- General
The Board of Directors of Shurgard Storage Centers, Inc. (the "Company") sets high standards for the Company's employees, officers and directors. Implicit in this philosophy is the importance of sound corporate governance. It is the duty of the Board of Directors to serve as a prudent fiduciary for shareholders and to oversee the management of the Company's business. To fulfill its responsibilities and to discharge its duty, the Board of Directors follows the procedures and standards that are set forth in these guidelines. These guidelines are subject to modification from time to time as the Board of Directors deems appropriate in the best interests of the Company or as required by applicable laws and regulations.
The Board of Directors shall:
Review and approve strategic plans, significant corporate actions and major transactions.
Review corporate performance.
Oversee and evaluate management's systems for internal control, financial reporting and public disclosure.
Establish corporate governance standards, foster a climate of corporate trust and confidence and monitor compliance with processes designed to ensure the integrity of the Company's actions.
Oversee and evaluate senior management performance and compensation.
Consider effective succession of the Chairman of the Board and Chief Executive Officer and other senior management.
Be apprised of relations with stockholders.
Set standards for director qualification.
Undertake an annual performance evaluation of the Board of Directors.
Require that any transaction involving non-compensation payments to management shall be reviewed by the Company's external counsel and where designated by the Audit Committee or its Chair, the Company's external auditor.
Set and review the Company's investment policies including use of derivatives and hedging instruments.
- II. Director Qualification Standards
The Board of Directors is responsible for reviewing, on an annual basis, the requisite skills and characteristics of members of the Board of Directors. The Board of Directors will assess independence, attendance and overall experience and performance. See "Annual Performance Evaluation of the Board of Directors."
Independence
A majority of the members of the Board of Directors must be independent directors, as such term is defined by the rules of the New York Stock Exchange ("Outside Directors"). No director shall qualify as "independent" unless the Board finds by the affirmative vote of a majority of its members that the director satisfies the requirements for independence under the NYSE rules and rules promulgated by the Securities and Exchange Commission, each as amended from time to time. In order to be deemed independent, a director must comply with all rules promulgated by the SEC and the NYSE regarding independence, each as amended from time to time. To preserve independence and to avoid conflicts of interest, each director shall advise the Chairman and Chief Executive Officer in advance of accepting an invitation to serve on another public company Board of Directors.
The members of the Audit Committee shall satisfy the additional independence requirements set forth by the SEC and the NYSE.
Qualities
Directors should demonstrate the qualities set forth in the "Director Selection Guidelines" outlined in Exhibit A to the Nominating and Corporate Governance Committee charter. (See "Availability.") Nominees for directors will be selected in accordance with those criteria.
The Nominating and Corporate Governance Committee considers candidates for Board positions created by expansion or by vacancy. If a director's principal business or personal activities changes substantially, that director must tender his/her resignation to be considered by the Nominating and Corporate Governance Committee for action, if any is to be taken.
The Nominating and Corporate Governance Committee has set the mandatory retirement age for directors at 75; provided, however, that any board member that has obtained the retirement age during an elected term, should be allowed to serve out the remainder of the three-year term.
Director Responsibilities
Elected by the shareholders, the Board of Directors is the ultimate decision-making body of the Company, except for those decisions reserved for Shurgard's shareholders. The Board designates the Chief Executive Officer and assists the Chief Executive Officer in selecting the senior management, which senior management shall carry out Shurgard's day-to-day business. The Board shall advise and counsel senior management and monitor senior management performance and compensation. Outside Directors, with substantive knowledge of the Company's business, are required to assure continued monitoring of senior management performance.
Directors must exercise sound business judgment and act in what they reasonably believe to be the best interests of the Company and its stockholders. In discharging this obligation, directors may reasonably rely on the honesty and integrity of the Company's management as well as that of its independent auditors. Directors and management shall be entitled to indemnification as set forth in the Company's Articles of Incorporation and Restated By-laws.
In order to oversee effectively the management of the Company, all directors are expected to attend meetings of the Board of Directors and meetings of committees of the Board of Directors of which they are members. Directors are expected to be prepared for these meetings and to be able to devote the time required. Information and data that are important to the understanding of the business to be conducted at a Board of Directors or committee meeting will generally be distributed in advance of the meeting.
TThe Board must remain a size that can effectively and efficiently function as the Company's governing body. The Nominating and Corporate Governance Committee, in conjunction with the Chairman and CEO, will monitor, advise, and recommend an appropriate size for the Company's Board.
Functions of the Board
The Chairman and CEO sets the agenda for Board meetings in consultation with the Lead Director. Any agenda items falling under the responsibility of a Board committee are reviewed by the chair of that particular committee. Board members may offer items for a meeting's agenda.
All materials related to items on the Board's agenda will generally be distributed to Board members in advance of the meeting when necessary so that Directors are able to adequately prepare for discussions.
At the Board's invitation, senior management may participate in the Board's discussions. For matters to be considered by the Board, presentations will be made by the manager responsible for such matters. Board members, however, have free access to all other management team members and employees of the Company.
