UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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| | | | | Preliminary Proxy Statement | | | |||||
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Wednesday, April 3, 2019Thursday, March 10, 2022 at 9:30 a.m., Eastern time
It is our pleasure to invite you to join our Board of Directors and executive officers at The RMR Group Inc.'s 2019 Annual Meeting of Shareholders in Newton, Massachusetts. The enclosed Notice of 2019 Annual Meeting of Shareholders and Proxy Statement provides you with information about our Company and the matters to be voted on at the 2019 Annual Meeting of Shareholders.
Your support is important to us and to our Company. I encourage you to use telephone or internet methods, or sign and return a proxy card/voting instruction form, to authorize your proxy prior to the meeting so that your shares will be represented and voted at the meeting.
Thank you for being a shareholder and for your continued investment in our Company.
January 23, 2019
On behalf of the Board of Directors,
Rosen PlevnelievChair of the Nominating and Governance Committee
NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April 3, 2019
9:30 a.m., Eastern time
The RMR Group HeadquartersTwo Newton Place, 255 Washington Street, Suite 100Newton, Massachusetts 02458
ITEMS OF BUSINESS
| Location: Live Webcast Accessible at https://www.virtualshareholder meeting.com/RMR2022 Date: Thursday, March 10, 2022 Time: 9:30 a.m., Eastern time | | | Agenda: • Elect the Director nominees identified in the accompanying Proxy Statement to our Board of Directors; • Advisory vote to approve executive compensation; • Advisory vote on the frequency of future shareholder advisory votes relating to our executive compensation; • Approve The RMR Group Inc. Amended and Restated 2016 Omnibus Equity Plan; • Ratify the appointment of Deloitte & Touche LLP as our independent auditors to serve for the 2022 fiscal year; and • Transact such other business as may properly come before the meeting and at any postponements or adjournments of the meeting. Record Date: You can vote if you were a shareholder of record as of the close of business on January 6, 2022. | |
| | | | Attending the Annual Meeting: Due to the continuing public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders, directors and employees, the Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by webcast. No physical meeting will be held. • Record Owners: If you are a shareholder as of the close of business on the record date who holds shares directly, you may participate in the Annual Meeting by visiting https://www.virtualshareholdermeeting.com/RMR2022 and entering the 16 digit control number located on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form. • Beneficial Owners: If you are a shareholder as of the close of business on the record date who holds shares indirectly through a brokerage firm, bank or other nominee, you may participate in the Annual Meeting by visiting https://www.virtualshareholdermeeting.com/RMR2022 and entering the 16 digit control number located on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form. Please follow the instructions from your bank, broker or nominee included with these proxy materials, or contact your bank, broker or nominee to request a control number if needed. Please see the accompanying Proxy Statement for additional information. By Order of our Board of Directors, Jennifer B. Clark Managing Director, Executive Vice President, General Counsel and Secretary January 12, 2022 | |
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RECORD DATE
The Board of Directors set January 16, 2019 as the record date for the meeting. This means that owners of record Holders of shares of common stockour Class A Common Stock (“Class A Common Shares”) are entitled to one vote for each Class A Common Share, holders of the Companyshares of our Class B-1 Common Stock (“Class B-1 Common Shares”) are entitled to ten votes for each Class B-1 Common Share and holders of shares of our Class B-2 Common Stock (“Class B-2 Common Shares,” and, together with Class A Common Shares and Class B-1 Common Shares, “Common Shares”) are entitled to ten votes for each Class B-2 Common Share. Holders of our Class A Common Shares, Class B-1 Common Shares and Class B-2 Common Shares will vote as a single class on all matters at our 2022 Annual Meeting. Our Class A Common Shares are listed on The Nasdaq Stock Market LLC (“Nasdaq”). On January 6, 2022, there were 15,485,011 Class A Common Shares, 1,000,000 Class B-1 Common Shares and 15,000,000 Class B-2 Common Shares issued and outstanding.
| | IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR OUR 2022 ANNUAL MEETING TO BE HELD ON THURSDAY, MARCH 10, 2022. | | |
| | The Notice of 2022 Annual Meeting, Proxy Statement and Annual Report to Shareholders for the fiscal year ended September 30, 2021 are available at www.proxyvote.com. | | |
PROXY VOTING
Shareholders as of the close of business on the record date are invited to attend the 2019 Annual Meeting. All shareholders are encouraged to vote in advance of the 2019 Annual Meeting by using one of the methods described in the accompanying Proxy Statement.
January 23, 2019
Newton, Massachusetts
By Order of the Board of Directors,
Jennifer B. ClarkManaging Director, Executive Vice President,General Counsel and Secretary
Please promptly sign and return the proxy card or voting instruction form or use telephone or internet methods to authorize a proxy in advance of the 2019 Annual Meeting. See the "Voting Information" section on page 2 for information about how to authorize a proxy by telephone or internet or how to attend the 2019 Annual Meeting and votenondiscretionary matters without your shares in person.
THE RMR GROUP INC. 2019 Proxy Statement 1
VOTING INFORMATION
WE WANT TO HEAR FROM YOU – VOTE TODAY
Your vote is important.
ELIGIBILITY TO VOTE
You can vote if you were a shareholder of record at the close of business on January 16, 2019.
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| | MORE INFORMATION | | | BOARD RECOMMENDATION | | | VOTES REQUIRED FOR APPROVAL | | ||||
1 | | | Election of Directors | | | Page | | ✓FOR | | | Plurality of all votes cast | | |
2 | | Advisory vote to approve executive compensation | | | Page | | ✓FOR | | | Majority of all votes cast* | | ||
3 | | | Advisory vote on the frequency of future advisory votes to approve executive compensation | | | Page 37 | | | EVERY YEAR (“1 Year” on proxy card) | | | Majority of all votes cast* | |
4 | | | Approval of The RMR Group Inc. Amended and Restated 2016 Omnibus Equity Plan | | | Page 38 | | | ✓FOR | | | Majority of all votes cast | |
| | Ratification of independent auditors | | | Page 45 | | | ✓FOR | | | Majority of all votes cast* | |
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| | | Call 1-800-690-6903 if you are a shareholder of record and 1-800-454-8683 if you are a beneficial owner before 11:59 p.m., Eastern time, on | |
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| | | Sign, date and return your proxy card if you are a shareholder of record or voting instruction form if you are a beneficial owner to authorize a proxyBY | |
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| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 1 | |
| 2 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 3 | |
| Oversight of Strategy | | | Oversight of Risk | | | Succession Planning | |
| | ✓ Our Board oversees and monitors strategic planning. ✓ Business strategy is a key focus of our Board and embedded in the work of Board committees. ✓ Company management is charged with executing business strategy and provides regular performance updates to our Board. | | | | ✓ Our Board oversees risk management. ✓ Board committees, which meet regularly and report back to our full Board, play significant roles in carrying out the risk oversight function. ✓ Company management is charged with managing risk, through robust internal processes and effective internal controls. | | | | ✓ Our Board oversees succession planning and talent development for senior executive positions. ✓ Our Nominating and Governance Committee makes an annual report to our Board on succession planning. ✓ In the event of a succession, our entire Board may work with our Nominating and Governance Committee, or the Independent Directors, as applicable, to nominate and evaluate potential successors. | | |
| 4 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 5 | |
| 6 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 7 | |
| 8 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 9 | |
| • exhibit high standards of integrity and ethics; • have business acumen, practical wisdom, ability to exercise sound judgment in a congenial manner and be able to make independent analytical inquiries; • have a strong record of achievements; • have knowledge of the asset management industry, commercial real estate (“CRE”) industry and real estate investment trusts (“REITs”); | | | • have diverse perspectives, backgrounds and experiences, including professional background, skills and community membership; and • be committed to serve on our Board over a period of years in order to develop knowledge about our operations and have sufficient time and availability to devote to Board and committee matters. | |
| • work experience with a proven record of success in his, her or their field; • risk oversight/management expertise; • accounting and finance, including a high level of financial literacy and understanding of the impact of financial market trends on the real estate industry; • operating business and/or transactional experience; • management/leadership experience; • knowledge of our historical business activities; • familiarity with client sectors; | | | • familiarity with the public capital markets; • experience at a strategic or policymaking level in a business, government, non-profit or academic organization of high standing; • service on other public company boards and committees; • qualifying as a Managing Director in accordance with the requirements of our governing documents; and • qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our governing documents. | |
| 10 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Total Number of Directors | | | | | | | | | | | | | | | 6 | | | | | |||||||||
Part I: Gender Identity | | | | | Female | | | | | | Male | | | | | | Non-Binary | | | | | | | | | | Did Not Disclose Gender | |
Directors | | | | | 2 | | | | | | 4 | | | | | | — | | | | | | | | | | — | |
Part II: Demographic Background | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
African American or Black | | | | | — | | | | | | 1 | | | | | | — | | | | | | | | | | — | |
Alaskan Native or Native American | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | — | |
Asian | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | — | |
Hispanic or Latinx | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | — | |
Native Hawaiian or Pacific Islander | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | — | |
White | | | | | 2 | | | | | | 3 | | | | | | — | | | | | | | | | | — | |
Two or More Races or Ethnicities | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | — | |
LGBTQ+ | | | | | | | | | | | | | | | | | | | | | | | — | | | | | |
Did Not Disclose Demographic Background | | | | | | | | | | | | | | | | | | | | | | | — | | | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 11 | |
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| | | | | | | | | | | | | Jennifer B. Clark Age: 60 Managing Director since 2018 Term: Term expiring at our 2022 Annual Meeting | | | | | | | | Board Committees: None | | | | | | | | Other RMR Managed Public Company Boards(1): • Five Star Senior Living Inc. (since 2020) • Office Properties Income Trust (since 2021) Other Non-RMR Managed Public Company Boards: None | | | | | | | |
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| | | | | | Ms. Clark has been our Executive Vice President, General Counsel and Secretary since shortly after our formation in 2015. Ms. Clark joined RMR LLC in 1999 as a vice president; she became a senior vice president in 2006, an executive vice president and general counsel in 2008 and secretary in 2015. Ms. Clark serves as secretary of Diversified Healthcare Trust, Industrial Logistics Properties Trust, Service Properties Trust, Office Properties Income Trust, Seven Hills Realty Trust (formerly known as RMR Mortgage Trust), Five Star Senior Living Inc. and TravelCenters of America Inc. Ms. Clark also serves as an officer of ABP Trust, our controlling shareholder, director and secretary of Sonesta Holdco Corporation, director, executive vice president and general counsel and secretary of Tremont Realty Capital LLC (formerly known as Tremont Realty Advisors LLC). Ms. Clark also served as a trustee of Diversified Healthcare Trust from 2018 to June 2021, a trustee of RMR Mortgage Trust (now known as Seven Hills Realty Trust) from 2019 to January 2021 and chief legal officer of RMR Mortgage Trust from 2002 to January 2021. Until Tremont Mortgage Trust’s merger with and into RMR Mortgage Trust, Ms. Clark served as secretary of Tremont Mortgage Trust. Until RMR Advisors LLC’s merger with and into Tremont Realty Capital LLC on January 6, 2021, Ms. Clark served as a director of RMR Advisors LLC from 2016 and as its president and chief executive officer from 2019, and prior to that as its executive vice president, general counsel and secretary from October 2017 through December 2018, as vice president and chief legal officer from 2007 through September 2017, and as secretary since 2004. Prior to joining RMR LLC, Ms. Clark was a partner at the law firm of Sullivan & Worcester LLP. | | | | | | | | Specific Qualifications, Attributes, Skills and Experience: • Professional skills and experience in legal, corporate governance and real estate matters; • Leadership position with RMR LLC and demonstrated management ability; • Extensive experience in, and knowledge of, the commercial real estate industry and REITs; • Institutional knowledge earned through prior service as an officer of our Company and in leadership positions with RMR LLC; • Identifies as female; and • Qualifying as a Managing Director in accordance with the requirements of our Bylaws. | | | | | | | ||||||||||||||||
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| 12 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
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| | | | | | | | | | | | | Ann Logan Independent Director since 2015 Term: Term expiring at our 2022 Annual Meeting | | | | | | | | Board Committees: • Audit (Chair) • Compensation • Nominating and Governance | | | | | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | | | | | |
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| | | | | | Ms. Logan was previously employed in various executive capacities at Fannie Mae, a U.S. Government sponsored enterprise with various classes of publicly owned securities, including as executive vice president of the single family mortgage business from 1998 to | | | | | | | | Specific Qualifications, Attributes, Skills and Experience: • Experience in • Valuable perspective on the broader real estate industry; • Professional skills, training and expertise in finance and risk management matters; • Demonstrated management ability; • Service on boards and board committees and experience as a senior executive of a public company; • Identifies as female; and • Qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our Bylaws. | | | | | | | ||||||||||||||||
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| | | | | | | | | | | | | Rosen Plevneliev Age: 57 Independent Director since 2017 Term: Term expiring at our 2022 Annual Meeting | | | | | | | | Board Committees: • Audit • Compensation • Nominating and Governance (Chair) | | | | | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | | | | | |
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| | | | | | Mr. Plevneliev is the former president of the Republic of Bulgaria, having served from January 22, 2012 to | | | | | | | | Specific Qualifications, Attributes, Skills and Experience: • Executive experience and demonstrated leadership ability as a former head of state; • Experience heading large scale real estate construction and development projects in both the public and private sectors; • Experience as a senior executive of a construction management company; • Bulgarian national; • Identifies as male; and • Qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our Bylaws. | | | | | | | ||||||||||||||||
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2 THE RMR GROUP INC. 2019 Proxy Statement
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 13 | |
SUMMARYTABLE OF PROPOSALS
This summary highlights matters for consideration by shareholders at our 2019 Annual Meeting. You should read this entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.
