UDR ESG — Elevated Excellence
Our Commitment to
Corporate Governance
UDR has a history of strong Corporate Governance which not only contributes to our long-term success and our ability to create value for our stakeholders, but fosters a foundational structure for the management of ESG opportunities and risks. We enhance our policies and procedures when our Board determines that it would benefit our Company and stakeholders to do so. In early 2022, we codified a long-held, internal political contributions and charitable donations policy.
Governance Goals
- Provide training opportunities to 100% of associates and confirm 95% or higher completion at any given time for the following training courses: Business Ethics, Diversity and Inclusion (including unconscious bias), Fair Housing, IT Security Awareness, Sexual Harassment, and Workplace Harassment.
- Perform internal and external compliance screening for all new vendors to confirm compliance with federal laws including the Patriot Act, The Money Laundering Control Act, and Executive Order 13224.
- Continue to evaluate the risk of climate change as part of our Enterprise Risk Management process.
- Regularly engage with key stakeholders throughout the year through meetings and participation surveys in order to understand their ESG-related priorities and further improve the Company's ESG disclosures.
Governance Highlights
Shareholder Rights
- Annual election of all directors
- Majority voting in uncontested director elections
- Proxy access for eligible director candidates nominated by eligible shareholders
- No shareholder rights plan (Poison Pill)
- Confidential voting
- No material restrictions on shareholders’ right to call a special meeting
- In 2022 and early 2023, we had 539 interactions with our investors through meetings and property tours, representing ownership of approximately 80% of our outstanding common stock
- Ability for shareholders to propose binding bylaw amendments
Independent Oversight
- Strong Lead Independent Director role with clearly articulated responsibilities
- Audit and Risk Management, Compensation and Management Development, Governance and Nominating Committees consist entirely of independent directors
- All directors are independent, except the Chairman and Chief Executive Officer
- Independent directors meet regularly in executive session
Good Governance
- Extensive board dialogue with formal processes for shareholder engagement
- Annual board and committee self-evaluations
- Annual individual director evaluation process
- Periodic continuing education for directors
- All Directors attended at least 75% of meetings held
- Annual advisory approval of named executive officer compensation
- Code of Business Conduct and Ethics, and Code of Ethics for Senior Financial Officers
- Stock Ownership Guidelines for Executive Officers and Directors
- Prohibition on Hedging Transactions
- Pledging Transactions Prohibited Without Prior Approval
- Policy on Recoupment of Performance-Based Incentives
- Require diverse candidates be included in the initial pool for any search for a new director or external search for a CEO, and all associates starting in 2021
Board Composition and Expertise
The members of our Board have diverse backgrounds, experience, and skillsets that are both relevant to the role of the Board and the needs of our business. The diversity of our Board has remained an ongoing focus in connection with our Board refreshment, evidenced by the addition of six new independent Directors in the last seven years, each with a range of viewpoints and additive expertise. Most recently, the Board continued its refreshment efforts with the additions of Diane M. Morefield in 2020 and Kevin C. Nickelberry in 2021. Directors are elected annually to serve for a term until the next annual meeting of shareholders or until their successors are elected and qualified.
Succession Planning
The Board’s oversight of succession planning and appointment of senior management contributes to UDR’s strong foundational governance and leadership. As evidenced through the Company’s track record on succession combined with our talent development approach, this helps to ensure that we have management talent capable of driving strong results and executing our business strategy. The Company’s Statement on Corporate Governance provides that the Board is responsible for appointing the CEO, and planning for their succession, as well as the succession of other executive officers of the Company. The Compensation Committee is responsible for annually reviewing the development and retention plans for the Company’s key executive officers, including the CEO; reviewing and approving a succession plan for the CEO; and ensuring development and succession plans are in place for the Company’s key executive officers reporting to the CEO. Consistent with its responsibilities, the Compensation Committee regularly reviews succession plans for the CEO and the key executive officers and reports to the Board regarding those plans.
Executive Compensation Program
UDR’s executive compensation program is a combination of base salary as well as long- and short-term incentive programs and is structured to be aligned with quantifiable results, total shareholder return, and successful execution of our business strategy. In addition to driving value for our shareholders, the metrics used for our Long-Term Incentive Program (“LTI”) and our Short-Term Incentive Program (“STI”) are tied to our strategic objectives of operating excellence, portfolio diversification, culture and ESG, accretive capital allocation and balance sheet strength. To that end, ESG was one of the added metrics to our STI in 2021, and in 2022 these metrics were enhanced to incorporate both an ESG Index and Associate Engagement & DEI metric.
Business Integrity
The UDR Code of Business Conduct and Ethics cannot cover every issue that may arise but sets out basic principles to be followed by all the Company’s directors, officers, and associates. Additionally, it is expected that this Code is provided to and followed by the Company’s agents, representatives, and consultants
Some of the topics that The Code of Business Conduct and Ethics covers include Conflicts of Interest, Insider Trading, Competition and Fair Dealing, Gifts and Entertainment, Health and Safety, and Bribery and Corruption. The Code also reiterates the Company’s commitment to equal opportunity and strict forbiddance of discrimination. Annually, the Code of Business Conduct and Ethics is acknowledged by all associates and provided to new associates during their onboarding with the Company.
