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 rule or regulation of The Nasdaq
Stock Market, Inc. ("Nasdaq") 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
It is the policy of the Board that a majority of directors will not be current employees of
the Company and will otherwise meet appropriate standards on independence. In determining
independence, the Board will consider the definition of "independent director" in the listing
standards of Nasdaq (currently set forth in Listing Rule 5605(a)(2)), others laws and regulations
applicable to the Company as well as other factors that will contribute to effective oversight and
decision-making by the Board. Directors, other than the Series A Director (as defined below),
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 director ("Series A
Director") elected by a majority of the outstanding shares of Series A Preferred Stock of the
Company ("Series A Stockholders"), will be reviewed and nominated in accordance with the
Company’s charter and Section 2 of the Investors’ Rights Agreement dated as of March 29, 2009
(the "Investors’ Rights Agreement"), by and among the Company, Calera Capital Partners
("Calera") and certain other investors. The initial Series A Director was designated by Calera.
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, subject to Section 2.1 (Board Size) of the Investors’ Rights
Agreement, which currently requires the board size to be fixed at seven (7), with any increases in
the board size to be approved by Calera. The Board may increase the size of the Board to eight
(8) to add an additional non-employee director if such director is mutually agreed upon by the
Company and Calera. 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 does not 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 member’s 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, unless such director is the Series
A Director, whose continued service shall be determined by Calera, shall 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. Any executive officer of the Company, who
serves on the Board, shall submit his or her 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, other than the Series A Director, 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 Series A Director, who has been
designated by Calera, shall be nominated and elected by the Series A Stockholders in accordance
with the Company’s charter and the Investors’ Rights Agreement. 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. However, when the Chairman of the Board also serves as the CEO, the Board will
designate an independent director to act as a Lead Independent Director and has currently done
so. The Lead Independent Director is responsible for coordinating the activities of the
independent directors. The specific responsibilities of the Lead Independent Director may
include the following:
- 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 will have primary responsibility for preparing the agenda for each Board
meeting and arranging for it to be sent in advance of the meeting to directors along with
appropriate written information and background materials so that Board meeting time may be
conserved and discussion time focused on questions that the Board has about the materials. Each
Board committee, and each individual director, is encouraged to suggest items for inclusion on
the agenda. 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 may be scheduled in connection
with regularly scheduled meetings or at other times and shall occur at least semi-annually. The
Lead Independent Director, if one has been designated, 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 currently has three standing committees of the Board: Audit,
Compensation and Corporate Governance and Nominating. From time to time, the Board may
establish a new committee or disband a current committee depending on circumstances. The full
authority and responsibilities of each committee is fixed by resolution of the full Board and the
committee’s charter, if any. Committee charters for the standing committees are available on the
Company’s website at www.loopnet.com in the "Investor Relations" section, and a brief
description of the committee functions is available in the Company’s most recent annual proxy
statement.
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, which directors shall also meet applicable
criteria for independence under Nasdaq, the Securities and Exchange Commission ("SEC")
and/or tax rules applicable to such committees. In addition, the Audit Committee shall be composed of independent directors that possess such accounting and financial expertise as
Nasdaq or the SEC shall require.
The Corporate Governance and Nominating Committee shall be responsible, after
consultation with the CEO, 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
Communications received in writing will be collected, organized and processed by the
Secretary, who will distribute the communications to members of the Board as appropriate
depending on the facts and circumstances outlined in the communication received. Comments or
questions regarding the Company’s accounting, internal controls or auditing matters will
generally be referred to the Chair of the Audit Committee. Comments or questions regarding the
nomination of directors and other corporate governance matters will generally 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 CEO reviews succession planning and management development with the Board on
an annual basis.
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. It is the general policy of the Board that Board compensation should be a
mix of cash and equity-based compensation. The Board, through the Compensation Committee,
will review, with the assistance or management or outside consultants if desired, appropriate
compensation policies for the directors serving on the Board and its committees, taking into
account board compensation practices of other public companies, contributions to Board
functions, service as committee chairs, and other appropriate factors.
XI. Board and Committee Evaluation
The Board shall conduct a self-evaluation from time to time of its performance and the
performance of individual directors, 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 appointment, management shall provide new board members with director
orientation materials, including presentations from senior executives and Company policies.
Each director is expected to participate in continuing education programs in order to maintain the
necessary level of expertise to perform his or her responsibilities.
Last Revised May 28, 2009