|Corporate Governance Guidelines|
(Revised February 9, 2009)
1. Every Director owes a duty of loyalty to the enterprise and is expected always to act in the best interests of the Company’s stockholders as a whole.
2. The Board will have at least a majority of directors who, in the business judgment of the Board, meet the criteria for independence required by the New York Stock Exchange for continued listing and other legal requirements.
3. The Board will evaluate the performance of the CEO at least annually in meetings of independent directors that are not attended by the CEO. For this purpose, “independent” means no present employment by the Company and no significant financial or personal tie to the Company other than share ownership and entitlement to director fees.
4. When the CEO also holds the position of Chairperson of the Board, the Board will elect an independent director to act in a leadership capacity and to preside at meetings to evaluate the performance of the CEO.
5. To promote open discussion among the non-management directors, the non-management directors will meet in an executive session at each in-person meeting of the Board.
6. Directors shall have full and free access to senior management and other employees of the Company. In addition, the Board and each committee shall have full and free access, when necessary and appropriate, to the Company's outside advisors.
7. Directors are expected to attend each meeting of the full Board and each meeting of any Committee on which he or she serves. Directors are expected to attend the Annual Meeting of Shareholders.
8. Every year the Board will review and approve a one-year operating plan for the Company and a three-year strategic plan, or if there are no material changes to the strategic plan then in effect, at such time as the Board deems it necessary.
9. The Board will have no more than two executive Directors.
10. The Audit, Compensation and Corporate Governance and Nominating Committees will consist entirely of independent directors under the standards set forth in each committee’s charter.
11. Committee members will be appointed by the Board.
12. The Corporate Governance and Nominating Committee will annually assess Board and Committee effectiveness.
13. Whenever feasible, Directors will receive materials well in advance of meetings for items to be acted upon. The aspiration is to get materials to the Board at least one week in advance of Board meetings.
14. The Board is committed to training new Directors and providing continuing education for existing Directors, including presentations by senior management on the Company's strategic plans, its significant financial, accounting, and risk management issues, its compliance programs, its management structure and executive officers and its internal and independent auditors.
15. Interlocking directorships will not be allowed except with respect to joint ventures. (An interlocking directorship would occur if a Choice Hotels officer served on the Board of Company X and an officer of Company X served on the Choice Hotels board, or if an officer of a major supplier or customer served on the Choice Hotels Board.)
16. Directors are required to reach and maintain ownership of $175,000 of Company stock within five years of election.
17. Directors other than Stewart Bainum, Jr. must retire as of the annual meeting of stockholders next following the date they attain the age of 72.
18. Succession planning and management development will be reported annually by the CEO to the Board.
19. Directors who are employees of the Company shall not receive any additional compensation for serving on the Board or its committees. Non-employee directors will receive an annual equity award and be paid annual cash retainers for Board and committee service in amounts to be determined from time to time. Directors shall not receive any other compensation (e.g. retirement benefits).
20. Incentive compensation plans will link pay directly and objectively to measured performance goals set in advance by the Compensation Committee.
21. Stock options will not be repriced (the exercise price for options will not be lowered even if the current market price of the stock is below the exercise price).
22. These Corporate Governance Guidelines have been developed and approved by the Board.