EXHIBIT 14.2
CODE OF BUSINESS CONDUCT AND ETHICS
OF
HOME PROPERTIES OF NEW YORK, INC.
AND ITS AFFILIATED COMPANIES (THE "COMPANY")
This Code of Business Conduct and Ethics ("Code of Ethics") of the Company
embodies the Company's commitment to continue to conduct our business in
accordance with the highest ethical standards. All employees and directors of
the Company are expected to follow those policies and principles set forth in
this Code of Ethics that apply to them. The purposes of this Code of Ethics are
to:
- - Further our Company's culture of honesty and accountability.
- - Promote honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and professional
relationships.
- - Promote full, fair, accurate, timely and understandable disclosure in
reports required to be filed and other public communications by the
Company.
- - Promote compliance with applicable governmental rules and regulations.
- - Provide mechanisms to report unethical conduct.
This Code of Ethics is not intended to cover every applicable law or provide
answers to all questions that might arise; for that, we must rely on each
person's sense of what is right. It is also expected that all employees and
directors will seek advice and guidance on the appropriate course of conduct
when they experience a potential violation of these policies and principles.
A. CONFLICTS OF INTEREST
It is the Company's policy and expectation that all employees and directors will
take actions and make decisions giving primary importance to the Company and its
shareholders. A "conflict of interest" arises when your private interests come
into conflict with the interests of the Company. A conflict situation can arise
when you take actions or have interests that make it difficult for you to
perform your work objectively and effectively, or when you receive improper
personal benefits as a result of your position in the Company. You must avoid
situations which might cause you to place your own interests above your
obligations to the Company. For purposes of this Code of Ethics, your interests
shall include the interests of your family, which obviously includes your
spouse, children and stepchildren, parents, stepparents, siblings, mothers and
fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law, but
also includes less immediate family members such as cousins, aunts and uncles.
Some specific conflicts of interest are described below. However, this list does
not and is not intended to cover every conflict of interest. There are
additional specific conflicts of interests that can exist by nature of the
ownership by some directors and officers of the Company of interests in our
operating partnership, Home Properties, L.P. and in other entities whose assets
are managed by the Company. Specific policies relating to those conflicts are
included within a separate policy attached to this Policy as Appendix A.
If you are unsure whether your particular circumstances are a conflict of
interest, you should disclose your situation to the appropriate person and
request guidance. The appropriate persons to whom disclosure should be made (an
"Appropriate Company Representative") are as follows: for employees in the
corporate office, your supervisor, Internal Audit Manager or the General
Counsel; for employees outside the corporate office, your supervisor, Regional
Leader, Internal Audit Manager or the General Counsel; and for directors, the
Chair of the Nominating/Corporate Governance Committee or the General Counsel.
Contact information is listed at the end of this Code of Ethics.
1. Corporate Opportunities.
You are prohibited from taking for yourself personally or telling others
about any opportunity which you learned of because of your position with
the Company and which you know or could reasonably expect that the Company
would be interested (unless the Company has decided not to pursue the
opportunity). For example, in connection with your job, you hear that a
particular apartment community (of a type normally sought by the Company)
is for sale. It is against this policy for you to advise your brother, who
owns a real estate company, about the opportunity without first advising
someone at the Company of the opportunity.
In addition, you may not:
- use Company property, information or position for personal financial
profit; or
- compete with the Company generally or with respect to specific
transactions or opportunities.
2. Transactions with or Ownership of Vendors
Doing personal business with the Company's vendors, suppliers, contractors,
or customers (collectively, "Vendors") creates opportunities for serious
conflicts of interest. In dealing with Vendors, you must make decisions in
the best interests of the Company and its shareholders without favor or
preference.
You may not use the Company's relationship or influence with any Vendor to
achieve a personal, individual gain which is not available generally to
employees of the Company. Accordingly, any personal transactions with
Vendors should generally be on arms' length price and terms (a discount
available to all employees is acceptable).
You and any member of your immediately family may not own a "significant"
interest in a Vendor with which the Company does business unless the
relationship has been disclosed to and approved by an Appropriate Company
Representative. A significant interest is one that is so substantial as to
interfere with your exercise of judgment in the best interest of the
Company.
Special rules relating to disclosure and approval of any such conflicts
involving the officers and directors of the Company are included in Section
E of this Code of Ethics.
3. Hiring Relatives
Hiring a member of your immediate family as an employee of the Company can
result in many conflicts, both personal and professional. You should never
hire a member of your immediate family to work with or for you unless you
have disclosed the relationship to an Appropriate Company Representative
and received their prior approval.
