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Artis REIT’s Board of Trustees believe that sound governance practices are essential to achieve the best long-term interests of Artis and the enhancement of value for all of its Unitholders. The Board recognizes that proper and effective corporate governance is a significant concern of and priority for investors and other stakeholders and accordingly, the Board has instituted a number of procedures and policies in an effort to ensure appropriate governance practices.
Board of Trustees
Artis REIT has a strong Board of Trustees who collectively bring a solid background in real estate and prior public company experience to the table. A majority of the Trustees are independent of the REIT and the Board strives to follow best practices in corporate governance.
The Board has three committees:
Governance and Compensation Committee
Pursuant to the Declaration of Trust, the Board is required to have an audit committee consisting of at least three Trustees. Subject to the delegation to the Audit Committee of such other responsibilities as are determined by the Trustees from time to time and subject to such changes in its form and function as may be mandated by any relevant regulatory authorities, the Audit Committee shall, among other things:
(a) oversee the work of the external auditors, including resolution of disagreements between management and the external auditors regarding financial reporting;
(b) satisfy itself on behalf of the Board with respect to Artis’ internal control system, including (i) to identify, monitor and assess business risks; and (ii) to ensure compliance with legal, ethical and regulatory requirements;
(c) review the annual financial statements of Artis prior to their submission to the Board for approval;
(d) review the financial statements, management discussion and analysis and annual and interim earnings press releases, and make a recommendation to the Board with respect to their approval, prior to their release to the public. The Committee must be satisfied that adequate procedures are in place for the review of the Artis’ disclosure of all other financial information, where extracted or derived from the financial statements, and shall periodically assess the adequacy of those procedures;
(e) with respect to the appointment of external auditors by the Board:
(i) recommend to the Board the appointment of the external auditors;
(ii) recommend to the Board the terms of engagement of the external auditors, including the compensation of the external auditors and a confirmation that the external auditors shall report directly to the Committee; and
(iii) when there is to be a change in auditors, review the issues related to the change and the information to be included in the required notice to securities regulators of such change;
(f) review with external auditors (and the internal auditor if one is appointed by Artis) their assessment of the internal controls of Artis, their written reports containing recommendations for improvement, and management’s response and follow-up to any identified weaknesses, and to review annually with the external auditors their plan for their audit and, upon completion of the audit, their reports upon the financial statements of Artis;
(g) review risk management policies and procedures of Artis; and
(h) annually review, discuss and assess the performance of the Committee and its members, and shall periodically review and consider the need for recommending amendment to this charter to the Board.
Governance and Compensation Committee
Pursuant to the Declaration of Trust, the Board is required to have a governance and compensation committee. The Governance and Compensation Committee is comprised of three Independent Trustees. Subject to the delegation to the Governance and Compensation Committee of such other responsibilities as are determined by the Trustees from time to time and subject to such changes in its form and function as may be mandated by any relevant regulatory authorities, the Governance and Compensation Committee is responsible for:
(a) developing the system of, and overall approach to, governance generally, monitoring compliance with applicable governance requirements, assessing the Board’s effectiveness in governance matters and making recommendations to the Board with respect to corporate governance of Artis as a whole, including without limitation:
(i) the stewardship role of the Board in respect of management of Artis;
(ii) Board size and composition;
(iii) Trustees’ remuneration; and
(iv) such processes and procedures as may be reasonably necessary to allow the Board to function independently of management;
(b) generally review and make recommendations to the Board with respect to all direct and indirect compensation, benefits and perquisites for the management of Artis;
(c) review and make recommendations to the Board regarding incentive compensation and equity based plans generally;
(d) administer those functions delegated to the Governance and Compensation Committee pursuant to the Unit Option Plan; and
(e) generally review and make recommendations to the Board with respect to succession planning for the management of Artis.
With respect to compensation, the Governance and Compensation Committee is responsible for, among other things:
(a) evaluating management performance, including in respect of any established goals and objectives, and reviewing and making recommendations to the Board with respect to all direct and indirect compensation, benefits and perquisites (cash and non-cash) for management based on such evaluation;
(b) reviewing and making recommendations to the Board with respect to incentive compensation; and
(c) reviewing and making recommendations to the Board with respect to policies regarding management benefits and perquisites, if any.
The Governance and Compensation Committee is also responsible for administering the Unit Option Plan, including, where consistent with the general purpose and intent of the Unit Option Plan and subject to the specific provisions of the Unit Option Plan:
(a) selecting the persons who will receive a grant of Unit options;
(b) determining the exercise price of each Unit option; and
(c) determining the time or times when Unit options will be granted and exercisable and the conditions applicable thereto.
The Governance and Compensation Committee established a sub-committee called the Disclosure Committee, which is comprised of the President and Chief Executive Officer of Artis, the Chairman of Artis and the Chief Financial Officer of Artis. The composition of the Disclosure Committee will be determined from time to time by the Governance and Compensation Committee.
The Disclosure Committee has adopted a disclosure policy addressing, among other things, the following matters:
(a) the timely and accurate public dissemination of material information regarding Artis;
(b) the protection of the confidential information regarding Artis;
(c) the persons who are authorized spokespersons of Artis;
(d) prohibitions on selective disclosure and other prohibited uses of material information regarding Artis which has not been generally disclosed; and
(e) requirements with respect to the use of forward-looking information.
The Trustees established an Investment Committee comprised of three Trustees, each of whom is an Independent Trustee. Subject at all times to the provisions of the Declaration of Trust, and to any other regulations or resolutions that the Trustees may adopt, the Investment Committee is responsible for:
(a) reviewing all proposals regarding investments, dispositions and financings, subject to the following limitations:
(i) The Investment Committee may authorize strategic transactions (acquisitions or dispositions) of up to 20% of Artis’ gross book value in a given year;
(ii) Once the Investment Committee has reached its authorization limit within the year, it may seek approval from the Board for a new authorization limit for the forthcoming year;
(iii) The Investment Committee authorizes the Chief Executive Officer to enter into proposed transactions and make investments on behalf of the trust provided that the amount of the investment is not more than 1% of the REIT’s then-calculated gross book value;
(iv) The Investment Committee authorizes the Chief Executive Officer to enter into mortgage financing arrangements with respect to acquisitions and owned properties;
(v) The Investment Committee may authorize equity and debenture offerings required to finance the transactions approved by the Investment Committee, provided that the overall debt-to-gross book value ratio remains consistent with Board policy.
(b) to make recommendations in connection therewith to the Board of Trustees; and
(c) to the extent authorized by the Board of Trustees, to authorize proposed transactions and make investments on behalf of the Trust.
The Committee will carry out these responsibilities with a view to achieving the Trust’s strategic objectives of acquiring a portfolio of quality assets and delivering the benefits of such asset ownership to unitholders.
The Declaration of Trust contains detailed investment and operating guidelines which are binding on the Committee at all times.