Related Party Transaction Approval
Policies and Procedures.
With respect to transactions involving our trustees, the Corporate Governance Guidelines provide for review by the Governance Committee of related party transactions that might
present possible conflicts of interest. The Governance Committee reviews related party transactions involving Board members pursuant to the Corporate Governance Guidelines. Before undertaking a related party transaction, we request that trustees
submit information to the Governance Committee, who will advise the companys Chief Legal Officer. The Governance Committee considers the matters submitted to it and makes a recommendation to the Board with respect to any action to be taken.
The trustee with an actual, potential or apparent conflict of interest does not participate in the decision-making process related to the transaction.
Our
executive officers who are not also trustees are subject to the Code of Conduct. Under the Code of Conduct, executive officers are required to disclose to our Chief Legal Officer any potential conflicts of interest, which include, among other
interests, financial relationships, or associations where an executives personal interest may conflict with ours. In addition, the Audit Committee reviews on an ongoing basis related party transactions involving our executive officers and
trustees and PS Business Parks that may require Board
pre-approval
under applicable law or may be required to be disclosed in our financial statements or proxy statement.
Relationships and Transactions with the Hughes Family.
B. Wayne Hughes, our Chairman Emeritus and the companys
Co-Founder,
and Tamara Hughes Gustavson, a trustee on our Board, own and control 57 self-storage facilities in Canada.
These facilities operate under the Public Storage trade name, which we license to the owners of these facilities on a royalty-free,
non-exclusive
basis. Our subsidiaries reinsure risks relating to
loss of goods stored by customers in these facilities, and have received approximately $1.1 million for the year ended December 31, 2017. Our right to continue receiving these premiums may be qualified. We have a right of first refusal,
subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them.
Management Agreement with PS Business Parks.
PS Business Parks manages certain of the commercial facilities that we own
pursuant to management agreements for a management fee equal to 5% of revenues. Public Storage paid a total of $506,000 in management fees with respect to PS Business Parks property management services in 2017. In 2017, PS Business Parks
allocated approximately $537,000 in operating expenses to Public Storage related to the management of the properties, including payroll and other overhead expenses.
PS Business Parks owns certain commercial facilities that include self-storage space. We manage this self-storage space for PS Business Parks for a management fee equal
to 6% of revenues generated by the self-storage space. We recorded management fees with respect to these facilities of approximately $92,000 for the year ended December 31, 2017. In 2017, we allocated approximately $61,000 in operating
expenses to PS Business Parks related to the management of the properties, including payroll and overhead expenses.
Cost Sharing and Other Arrangements with
PS
Business Parks.
Pursuant to a cost sharing and administrative services arrangement, we
share certain administrative services, corporate office space and certain other third party costs with PS Business Parks which are allocated based upon time, effort and other methodologies. PS Business Parks reimbursed us $1.3 million for the
year ended December 31, 2017 for costs paid on their behalf, and we reimbursed PS Business Parks $31,000 in costs that PS Business Parks incurred on our behalf for the year ended December 31, 2017.
Public
Storage 2018 Proxy Statement 52