Investor Relations

Corporate Governance Guidelines

(Reviewed 7/14/09)

Mission of the New Jersey Resources Corporation Board of Directors
The Board of Directors (the "Board") of New Jersey Resources Corporation (the "Company") is elected by the Company's shareholders to manage the business and affairs of the Company and to act in the best interest of the Company and its shareholders. The Board is responsible for setting the policy for the successful operation of the Company by the management for the benefit of its shareholders. By carefully overseeing the strategic planning process and monitoring performance, the Board seeks to enhance the total return on shareholder investment. The Board will ensure appropriate programs for the retention and development of management. Recognizing the important role that other stakeholders play in the long-term success of the Company, the Board will promote a challenging and rewarding work environment for employees, compliance with environmental and public safety standards and fair and honest relationships with all others with whom the Company does business.

While no set of guidelines can cover every conceivable situation, this document provides general principles for the Board to follow in carrying out its mission in a professional, ethical, and legal manner.

I. BOARD MEMBERSHIP

1. Number
   It is the responsibility of the Nominating/Corporate Governance Committee ("NCG Committee") or any successor committee with essentially the same duties, to recommend to the Board the appropriate number of members that should constitute the Board. The Board shall set the number by resolution.
2. Term
   
   1. Pursuant to the Company's By-laws, each member of the Board will be elected by the shareholders for three years and will serve until his/her successor has been elected and qualified, (except in the instance of filling an unexpired term or when the number of directors is increased prior to the Annual Meeting of Shareholders). The NCG Committee may recommend the nomination of a sitting director for a one or two year term so that the expiration of said term would occur no later than that director's seventieth (70) birthday.
   2. There is no limit on the number of terms a director may serve, except that no director may serve beyond his/her seventieth (70) birthday.
   3. Only under extraordinary circumstances, as determined by the Board, shall a retired director remain on the Board as a director emeritus. Any director currently enjoying this status is hereby "grandfathered" as a director emeritus.
3. Criteria for Membership
   
   1. The NCG Committee is responsible for evaluating the composition, size, skills and talents needed by the Board, based on the Company's strategic plan and in consultation with the CEO. The evaluation will assist the NCG Committee in determining the appropriate skills, areas of expertise and characteristics of potential Board members. Goals to be considered include ensuring that sitting Board members continue to serve the shareholders' best interest and appropriately identifying "new talent" as the needs of the business require. The NCG Committee will then recommend to the Board guidelines for selecting members and characteristics needed in new directors, based on the above evaluation and the composition of the current Board.
   2. The only active full-time officer who may serve on the Board will be the Chief Executive Officer ("CEO"). At the time the CEO ceases serving the Company as such, he/she shall resign from the Board.
   3. A majority of the Board shall be independent under the independence standards established by these Corporate Governance Guidelines and the rules of the New York Stock Exchange and the U.S. Securities and Exchange Commission as in effect from time to time. In order for a Board member or candidate for election to the Board to qualify as independent, the Board must affirmatively determine that the person or his or her immediate family members have no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) or any of its affiliates. A member of the Board is not independent if:
      1. The director is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive officer, of the Company.
      2. The director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).
      3. (i) The director is a current partner or employee of a firm that is the Company's internal or external auditor; (ii) the director has an immediate family member who is a current partner of such a firm; (iii) the director has an immediate family member who is a current employee of such a firm and personally works on the Company's audit; or (iv) the director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on the Company's audit within that time.
      4. The director or an immediate family member is, or has been with the last three years, employed as an executive officer of another company where any of the Company's present executive officers at the same time serves or served on that company's compensation committee.
      5. The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company's consolidated gross revenues.
      The Board shall also consider a director's charitable relationships. Contributions to tax exempt organizations shall not be considered payments for purposes of subsection (e) above, provided however that the Company shall disclose in its annual proxy statement any such contributions made by the Company to any tax exempt organization in which any independent director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year from the Company to the organization exceeded the greater of $1 million, or 2% of such tax exempt organization's consolidated gross revenues. For purposes of this Section, an "immediate family member includes a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person's home. When applying the look-back provisions set forth above, the Board need not consider individuals who are no longer immediate family members as a result of legal separation or divorce, or those who have died or become incapacitated.
   4. A Board member may sit on the board of any affiliate of the Company so long as, except for being a director on each such board of directors, the member otherwise meets the independence requirements for each such entity, including the receipt of only ordinary-course compensation for serving as a member of the board of directors.
   5. Each member of the Board shall submit a letter of resignation to the Chairman of the Board when the member changes his or her principal occupation or employment, or leaves or retires from the business with which such occupation or employment was carried out. The letter shall be submitted to the Board for its determination as to whether to accept such resignations.
4. Membership Recruitment
   
