Corporate Governance Guidelines
FIRST INDUSTRIAL REALTY TRUST, INC. CORPORATE GOVERNANCE GUIDELINES
The Board of Directors of First Industrial Realty Trust, Inc. (the "Company") has adopted the following guidelines with respect to corporate governance. The Board will review and amend these guidelines as it deems necessary and appropriate.
1. Board Mission and Director Responsibilities
The Board is elected by the stockholders to oversee their interest in the long-term financial strength and overall success of the Company's business. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the stockholders. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.
The core responsibility of Directors is to exercise their business judgment to further what they reasonably believe are the best interests of the Company and its stockholders. Directors must fulfill their responsibilities consistent with their fiduciary duty to the stockholders, in compliance with all applicable laws and regulations.
The Board provides advice and counsel to the Chief Executive Officer and other senior officers of the Company. The Board ensures that the assets of the Company are properly safeguarded, that appropriate financial and other controls are maintained, and that the Company's business is conducted wisely and in compliance with applicable laws and regulations.
In discharging their duties, Directors may rely on the Company's senior executives and outside advisors and auditors. Accordingly, skill and integrity will be important factors in selection of the Company's senior executives and other advisors. The Board has the authority to hire independent legal, accounting, financial or other advisors as it may deem necessary. The Directors shall also be entitled (i) to have the Company purchase reasonable directors' and officers' liability insurance on their behalf, (ii) to enjoy the benefits of indemnification to the fullest extent permitted by applicable law, the Company's Charter, its Bylaws and any indemnification agreements to which it is a party and (iii) to exculpation as provided by state law and the Company's Charter.
Directors are expected to attend all meetings of the Board and of the committees on which they serve. Directors should devote the time and effort necessary to fulfill their responsibilities. Information important to Directors' understanding of issues to come before the Board or a committee will be provided sufficiently in advance of meetings to permit Directors to inform themselves. Directors are expected to review these materials before meetings.
The Board will hold regularly scheduled meetings at least four times a year. The Chairman of the Board will set the agenda for Board meetings. Any Director may suggest items for inclusion on the agenda. Any Director may raise a subject that is not on the agenda at any meeting. The Board will review the Company's long-term strategic plans and the most significant financial, accounting and risk management issues facing the Company at at least one Board meeting each year.
Non-management Directors will meet regularly in executive session without management participation. Normally, such meetings will occur in conjunction with regularly scheduled Board meetings. Meetings of the non-management Directors will be chaired by the Chairman of the Board, unless he is not independent, in which case meetings of the non-management Directors will be chaired by the Chairman of the Nominating/Corporate Governance Committee. The Board will establish and disclose methods by which interested parties may communicate directly with the presiding Director of the non-management committee or with the non-management Directors of the Board as a group.
2. Director Qualifications
In accordance with the requirements of the New York Stock Exchange, a majority of the Directors must be independent. No Director will be deemed independent unless the Board affirmatively determines that the Director has no material relationship with the Company, directly or as an officer, stockholder or partner of an organization that has a material relationship with the Company. The Board will observe all additional criteria for independence established by the New York Stock Exchange or other governing laws and regulations.
Directors may be nominated by the Board or by stockholders in accordance with the Company's Bylaws. The Nominating/Corporate Governance Committee will review all nominees for the Board in accordance with its charter. The assessment will include a review of the nominee's judgment, experience, independence, understanding of the Company's business or that of other related industries, and such other factors as the Committee concludes are pertinent in light of the current needs of the Board. The Committee will select qualified nominees and review its recommendations with the Board, which will decide whether to invite the nominee to join the Board.
In accordance with the Company's Charter, Directors are elected for a term of one year. The Board does not believe that it should establish limits on the number of terms a Director may serve. Term limits may cause the loss of experience and expertise important to the optimal operation of the Board. However, to ensure that the Board remains composed of high functioning members able to keep their commitments to Board service, the Nominating/Corporate Governance Committee will evaluate the qualifications and performance of each incumbent Director before recommending the nomination of that Director for an additional term.
While the Company has not adopted a formal diversity policy, the Board values diversity, in its broadest sense, reflecting, but not limited to, profession, geography, gender, ethnicity, skills and experience. As part of the nomination process, the Company will endeavor to have a diverse Board representing a range of experiences in areas that are relevant to the Company's business and the needs of the Board from time-to-time, and the Nominating and Corporate Governance Committee and the Board will consider highly qualified candidates, including women and minorities.