BOARD NOMINEES (page 13)
The following five Directors are up for election to our Company's Board of Directors.
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| | | | | | | | | | | | | Adam Portnoy Managing Director since 2015 Term: Term expiring at our 2022 Annual Meeting | | | | | | | | Board Committees: None | | | | | | | | Other RMR Managed Public Company Boards(1): • Diversified Healthcare Trust (since 2007) Service Properties Trust (since 2007) Office Properties Income Trust (since 2009) | ||||||||
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| | | | | | Mr. Portnoy has been our President and Chief Executive Officer since shortly after our formation in 2015. Mr. Portnoy has been the president and chief executive officer of RMR LLC since 2005 and was a director of RMR LLC from 2006 until June 5, 2015 when RMR LLC became a majority owned subsidiary of our Company and we became RMR LLC’s managing member. Mr. Portnoy serves as the chair of the boards of Diversified Healthcare Trust, Industrial Logistics Properties Trust, Office Properties Income Trust, Seven Hills Realty Trust (formerly known as RMR Mortgage Trust), Service Properties Trust, Five Star Senior Living Inc. and TravelCenters of America Inc. Until RMR Advisors LLC’s merger with and into Tremont Realty Capital LLC on January 6, 2021, Mr. Portnoy was a director of RMR Advisors LLC from 2007, and he served as its president from 2007 to September 2017 and its chief executive officer from 2015 to September 2017. Mr. Portnoy has been a director of Tremont Realty Capital LLC (formerly known as Tremont Realty Advisors LLC) since March 2016 and served as its president and chief executive officer from March 2016 through December 2017. Mr. Portnoy is the sole trustee and controlling shareholder and an officer of ABP Trust. Mr. Portnoy is a director and the controlling shareholder of Sonesta Holdco Corporation. Mr. Portnoy served as president and chief executive officer of RMR Mortgage Trust (now known as Seven Hills Realty Trust) from 2007 to 2015 and as president of Office Properties Income Trust from 2009 to 2011. Mr. Portnoy was a managing trustee of Select Income REIT from 2011 until it merged with a wholly owned subsidiary of Office Properties Income Trust in December 2018 and a managing trustee of Tremont Mortgage Trust from 2017 until it merged with and into Seven Hills Realty Trust in September 2021. Prior to joining RMR LLC in 2003, Mr. Portnoy held various positions in the finance industry and public sector, including working as an investment banker at Donaldson, Lufkin & Jenrette and working in private equity at DLJ Merchant Banking Partners and at the International Finance Corporation (a member of The World Bank Group). In addition, Mr. Portnoy previously founded and served as chief executive officer of a privately financed telecommunications company. Mr. Portnoy currently serves as the Honorary Consul General of the Republic of Bulgaria to Massachusetts, as chair of the board of directors of the Pioneer Institute, as a member of the executive committee of the board of directors of the Greater Boston Chamber of Commerce and as a member of the AJC New England’s Leadership Board, and previously served on the board of governors for the National Association of Real Estate Investment Trust and the board of trustees of Occidental College. | | | | | | | | Specific Qualifications, Attributes, Skills and Experience: • Extensive experience in, and knowledge of, the asset management and commercial real estate industries and REITs; • Key leadership position with us and our subsidiaries and demonstrated management ability; • Public company director service; • Experience in investment banking and private equity; • Institutional knowledge earned through prior service on the boards of trustees and directors of our clients and familiarity with our clients’ businesses; • Identifies as male; and • Qualifying as a Managing Director in accordance with the requirements of our Bylaws. | | | | | | | |||||||||||||||||
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| 14 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
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| | | | | | | | | | | | | Jonathan Veitch Age: 62 Independent Director since 2020 Term: Term expiring at our 2022 Annual Meeting | | | | | | | | Board Committees: • Audit • Compensation • Nominating and Governance | | | | | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | | | | | |
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| | | | | | Mr. Veitch served as President of Occidental College (“Occidental”), a nationally-recognized private liberal arts college, and as a member of the board of trustees of Occidental and a member of the audit committee of the board, from 2009 to June 2020. Prior to becoming President of Occidental, Mr. Veitch held various leadership and management positions with The New School since 1996. Mr. Veitch has received numerous grants and awards in academia, and he has authored numerous publications and articles. Mr. Veitch holds a doctorate in American History from Harvard University. | | | | | | | | Specific Qualifications, Attributes, Skills and Experience: • Professional skills and experience in governance matters; • Management experience and demonstrated leadership ability; • Identifies as male; and • Qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our Bylaws. | | | | | | | ||||||||||||||||
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| | | | | | | | | | | | | Walter C. Watkins, Jr. Age: 75 Independent Director since 2015 Term: Term expiring at our 2022 Annual Meeting | | | | | | | | Board Committees: • Audit • Compensation (Chair) • Nominating and Governance | | | | | | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | | | | | | |
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| | | | | | Mr. Watkins is the principal of WCW Enterprises, LLC, which he founded in 2000 to provide business consulting services and manage certain private investments. Prior to founding WCW Enterprises, Mr. Watkins served in various executive capacities at Bank One Corporation (the successor to First Chicago NBD, NBD Bancorp and National Bank of Detroit) from 1968 to 2000, including serving as executive vice president and president of Bank One, Michigan. As executive vice president, he was responsible for middle market banking in Michigan, Ohio and Kentucky, from 1998 to 2000. As president of Bank One, Michigan, he was the bank’s primary public spokesman, community liaison and business coordinator for the state of Michigan. Mr. Watkins served as the chief development officer for the City of Detroit from 2002 to 2006 and the interim chief executive officer of Detroit Regional Convention Facility Authority from 2009 to 2010. Mr. Watkins is a director of the Omega Historic Preservation Foundation. His past board affiliations include Health Alliance Plan, Detroit Economic Growth Corporation, Detroit Medical Center, Detroit Regional Chamber of Commerce, United Way of Southeast Michigan and Fisk University. | | | | | | | | Specific Qualifications, Attributes, Skills and Experience: • Demonstrated business leadership as a successful entrepreneur; • Work on community boards and committees; • Experience as a senior executive officer of a large banking business; • Financial background; • African American; • Identifies as male; and • Qualifying as an Independent Director in accordance with the requirements of the Nasdaq, the SEC and our Bylaws. | | | | | | | ||||||||||||||||
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| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 15 | |
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| | | | | | | | | | | | | Adam Portnoy Age: 51 | | | | | | | | President and Chief Executive Officer of our Company since 2015 President and Chief Executive Officer of RMR LLC since 2005 | | | | | | | |
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| | | | | | Mr. Portnoy’s background and qualifications are described above. | | | | | | | ||||||||||||||||
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| | | | | | | | | | | | | Jennifer B. Clark Age: 60 | | | | | | Executive Vice President, General Counsel and Secretary of Executive Vice President and | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Ms. Clark’s background and qualifications are described above. | | | | | | | ||||||||||||||||
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| | | | | | | | | | | | | Matthew P. Jordan Age: 46 | | | | | | | | Executive Vice President of our Company since 2018 Chief Financial Officer and Treasurer of our Company since 2015 Executive Vice President, Chief Financial Officer and Treasurer of RMR LLC since 2017 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Mr. Jordan joined RMR LLC in April 2012 as chief accounting officer; he became senior vice president, chief financial officer and treasurer of RMR LLC in November 2012; and he became an executive vice president of RMR LLC in October 2017 while continuing to serve as RMR LLC’s chief financial officer and treasurer. Mr. Jordan has served as a managing trustee of Seven Hills Realty Trust (formerly known as RMR Mortgage Trust) since January 2021. Mr. Jordan was a managing trustee of Tremont Mortgage Trust from January 2021 until it merged with and into Seven Hills Realty Trust in September 2021. Mr. Jordan was an executive vice president, chief financial officer and treasurer of RMR Advisors LLC from October 2017 until January 6, 2021, when RMR Advisors LLC merged with and into Tremont Realty Capital LLC (formerly known as Tremont Realty Advisors LLC). Mr. Jordan has been a director, president and chief executive officer of Tremont Realty Capital LLC since January 2021; he was the executive vice president from October 2017 to December 2020, was previously treasurer and chief financial officer from its formation in 2016 to December 2020 and a vice president from its formation until October 2017. Prior to joining RMR LLC, Mr. Jordan was employed at Stanley Black & Decker from July 2011 until April 2012 and before then at Ernst & Young LLP. Mr. Jordan is a certified public accountant. | | | | | | | ||||||||||||||||
