SECOND AMENDED AND RESTATED CORPORATE GOVERNANCE GUIDELINES OF BRT APARTMENTS CORP. AS OF MARCH 18, 2017
The Board of Directors (the "Board") of BRT Apartments Corp. (the "Company") has adopted the following second amended and restated 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 stockholders. These Guidelines should be interpreted in the context of all applicable laws and the Company's Articles of Incorporation, Bylaws, 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 stockholders or as required by applicable laws and regulations. In the event of any inconsistency between the Company’s Articles of Incorporation and/or Bylaws (collectively the “Organizational Documents”), on the one hand, and these Guidelines on the other hand, the Organizational Documents shall govern.
These Guidelines shall be made available on the Company's website at www.brtrealty.com and to any shareholder who requests a copy.
II. The Board
Size of the Board
Pursuant to the Organizational Documents, the Board will consist of ten directors, subject to increase or decrease as determined by the Board. 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").
The Nominating and Corporate Governance Committee (the “Nominating Committee”) will review annually the relationships that each Companyee 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 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. The Company's annual proxy statement will include such information as may be required by applicable law with respect to any such relationship.
Any nominee for director who is an incumbent director but who is not elected by the vote required in the Bylaws, and with respect to whom no successor has been elected, shall promptly tender his or her offer to resign to the Board for its consideration. The Nominating Committee shall consider such offer and shall recommend to the Board whether to accept the offer to resign. No later than the next regularly scheduled Board meeting to be held at least ten days after the date of the election, the Board shall decide whether to accept the offer to resign. The Board will promptly and publicly disclose its decision. The nominee may address the Nominating Committee and/or the Board, but may not be present during deliberations or voting on whether to accept the nominee’s offer to resign. If the resignation is not accepted, the director will continue to serve until the next annual meeting of stockholders and until the director’s successor is duly elected and qualified or until the director’s earlier resignation or removal. The Nominating Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.
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 management Directors or management present on a regularly scheduled basis. The leader of these sessions will rotate among the independent Directors. The leader will chair the regularly scheduled executive session and bear such further responsibilities that the Non-Management Directors as a whole might designate 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.
Director Qualification Standards
The Nominating 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 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 ability to make independent analytical inquiries, general understanding of finance and accounting, understanding of the Company's business, and educational and professional background. Each nominee 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 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 Organizational Documents, 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 the slate of Directors for election by the stockholders. The Board will also be responsible for filling vacancies and/or newly-created seats on the Board that may occur between annual meetings of stockholders. The Nominating 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 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 stockholders.
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 two 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.
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:
- overseeing the conduct of the Company's business to evaluate whether the business is being properly managed (including being managed in conformity with applicable laws, regulations and ethical standards);
- reviewing and, where appropriate, approving the Company's major financial objectives, plans and actions;
- 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; and
- 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.
Except as otherwise determined by the Compensation Committee or the Board, the Company's executive officers shall not receive additional compensation for their service as directors. Director and committee fees (including fees for serving as Chairperson of any committee and equity based compensation) are the sole form of compensation that Non-Management Directors and members of any standing committee may receive from the Company. The Compensation Committee shall have the responsibility for recommending to the Board compensation for Non-Management Directors. The Board believes that the amount of director compensation should be fair and competitive in relation to the director compensation at other companies with businesses similar in size and scope to the Company; and in the same geographic region in which the Company’s executive offices are located; the type and amount of compensation should align directors' interest with the long-term interests of stockholders; and the structure of the compensation program should be simple, transparent and easy for stockholders to understand.
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 Chief Executive Officer or his designee.
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.
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.
The Nominating Committee will oversee an annual assessment by the Board of the performance of the Board and its Committees. The Nominating 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.
III. Board Meetings
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 encouraged to participate in such meeting via teleconference.
Participation of Non-Directors
The Board and its committees are encouraged to bring management and outside advisors from time-to-time into Board and/or committee meetings to provide insight into, and/or make presentations with respect to, items being discussed by the Board or the committee, as the case may be. Attendance of non-directors at Board or Committee meetings is at the discretion of the Board or the committee, as the case may be.
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.
IV. Committee Matters
Number, Name, and Responsibilities of Committees
The Board currently has three standing committees (i.e., Audit, Compensation and Nominating). Each committee will perform its duties as assigned by the Board in compliance with the committee's charter.
From time-to-time, the Board may form a new committee or disband a current committee, depending upon the circumstances.
Assignment and Rotation of Committee Members
Based on the recommendations of the Nominating 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.
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.
On an annual basis, each committee will review its performance and recommend to the Board any changes it deems necessary.
V. Leadership Development
Annual Review of Chief Executive Officer
The Compensation Committee should evaluate the performance of the Chief Executive Officer on an annual basis. The evaluation should be based on criteria that such committee deems appropriate.
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 on a periodic basis to the Board on succession planning.
The Company shall assist the directors in continuing to stay informed about the Company, its activities and the directors’ duties and responsibilities.