   1. The Board believes the diversity of the Company's employees, customers and communities should be taken into account when determining the Board's composition.
   2. All members of the Board are encouraged to submit potential Board member candidates to the NCG Committee for consideration. The NCG Committee will then submit its recommendations to the Board.
   3. The NCG Committee will evaluate all candidates for election to the Board of Directors, regardless of the source from which the candidate was first identified, based upon the totality of the merits of each candidate, and not based solely upon minimum qualifications or attributes.
   4. The NCG Committee may retain a third-party search firm to assist in the identification of possible candidates for election to the Board of Directors.
   5. Potential Board members identified by the NCG Committee should be interviewed by the Chairperson of the NCG Committee, the Chairman of the Board and the CEO (if other than the Chairman of the Board). If practical, the full Board should have an opportunity to meet the candidate prior to voting on his/her nomination for election to the Board.
   6. The Chairman of the Board, CEO (if other than the Chairman) or Chairperson of the NCG Committee, on behalf of the Board, should extend the invitation to join the Board.
5. Board Training and Orientation
   
   1. Management has a complete orientation process for new Board members that includes background information on the Company and the industry, the Company Code of Conduct, the policy regarding trading in Company stock, Board compensation, meetings with senior management, and visits to various Company facilities.
   2. On an on-going basis, Board members shall be provided the opportunity to participate in tours of various Company facilities and field trips to view specific job activities or projects, to increase their understanding of the Company and its businesses.
   3. Board members are encouraged to attend conferences and other continuing education programs designed for directors of publicly traded companies. Each member of the Board shall attend at least one certified course on corporate governance during any five-year period, at the Company's expense.
   4. Annually, subsequent to the organizational meeting of the Board, members shall receive an updated copy of the Board of Directors' Handbook that includes the By-laws, Charters of each Board committee, Code of Conduct, Policy on the Purchase and Sale of Company Securities, and information on the Board, management, work locations and organizational structure of the Company and each of its functioning subsidiaries.
6. Member Participation
   
   1. Board members are expected to attend and participate in all meetings of the Board and the committees on which they serve and the annual meeting of shareholders. When attendance in person is impossible, every effort should be made to attend via telephone. The Chairperson of the NCG Committee will discuss attendance with any member whose attendance falls below 75% to determine if excessive time conflicts are likely to continue, and whether the member should continue to serve on the Board.
   2. Members of the Board should be available to provide advice, mentoring, or guidance at management's request.
   3. The Board shall designate one of its members to serve as the Lead Director for whatever period of time the Board determines to be appropriate. The name of the Lead Director shall be disclosed in the Proxy Statement.
   4. The CEO and employee(s) designated by the CEO are the Company spokespersons. No outside Board member shall represent him or herself as spokesperson to investors, media, or others without prior request by the CEO or the CEO's executive designee.
7. Board Compensation Review
   
   1. Board compensation should be both cash and stock-based. Total compensation should be comparable to that paid to other boards of similar companies.
   2. It is the responsibility of the NCG Committee, with the CEO and Corporate Secretary, to review annually the total Board compensation package to ensure that it is competitive so that the Company may recruit and maintain quality Board members.
   3. The Board shall approve the total Board compensation package (including fees for services on committees and as chairs thereof) and annually approve retainer and attendance fees.
8. Board Ownership of Company Stock
   
   1. All Board members should own at least 6,000 shares of the Company's common stock, to foster a mutual interest between Board members and shareholders of the Company. This requirement should be met by the end of five years after election to the Board. This policy will be reviewed from time to time, as the Board deems appropriate.
   2. In addition to shares acquired through the stock options as share awards which the members may receive as part of the Board compensation package, Board members may use their fees and/or retainers to regularly purchase stock through the Company, or purchase stock through the Company's Dividend Reinvestment Plan.
   3. Directors should be familiar with the "Policy on Transactions in Company Stock" in order to comply with regulatory and/or legal requirements. Each director should contact the Company's General Counsel for advice prior to engaging in any transactions in Company stock.