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| 16 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Jennifer F. Francis Age: 57 | | | | | | | | Executive Vice President of RMR LLC since 2020 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Ms. Francis joined RMR LLC in 2006 and became a senior vice president of RMR LLC in 2014 and an executive vice president of RMR LLC in 2020. Ms. Francis is responsible for the asset management division of RMR LLC, which includes, office, industrial, senior living and hotel asset management. Ms. Francis has been a managing trustee of Diversified Healthcare Trust since June 2021, its chief executive officer since June 2021 and its president since 2018. She previously also served as chief operating officer of Diversified Healthcare Trust from 2018 until June 2021. Prior to joining RMR LLC, Ms. Francis was a partner at CBRE/NE Partners, where she performed brokerage and corporate advisory services for large corporate clients on their national commercial real estate portfolios. Previously, Ms. Francis was a vice president at The Gunwyn Company where she was responsible for the asset management of a portfolio of commercial, retail and residential assets. Ms. Francis has over 30 years of experience working in the commercial real estate industry. She is on the executive board of the American Seniors Housing Association (ASHA), a member of the Nareit 2021 Advisory Board of Governors, a member of the National Association of Industrial and Office Properties (NAIOP) and a member of the Commercial Real Estate Women (CREW). | | | | | | | ||||||||||||||||
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | John G. Murray Age: 61 | | | | | | | | Executive Vice President of RMR LLC since 2001 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Mr. Murray has served in various capacities with RMR LLC and its affiliates since 1993, including as an executive vice president of RMR LLC since 2001 and as a senior vice president of RMR LLC from 1993 to 2001. Mr. Murray has been a managing trustee and chief executive officer of Service Properties Trust since 2018 and its president since 1996. He also previously served as Service Properties Trust’s chief operating officer from 1996 until June 2018 and its chief financial officer and treasurer from 1995 to 1996. Mr. Murray has also been a managing trustee and the president and chief executive officer of Industrial Logistics Properties Trust since 2018. Mr. Murray also serves as a director of Sonesta Holdco Corporation. From 2014 to 2017, Mr. Murray served as a member of the board of directors of the American Hotel & Lodging Association representing the owners’ segment of the association. Prior to joining RMR LLC, Mr. Murray was employed at Fidelity Brokerage Services Inc. and at Ernst & Young LLP. | | | | | | | ||||||||||||||||
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Jonathan M. Pertchik Age: 55 | | | | | | | | Executive Vice President of RMR LLC since 2019 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Since December 2019, Mr. Pertchik has been an executive vice president of RMR LLC and chief executive officer and a managing director of TravelCenters of America Inc. Mr. Pertchik is responsible for all travel center operations at RMR LLC. Prior to joining RMR LLC, Mr. Pertchik served as the chief executive officer of InTown Suites, Inc., a large extended stay hotel chain in the United States, from July 2014 to April 2019. From February 2013 to June 2014, Mr. Pertchik served as the chief executive officer of ST Residential, LLC, an owner and manager of luxury condominiums, apartment projects, hotels, and office and retail spaces, where he had previously served as chief operating officer from March 2010 to February 2013. Prior to joining ST Residential, Mr. Pertchik held various executive management positions at WCI Communities, a luxury homebuilder and developer from 2007 to January 2010, and had been a senior vice president and managing principal at The Staubach Company, a leading national real estate tenant representative, from 1999 to 2006. Additionally, Mr. Pertchik served as a member of the board of directors of AV Homes, Inc., a publicly-traded homebuilder, from July 2014 until its sale in October 2018, and has served as a member of the board of directors of Lenkbar, Inc., a private inventor, designer, engineer and manufacturer of medical device products since December 2014. | | | | | | | ||||||||||||||||
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| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 17 | |
| Members Ann Logan (Chair) | ||||||
| |||||||
| |||||||
9 meetings in the fiscal year ended September 30, 2021 | | Our Audit Committee is comprised solely of Independent Directors. Its primary role is to help our Board fulfill its oversight responsibilities related to the integrity of our financial statements and financial reporting process, the qualifications, independence and performance of our independent registered public accounting firm, the performance of our internal audit function, risk management and our compliance with legal and regulatory requirements. Our Audit Committee is responsible for the appointment, compensation, retention and oversight, and the evaluation of the qualifications, performance and independence, of our independent auditors and the resolution of disagreements between our management and our independent auditors. Our independent auditors report directly to our Audit Committee. Our Audit Committee also has final authority and responsibility for the appointment and assignment of duties to our Director of Internal Audit. Our Audit Committee reviews the overall audit scope and plans of the audit with our independent auditors. Our Audit Committee also reviews, with our management and our independent auditors, our quarterly reports on Form 10-Q, annual reports on Form 10-K and earnings releases. Our Board has determined that each member of our Audit Committee is financially literate and that Ms. Logan is our Audit Committee’s “financial expert.” |
| Members Walter C. Watkins, Jr. (Chair) Ann Logan Rosen Plevneliev Jonathan Veitch 4 meetings in the fiscal year ended September 30, 2021 | | | Our Compensation Committee is comprised solely of | |
| Members Rosen Plevneliev (Chair) Ann Logan Jonathan Veitch Walter C. Watkins, Jr. 1 meeting in the fiscal year ended September 30, 2021 | | | Our Nominating and Governance Committee is comprised solely of Independent Directors. Its primary role is to identify individuals qualified to become Board members, consistent with criteria approved by our Board, and to recommend candidates to our entire Board for nomination or selection as Board members for each annual meeting of shareholders or when vacancies occur; to develop and recommend to our Board governance principles for our Company; and to oversee the evaluation of our Board and, to the extent not overseen by our Compensation Committee or a committee composed entirely of Directors meeting the independence requirements of the rules of the Nasdaq, Company management. Under its charter, our Nominating and Governance Committee is also responsible for considering and reporting on our succession planning to our Board. | |
| 18 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Name | | | Fees Earned or Paid in Cash($)(1) | | | Stock Awards($)(2) | | | All Other Compensation($) | | | Total($) | |
Jennifer B. Clark(3) | | | — | | | 128,550 | | | — | | | 128,550 | |
Ann Logan | | | 102,500 | | | 128,550 | | | — | | | 231,050 | |
Rosen Plevneliev | | | 97,500 | | | 128,550 | | | — | | | 226,050 | |
Adam Portnoy(3) | | | — | | | 128,550 | | | — | | | 128,550 | |
Jonathan Veitch | | | 85,000 | | | 128,550 | | | — | | | 213,550 | |
Walter C. Watkins, Jr. | | | 97,500 | | | 128,550 | | | — | | | 226,050 | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 19 | |
Name of Beneficial Owner | | | Class A Common Shares* | | | Class B-1 Common Shares | | | Class B-2 Common Shares | | | Combined Voting Power | | |||||||||||||||||||||||||||
| Number | | | % | | | Number | | | % | | | Number | | | % | | | % | | ||||||||||||||||||||
ABP Trust | | | | | 1,090,564(1) | | | | | | 6.6% | | | | | | 1,000,000 | | | | | | 100.0% | | | | | | 15,000,000 | | | | | | 100.0% | | | | 91.2% | |
Directors, Director Nominees and Executive Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adam Portnoy | | | | | 1,170,502(1)(2) | | | | | | 7.1% | | | | | | 1,000,000(2) | | | | | | 100.0% | | | | | | 15,000,000(2) | | | | | | 100.0% | | | | 91.3% | |
Jennifer B. Clark | | | | | 32,651 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Matthew P. Jordan | | | | | 27,201 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
John G. Murray | | | | | 20,666 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Ann Logan | | | | | 17,578 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Walter C. Watkins, Jr. | | | | | 15,000 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Rosen Plevneliev | | | | | 11,475 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Jennifer F. Francis | | | | | 10,754 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Jonathan M. Pertchik | | | | | 9,520 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
Jonathan Veitch | | | | | 6,000 | | | | | | **% | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | **% | |
All executive officers and directors as a group (10 persons) | | | | | 1,321,347(1) | | | | | | 8.0% | | | | | | 1,000,000 | | | | | | 100.0% | | | | | | 15,000,000 | | | | | | 100% | | | | 91.4% | |
| 20 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Name and Address | | | Aggregate Number of Shares Beneficially Owned* | | | Percent of Outstanding Shares** | | | Additional Information | |
The Vanguard Group, Inc. (“Vanguard”) 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | 2,205,719 | | | 14.2% | | | Based on a Schedule 13G/A filed with the SEC on February 10, 2021 by Vanguard reporting that, at December 31, 2020 Vanguard beneficially owned 2,205,719 Class A Common Shares and had shared voting power over 32,176 Class A Common Shares, sole dispositive power over 2,161,928 Class A Common Shares and shared dispositive power over 43,791 Class A Common Shares. | |