4. Gifts
You may not receive benefits, favors, gifts, entertainment or costs of
travel ("Gifts") from Vendors or others which might conflict with the
proper performance of your job responsibilities or which might adversely
affect your independent judgment on behalf of the Company. The Company
discourages you from receiving Gifts, as it may be misconstrued as an
attempt to influence your business decisions.
Gifts of insubstantial value (i.e., less than $50) are permitted, provided
they are given as a gesture of professional friendship and do not involve a
Company commitment to transact business. Gifts having a value in excess of
$50 but less than $250 may be permitted with the prior approval of an
Appropriate Company Representative. In cases where the nature of such a
Gift permits, you should donate the Gift to charity or share it within your
department or working group. You should never accept a Gift of cash or a
Gift offered in return for or in expectation of corporate business. If you
are unsure whether the receipt of a Gift would violate this policy, you
should consult with an Appropriate Company Representative. You may not
solicit Gifts from Vendors or anyone else. The Company recognizes that
occasional entertainment or meals may be incidental to business
relationships of value to the Company; however, such hospitality by Vendors
or others should not be excessive or unusual in nature and you should be
satisfied that such hospitality is consistent with the best interests of
the Company.
5. Outside Employment or Activities
Full-time employees may not participate in outside business activities that
conflict with your ability to devote your full-time conscientious efforts
to the business of the Company. Employment outside and in addition to your
job at the Company must be reported to and approved by an Appropriate
Company Representative.
The Company is committed to maintaining good will and being a good civic
neighbor and encourages employees and directors to serve on nonprofit
boards and in other volunteer capacities. You must report your interest in
serving as a director or in another capacity for a non-profit (or other)
organization with which the Company is involved in a transaction to an
Appropriate Company Representative who will review the situation to
determine if it will impair your independence or otherwise create a
conflict of interest.
The Company does not make contributions to political candidates or
political parties except as permitted by applicable law. The permitted
exceptions are very limited, however, nothing shall prevent the Company
from advocating a position, expressing a view or taking other appropriate
action with respect to any legislative or political matters affecting the
Company or its interests. The Company also considers that employee
participation in our political system by voting, contributing financially
to candidates or political parties of one's choice, speaking out on public
issues, and being active in civic and political activities is important.
Accordingly, nothing in this Code of Ethics prevents or restricts
individual directors or employees from engaging in political activity,
making political contributions, expressing views or taking other
appropriate action on any political or legislative matter. It is important,
however, that you clearly distinguish your personal views from those of the
Company, unless you are specifically authorized by the Company to speak on
its behalf. Your conduct must also not give the impression that any benefit
to the Company is sought or desired.
It is inappropriate to solicit or demand from other employees political
contributions or contributions to any other organization during working
hours on the Company premises, or to use Company equipment or resources in
connection with any such solicitations. An exception to this rule is the
Company sponsored solicitation of contributions by employees in connection
with annual United Way campaigns. The offering by employees to other
employees of the opportunity to purchase candy, cookies or similar items or
to sponsor a participant in a walk-a-thon or similar event to benefit a
non-profit organization such as scouting, school sports or health
organizations also does not violate this policy.
6. Loans
No new loans will be made to employees or directors, nor will the Company
guarantee any personal loans of employees or directors.
7. Disclosure of Conflicts
In many cases, it may be possible to avoid a potential conflict of interest
by making full disclosure to the Company as soon as you realize a conflict
may exist. It may be possible for you and the Company to find a solution
which would allow you to proceed, while still protecting the Company's
interests. If you are in doubt, disclose the situation to an Appropriate
Company Representative.
As soon as you find that you have an interest which might conflict with the
proper performance of your duties or responsibilities to the Company, or
which might tend to adversely affect your independent judgment on behalf of
the Company, or if you are unsure whether your situation is a conflict of
interest, you must disclose the situation to an Appropriate Company
Representative.
B. PROPER USE AND PROTECTION OF COMPANY ASSETS
1. General
All employees should protect the Company's assets and ensure their
efficient use. Theft, carelessness and waste have a direct negative impact
on the Company's profitability. All Company assets should be used for
legitimate business purposes, with any personal use limited to those
approved by specific Company policy or an Appropriate Company
Representative .
2. Fraud
One of the functions of the Internal Audit team is to detect fraud,
misappropriation, accounting irregularities or other activities not in the
best interests of the Company, its shareholders or our residents. Internal
Audit has primary responsibility for investigating reports of suspected
fraudulent activities, which are handled on a confidential basis. If the
investigation reveals that fraudulent activities have occurred, Internal
Audit will issue reports to senior management, and to the Audit Committee
of the Board of Directors.