The Outside Directors will meet in executive session or in other meetings without management present at least quarterly. At these meetings, the Outside Directors will review the Company's outside auditor's report, the performance criteria for the Chairman and CEO as well as other senior management, the Chairman and CEO's performance, and compensation for the Chairman and CEO and the other senior management. The Outside Directors may hold other executive sessions or meetings as required. Also, executive sessions or meetings may be held with the Chairman and CEO to discuss relevant subject matters.
To contact any member of the Board, please direct the communication to the General Counsel at the Company's principal place of business. The General Counsel will forward you communication to the relevant Board member(s). If you have a particular concern regarding (1) accounting, internal accounting controls or auditing matters, (2) compliance with legal and regulatory requirements or (3) retaliation by the Company against anyone who makes such allegation, please follow the procedures set forth in the Company's Code of Business Conduct. (See "Availability.")
Functions of the Committees of the Board
The Board's committees shall be the Audit Committee and its subcommittee the Finance Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Technology Committee and such other committees as it determines appropriate. The Nominating and Corporate Governance Committee, advised by the Chairman and CEO, will recommend directors to be members and chairs of these committees. The Compensation, Nominating and Corporate Governance, and Audit committees shall consist solely of Outside Directors. Membership on these three committees and chairs of these committees will be rotated from time to time.
Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall have written charters. These charters will address each committee's purpose, duties, goals and responsibilities as well as qualifications for committee membership, committee structure and operations and committee reporting to the Board of Directors.
The chair of each committee will set the agenda, length, and frequency of each committee meeting, allowing for sufficient time to discuss pertinent matters. All committee members will generally receive any relevant material in advance of the meeting. Members should review the materials and be adequately prepared for discussion.
The Board may revise the responsibilities of each committee as it determines is necessary.
Director Responsibilities
The Lead Director reports to the Independent Directors.
Overall responsibility: Represents the Shurgard Board of Directors as the lead and primary liaison between the Chairman and the Independent Directors. The Lead Director role is designed to be a rotational responsibility with an expected term of one year. The annual term may be renewed once by the Board for a maximum appointment of two consecutive years.
Primary duties:
Act as a liaison between the Chairman and the independent directors
Preside at Board meetings when the Chairman is not present
Preside at executive sessions of the independent directors and provide appropriate feedback to Chairman
Has the authority to call meetings of independent directors
Develop the flow of information to directors
Available for consultation and direct communication with major shareholders
Advise committee chairs and management on appropriate issues
Meet with all GBU and BLU leaders and key personnel during the annual term
Work with the CEO on pre- and post-executive session materials and summaries
Identify strategic issues for Board consideration and be involved as appropriate in the annual strategic planning processes
Assist in the selection of committee chairs
Ensure management succession planning and progress against those plans are tracked
Ensure the Board's corporate governance guidelines are regularly reviewed, in compliance and followed by the Board and its Committees
Collaborate with the Chairman to develop the Board budget
Serves as a "champion" to shareholders interests as an Independent Director
Director Access to Management and to Select Outside Advisors
Directors have full and free access to management and the right, if necessary and appropriate, to select and consult appropriate independent advisors at the expense of the Company. Any meetings or contacts that a director wishes to initiate may be arranged through the Chairman and Chief Executive Officer, the General Counsel or directly by the director. Directors should use their judgment to ensure that any such contact is not disruptive the business operations of the Company.
Director Compensation
The Board of Directors, with the assistance of the Compensation Committee, will conduct annual reviews of director compensation and shall determine the form and amount of director compensation. Compensation may include an annual retainer, a fee for meetings attended, equity based compensation amounts and reimbursement for reasonable expenses related to their service as directors. No directors who are employees of the Company will receive any compensation for their services as directors. The Board is aware that questions as to directors' independence may be raised when directors' fees and emoluments exceed customary standards.
Director Orientation and Continuing Education
In order to prepare new Board members for their work on the Board of Directors, each member will be given extensive materials on the operations, finances and business plans of the Company, will have meetings with key management, and will visit the Company's facilities. Directors will receive periodic education in subjects relevant to the duties of a director and the business of the Company. The education may be in the form of a program planned by the Company or by the director attending an outside pre-approved seminar or continuing education program with reasonable expenses paid by the Company.
Management Succession
The Board shall consider effective succession of the Chairman and Chief Executive Officer, including policies and principles for selection and performance review for the Chairman and Chief Executive Officer as well as policies regarding succession in case of emergency or the retirement of the Chairman and Chief Executive Officer. The Chairman and Chief Executive Officer will provide the Board with an annual assessment of senior managers and their potential to succeed him/her. The Chairman and Chief Executive Officer will also provide the Board with assessments of other persons who may fill senior management positions.
Annual Performance Evaluation of the Board of Directors
The Board of Directors and each committee of the Board of Directors will conduct an annual self-evaluation to determine whether they are functioning effectively. The reviews will focus on the performance of the Board of Directors as a whole, the performance of each director individually, and the performance of each committee. The Board of Directors will survey and receive comments from each director and report annually to the Board of Directors with an assessment of the Board of Directors' performance. The Board shall review and revise these guidelines as it deems necessary.
Availability
A copy of these Corporate Governance Guidelines, as well as the Company's Code of Business Conduct, and Charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on the Company's website at www.shurgard.com.
Amended by Shurgard Storage Centers, Inc. Board of Directors on
November 11, 2004