BlackRock, Inc. (“BlackRock”) 55 East 52nd Street New York, New York 10055 | | | 1,377,336 | | | 8.9% | | | Based on a Schedule 13G filed with the SEC on February 1, 2021 by BlackRock reporting that, at December 31, 2020, BlackRock beneficially owned 1,377,336 Class A Common Shares and had sole voting power over 1,308,774 Class A Common Shares and sole dispositive power over 1,377,336 Class A Common Shares. | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 21 | |
| 22 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 23 | |
| 24 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Compensation Element | | | What It Does | | | Key Measures | |
Base Salary | | | • Provides a level of fixed pay appropriate to an executive’s role and responsibilities • Evaluated on an annual basis | | | • Experience, duties and scope of responsibility • Internal and external market factors | |
Discretionary Cash Bonus | | | • Provides a competitive annual cash incentive opportunity • Links executives’ interests with shareholders’ interests • Incentivizes and rewards superior group, individual and Company performance | | | • Based on holistic performance evaluation | |
Equity Compensation | | | • Links executives’ interests with long-term interests of shareholders • Incentivizes and rewards superior group, individual and Company performance | | | • Based on holistic performance evaluation by our Compensation Committee | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 25 | |
| 26 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 27 | |
| 28 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 29 | |
Name and Principal Position | | | Fiscal Year | | | Salary ($) | | | Bonus ($)(1) | | | Stock Awards ($)(2) | | | All Other Compensation ($)(3) | | | Total ($) | | ||||||||||||||||||
Adam Portnoy Managing Director, President and Chief Executive Officer | | | | | 2021 | | | | | | 350,000 | | | | | | 2,700,000 | | | | | | 1,052,505 | | | | | | 171,576 | | | | | | 4,274,081 | | |
| | | 2020 | | | | | | 350,000 | | | | | | 2,675,000 | | | | | | 693,330 | | | | | | 38,683 | | | | | | 3,757,013 | | | ||
| | | 2019 | | | | | | 325,000 | | | | | | 2,675,000 | | | | | | 914,465 | | | | | | 31,891 | | | | | | 3,946,356 | | | ||
Jennifer B. Clark Managing Director, Executive Vice President, General Counsel and Secretary | | | | | 2021 | | | | | | 350,000 | | | | | | 2,700,000 | | | | | | 1,554,885 | | | | | | 156,363 | | | | | | 4,761,248 | | |
| | | 2020 | | | | | | 350,000 | | | | | | 2,675,000 | | | | | | 1,091,920 | | | | | | 97,096 | | | | | | 4,214,016 | | | ||
| | | 2019 | | | | | | 325,000 | | | | | | 2,675,000 | | | | | | 1,432,925 | | | | | | 107,727 | | | | | | 4,540,652 | | | ||
John G. Murray Executive Vice President | | | | | 2021 | | | | | | 350,000 | | | | | | 2,100,000 | | | | | | 1,543,130 | | | | | | 160,397 | | | | | | 4,153,527 | | |
| | | 2020 | | | | | | 350,000 | | | | | | 2,000,000 | | | | | | 1,218,325 | | | | | | 91,712 | | | | | | 3,660,037 | | | ||
| | | 2019 | | | | | | 325,000 | | | | | | 2,000,000 | | | | | | 1,557,953 | | | | | | 67,919 | | | | | | 3,950,872 | | | ||
Matthew P. Jordan Executive Vice President, Chief Financial Officer and Treasurer | | | | | 2021 | | | | | | 350,000 | | | | | | 1,800,000 | | | | | | 1,186,840 | | | | | | 150,569 | | | | | | 3,487,409 | | |
| | | 2020 | | | | | | 350,000 | | | | | | 1,300,000 | | | | | | 900,980 | | | | | | 74,379 | | | | | | 2,625,359 | | | ||
| | | 2019 | | | | | | 325,000 | | | | | | 1,300,000 | | | | | | 1,112,958 | | | | | | 42,646 | | | | | | 2,780,604 | | | ||
Jennifer F. Francis Executive Vice President | | | | | 2021 | | | | | | 350,000 | | | | | | 1,000,000 | | | | | | 1,259,980 | | | | | | 56,980 | | | | | | 2,666,960 | | |
Jonathan M. Pertchik(4) Executive Vice President | | | | | 2021 | | | | | | 75,000 | | | | | | 400,000 | | | | | | 2,797,120 | | | | | | 53,600 | | | | | | 3,325,720 | | |
| 30 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Name | | | Company | | | Grant Date | | | Number of Shares (#) | | | Grant Date Fair Value of Share Awards ($)(a) | | |||||||||
Adam Portnoy | | | RMR | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 338,000 | | |
| | | RMR | | | | | 3/11/2021 | | | | | | 3,000(b) | | | | | | 128,550 | | |
| | | DHC | | | | | 6/3/2021 | | | | | | 20,000(b) | | | | | | 74,000 | | |
| | | ILPT | | | | | 6/2/2021 | | | | | | 3,500(b) | | | | | | 89,670 | | |
| | | OPI | | | | | 6/17/2021 | | | | | | 3,500(b) | | | | | | 104,580 | | |
| | | SVC | | | | | 6/16/2021 | | | | | | 7,000(b) | | | | | | 97,580 | | |
| | | FVE | | | | | 6/8/2021 | | | | | | 12,500(b) | | | | | | 76,875 | | |
| | | TA | | | | | 6/10/2021 | | | | | | 3,000(b) | | | | | | 88,620 | | |
| | | SEVN | | | | | 5/27/2021 | | | | | | 3,000(b) | | | | | | 36,300 | | |
| | | TRMT(c) | | | | | 5/27/2021 | | | | | | 3,000(b) | | | | | | 18,330 | | |
| | | | | | | | | | | | | | | | | | | | 1,052,505 | | |
Jennifer B. Clark | | | RMR | | | | | 9/15/2021 | | | | | | 5,000 | | | | | | 169,000 | | |
| | | RMR | | | | | 3/11/2021 | | | | | | 3,000(b) | | | | | | 128,550 | | |
| | | DHC | | | | | 9/15/2021 | | | | | | 40,000 | | | | | | 136,400 | | |
| | | ILPT | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 259,800 | | |
| | | OPI | | | | | 9/15/2021 | | | | | | 15,000 | | | | | | 381,300 | | |
| | | OPI | | | | | 6/17/2021 | | | | | | 3,500(b) | | | | | | 104,580 | | |
| | | SVC | | | | | 9/15/2021 | | | | | | 20,000 | | | | | | 216,400 | | |
| | | FVE | | | | | 6/8/2021 | | | | | | 12,500(b) | | | | | | 76,875 | | |
| | | FVE | | | | | 12/14/2020 | | | | | | 2,000 | | | | | | 15,700 | | |
| | | TA | | | | | 12/2/2020 | | | | | | 2,000 | | | | | | 66,280 | | |
| | | | | | | | | | | | | | | | | | | | 1,554,885 | | |
John G. Murray | | | RMR | | | | | 9/15/2021 | | | | | | 5,000 | | | | | | 169,000 | | |
| | | DHC | | | | | 9/15/2021 | | | | | | 40,000 | | | | | | 136,400 | | |
| | | ILPT | | | | | 9/15/2021 | | | | | | 15,000(b) | | | | | | 389,700 | | |
| | | ILPT | | | | | 6/2/2021 | | | | | | 3,500(b) | | | | | | 89,670 | | |
| | | OPI | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 254,200 | | |
| | | SVC | | | | | 9/15/2021 | | | | | | 30,000(b) | | | | | | 324,600 | | |
| | | SVC | | | | | 6/16/2021 | | | | | | 7,000(b) | | | | | | 97,580 | | |
| | | FVE | | | | | 12/14/2020 | | | | | | 2,000 | | | | | | 15,700 | | |
| | | TA | | | | | 12/2/2020 | | | | | | 2,000 | | | | | | 66,280 | | |
| | | | | | | | | | | | | | | | | | | | 1,543,130 | | |
Matthew P. Jordan | | | RMR | | | | | 9/15/2021 | | | | | | 5,000 | | | | | | 169,000 | | |
| | | DHC | | | | | 9/15/2021 | | | | | | 40,000 | | | | | | 136,400 | | |
| | | ILPT | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 259,800 | | |
| | | OPI | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 254,200 | | |
| | | SVC | | | | | 9/15/2021 | | | | | | 20,000 | | | | | | 216,400 | | |
| | | FVE | | | | | 12/14/2020 | | | | | | 2,000 | | | | | | 15,700 | | |
| | | TA | | | | | 12/2/2020 | | | | | | 2,000 | | | | | | 66,280 | | |
| | | SEVN | | | | | 5/27/2021 | | | | | | 3,000(b) | | | | | | 36,300 | | |
| | | TRMT(c) | | | | | 2/19/2021 | | | | | | 3,000(b) | | | | | | 14,430 | | |
| | | TRMT(c) | | | | | 5/27/2021 | | | | | | 3,000(b) | | | | | | 18,330 | | |
| | | | | | | | | | | | | | | | | | | | 1,186,840 | | |
Jennifer F. Francis | | | RMR | | | | | 9/15/2021 | | | | | | 5,000 | | | | | | 169,000 | | |
| | | DHC | | | | | 9/15/2021 | | | | | | 60,000(b) | | | | | | 204,600 | | |
| | | DHC | | | | | 6/3/2021 | | | | | | 20,000(b) | | | | | | 74,000 | | |
| | | ILPT | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 259,800 | | |
| | | OPI | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 254,200 | | |
| | | SVC | | | | | 9/15/2021 | | | | | | 20,000 | | | | | | 216,400 | | |
| | | FVE | | | | | 12/14/2020 | | | | | | 2,000 | | | | | | 15,700 | | |
| | | TA | | | | | 12/2/2020 | | | | | | 2,000 | | | | | | 66,280 | | |
| | | | | | | | | | | | | | | | | | | | 1,259,980 | | |
Jonathan M. Pertchik | | | RMR | | | | | 9/15/2021 | | | | | | 5,000 | | | | | | 169,000 | | |
| | | DHC | | | | | 9/15/2021 | | | | | | 40,000 | | | | | | 136,400 | | |
| | | ILPT | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 259,800 | | |
| | | OPI | | | | | 9/15/2021 | | | | | | 10,000 | | | | | | 254,200 | | |
| | | SVC | | | | | 9/15/2021 | | | | | | 20,000 | | | | | | 216,400 | | |
| | | FVE | | | | | 12/14/2020 | | | | | | 2,000 | | | | | | 15,700 | | |
| | | TA | | | | | 6/10/2021 | | | | | | 3,000(b) | | | | | | 88,620 | | |
| | | TA | | | | | 12/2/2020 | | | | | | 50,000(b) | | | | | | 1,657,000 | | |
| | | | | | | | | | | | | | | | | | | | 2,797,120 | | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 31 | |
| | | | | | | | | Stock Awards | | |||
Name | | | Company | | | Date Granted | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | |
Adam Portnoy | | | RMR | | | 9/15/2021 | | | 8,000 | | | 267,600 | |
| | | RMR | | | 9/17/2020 | | | 6,000 | | | 200,700 | |
| | | RMR | | | 9/18/2019 | | | 4,000 | | | 133,800 | |
| | | RMR | | | 9/13/2018 | | | 1,600 | | | 53,520 | |
| | | FVE | | | 12/13/2017 | | | 300 | | | 1,314 | |
| | | TA | | | 11/29/2017 | | | 480 | | | 23,899 | |
| | | | | | | | | | | | 680,833 | |
Jennifer B. Clark | | | RMR | | | 9/15/2021 | | | 4,000 | | | 133,800 | |
| | | RMR | | | 9/17/2020 | | | 3,000 | | | 100,350 | |
| | | RMR | | | 9/18/2019 | | | 2,000 | | | 66,900 | |
| | | RMR | | | 9/13/2018 | | | 800 | | | 26,760 | |
| | | DHC | | | 9/15/2021 | | | 32,000 | | | 108,480 | |
| | | DHC | | | 9/17/2020 | | | 18,000 | | | 61,020 | |
| | | DHC | | | 9/18/2019 | | | 8,000 | | | 27,120 | |
| | | DHC | | | 9/13/2018 | | | 2,000 | | | 6,780 | |
| | | ILPT | | | 9/15/2021 | | | 8,000 | | | 203,280 | |
| | | ILPT | | | 9/17/2020 | | | 6,000 | | | 152,460 | |
| | | ILPT | | | 9/18/2019 | | | 4,000 | | | 101,640 | |
| | | ILPT | | | 9/13/2018 | | | 1,000 | | | 25,410 | |
| | | OPI | | | 9/15/2021 | | | 12,000 | | | 303,960 | |
| | | OPI | | | 9/17/2020 | | | 6,000 | | | 151,980 | |
| | | OPI | | | 9/18/2019 | | | 4,000 | | | 101,320 | |
| | | OPI | | | 9/13/2018 | | | 714 | | | 18,086 | |
| | | SVC | | | 9/15/2021 | | | 16,000 | | | 179,360 | |
| | | SVC | | | 9/17/2020 | | | 12,000 | | | 134,520 | |
| | | SVC | | | 9/18/2019 | | | 4,000 | | | 44,840 | |
| | | SVC | | | 9/13/2018 | | | 1,700 | | | 19,057 | |