Potentially fraudulent transactions include, without limitation,
embezzlement, forgery, alteration of checks and other documents, theft,
misappropriation or conversion to personal use of Company assets or
information, and falsification of records.
3. Confidentiality
We strive to protect the confidentiality of our residents' personal and
financial information. You may disclose such information only when required
by law or when disclosure is in the best interests of the Company. If you
receive a subpoena or face a situation which calls for you to disclose
confidential information, consult the Legal Department prior to disclosing
any information. In addition, one of the Company's most valuable assets is
the information gathered and developed in the management and operation of
its business, as well as in the review of potential new acquisitions. Some
of this information is not known to the public or our competitors, and each
of you must safeguard and keep private all Company proprietary and
confidential information and trade secrets. Confidential information
includes, generally, all non-public information that might be of use to
competitors of the Company or, if disclosed, might be harmful to the
Company, its shareholders or our residents.
4. Fair Dealing
One of our Company's other greatest assets is its reputation. You should
never speak in a negative fashion about the Company to any of our vendors,
residents, shareholders, partners, competitors, employees or others with
whom you deal. You should also always treat fairly all Vendors, residents,
shareholders, partners, competitors, employees and others with whom you
deal. No one should take unfair advantage of a Vendor or anyone else
through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts, or other unfair dealing practice. In
deciding among competing Vendors, weigh all material facts impartially.
Seek to buy from approved Vendors at the lowest permissible cost, keeping
in mind the requirements for quality, performance and the Vendor's ability
to meet your timeframe.
C. COMPLIANCE WITH INTERNAL AND DISCLOSURE CONTROLS
As a public company, it is of critical importance that we follow practices
designed to promote full, fair, timely and understandable disclosure in all
of the Company's filings with the SEC and in press releases and other
public disclosures. Many employees, whether they are site employees
entering data, bookkeepers, or senior financial officers, are important to
the process of compiling accurate and complete information from which
reports are prepared. We expect you to take this responsibility seriously
and to provide prompt, accurate answers to inquiries related to the
Company's public disclosure requirements.
The Company has adopted a system of internal controls that must be strictly
adhered to by all employees providing financial and business transaction
information to and within the Company. These internal controls are the
backbone of the integrity of the Company's financial records and financial
statements.
All Company funds, assets and disbursements shall be properly recorded in
the appropriate records and books of account. All directors, officers,
employees and other persons are prohibited from directly or indirectly
falsifying or causing to be false or misleading any financial or accounting
book, record or account. It is expressly against Company policy to directly
or indirectly manipulate an audit or to destroy or tamper with any record,
document or tangible object with the intent to obstruct a pending or
contemplated audit, review or federal investigation.
As mentioned above, the Company has developed internal control procedures
to ensure compliance with the above. You are encouraged to bring to the
attention of your supervisor or Internal Audit any changes that you believe
may help improve the Company's internal controls.
D. COMPLIANCE WITH LAWS
1. Generally
The Company is committed to compliance with applicable federal, state and
local laws and with applicable rules and regulations of governmental
agencies, stock exchanges on which the Company's shares are listed, and
other regulatory agencies (collectively, "Laws"). You should strive at all
times to comply with all Laws in connection with your service to the
Company.
If you are unsure whether a particular action would violate a Law, or if
you become aware of a violation of a Law, you are encouraged to report it
to the Internal Audit Manager or the General Counsel.
The Company has adopted several internal compliance controls to help ensure
compliance with Laws and to identify and deal with any potential problems.
For example, the Company's Risk Management Department develops Company-wide
risk management programs including employee and property safety, identifies
potential exposure based on loss data tracked by the department and,
together with the Legal Department, manages claims and monitors lawsuits.
The Director of Risk Management reports to the Company Treasurer to promote
proper reporting and disclosure of liabilities and contingencies. Employees
attend classes given by the Company's Education Department where they
receive guidance on, among other topics, Fair Housing Laws. The Internal
Audit Department handles or coordinates both scheduled and unscheduled
audits of practices at individual apartment communities. These and other
internal control processes help the Company ensure that we comply with
applicable Laws.