II. BOARD STRUCTURE

1. Meetings
   
   1. Number
      Pursuant to the Company By-laws, the Board should meet at least six (6) times annually, as scheduled by the Board. At least one of the meetings shall be devoted to discussions of the Company's strategic plan.
   2. Meetings Without Management Present
      The Lead Director shall chair all meetings of the independent members of the Board without the CEO or other members of management present immediately following each meeting of the Board, unless the independent directors determine such a meeting is not necessary. The Lead Director shall set the agenda for each of these meetings, with input from other members of the Board as they desire. At least twice a year, these meetings should include a discussion of the CEO's performance.
   3. Communication with the Lead Director
      In order that interested parties may be able to make their concerns known to non-management directors, the Company shall disclose a method for such parties to communicate directly and confidentially with the Lead Director, or a designated representative. The procedure for such communications is attached hereto as EXHIBIT "A".
   4. Agendas and Presentations
      
      1. The Board's meeting agenda shall be determined by the Chairman. Members are encouraged to notify the Chairman, or the CEO if not the Chairman, or the Corporate Secretary of any agenda suggestions.
      2. Information and data that is important to the Board's understanding of the business will be distributed in writing to the Board before the Board meets. Absent unusual circumstances, the material will be submitted to the Board at least one week prior to the meeting.
      3. The Board realizes that the length of meetings will vary, depending on the topics. The meeting agenda should set forth the times scheduled for both presentations and discussions.
      4. At each Board meeting, the chairperson of each committee or their designee from management should provide a report of each committee meeting held subsequent to the last Board meeting.
      5. The CEO should provide the Board with an update at each meeting on the Company's performance in comparison with its strategic plan.
      6. The Chief Financial Officer ("CFO") should provide an update at each meeting on the financial performance of the Company in comparison with the stated goals contained in the financial plan, or provide such an update in a written report prior to each meeting.
      7. Presentations from management employees selected by the CEO are welcomed. These serve as informational and educational opportunities for the Board and provide insight into the presenter's management skills and expertise. However, presentations should be limited to one or two per meeting, unless otherwise required in the judgment of the CEO.
   5. Attendance
      
      1. In addition to the CEO (if other than the Chairman), the Corporate Secretary may attend all Board meetings. The Board may ask the Corporate Secretary and/or the CEO to leave the meeting as and when the Board thinks it appropriate.
      2. The CEO will decide which of the Company's management employees should attend portions of any meeting.
      3. It will be necessary and appropriate, from time to time, for consultants, attorneys, financial advisors and others to attend portions of a meeting for the purpose of advising the Board.
   6. Authority to Engage Advisers
      The Board and any committee of the Board shall have the authority to engage independent legal, financial and other advisers and to provide for their compensation by the Company as the Board or such Committee determines necessary or appropriate to carry out its duties.
   7. Access to Management
      As the representatives of the shareholders, and in order to fulfill its obligations, the Board or any member of the Board, shall have the authority to meet with and discuss Company related matters with any member of Company management or any employee, as determined by the Board. Such meetings may be arranged through the CEO, unless the Board determines that the CEO's involvement is inappropriate. In that case, the Lead Director may make the necessary arrangements.
   8. Service on Other Boards
      To protect against potential conflicts of interest, independent directors should advise the Chairman of the NCG Committee in advance of accepting an invitation to serve on another board. If a member of the Audit Committee simultaneously serves on the audit committee of more than three other public companies, the Board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the Audit Committee annually, and must disclose such determination in the annual proxy statement.
2. Committees
   1. Structure
      The current committee structure of the Company appears appropriate; however, there may be circumstances under which the Board may want to form a new committee or disband a current one. The Board's current standing committees are: Audit, Nominating/Corporate Governance, Executive, Financial Policy, and Leadership Development & Compensation.
   2. Meetings
      
      1. The number of meetings scheduled for each committee are set forth in its charter.
      2. All Board members are welcome to attend the meeting of any committee. This policy fosters openness, and provides greater opportunities for learning more about the Company.
      3. The agenda for each committee meeting should be set by the committee chairperson the CEO and/or other appropriate members of management. The agenda and related materials should be distributed to the committee members at least one week prior to the meeting. Committee members may request inclusion of matters on the agenda.
      4. Minutes of each committee meeting should be submitted for review by the chairperson. The minutes of any committee meeting must be approved by that committee before submission to the Board for review.
   3. Membership
      
