriate. Each of the
Compensation and Audit Committee and the Nominating and Corporate
Governance Committee shall have written charters which will be made available
to stockholders (see “Availability”
below). These charters will address
each committee’s purpose, duties, goals and responsibilities as well as
qualifications for committee membership, committee structure and
operations, and committee reporting to the Board.
Access to Management and
to Select Outside Advisors
are expected to be highly interactive with management. Directors have full and free access to
management and all employees of the Company and the right, if they deem it
necessary and appropriate, to consult and select appropriate independent
advisors at the expense of the Company.
Any meetings or contacts that a director wishes to make should be
arranged through the Chief Executive Officer, the Chief Financial Officer,
the Secretary or directly by the director.
Directors should use their judgment to ensure that any such contact
is not disruptive to the Company’s business operations.
may receive compensation only as provided in the Company’s Bylaws. The Board will, with the assistance of
the Compensation and Audit Committee, review director compensation at least
on an annual basis. The Board is
aware that questions as to directors’ independence may be raised when
directors’ fees and emoluments exceed customary standards. When determining director compensation,
the Board, with the assistance of the Compensation and Audit Committee, may
take into account such factors as the Company’s size, industry
characteristics, location and such other factors it deems relevant.
Orientation & Continuing Education
directors are provided with comprehensive materials on the operations,
finances and business plan of the Company and, as stated above under “Director
Access to Management and to Select Outside Advisors,” access to the
Company’s management and employees.
The Board shall consider appropriate succession
planning for the Chief Executive Officer of the Company, including policies
and principles for selection and performance review for the Chief Executive
Officer, as well as policies regarding succession in case of emergency or
the retirement of the Chief Executive Officer.
Board shall be proactive in the context of any governance, compliance or
business crisis affecting the Company.
The Board will work with management and any outside advisors in
order to assess a crisis situation and choose a proper course of
action. The Board will use its best
efforts to maintain and preserve the value and integrity of the Company.
Board, with the oversight of the Nominating and Corporate Governance
Committee, shall conduct an annual self-evaluation to determine whether it
is functioning effectively. Each committee shall also
conduct an annual self-evaluation and report the results to the Board. The reviews
will focus on the performance of the Board or the respective committee as a
A copy of these Guidelines, the Code of Ethics, as well
as the charters of the Compensation and Audit Committee and the Nominating
and Corporate Governance Committee are available on the Company’s website
at www.primehospitality.com. Copies of the foregoing documents are also available in print
to any stockholder who requests such information by writing to the
Company’s Secretary, Prime Hospitality Corp., 700 Route 46 East, Fairfield,
New Jersey 07004.
The Board will continuously review these Guidelines and
may amend them at any time to reflect changing standards.