2. Insider Trading
It is the Company's policy to protect shareholder investments through
strict enforcement of the prohibition against insider trading in federal
securities laws and regulations. Employees and directors may not buy or
sell Company stock while they have material information about the Company
that is not publicly known. Inside information includes, but is not limited
to, knowledge of pending Company business transactions, corporate finance
activity, mergers or acquisitions, unannounced earnings and financial
results and other significant developments affecting the Company. It is
illegal to buy or sell the stock of any company when you have material
nonpublic information about that company. You should not buy or sell stock
of another company which has been targeted for acquisition by the Company
or which is engaged in a material nonpublic transaction with the Company
without first obtaining the approval of the General Counsel. It is also
illegal to "tip" or share material nonpublic information about the Company
with any outsiders (including family members). If you have questions about
whether you have material nonpublic information, contact the General
Counsel before buying or selling Company stock. It is generally acceptable
for an employee to purchase stock pursuant to the 401-K plan so long as you
do not change your participation while in possession of material nonpublic
information. Insider trading is both unethical and illegal and will be
dealt with firmly.
The directors and certain high level employees designated as "insiders" may
only buy and sell Company stock during certain designated quarterly trading
windows or with prior permission of the General Counsel. In addition,
executive officers and directors are subject to other securities laws and
regulations prohibiting profiting on transactions within a six-month
period. Those individuals are also required to file a trading plan with the
Company at least thirty days prior to selling any Company stock.
E. WAIVERS
Waivers to the policies set forth in this Code of Ethics may be granted to any
employee or director provided that only the directors and Corporate
Governance/Nominating Committee of the Board of Directors may grant waivers to
directors and executive officers. Waivers to any other employees may be granted
only by an Appropriate Company Representative with whom the applicable employee
has consulted or to whom the employee has disclosed any violation or potential
violation of this Code of Ethics.
A waiver granted to any employee shall be promptly reported by the Appropriate
Company Representative granting the waiver to the General Counsel and the
Internal Audit Manager. A waiver granted to any Executive Officer or a Director
shall be promptly disclosed as required by the rules and regulations of the New
York Stock Exchange and any applicable securities laws.
The Company's Articles of Amendment and Restatement of the Articles of
Incorporation contain special rules regarding an officer's or director's
interests in contracts or other transaction with the Company. To summarize: any
director or officer and any entities with which they are affiliated may enter
into contracts with the Company so long as: (a) The Board of Directors has been
informed of the connection and a majority of the disinterested directors have
approved the contract; (b) if the matter is subject to a shareholder vote, the
shareholders have been informed of the connection and the contract has been
approved by a vote of the majority of disinterested shareholders; or (c) the
contract is fair and reasonable to the Company. The interested director may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors where such a contract is to be voted on.
F. DUTY TO REPORT
Each director and employee has a duty to adhere to this Code of Ethics and to
report to an Appropriate Company Representative any suspected violation. Failure
to report a violation can by itself, depending on the circumstances, be a
violation of this Code of Ethics.
For anyone who desires to report ethical, legal or other violations of this Code
of Ethics or other Law or Company policy (anonymously, confidentially or
otherwise), please contact any of the following (contact information is set
forth at the end of this Code of Ethics):
(1) Internal Audit Manager;
(2) General Counsel; or
(3) Hotline 1-877-888-0002.
Directors may also contact the Chairman of the Corporate Governance/Nominating
Committee. Contact information is set forth at the end of this Code of Ethics.
The Company's contract requires the Hotline to communicate concerns regarding
accounting, internal accounting controls and other accounting matters directly
to the Chairman of the Audit Committee of the Board of Directors. The Hotline
will communicate other matters, depending on the nature of the matter, to
appropriate management personnel or non-management directors.
It is the right and duty of every director and employee to report in good faith
any violation or suspected violation of this Code of Ethics without risk to job
status or position by reason of such report. The Company shall attempt to ensure
that each person to whom a report is made or from whom advice is sought shall
use every reasonable means available to keep confidential the identity of any
director or employee who requests such protection. Some disclosure may be
required to investigate the report and act upon it. Further, a director or
employee who in good faith reports a possible violation of this Policy shall not
be subject to discipline or otherwise retaliated against or disadvantaged with
respect to his or her position with or employment by the Company as a result of
such good faith reporting.
G. CONSEQUENCES OF VIOLATION.
Any violation of this Code of Ethics, applicable laws and regulations or
principles of ethics set forth in this Code of Ethics will be grounds for
disciplinary action or discharge from employment for employees and for removal
from the Board of Directors for directors. Violations may also subject the
employee, former employee, director or former director to civil liability and/or
criminal prosecution under applicable law. Any director or employee of the
Company who authorizes or permits another to engage in a violation will also be
subject to disciplinary action, dismissal, and/or other penalties.