| | | FVE | | | 12/14/2020 | | | 1,600 | | | 7,008 | |
| | | FVE | | | 12/11/2019 | | | 1,200 | | | 5,256 | |
| | | FVE | | | 12/11/2018 | | | 600 | | | 2,628 | |
| | | FVE | | | 12/13/2017 | | | 300 | | | 1,314 | |
| | | TA | | | 12/2/2020 | | | 1,600 | | | 79,664 | |
| | | TA | | | 12/4/2019 | | | 1,800 | | | 89,622 | |
| | | TA | | | 11/28/2018 | | | 960 | | | 47,798 | |
| | | TA | | | 11/29/2017 | | | 480 | | | 23,899 | |
| | | TRMT(2) | | | 9/17/2020 | | | 1,548 | | | 15,960 | |
| 32 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| | | | | | | | | Stock Awards | | |||
Name | | | Company | | | Date Granted | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | |
| | | TRMT(2) | | | 9/18/2019 | | | 1,032 | | | 10,640 | |
| | | TRMT(2) | | | 9/13/2018 | | | 516 | | | 5,320 | |
| | | | | | | | | | | | 2,256,232 | |
John G. Murray | | | RMR | | | 9/15/2021 | | | 4,000 | | | 133,800 | |
| | | RMR | | | 9/17/2020 | | | 3,000 | | | 100,350 | |
| | | RMR | | | 9/18/2019 | | | 2,000 | | | 66,900 | |
| | | RMR | | | 9/13/2018 | | | 800 | | | 26,760 | |
| | | DHC | | | 9/15/2021 | | | 32,000 | | | 108,480 | |
| | | DHC | | | 9/17/2020 | | | 12,000 | | | 40,680 | |
| | | DHC | | | 9/18/2019 | | | 4,000 | | | 13,560 | |
| | | DHC | | | 9/13/2018 | | | 800 | | | 2,712 | |
| | | ILPT | | | 9/15/2021 | | | 12,000 | | | 304,920 | |
| | | ILPT | | | 9/17/2020 | | | 9,000 | | | 228,690 | |
| | | ILPT | | | 9/18/2019 | | | 6,000 | | | 152,460 | |
| | | ILPT | | | 9/13/2018 | | | 500 | | | 12,705 | |
| | | OPI | | | 9/15/2021 | | | 8,000 | | | 202,640 | |
| | | OPI | | | 9/17/2020 | | | 6,000 | | | 151,980 | |
| | | OPI | | | 9/18/2019 | | | 4,000 | | | 101,320 | |
| | | OPI | | | 9/13/2018 | | | 102 | | | 2,584 | |
| | | SVC | | | 9/15/2021 | | | 24,000 | | | 269,040 | |
| | | SVC | | | 9/17/2020 | | | 18,000 | | | 201,780 | |
| | | SVC | | | 9/18/2019 | | | 6,000 | | | 67,260 | |
| | | SVC | | | 9/13/2018 | | | 1,700 | | | 19,057 | |
| | | FVE | | | 12/14/2020 | | | 1,600 | | | 7,008 | |
| | | FVE | | | 12/11/2019 | | | 1,200 | | | 5,256 | |
| | | FVE | | | 12/11/2018 | | | 56 | | | 245 | |
| | | FVE | | | 12/13/2017 | | | 28 | | | 123 | |
| | | TA | | | 12/2/2020 | | | 1,600 | | | 79,664 | |
| | | TA | | | 12/4/2019 | | | 1,800 | | | 89,622 | |
| | | TA | | | 11/28/2018 | | | 480 | | | 23,899 | |
| | | TA | | | 11/29/2017 | | | 240 | | | 11,950 | |
| | | TRMT(2) | | | 9/17/2020 | | | 1,548 | | | 15,960 | |
| | | TRMT(2) | | | 9/18/2019 | | | 1,032 | | | 10,640 | |
| | | TRMT(2) | | | 9/13/2018 | | | 258 | | | 2,660 | |
| | | | | | | | | | | | 2,454,705 | |
Matthew P. Jordan | | | RMR | | | 9/15/2021 | | | 4,000 | | | 133,800 | |
| | | RMR | | | 9/17/2020 | | | 3,000 | | | 100,350 | |
| | | RMR | | | 9/18/2019 | | | 2,000 | | | 66,900 | |
| | | RMR | | | 9/13/2018 | | | 800 | | | 26,760 | |
| | | DHC | | | 9/15/2021 | | | 32,000 | | | 108,480 | |
| | | DHC | | | 9/17/2020 | | | 12,000 | | | 40,680 | |
| | | DHC | | | 9/18/2019 | | | 4,000 | | | 13,560 | |
| | | DHC | | | 9/13/2018 | | | 800 | | | 2,712 | |
| | | ILPT | | | 9/15/2021 | | | 8,000 | | | 203,280 | |
| | | ILPT | | | 9/17/2020 | | | 6,000 | | | 152,460 | |
| | | ILPT | | | 9/18/2019 | | | 4,000 | | | 101,640 | |
| | | ILPT | | | 9/13/2018 | | | 500 | | | 12,705 | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 33 | |
| | | | | | | | | Stock Awards | | |||
Name | | | Company | | | Date Granted | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | |
| | | OPI | | | 9/15/2021 | | | 8,000 | | | 202,640 | |
| | | OPI | | | 9/17/2020 | | | 6,000 | | | 151,980 | |
| | | OPI | | | 9/18/2019 | | | 4,000 | | | 101,320 | |
| | | OPI | | | 9/13/2018 | | | 102 | | | 2,584 | |
| | | SVC | | | 9/15/2021 | | | 16,000 | | | 179,360 | |
| | | SVC | | | 9/17/2020 | | | 12,000 | | | 134,520 | |
| | | SVC | | | 9/18/2019 | | | 4,000 | | | 44,840 | |
| | | SVC | | | 9/13/2018 | | | 500 | | | 5,605 | |
| | | FVE | | | 12/14/2020 | | | 1,600 | | | 7,008 | |
| | | FVE | | | 12/11/2019 | | | 1,200 | | | 5,256 | |
| | | FVE | | | 12/11/2018 | | | 56 | | | 245 | |
| | | FVE | | | 12/13/2017 | | | 28 | | | 123 | |
| | | TA | | | 12/2/2020 | | | 1,600 | | | 79,664 | |
| | | TA | | | 12/4/2019 | | | 1,800 | | | 89,622 | |
| | | TA | | | 11/28/2018 | | | 120 | | | 5,975 | |
| | | TA | | | 11/29/2017 | | | 36 | | | 1,792 | |
| | | TRMT(2) | | | 9/17/2020 | | | 1,548 | | | 15,960 | |
| | | TRMT(2) | | | 9/18/2019 | | | 1,032 | | | 10,640 | |
| | | TRMT(2) | | | 9/13/2018 | | | 258 | | | 2,660 | |
| | | | | | | | | | | | 2,005,121 | |
Jennifer F. Francis | | | RMR | | | 9/15/2021 | | | 4,000 | | | 133,800 | |
| | | RMR | | | 9/17/2020 | | | 1,200 | | | 40,140 | |
| | | RMR | | | 9/18/2019 | | | 800 | | | 26,760 | |
| | | RMR | | | 9/13/2018 | | | 300 | | | 10,035 | |
| | | DHC | | | 9/15/2021 | | | 48,000 | | | 162,720 | |
| | | DHC | | | 9/17/2020 | | | 18,000 | | | 61,020 | |
| | | DHC | | | 9/18/2019 | | | 6,000 | | | 20,340 | |
| | | DHC | | | 9/13/2018 | | | 1,500 | | | 5,085 | |
| | | ILPT | | | 9/15/2021 | | | 8,000 | | | 203,280 | |
| | | ILPT | | | 9/17/2020 | | | 1,200 | | | 30,492 | |
| | | ILPT | | | 9/18/2019 | | | 800 | | | 20,328 | |
| | | ILPT | | | 9/13/2018 | | | 200 | | | 5,082 | |
| | | OPI | | | 9/15/2021 | | | 8,000 | | | 202,640 | |
| | | OPI | | | 9/17/2020 | | | 1,200 | | | 30,396 | |
| | | OPI | | | 9/18/2019 | | | 800 | | | 20,264 | |
| | | OPI | | | 9/13/2018 | | | 102 | | | 2,584 | |
| | | SVC | | | 9/15/2021 | | | 16,000 | | | 179,360 | |
| | | SVC | | | 9/17/2020 | | | 2,400 | | | 26,904 | |
| | | SVC | | | 9/18/2019 | | | 800 | | | 8,968 | |
| | | SVC | | | 9/13/2018 | | | 340 | | | 3,811 | |
| | | FVE | | | 12/14/2020 | | | 1,600 | | | 7,008 | |
| | | FVE | | | 12/11/2019 | | | 1,200 | | | 5,256 | |
| | | FVE | | | 12/11/2018 | | | 56 | | | 245 | |
| | | FVE | | | 12/13/2017 | | | 28 | | | 123 | |
| | | TA | | | 12/2/2020 | | | 1,600 | | | 79,664 | |
| | | TA | | | 12/4/2019 | | | 162 | | | 8,066 | |
| | | TA | | | 11/28/2018 | | | 72 | | | 3,585 | |
| 34 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| | | | | | | | | Stock Awards | | |||
Name | | | Company | | | Date Granted | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | |
| | | TA | | | 11/29/2017 | | | 36 | | | 1,792 | |
| | | TRMT(2) | | | 9/17/2020 | | | 309 | | | 3,186 | |
| | | TRMT(2) | | | 9/18/2019 | | | 206 | | | 2,124 | |
| | | TRMT(2) | | | 9/13/2018 | | | 103 | | | 1,062 | |
| | | | | | | | | | | | 1,306,120 | |
Jonathan M. Pertchik | | | RMR | | | 9/15/2021 | | | 4,000 | | | 133,800 | |
| | | RMR | | | 9/17/2020 | | | 3,000 | | | 100,350 | |
| | | DHC | | | 9/15/2021 | | | 32,000 | | | 108,480 | |
| | | DHC | | | 9/17/2020 | | | 6,000 | | | 20,340 | |
| | | ILPT | | | 9/15/2021 | | | 8,000 | | | 203,280 | |
| | | ILPT | | | 9/17/2020 | | | 3,000 | | | 76,230 | |
| | | OPI | | | 9/15/2021 | | | 8,000 | | | 202,640 | |
| | | OPI | | | 9/17/2020 | | | 3,000 | | | 75,990 | |
| | | SVC | | | 9/15/2021 | | | 16,000 | | | 179,360 | |
| | | SVC | | | 9/17/2020 | | | 12,000 | | | 134,520 | |
| | | FVE | | | 12/14/2020 | | | 1,600 | | | 7,008 | |
| | | TA | | | 12/2/2020 | | | 40,000 | | | 1,991,600 | |
| | | TA | | | 12/16/2019 | | | 30,000 | | | 1,493,700 | |
| | | TRMT(2) | | | 9/17/2020 | | | 774 | | | 7,980 | |
| | | | | | | | | | | | 4,735,278 | |
| | | Stock Awards | | |||
Name | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(1) | |
Adam Portnoy(2) | | | 9,200 | | | 311,480 | |
Jennifer B. Clark(3) | | | 4,600 | | | 155,740 | |
John G. Murray | | | 4,600 | | | 155,740 | |
Matthew P. Jordan | | | 4,600 | | | 155,740 | |
Jennifer F. Francis | | | 2,400 | | | 81,212 | |
Jonathan M. Pertchik | | | 2,000 | | | 67,490 | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 35 | |
Name | | | Number of Shares Vested Upon Termination Event (#) | | | Value Realized on Termination Event as of September 30, 2021 ($)(1) | |
Adam Portnoy | | | 19,600 | | | 655,620 | |
Jennifer B. Clark | | | 9,800 | | | 327,810 | |
John G. Murray | | | 9,800 | | | 327,810 | |
Matthew P. Jordan | | | 9,800 | | | 327,810 | |
Jennifer F. Francis | | | 6,300 | | | 210,735 | |
Jonathan M. Pertchik | | | 7,000 | | | 234,150 | |
| 36 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 37 | |
| 38 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 39 | |
| 40 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 41 | |
| 42 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Year | | | Awards Granted (number of shares) | | | Weighted Average Class A Common Shares Outstanding | |
2019 | | | 90,400 | | | 15,132,000 | |
2020 | | | 111,700 | | | 15,194,000 | |
2021 | | | 114,300 | | | 15,266,000 | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 43 | |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| | | (a) | | | (b) | | | (c) | |
Equity compensation plans approved by security holders | | | None | | | None | | | 114,764 | |
Equity compensation plans not approved by security holders | | | None | | | None | | | None | |
Total | | | None | | | None | | | 114,764 | |
| 44 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 45 | |
| | 2021 Fees | | | 2020 Fees | | |||||||
Audit Fees | | | | $ | 517,000 | | | | | $ | 447,652 | | |
Audit Related Fees | | | | | — | | | | | | — | | |
Tax Fees | | | | | — | | | | | | — | | |
All Other Fees | | | | | 812 | | | | | | 948 | | |
| | | 2020 Fees | | |||
Audit Fees | | | | $ | 176,490 | | |
Audit Related Fees | | | | | — | | |
Tax Fees | | | | | — | | |
All Other Fees | | | | | 992 | | |
| 46 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
TWO NEWTON PLACE255 WASHINGTON STREET, SUITE 300NEWTON, MASSACHUSETTS 02458
January 23, 2019
PROXY STATEMENT
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 47 | |
The mailing addressletter from our auditors required by applicable requirements of the Company's principal executive officesPCAOB regarding our independent auditors’ communications with our Audit Committee concerning independence; (iv) discussed with our independent auditors their independence; and (v) considered whether the provision of non-audit services by our independent auditors is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458. The Company commenced mailingcompatible with maintaining their independence and concluded that it is compatible at this time.
