LoopNet, Inc. Corporate Governance Guidelines
I. Introduction
The Board of Directors (the "Board") of LoopNet, Inc. (the "Company") has adopted the following Corporate Governance Guidelines (the "Guidelines") to promote the effective functioning of the Board and to assist the Board in fulfilling its responsibilities. These 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 Nasdaq Stock Market rule or regulation 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.
II. Director Qualifications
The Board shall have at a minimum a majority of directors who meet the criteria for independence established by the Nasdaq Stock Market and others laws and regulations applicable to the Company. Directors 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 Corporate Governance and Nominating Committee is responsible for reviewing with the Board the appropriate skills and characteristics required 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 considering diversity, skills and experience in such areas as operations, finance, marketing and sales and the general needs of 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).
The Board will periodically evaluate the appropriate size of the Board and may make changes it deems appropriate. 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. Likewise the Board doesn't believe that a mandatory retirement age is appropriate but will assess a director's ability to continue serving on the Board every three years.
Each Board member must ensure that other existing and anticipated future commitments do not materially interfere with the members' 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. In any event, no director who serves on the Audit Committee shall serve on the audit committee of more than two additional public company Boards without prior consultation with the Chair of the Corporate Governance and Nominating Committee and no director should sit on more than five other public company boards at the same time. 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.
When a director's principal occupation or business or professional occupations changes substantially during his or her tenure as a director, that director should tender his or her resignation for consideration by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee will recommend to the Board the action, if any, to be taken with respect to the resignation. Each executive officer of the Company, who serves on the Board, will submit their 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.
III. Director Nominations
Directors 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 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. Any candidates properly recommended will be considered in such manner as the members of the Committee deem appropriate.
IV. Director Responsibilities
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. 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 Board does not have a policy on whether or not the roles of Chief Executive Officer ("CEO") and Chairman of the Board should be separate and, if they are to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. The Board believes these issues should be considered as part of the Board's broader succession planning process. When the Chairman of the Board also serves as the CEO, the Board may designate an independent director to act as a Lead Independent Director. The Lead Independent Director is responsible for coordinating the activities of the independent directors. The specific responsibilities of the Lead Independent Director are as follows:
- Consult with the Chairman as to an appropriate schedule of Board meetings, seeking to ensure that the independent directors can perform their duties responsibly while not interfering with the flow of Company operations;
- Provide the Chairman with input as to the preparation of the agendas for the Board;
- Consult with the Chairman as to the quality, quantity and timeliness of the flow of information from Company management that is necessary for the independent directors to effectively and responsibly perform their duties;
- Consult with the Chairman regarding the retention of consultants who report directly to the Board;
- Coordinate and develop the agenda for and moderate executive sessions of the Board's independent directors; and
- Act as principal liaison between the independent directors and the Chairman on sensitive issues.
The Chairman of the Board will establish the agenda for each Board meeting in consultation with the Lead Independent Director and distribute it in advance to the Board. Each Board member is free to suggest the inclusion of items on the agenda and to raise at any Board meeting subjects that are not on the agenda for that meeting. 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 shall be scheduled in advance in connection with regularly scheduled meetings and shall occur at least semi-annually. The Lead Independent Director shall preside over such sessions.
The Board believes that management speaks for 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.
V. Board Committees
The Company shall have three standing committees: Audit, Compensation and Corporate Governance and Nominating. The duties of these committees shall be set forth in their charters or in a resolution of the Board or the Bylaws of the Company. The Board may consider or form a new committee or disband a current committee depending on circumstances and good business practices.
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. In addition, the Audit Committee shall be composed of independent directors that possess such accounting and financial expertise as the principal stock exchange on which the Company's shares are listed shall require.
The Corporate Governance and Nominating Committee shall be responsible, after consultation with the CEO and the Chairman of the Board and the Lead Independent Director, 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.
VI. Director Access to Management and Advisors
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. Board members are expected to use sound business judgment to ensure that such contact does not distract management from performing its duties.
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.
VII. Director Attendance at Annual Meeting of Stockholders
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.
VIII. Communications with Directors
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] c/o Secretary
LoopNet, Inc.
185 Berry Street, Suite 4000
San Francisco, CA 94107
The Secretary will forward any correspondence sent in the forgoing manner to the appropriate addressee without review by management. Comments or questions regarding the Company's accounting, internal controls or auditing matters will be referred to the Chair of the Audit Committee. Comments or questions regarding the nomination of directors and other corporate governance matters will be referred to the Chair of the Corporate Governance and Nominating Committee.
IX. CEO Evaluation; Succession Planning
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 Lead Independent Director if one is designated and the Chair of the Compensation Committee.
The Nominating and Corporate Governance Committee shall conduct a periodic review of the Company's succession planning, including policies and principles for CEO selection and succession in the event of an emergency or retirement of the CEO. The Committee shall report is recommendation to the Board.
X. Director Compensation
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. The principles for setting the form and amount of such compensation shall be reviewed at least annually by the Board or a committee thereof composed of independent directors. Director fees are the only form of compensation that an Audit Committee member may receive from the Company.
XI. Board and Committee Evaluation
The Board shall conduct a self-evaluation from time to time of its performance, 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.
XII. Director Orientation and Continuing Education
Upon request by the Board, the Corporate Governance and Nominating Committee shall develop and maintain and orientation and education program for new directors. Directors shall be entitled to attend continuing education programs for directors if approved in advance by the Chair of the Corporate Governance and Nominating Committee.
Adopted May 23, 2007