H. CONTACT INFORMATION FOR APPROPRIATE COMPANY REPRESENTATIVES
1. Internal Audit Manager
Kristen Duckles
Internal Audit Manager
Home Properties of New York
850 Clinton Square
Rochester, NY 14604
(585) 295-4203
Fax: (585) 546-5433
Email: kristeTi@homeproperties.com
2. General Counsel
Ann M. McCormick
Home Properties of New York
850 Clinton Square
Rochester, NY 14604
(585) 246-4105
Fax: (585) 232-3147
Email: ann@homeproperties.com
3. Hotline
1-877-888-0002
4. Chairman of the Corporate Governance/Nominating Committee
William Balderston
Please contact Ann McCormick (see above) for
Mr. Balderston's contact information.
APPENDIX A
HOME PROPERTIES OF NEW YORK, INC.
CONFLICT OF INTEREST POLICY STATEMENT
RELATING TO PARTNER INTERESTS IN
HOME PROPERTIES OF NEW YORK, L.P. AND
MANAGED PROPERTIES
This Conflict of Interest Policy Statement applies to all of the officers and
directors of Home Properties, Inc. and its affiliates ("Home Properties" or the
"Company") who have partner interests in Home Properties, L.P. (the "Operating
Partnership") or ownership interests in properties that are managed by the
Company.
A. ADDITIONAL POLICY
This policy is in addition to the policies set forth in the Company's Code of
Business Conduct and Ethics.
B. INTERESTS IN THE OPERATING PARTNERSHIP
Certain officers and directors of the Company own limited partnership units in
the Operating Partnership. The sale or refinancing of some of the properties
owned by the Operating Partnership may therefore have certain tax consequences
with respect to those officers and directors, which consequences may differ from
those of the Company and its stockholders with respect to the sale and
refinancing of certain properties owned by the Operating Partnership.
It is the company policy that any director who owns partnership units in the
Operating Partnership shall not be entitled to vote on any matter affecting
certain properties the sale or refinancing of which would personally affect that
director if the matter to be voted on would so affect that director. The
interested director may be counted in determining the existence of a quorum at
any meeting of the Board of Directors at which such a matter is to be voted on.
It is also the company's policy that any officer or director who owns such
partnership units in the Operating Partnership shall report to the General
Counsel of the Company on each and every occasion when such officer or director
is making a decision in their capacity as an officer or director of the Company
and feels that their position as a partner of the Operating Partnership is
having, or might be construed as having, an effect on that decision. In such
event, the General Counsel shall consult with the notifying officer or director
as to how best to handle the conflict of interest and shall determine whether
and how to involve any or all of the Company directors in the situation. In the
event the General Counsel is involved in such a conflict, he or she shall so
notify the Chairman or President of the Company.
In addition, annually, at the meeting of the Audit Committee held in or nearest
the month of May, the Audit Committee of the Board of Directors shall review the
status of the ongoing business conflicts, including a review of the status of
the certain properties owned by the Operating Partnership, the sale or
refinancing of which would affect the officers and directors who are partners of
the Operating Partnership. The Audit Committee shall thereafter make a report to
the Board of Directors at the next meeting of the Board of Directors following
the Audit Committee meeting.
C. MANAGED PROPERTIES
Certain officers and directors of the Company have a significant interest in
some of the properties managed by the Company and its affiliates (the "Managed
Properties"). Those officers and directors may have conflicts of interest
between their fiduciary obligations to the partnerships that own the Managed
Properties and their obligations to the Company.
It is the company policy that any director who holds an interest in one of the
Managed Properties shall not be entitled to vote on any matter affecting the
Managed Properties in which they hold an interest if the matter to be voted on
would personally affect the director. The interested director may be counted in
determining the existence of a quorum at any meeting of the Board of Directors
at which such a matter is to be voted on.
It is also the company's policy that any officer or director who owns interests
in the Managed Properties shall report to the General Counsel on each and every
occasion when such officer of director is making a decision in their capacity as
an officer or directors and feels that their position as an interested holder in
an entity owning a Managed Property is having, or might be construed as having,
an effect on that decision. In such event, the General Counsel shall consult
with the notifying officer or director as to how best to handle the conflict of
interest and shall determine whether and how to involve any or all of the
company directors in the situation. In the event the General Counsel is involved
in a conflict, her or she shall notify the Chairman or President of the Company.
In addition, annually, at the meeting of the Audit Committee held in or nearest
to the month of May, the Audit Committee of the Board of Directors shall review
the status of the property management conflicts, including a review of the
status of the Managed Properties. The Audit Committee shall thereafter make or
report thereon to the Board of Directors at the next meeting of the Board of
Directors following the Audit Committee meeting.
D. FAILURE TO COMPLY
Failure to comply with these policies may result in the termination of
employment or in removal of a director. Action taken will be commensurate with
the seriousness of conduct and an evaluation of the situation.