All properly executed written proxies, and all properly completed proxies submitted by telephone or internet, that are delivered pursuant to this solicitation will be voted at the 2019 Annual Meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to it being exercised at the meeting. These proxies also may be voted at any postponements or adjournments of the meeting.
Only owners of record of shares of common stock of the Company as of the close of business on January 16, 2019, the record date for the meeting (the "Record Date"), are entitled to notice of, and to vote at, the meeting and at any postponements or adjournments of the meeting. Holders of shares of our Class A Common Stock ("Class A Common Shares") are entitled to one vote for each Class A Common Share held on the Record Date, holders of shares of our Class B-1 Common Stock ("Class B-1 Common Shares") are entitled to ten votes for each Class B-1 Common Share held on the Record Date and holders of shares of our Class B-2 Common Stock ("Class B-2 Common Shares," and, together with Class A Common Shares and Class B-1 Common Shares, "Common Shares") are entitled to ten votes for each Class B-2 Common Share held on the Record Date. Holders of our Class A Common Shares, Class B-1 Common Shares and Class B-2 Common Shares will vote as a single class on all matters at the 2019 Annual Meeting of Shareholders. Our Class A Common Shares are listed on The Nasdaq Stock Market LLC ("Nasdaq"). On January 16, 2019, there were 15,229,687 Class A Common Shares, 1,000,000 Class B-1 Common Shares and 15,000,000 Class B-2 Common Shares issued and outstanding.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALSFOR THE 2019 ANNUAL MEETING TO BE HELD ON WEDNESDAY, APRIL 3, 2019.
The Notice of 2019 Annual Meeting, Proxy Statement and Annual Report to Shareholders for thefiscal year ended September 30, 2018 are available at2021, for filing with the Securities and Exchange Commission.
| 48 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
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The proxy materials for the 2019our 2022 Annual Meeting include the Notice Regarding the Availability of Proxy Materials, Notice of 20192022 Annual Meeting, this Proxy Statement and the Company'sour Annual Report on Form 10-K to shareholders for the fiscal year ended September 30, 2018 (the "Annual Report" and, together with2021 (collectively, the other materials, the "proxy materials"“proxy materials”). If you request a paper copy of these materials, the proxy materials will also include a proxy card or voting instruction form.
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If your shares are registered directly in your name with the Company'sour registrar and transfer agent, Equiniti Shareowner Services, you are considered a shareholder of record of those shares. If you are a shareholder of record, you should receive only one notice or proxy card for all the Class A Common Shares you hold in certificate form and in book entry form.
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By Written Proxy. All shareholders of record can submit voting instructions by written proxy card. If you are a shareholder of record and receive a Notice Regarding the Availability of Proxy Materials, you may request a written proxy card by following the instructions included in the notice. If you are a beneficial owner, you may request a written proxy card or a voting instruction form from your bank, broker or other nominee. Proxies submitted by mail must be received by 11:59 p.m., Eastern time, on April 2, 2019 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
By Telephone or Internet. All shareholders of record also can authorize a proxy to vote their shares by touchtone telephone by calling 1-800-690-6903, or through the internet atwww.proxyvote.com,, using the procedures and instructions described in your Notice Regarding the Availability of Proxy Materials or
THE RMR GROUP INC. 2019 Proxy Statement 5
proxy card. Beneficial owners may authorize a proxy by telephone or internet if their bank, broker or other nominee makes those methods available, in which case the bank, broker or nominee will include the instructions with the proxy voting materials. To authorize a proxy by telephone or internet, you will need the 16 digit control number provided on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form. The telephone and internet proxy authorization procedures are designed to authenticate shareholder identities, to allow shareholders to vote their shares and to confirm that their instructions have been recorded properly. Proxies submitted by telephone or through the internet must be received by 11:59 p.m., Eastern time, on April 2, 2019March 9, 2022 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 49 | |
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Holders of record of Class A Common Shares, Class B-1 Common Shares or Class B-2any class of our Common Shares as of the close of business on January 16, 2019,6, 2022, the Record Date,record date, may vote at the meeting. Holders of Class A Common Shares are entitled to one vote for each Class A Common Share held on the Record Date. Holdersany class of Class B-1 Common Shares are entitled to ten votes for each Class B-1 Common Share held on the Record Date and holders of Class B-2 Common Shares are entitled to ten votes for each Class B-2 Common Share held on the Record Date. Holders of our Class A Common Shares, Class B-1 Common Shares and Class B-2 Common Shares will vote as a single class on all matters at the meeting. As of the close of business on the Record Date, there were 15,229,687 Class A Common Shares, 1,000,000 Class B-1 Common Shares
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6 THE RMR GROUP INC. 2019 Proxy Statement
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If you returnsubmit a signed proxy card or authorize a proxy by internet or telephone, andbut do not specify a choice for a matter, you will be instructingindicate how your proxy to vote in the manner recommended by the Board on that matter:
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If you are a beneficial owner and do not provide voting instructions to your bank, broker or other nominee, the following applies:
Non-Discretionary Items. The election of Directors is a non-discretionary item and may notCommon Shares should be voted on by brokers, banksone or more proposals, then the proxies will vote your shares as our Board recommends on those proposals. Other than the proposals listed on pages 9, 22, 37, 38 and 45, we do not know of any other nominees who have not received specific voting instructions from beneficial owners. The result ofmatters to be presented at the inability of a broker, bank ormeeting. If any other nominee tomatters are properly presented at the meeting, the proxies may vote on a non-discretionary item for which it has not received specific voting instructions from beneficial owners is referred to as a broker non-vote.your shares in accordance with their discretion.
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A quorum of shareholders is required for shareholders to take action at the 2019our 2022 Annual Meeting. The presence, in person or by proxy, of shareholders entitled to cast a majority of all the votes entitled to be cast at the 2019our 2022 Annual Meeting constitutes a quorum.
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The Notice of Shareholders have the right to revoke a proxy at any time before it is voted at the 2019 Annual Meeting, subject tovoting deadlines described above. Shareholders may revoke amaterials on the internet? How can I sign up for the electronic proxy by authorizing a proxy again on a later date by internet or by telephone (only the last internet or telephone proxy submitted prior to the meeting will be counted) or by signing and returning a later dated proxy card or by attending the meeting and voting in person. If you are a beneficial owner, see the response toquestion 15.delivery service?THE RMR GROUP INC. 2019 Proxy Statement 7A shareholder's attendance at the 2019 Annual Meeting will not revoke that shareholder's proxy unless that shareholder votes again at the meeting or sends an original written statement to the Secretary of the Company revoking the prior proxy. An original written notice of revocation or subsequent proxy should be delivered to The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, Attention: Secretary, or hand delivered to the Secretary before the taking of the vote at the 2019 Annual Meeting.Beneficial owners who wish to change their votes should contact the organization that holds their shares.10. Can I access the proxy materials on the internet? How can I sign up for the electronic proxy delivery service?20192022 Annual Meeting, this Proxy Statement and the Annual Report are available atwww.proxyvote.com. www.proxyvote.com. You may access these proxy materials on the internet through the conclusion of the 2019our 2022 Annual Meeting.
| 50 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
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The Company will report the final results in a Current Report on Form 8-K filed with the SEC following the completion of the 2019 Annual Meeting.
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The Company bearsWe bear all expenses incurred in connection with the solicitation of proxies. We will request banks, brokers and other nominees to forward proxy materials to the beneficial owners of Class A Common Shares and to obtain their voting instructions. We will reimburse those firms for their expenses of forwarding proxy materials.
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As permitted by the Securities Exchange Act, of 1934, as amended (the "Exchange Act"), we may deliver to shareholders only one copy of the Notice Regarding the Availability of Proxy Materials, Notice of 20192022 Annual Meeting, this Proxy Statement and the Annual Report to Shareholders residing at the same address, unless the shareholders havea shareholder at such address has notified us of theirsuch shareholder’s desire to receive multipleseparate copies of those documents. This practice is known as "householding."
“householding.”
8 THE RMR GROUP INC. 2019 Proxy Statement
20192022 Annual Meeting Information
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IMPORTANT NOTE: If you plan to attend the 2019Why is our 2022 Annual Meeting you must follow these instructions to ensure admission.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement 51 | |
if needed.
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If you are a beneficial owner and want to vote your shares at the 2019our 2022 Annual Meeting, you need to have a legal proxy16 digit control number from your bank, broker or other nominee. You also need toPlease follow the procedures described in the response toquestion 14questions 3 and to bring the legal proxy with you to the meeting and hand it in with a signed ballot that will be provided to you at the meeting. 11.