      1. The NCG Committee and the CEO shall review the composition of each committee annually, and the NCG Committee shall make recommendations on such composition to the Board. It is the responsibility of the Board to appoint the members of each committee and designate a chairperson from among its members.
      2. The members of the Audit, Leadership Development and Compensation Committee ("LD&C"), and NCG Committees are comprised solely of independent directors. Membership on the Audit Committee is limited to those directors who meet additional independence and other qualifications for audit committee members, as established from time to time under applicable law, regulations and New York Stock Exchange listing standards.
      3. It is the sense of the Board that consideration should be given to rotating committee members periodically, but the Board does not feel that such a rotation should be mandated as a policy since there may be reasons at a given point in time to maintain an individual director's committee membership for a longer period or to shorten the period. The chairperson, when possible, should have served as a prior member of that committee or a similar committee with another board of directors, or have a background providing expertise in the area of the Committee's responsibilities.
      4. The CEO (even if the Chairman of the Board) shall serve on the Executive Committee only. Notwithstanding the above, the CEO may attend all committee meetings and shall be excused from any meeting or portion thereof, upon the request of the committee chairperson.

III. BOARD DUTIES

1. Strategic Planning
   
   1. Management shall, prior to the start of each fiscal year, submit a three-year financial plan that will first be presented to the Financial Policy Committee. The first of the three years of such financial plan shall be subject to the approval of the Board.
   2. Updates on the strategic plan at each Board meeting by the CEO will allow the Board to monitor management's performance on a regular basis and approve modifications as recommended.
2. Financial Performance
   Reports by the CFO at each Board meeting or in writing prior to the meeting, on the Company's financial performance will provide the Board the opportunity to discuss and monitor the financial condition of the Company in comparison with the approved financial plan.
3. Ethical Conduct
   The Company's employees, officers, directors and agents who are authorized to act on the Company's behalf, shall behave and conduct the business of the Company in an ethical and legal manner. The guidelines that describe this behavior are set forth in the Code of Conduct and the Code of Ethics for the senior executive officer and senior financial officers that are approved by the Board, upon the recommendation and advice of the NCG Committee.
4. Human Resources Performance
   
   1. The Board will conduct an annual evaluation of the CEO and the results of the evaluation should be communicated to him/her by the Lead Director, the Chairman (if other than the CEO) or the Chairperson of the Leadership Development and Compensation Committee (the "LD&C). The evaluation will be used by the LD&C in the course of its deliberations when considering the CEO's compensation.
   2. The Board believes diversity among the Company's work force, equal opportunity and a work environment that is free of discrimination and harassment are essential attributes of the Company. The LD&C Committee will review these issues and make periodic reports and recommendations thereon to the full Board. The review shall include, but not be limited to, specific plans and objectives that are to be implemented and maintained by the Company.
   3. While the LD&C Committee is responsible for reviewing the Company's plans for management succession, the CEO shall annually report to the Board on the succession plan for the top five (5) officer positions.
5. Specific Approval
   While the CEO and management are given the usual discretion in the operation of the Company, the Board believes that any material investments or other plans, including the formation of new subsidiaries, not included in the strategic plan, should receive prior Board approval.
6. Stock Ownership Guidelines for Executives
   The Board shall set guidelines regarding the amount of Company common stock each executive officer shall be required to own. The current policy is that the executives of the Company shall own shares of Company common stock as set forth below:
   
   

   Position	Number of Shares
   CEO	60,000
   Senior Vice President	6,000
   Vice President	3,000

   
   
   This requirement should be met by the end of five years after initial appointment of the executive officer by the Board. The Board shall review this policy and revise it, as the Board deems appropriate.
7. Annual Board Evaluation
   The Board shall conduct an evaluation of its performance on an annual basis. The Board shall have the authority to retain advisers or consultants and to provide for their compensation by the Company, as it shall deem appropriate to assist in designing and implementing such evaluation.
8. Management Succession
   It shall be the responsibility of the LD&C Committee to develop and recommend for Board approval policies and procedures for CEO selection. Among other things, these policies shall provide for emergency interim succession in the event the CEO is incapacitated for any reason.

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NJR - (NYSE) $36.06   + 0.66

Nov 23, 2009 4:13 PM ET

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