prentiss properties trust
The Corporate Governance Committee (the “Governance Committee”) is appointed by the Board of Trustees (the “Board”) of Prentiss Properties Trust (the “Company”) to (1) develop and recommend to the Board a set of corporate governance principles applicable to the Company and to reevaluate these principles on an annual basis; (2) assist the Board by identifying individuals qualified to become Board members, and to recommend to the Board the trustee nominees for the next annual meeting of shareholders; (3) recommend to the Board trustee nominees for each committee; and (4) lead the Board in its annual review of the Board performance. On September 17, 2002, the Governance Committee recommended and the Board adopted the Corporate Governance Guidelines attached hereto as Exhibit A (the “Corporate Governance Guidelines”), which will be reviewed at least annually and will be monitored by the Governance Committee. The Board may revise, establish additional guidelines and make exceptions to the guidelines when it is deemed to be in the best interests of the Company and its shareholders to do so.
The Governance Committee shall consist of no fewer than three, but not more than five, members. Each member of the Governance Committee shall be a member of the Board. The members of the Governance Committee shall meet the independence requirements of the New York Stock Exchange. No person may be made a member of the Governance Committee if his or her service on the Governance Committee would violate any restriction on service imposed by any rule or regulation of the United States Securities and Exchange Commission or the New York Stock Exchange.
The members of the Governance Committee shall be appointed by the Board. Governance Committee members may be removed or replaced, with or without cause, by the Board. One of the members shall be appointed Chairman of the committee by the Board. The Chairman will be responsible for leadership of the Committee, including preparing the agenda, presiding over the meetings, making Committee assignments and reporting to the Board.
Committee Authority and Responsibilities
In carrying out its oversight responsibilities, the Governance Committee’s policies and procedures should remain flexible to enable the Governance Committee to react to changes in circumstances and conditions so as to ensure the Company remains in compliance with applicable legal and regulatory requirements. The Governance Committee shall have the following responsibilities:
Board Candidates and Nominees
(a) To propose to the Board a slate of nominees for election by the shareholders at the Annual Meeting of Shareholders and prospective trustee candidates in the event of the resignation, death or retirement of trustees or a change in Board composition requirements;
(b) To develop criteria for the selection of new trustees and nominees for vacancies on the Board, including procedures for reviewing potential nominees proposed by shareholders;
(c) To review with the Board the desired experience, mix of skills and other qualities to assure appropriate Board composition, taking into account the current Board members and the specific needs of the Company and the Board;
(d) To conduct candidate searches, interview prospective candidates and conduct programs to introduce the candidate to the Company, its management and operations, and confirm the appropriate level of interest of such candidates;
(e) To recommend to the Board, with the input of the Chairman and the Chief Executive Officer, qualified candidates for the Board who bring the background, knowledge, experience, skill sets and expertise that would strengthen and increase the diversity of the Board;
(f) To conduct appropriate inquiries into the background and qualifications of potential nominees;
(g) To review the suitability for continued service as a trustee of each Board member when he or she has a significant change in status, such as an employment change, and recommending whether or not such trustee should be re-nominated; and
(h) To work with senior management to provide an orientation and continuing education program for trustees.
Board and Committees
(a) To review periodically the size of the Board and recommend to the Board changes as appropriate;
(b) To establish and review policies pertaining to the roles, responsibilities, retirement age, tenure and removal of trustees;
(c) To determine and monitor whether or not each trustee and prospective trustee is an “independent trustee” within the meaning of any rules and laws applicable to the Company;
(d) To review and consider possible conflicts of interests that may arise between the Company and any trustee;
(e) To review and monitor the size and composition of the Board to ensure that a majority of the trustees are “independent trustees” within the meaning of any rules and laws applicable to the Company;
(f) To review and consider the compensation and benefits of trustees who are not employees of the Company and to recommend to the Compensation Committee any changes that the Committee deems appropriate;
(g) To review periodically, with the participation of the Chairman and the Chief Executive Officer, all Board committees and recommend to the Board changes, as appropriate, in the number, responsibilities, membership and chairs of the committees; and
(h) To recommend that the Board establish such special committees as may be necessary or appropriate to address ethical, legal or other matters that may arise.