UDR also maintains a Code of Ethics for Senior Financial Officers. To fulfill their responsibility to protect, balance, and preserve the interests of the Company’s shareholders, the Code is designed to outline additional standards of conduct to match the elevated role that Senior Financial Officers hold in corporate governance and is intended to supplement the Code of Business Conduct and Ethics applicable to all associates. Senior Financial Officers act in good faith and the Company’s Best interest in accordance with both Codes.
Diversity and Equal Opportunities
UDR is an equal opportunity employer. We are committed to treating our associates in a nondiscriminatory manner with regard to race, ethnicity, religion, sex, sexual orientation, gender, sexual / gender identity, age, disability, pregnancy, national origin, military or veteran status, or any other characteristic protected by law. We require every associate to take online educational courses on an annual basis to increase their awareness of what constitutes harassment, including classes that stressed that all forms of harassment are forbidden and that any witnessed harassment must be quickly identified, reported, and remedied. In addition, the Company’s learning and development program requires the annual completion of a diversity and inclusion course with unconscious bias training, and our associate diversity metrics are published in accordance with our GRI disclosures. We revamped our online learning and development program in 2022 to use Cornerstone, which includes two new courses on DEI and recognizing and overcoming bias. The enhanced capabilities of this new system allow associates to be in control of their learning and growth at UDR and supervisors to easily assign and monitor training courses through customizable dashboards and reporting features.
Enterprise Risk Management
Enterprise Risk Management (“ERM”) provides a proactive framework for the evaluation of threats and risks to our business with the aim to assist in the development of mitigation strategies to protect the enterprise. These risks include but are not limited to operational, financial, legal, strategic, cybersecurity, reputational, climate, environmental and societal change. While our Executive Officers communicate our ESG risk assessment and strategy, which are integrated into our overall risk management, ERM oversight is the responsibility of the Board.
Our approach to ERM includes:
- Identifying risks that could materially impact our enterprise;
- Assessing risks, including impact, timing, likelihood, and trend (short and long term);
- Identifying and evaluating controls and risk mitigation to determine sufficiency; and
- Adjusting resources, processes, and strategies if necessary to reduce risk.
Within our risk universe, we have identified and incorporated climate change, including physical, transitional, and regulatory related risks as types of risks, that can impact our enterprise and that are important to our stakeholders.
Cyber Security Program
The members of the UDR Cyber Security Office ("CSO") use a governance, risk, and compliance framework to ensure that we mature our security program at the same rate we innovate our technology. Quarterly, UDR’s Senior Vice President – Chief Technology Officer reports on the Company’s security posture to the Audit and Risk Management Committee of the Board. The Board is updated on cybersecurity at least annually.
UDR’s enterprise security framework operates with four guiding principles:
- The protection of personally identifiable data and privacy.
- Securing business data that is generated, stored, or transmitted.
- Complying with applicable laws and regulations.
- Educating our associates on the importance of information security and being aware of the latest threat issues.
Vendor Compliance
The Company has an established compliance program that is designed to help ensure business is conducted ethically in accordance with company policy. This reduces third-party risk, including fraud risk. Periodically, a due diligence review is performed of the Company’s vendors to confirm licenses, tax identification numbers, criminal, and other background searches, insurance, and that Company required standards of performance are met. This review ensures compliance with federal laws including the Patriot Act, The Money Laundering Control Act, and Executive Order 13224. All vendors must agree to comply with all applicable laws and regulations, including non-discrimination laws.
Internal Audit
Our Internal Audit group is independent and reports directly to the Audit and Risk Management Committee of the Board. The Internal Audit group utilizes data analytics software and robotic process automation to audit and test whole populations of significant Company operational and financial transactions. The audit results are summarized and provided to senior management and the Audit and Risk Management Committee.
In addition to financial related assurance work, the Internal Audit function is charged with performing reviews and certifications of external data submissions to third parties, specifically related to the GRESB submission and compliance certification of UDR’s EMS program on an annual basis.
Government Affairs
Our Government Affairs group was formed to track, monitor, and advise on regulatory matters that may impact our business at the local, county, state, federal, and judicial levels. Regulatory matters may include legislation such as COVID emergency measures, other housing statutes, mandated emission targets, changes to tax rules, general liability, as well as numerous other areas of interest to UDR. The group works closely with the Company’s Legal and Operations teams to ensure that UDR is considering legislative and regulatory items that may impact our business, associates, and residents in a timely manner. Regular reports on regulatory changes are provided to senior management and UDR’s operating team, to help guide our operating and capital allocation strategies.
In early 2022 our Board adopted a political contributions and charitable donations policy. The purpose of this policy is to ensure that all charitable contributions or political donations made by or on behalf of the Company are consistent with the Company’s values and policies, including the Company’s Code of Business Conduct and Ethics, and are in the best interest of the Company and comply with applicable laws and regulations.