3. Committees of the Board
The Board has five standing committees: Audit Committee, Compensation Committee, Nominating/Corporate Governance Committee, Investment Committee and Special Committee. The Board may establish additional committees as necessary or appropriate.
Only independent Directors may serve on the Audit Committee, the Compensation Committee and the Nominating/Corporate Governance Committee (the "Independent Committees"). Each of the Independent Committees will have its own charter setting forth its responsibilities and procedures, the qualifications of its members and how it will report to the Board. Each Independent Committee shall have authority to obtain advice and assistance from internal or external legal, accounting or other advisors. Each Independent Committee will conduct a self-evaluation annually.
The Chairman of each Independent Committee will determine the frequency of committee meetings, consistent with the committee's charter and the Company's needs.
4. Director Access to Officers, Employees and Information
Directors have full and free access to officers, employees and the books and records of the Company. Any meetings or contact that a Director wishes to initiate may be arranged through the Chief Executive Officer or directly by the Director. The Directors should use their judgment to ensure that any such contact is not disruptive to the business operations of the Company.
The Board may invite non-Board members who are in senior management positions in the Company and outside advisors to attend any Board meeting. The Chairman of the Board shall extend such invitations.
5. Director Orientation and Continuing Education
All new Directors must participate in the Company's Orientation Program, which should be conducted within two months of the annual meeting at which new Directors are elected. This orientation will include presentations by senior management to familiarize new Directors with the Company's business and strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Business Conduct and Ethics, its principal officers, and its independent auditors. Any sitting Directors may attend the Orientation Program. The Board and/or the Company will encourage Directors to periodically attend certain programs or sessions and/or to review materials relating to the responsibilities of Directors of publicly-traded companies.
6. Annual Chief Executive Officer Performance Evaluation; Succession Planning
To ensure that the Chief Executive Officer is providing the best leadership for the Company, the Compensation Committee will annually evaluate the Chief Executive Officer's performance and report the conclusions of its evaluation to the Board. The non-management Directors of the Board will discuss the Chief Executive Officer's performance in an executive session. In addition, the Compensation Committee shall annually review corporate goals and objectives relevant to the Chief Executive Officer's compensation and submit such goals and objectives to the Board for its ratification. The Board's input regarding the Compensation Committee's evaluation of the Chief Executive Officer's performance in respect of such corporate goals and objectives will be a significant factor in the Compensation Committee's annual review of the Chief Executive Officer's compensation.
As part of the annual evaluation of the Chief Executive Officer's performance, the Board's non-management Directors will work with the Chief Executive Officer to plan for Chief Executive Officer succession, as well as to develop plans for interim Chief Executive Officer succession in the event of an unexpected occurrence. Succession planning may be reviewed more frequently by the Board as it deems warranted..
7. Annual Board Performance Evaluation
The Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Nominating/Corporate Governance Committee will receive comments from all Directors and report annually to the Board with an assessment of the Board's performance, which will be discussed with the full Board. The assessment will focus on the Board's contribution to the Company, with specific focus on areas in which the Board or management believes that the Board or any of its committees could improve.
8. Director Compensation
The form and amount of Director compensation shall be determined by the Compensation Committee and then recommended to the full Board for action.
Director compensation is a combination of cash and restricted stock in the Company. The restricted stock component should be a significant portion of the total compensation.
9. Director Resignation Policy
Prior to the mailing of the proxy statement for an annual meeting at which an incumbent Director nominee's candidacy will be considered, each such incumbent Director nominee will submit an irrevocable contingent resignation letter to the Nominating/Corporate Governance Committee.
Promptly following the certification of the election results for such annual meeting, the Nominating/Corporate Governance Committee shall recommend to the Board that it accept the resignation of any incumbent Director who fails to receive a majority of votes cast in an uncontested election at such annual meeting unless the Board determines that accepting such resignation would not be in the best interests of the Company and its stockholders.
Within 120 days of the certification of the election results for such annual meeting, the Board shall accept such resignation unless it determines that accepting such resignation would not be in the best interests of the Company and its stockholders. In making such determination, the Board shall consider all factors deemed relevant by the members of the Board.
The Board may also consider possible alternatives concerning the Director's tendered resignation as the members of the Board deem appropriate, including acceptance of the resignation, rejection of the resignation or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the Board to have substantially resulted in such Director failing to receive a majority of votes cast.