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You can visit our website to view our Governance Guidelines, Board committee charters and Code of Business Conduct and Ethics (the "Code").the Code. To view these documents, go towww.rmrgroup.com, click on "Investors“Investors & Media"Media” and then click on "Corporate“Corporate Governance."” To view the Company'sour SEC filings and Forms 3, 4 and 5 filed by the Company'sour Directors and executive officers, go towww.rmrgroup.com, click on "Investors“Investors & Media"Media” and then click on "Financial“Financial Information."”
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Any shareholder or other interested person who wants to communicate with the Company'sour Directors, individually or as a group, should write to the party for whom the communication is intended, c/o Secretary, The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or email secretary@rmrgroup.com. The communication will then be delivered to the appropriate party or parties.
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A proposal for action to be presented by any shareholder at the Company's 2020our 2023 annual meeting of shareholders must be submitted as follows:
November 28, 2022.
10 THE RMR GROUP INC. 2019 Proxy Statement
ELECTION OF DIRECTORS (ITEM 1)
The Board serves as the decision making body of the Company, except for those matters reserved to the shareholders. The Board selects and oversees the Company's officers, who are charged by the Board with conducting the day to day business of the Company.
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In accordance with our Articles of Amendment and Restatement (our "Charter") and our Bylaws, the Board currently consists of five members, three of whom are Independent Directors and two of whom are Managing Directors.
A plurality of all the votes cast at the meeting at which a quorum is present is required to elect a Director at the 2019 Annual Meeting.
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The Nominating and Governance Committee is responsible for identifying and evaluating nominees for Director and for recommending to the Board nominees for election at each annual meeting of shareholders. The Nominating and Governance Committee may consider candidates suggested by the Company's Directors, officers or shareholders or by others.
Shareholder Recommendations for Nominees. Shareholders who would like to recommend a nominee for the position of Director should submit their recommendations in writing by mail to the Chair of the Nominating and Governance Committee, c/o The RMR Group Inc., Secretary, at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@rmrgroup.com. A shareholder's recommendation should include any information that the recommending shareholder believes relevant to the Nominating and Governance Committee's consideration. The Nominating and Governance Committee may request additional information about the shareholder recommended nominee or about the shareholder recommending the nominee. Recommendations by shareholders will be considered by the Nominating and Governance Committee in its discretion using the same criteria as other candidates it considers.
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Directors are responsible for overseeing the Company's business. This significant responsibility requires highly skilled individuals with various qualities, attributes and professional experience. The Board believes that there are general requirements that are applicable to all Directors, qualifications applicable to Independent Directors and other skills and experience that should be represented on the Board as a whole, but not necessarily by each Director. In accordance with our Charter and Bylaws, the Board consists of five Directors: two Managing Directors and three Independent Directors. As set forth in our Bylaws, Independent Directors are Directors who are not employees of the Company, are not involved in the Company's day to day activities and are persons who qualify as independent under the applicable rules of the Nasdaq and the SEC. As set forth in our Bylaws, Managing Directors are Directors who are not Independent Directors and who have been employees of the Company or any of its subsidiaries or involved in the day to day activities of the Company, any of its subsidiaries or any of their predecessors for at least one year prior to such Director's election. The Board and the Nominating and Governance Committee consider the qualifications of Directors and Director candidates individually and in the broader context of the Board's overall composition and the Company's current and future needs.
Qualifications for All Directors
In its assessment of each potential candidate, including those recommended by shareholders, the Nominating and Governance Committee considers the potential nominee's integrity, experience, achievements, judgment, intelligence, competence, personal character, likelihood that a candidate will be
THE RMR GROUP INC. 2019 Proxy Statement 11
able to serve on the Board for an extended period and other matters that the Nominating and Governance Committee deems appropriate. The Nominating and Governance Committee also takes into account the ability of a potential nominee to devote the time and effort necessary to fulfill his or her responsibilities to the Company.
The Board and Nominating and Governance Committee require that each Director candidate be a person of high integrity with a proven record of success in his or her field. Each Director candidate must demonstrate the ability to make independent analytical inquiries, familiarity with and respect for corporate governance requirements and practices and a commitment to serving the Company's long term best interests. In addition, the Nominating and Governance Committee may conduct interviews of potential Director candidates to assess intangible qualities, including the individual's ability to ask appropriate questions and to work collegially. The Board does not have a specific diversity policy in connection with the selection of nominees for Director, but due consideration is given to the Board's overall balance of diversity, including perspectives, backgrounds and experiences.
Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board
The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole, in light of the Company's long term interests. The following table summarizes certain key characteristics of the Company's business and the associated qualifications, attributes, skills and experience that the Board believes should be represented on the Board.
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Upon the recommendation of the Nominating and Governance Committee, the Board has nominated Jennifer B. Clark and Adam D. Portnoy for election as Managing Directors and Ann Logan, Rosen Plevneliev and Walter C. Watkins, Jr. for election as Independent Directors. Each Director nominee currently serves on the Board. If elected, each nominee would serve until the Company's 2020 annual meeting of shareholders and until his or her successor is duly elected and qualifies, subject to the individual's earlier death, resignation, retirement, disqualification or removal.
We expect each nominee for election as a Director will be able to serve if elected. However, if a nominee should become unable or unwilling to serve, proxies may be voted for the election of a substitute nominee designated by the Board.
The Board believes that the combination of the various qualifications, attributes, skills and experiences of the Director nominees would contribute to an effective Board serving the Company's long term best interests. The Board and the Nominating and Governance Committee believe that the Director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company's management. Below is a summary of the key experiences, qualifications, attributes and skills that led the Nominating and Governance Committee and the Board to conclude such person is currently qualified to serve as a Director.
The Board of Directors recommends a vote "FOR" the election of all Director nominees.
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The following is some important biographical information, including the ages and recent principal occupations, as of January 16, 2019, of the Director nominees and the Company's executive officers. The business address of the Director nominees and executive officers is c/o The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458. Included in each Director nominee's biography below are the attributes of that Director nominee consistent with the qualifications, attributes, skills and experience the Board has determined are important to be represented on the Board. For a general discussion of the particular Director nominee's qualifications, attributes, skills and experience, and the process for selecting and nominating individuals for election to serve as a Director, please see "Election of Directors" beginning on page 11.
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Directors and Director Nominees
Jennifer B. Clark
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Ann Logan
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Rosen Plevneliev
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Adam D. Portnoy
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Walter C. Watkins, Jr.
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Executive Officers
Adam D. Portnoy
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Jennifer B. Clark
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Matthew P. Jordan
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David M. Blackman
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John G. Murray
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Andrew J. Rebholz
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There are no family relationships among any of the Company's Directors or executive officers. The Company's executive officers serve at the discretion of the Board.
THE RMR GROUP INC. 2019 Proxy Statement 21
DIRECTOR COMPENSATION
The Compensation Committee is responsible for making recommendations to the Board regarding cash compensation paid to Directors and the Equity Plan Committee, a subcommittee of the Compensation Committee, is responsible for determining and approving the Class A Common Shares awarded to Directors, in each case, for Board, committee and committee chair services. Managing Directors do not receive cash compensation for their services as Directors but do receive Class A Common Share awards for their Board service. The number of Class A Common Shares awarded to each Managing Director for Board service is the same as the number awarded to each Independent Director.
In determining the amount and composition of our Directors' compensation, the Compensation Committee (including the Equity Plan Committee) and the Board take various factors into consideration, including, but not limited to, the responsibilities of Directors generally, as well as for service on committees and as committee chairs, and the forms of compensation paid to directors or trustees by comparable companies, including the compensation of directors and trustees of other companies managed by RMR LLC. The Board reviews the Compensation Committee's recommendations regarding Director cash compensation and determines and approves the amount of such compensation.
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Each Independent Director received an annual fee of $60,000 for services as a Director, plus a fee of $1,250 for each meeting attended. The annual fee for any new Independent Director is prorated for the initial year. Up to two $1,250 fees were paid if a Board meeting and one or more Board committee meetings, or two or more Board committee meetings, were held on the same date. Each Independent Director and Managing Director received an award of 2,500 Class A Common Shares in fiscal year 2018.
Each Independent Director who served as a committee chair of the Board's Audit, Compensation or Nominating and Governance Committees received an additional annual fee of $15,000, $10,000 and $10,000, respectively. Directors were reimbursed for travel expenses they incurred in connection with their duties as Directors and for out of pocket costs they incurred in connection with their attending certain continuing education programs, if any.
The following table details the total compensation of the Directors for the fiscal year ended September 30, 2018 for services as a Director.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||
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Jennifer B. Clark(3)(4) | $ | — | $ | 172,750 | $ | — | $ | 172,750 | |||||
Ann Logan | 108,750 | 172,750 | — | 281,500 | |||||||||
Rosen Plevneliev | | 92,500 | | 172,750 | | — | | 265,250 | |||||
Adam D. Portnoy(3) | — | 172,750 | — | 172,750 | |||||||||
Barry M. Portnoy(3)(4) | | — | | — | | — | | — | |||||
Walter C. Watkins, Jr. | 93,750 | 172,750 | — | 266,500 | |||||||||
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THE RMR GROUP INC. 2019 Proxy Statement 23
CORPORATE GOVERNANCE
The Company is committed to corporate governance that promotes the long term interests of our shareholders. The Board has established Governance Guidelines that provide a framework for effective governance. The guidelines address matters such as general qualification standards for the Board, Director responsibilities, Board meetings and communications, Board committees, Director access to management and independent advisors, Director compensation, Director orientation and continuing education, executive development and succession planning, related person transactions, annual performance evaluation of the Board and other matters. The Board regularly reviews developments in corporate governance and updates our Governance Guidelines and other governance materials as it deems necessary and appropriate.
The governance section of our website makes available our corporate governance materials, including the Governance Guidelines, the charter for each Board committee, the Code and information about how to report concerns or complaints about accounting, internal accounting controls or auditing matters and any violations or possible violations of the Code and how to communicate with our Directors, individually or as a group. To access these documents on the Company's website,www.rmrgroup.com, click on "Investors & Media" and then click on "Corporate Governance." In addition, instructions on how to obtain copies of the Company's corporate governance materials are included in the response toquestion 16 in the "Questions and Answers" section on page 10.
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In accordance with our Charter and Bylaws, the Board is comprised of five Directors, including three Independent Directors and two Managing Directors. All Directors play an active role in overseeing the Company's business both at the Board and committee levels. As set forth in the Company's Governance Guidelines, the core responsibility of our Directors is to exercise sound, informed and independent business judgment in overseeing the Company and its strategic direction. Our Directors are skilled and experienced leaders and currently serve or have served as members of senior management in public and private for profit and nonprofit organizations, and also have served as government officials. Our Directors may be called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of the Company's officers and advisors. The Board is small, which facilitates informal discussions and communication from management to the Board and among Directors.
We do not have a Chairman of the Board or a lead Independent Director. Other than Jennifer Clark and Adam Portnoy, our executive officers are not members of the Board, but they and the Company's Director of Internal Audit may attend Board and Board committee meetings at the invitation of the Board. The Company's President or the Board may call a special meeting of the Board.