Board Evaluations and Management Development
(a) To develop and review periodically a process for and to conduct, not less frequently than biennially, an evaluation of the effectiveness of the Board as a whole;
(b) To consider the recommendations of the Chairman and the Chief Executive Officer for the appointment of the other executive officers, including any replacements between annual appointment dates, and to recommend to the Board the appointment of the executive officers other than the Chief Executive Officer;
(c) To review the Company’s management succession plans to help assure proper management planning; and
(d) To review the Chairman’s and the Chief Executive Officer’s recommendation, and to make recommendations to the Board, for elected officer positions.
B. Corporate Governance
(a) To review periodically and monitor the Company’s Corporate Governance Guidelines to assure that they reflect best practices and are appropriate for the Company and to assist the Board in achieving such best practices;
(b) To periodically review and recommend changes to the Company’s Declaration of Trust and Bylaws as they relate to corporate governance issues, including any modifications and enhancements to the Company’s takeover and structural defenses;
(c) To review and evaluate the Company’s shareholder rights plan, at least every three years, in order to consider whether the maintenance of the shareholder rights plan continues to be in the best interests of the Company, its shareholders and any other relevant constituencies, and to report the findings of such review to the Board along with any recommendations as to whether the shareholder rights plan should be modified or redeemed;
(d) To make regular reports to the Board;
(e) To review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval; and
(f) The Governance Committee may form and delegate authority to subcommittees when appropriate.
The Governance Committee shall meet at least annually, and as many additional times as the Governance Committee deems necessary. Meetings of the Governance Committee for the consideration of pertinent matters may be requested by the Chairman of the Board, the President of the Company, the Chairman of the Governance Committee or any member of the Governance Committee by request of the Chairman of the Governance Committee. The Governance Committee may meet by telephone conference call or by any other means permitted by law or the Company’s Bylaws. A majority of the members of the Governance Committee shall constitute a quorum. The Governance Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present. Without a meeting, the Governance Committee may act by unanimous written consent of all members. The Chairman of the Governance Committee shall develop the agenda for each meeting and in doing so may consult with management or the Board. Officers of the Company may attend these meetings at the invitation of the Chairman of the Governance Committee.
The Corporate Secretary need not be a member of the Governance Committee and shall attend Governance Committee meetings and prepare minutes. The Governance Committee shall keep written minutes of its meetings, which shall be recorded or filed with the books and records of the Company. Any member of the Board shall be provided with copies of such Governance Committee minutes if requested and distributed to each member of the Governance Committee and the members of the Board who are not members of the Governance Committee.
Annual Evaluation Procedures
The Governance Committee shall annually assess its performance to confirm that it is meeting its responsibilities under this Charter. In this review, the Governance Committee shall consider, among other things, (a) the appropriateness of the scope and content of this Charter, (b) the appropriateness of matters presented for information and approval, (c) the sufficiency of time for consideration of agenda items, (d) frequency and length of meetings, and (e) the quality of written materials and presentations. The Governance Committee may recommend to the Board such changes to this Charter as the Governance Committee deems appropriate.
Investigations and Studies
The Governance Committee may conduct or authorize investigations into or studies of matters within the Governance Committee’s scope of responsibilities as described above, and may retain, at the expense of the Company, independent counsel or other consultants necessary to assist the Governance Committee in any such investigations or studies. The Governance Committee shall have sole authority to retain and terminate any search firm to be used to identify trustee candidates, including the sole authority to negotiate and approve the fees and retention terms of such search firm.
Nothing contained in this Charter is intended to expand applicable standards of liability under statutory or regulatory requirements for the trustees of the Company or members of the Governance Committee. The purposes and responsibilities outlined in this Charter are meant to serve as guidelines rather than as inflexible rules and the Governance Committee is encouraged to adopt such additional procedures and standards as it deems necessary from time to time to fulfill its responsibilities.
Adopted by the Nominating & Corporate Governance Committee and
approved by the Board of Trustees on