Pursuant to the Company's Governance Guidelines, the Company's Independent Directors are expected to meet in regularly scheduled meetings at which only Independent Directors are present. The presiding Director at these meetings is the Chair of the Audit Committee, unless the Independent Directors in attendance select another Independent Director to preside. Our Independent Directors may also meet to consider Company business without the attendance of the Managing Directors or other officers, and they meet separately with the Company's officers, with the Company's Director of Internal Audit and with the Company's independent auditors. In such meetings of the Company's Independent Directors, the Chair of the Audit Committee presides unless the Independent Directors determine otherwise.
In the fiscal year 2018, the Board held nine meetings. In fiscal year 2018, each Director attended 75% or more of the aggregate of all meetings of the Board and the committees on which he or she served during the period he or she served as a Director. All of the Directors attended last year's annual meeting of shareholders. The Company's policy with respect to Board members' attendance at meetings of the Board and annual meetings of shareholders can be found in the Company's Governance Guidelines, the full text of which appears at the Company's website,www.rmrgroup.com.
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Under the corporate governance listing standards of the Nasdaq, to be considered independent:
The Board affirmatively determines whether Directors have a direct or indirect material relationship with the Company, including the Company's subsidiaries, other than serving as the Company's Directors or directors of the Company's subsidiaries. In making independence determinations, the Board observes Nasdaq and SEC criteria, as well as the criteria in our Bylaws. When assessing a Director's relationship with the Company, the Board considers all relevant facts and circumstances, not merely from the Director's standpoint, but also from that of the persons or organizations with which the Director has an affiliation. Based on this review, the Board has determined that Ann Logan, Rosen Plevneliev and Walter C. Watkins, Jr. currently qualify as independent directors under applicable Nasdaq and SEC criteria and as Independent Directors under our Bylaws. In making these independence determinations, the Board reviewed and discussed additional information provided by the Directors and the Company with regard to each of the Directors' relationships with the Company and its affiliates and those companies to which the Company or its affiliates provide management or advisory services. The Board has concluded that none of these three Directors possessed or currently possesses any relationship that could impair his or her judgment in connection with his or her duties and responsibilities as a Director or that could otherwise be a direct or indirect material relationship under applicable criteria of the Nasdaq and SEC.
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The Board has an Audit Committee, Compensation Committee (including an Equity Plan Committee) and Nominating and Governance Committee. The Audit Committee, Compensation Committee and Nominating and Governance Committee have each adopted a written charter, which is available on our website,www.rmrgroup.com, by clicking on "Investors & Media" and then clicking on "Corporate Governance." Shareholders may also request copies free of charge by writing to Investor Relations, The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
Our Audit Committee is comprised entirely of Independent Directors under applicable Nasdaq rules who also meet the independence criteria applicable to audit committees under the Sarbanes Oxley Act and the SEC's implementing rules under that law.
Our Equity Plan Committee is a subcommittee of our Compensation Committee and operates under the charter of our Compensation Committee and The RMR Group Inc. 2016 Omnibus Equity Plan (the "Equity Plan"). Our Equity Plan Committee is comprised entirely of Independent Directors under applicable Nasdaq rules.
We are a "controlled company" under the rules of the Nasdaq because Adam Portnoy controls more than 50% of our voting power; therefore, our Compensation Committee and Nominating and Governance Committee may, and do, include Independent and Managing Directors. The Director of Internal Audit, with the assistance of Company management, proposes the agenda for committee meetings under the oversight and direction of the Committee Chairs. Additionally, the charter of each of our Audit Committee, Compensation Committee and Nominating and Governance Committee provides that the committee may form and delegate authority to subcommittees of one or more members when appropriate. Subcommittees are subject to the provisions of the applicable committee's charter. Additional information about the committees is provided below.
THE RMR GROUP INC. 2019 Proxy Statement 25
Audit Committee
"The Audit Committee is dedicated to maintaining the integrity of the Company's financial reporting; monitoring and mitigating the Company's financial risk exposure; selecting, assessing the independence and performance of, and working productively with, the Company's independent auditors; overseeing and collaborating with the Company's internal audit function; and monitoring the Company's legal and regulatory compliance."
Additional Committee Members: Walter C. Watkins, Jr. and Rosen PlevnelievMeetings Held in the fiscal year ended September 30, 2018: 8
Purpose and Primary Responsibilities:The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The purpose of the Audit Committee is to assist the Board in fulfilling its responsibilities for oversight of: (1) the integrity of the Company's financial statements; (2) the Company's compliance with legal and regulatory requirements; (3) the independent auditors' qualifications and independence; and (4) the performance of the Company's internal audit function and independent auditor. The Audit Committee takes a leading role in helping the Board fulfill its responsibilities for oversight of the Company's financial reporting, internal audit function, risk management and the Company's compliance with legal and regulatory requirements. Under its charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company's independent auditor and the resolution of disagreements between management and the independent auditor regarding financial reporting. The Audit Committee reviews the overall audit scope and plans of the audit with the independent auditor. The independent auditor reports directly to the Audit Committee. The Audit Committee also has final authority and responsibility for the appointment and assignment of duties to the Director of Internal Audit. The Audit Committee also reviews with management and the independent auditors the Company's quarterly reports on Form 10-Q, annual reports on Form 10-K and earnings releases. The Audit Committee reviews and assesses the adequacy of its charter at least annually and, when appropriate, recommends changes to the Board.
Independence:Each member of the Audit Committee meets the independence requirements of the Nasdaq, the Exchange Act and the Company's Governance Guidelines.
Financial Literacy and Expert:Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements. The Board has determined that Ms. Logan is the Audit Committee's "financial expert" and is independent as defined by the rules of the SEC and the Nasdaq. The Board's determination that Ms. Logan is the Audit Committee's financial expert was based upon her experience as: (i) a member of the audit committees and risk management committees of other public companies; and (ii) an executive vice president of the single family mortgage business and executive vice president and chief credit officer at Fannie Mae.
26 THE RMR GROUP INC. 2019 Proxy Statement
Compensation Committee
"The Compensation Committee strives to align the Company's compensation practices with the best long term interests of the Company."
Additional Committee Members:Ann Logan, Rosen Plevneliev and Adam D. PortnoyMeetings Held in the fiscal year ended September 30, 2018: 5
Purpose and Primary Responsibilities:The purpose of the Compensation Committee is to discharge directly, or assist the Board in discharging, its responsibilities related to: (1) the oversight of the Company's compensation and employee benefit programs as they apply to executive compensation; (2) the evaluation of services provided by any individual who serves as an executive officer of the Company and qualifies as a "named executive officer" under the applicable rules of the SEC; (3) the determination of compensation paid by the Company to any named executive officer and the approval or ratification of the compensation paid by the Company to other executive officers; (4) the evaluation of the services provided by the person serving as the Director of Internal Audit for the Company; (5) the approval of compensation paid by the Company to the person serving as the Director of Internal Audit for the Company; and (6) the approval (subject to applicable shareholder approval), evaluation and administration of all equity compensation plans of the Company.
Independence:Ms. Logan and Messrs. Plevneliev and Watkins meet the independence requirements of the Nasdaq, the Exchange Act and the Company's Governance Guidelines.
Equity Plan Committee:The Equity Plan Committee is a subcommittee of the Compensation Committee, established pursuant to the Compensation Committee charter and our Equity Plan, that has the power and authority to administer and determine share awards granted under the Equity Plan and to determine the cash compensation of Adam Portnoy and Barry Portnoy. The members of the Equity Plan Committee are Ms. Logan and Messrs. Plevneliev and Watkins, each of whom is an Independent Director. This subcommittee held three meetings in the fiscal year ended September 30, 2018.
THE RMR GROUP INC. 2019 Proxy Statement 27
Nominating and Governance Committee
"The Nominating and Governance Committee regularly evaluates the Board's leadership structure and corporate governance to promote the best long term interests of the Company."
Additional Committee Members: Ann Logan, Jennifer B. Clark, Adam D. Portnoy and Walter C. Watkins, Jr.Meetings Held in the fiscal year ended September 30, 2018: 2
Purpose and Primary Responsibilities:The principal purposes of the Nominating and Governance Committee are: (1) to identify individuals qualified to become Board members, consistent with criteria approved by the Board, and to recommend candidates to the entire Board for nomination or selection as Board members for each annual meeting of shareholders (or special meeting of shareholders at which directors are to be elected) or when vacancies occur; (2) to develop and recommend to the Board a set of governance principles applicable to the Company; and (3) to oversee the evaluation of the Board and, to the extent not overseen by the Company's Compensation Committee or a committee composed entirely of Directors meeting the independence requirements of the rules of the Nasdaq, Company management.
Independence:Ms. Logan and Messrs. Plevneliev and Watkins meet the independence requirements of the Nasdaq, the Exchange Act and the Company's Governance Guidelines.
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The Board is elected by shareholders to oversee the Company's business and long term strategy. As part of fulfilling its responsibilities, the Board oversees the safeguarding of the assets of the Company, the maintenance of appropriate financial and other internal controls and the Company's compliance with applicable laws and regulations. Inherent in these responsibilities is the Board's understanding and oversight of the various risks facing the Company. The Board considers that risks should not be viewed in isolation and should be considered in virtually every business decision and as part of the Company's business strategy.
Oversight of Risk
The Board oversees risk as part of its general oversight of the Company. Oversight of risk is addressed as part of various Board and Board committee activities and through regular and special Board and Board committee meetings. The actual day to day business of the Company is conducted by management, and management is responsible to incorporate risk management in its activities. The Company's Director of Internal Audit provides the Company advice and assistance with the Company's risk management function.
In discharging their oversight responsibilities, the Board and Board committees review regularly a wide range of reports provided to them by management, internal audit and service providers, including:
The Board and Board committees discuss these matters among themselves and with management of the Company, the Director of Internal Audit, counsel and the Company's independent auditors.
The Audit Committee takes a leading role in helping the Board fulfill its responsibilities for oversight of the Company's financial reporting, internal audit function, risk management and the Company's compliance with legal and regulatory requirements. The Audit Committee meets at least quarterly and reports its findings to the Board. The Board and Audit Committee review periodic reports from the Company's independent auditors regarding potential risks, including risks related to the Company's internal control over financial reporting. The Audit Committee also reviews annually, approves and oversees an internal audit plan developed by the Company's Director of Internal Audit with the goal of helping the Company systematically evaluate the effectiveness of its risk management, control and governance processes. The Audit Committee considers risks relating to cybersecurity and, for that purpose, receives regular reports
THE RMR GROUP INC. 2019 Proxy Statement 29
from management regarding cybersecurity risks and countermeasures being undertaken or considered by the Company, including updates on the internal and external cybersecurity landscape and relevant technical developments. The Audit Committee also meets periodically with the Company's Director of Internal Audit to review the results of the Company's internal audits, and directs or recommends to the Board actions or changes it determines appropriate to enhance or improve the effectiveness of the Company's risk management. The Compensation Committee evaluates the performance of the Company's Director of Internal Audit.
It is not possible to identify all of the risks that may affect the Company or to develop processes and controls to eliminate all risks and their possible effects, and processes and controls employed to address risks may be limited in their effectiveness. Moreover, it is necessary for the Company to bear certain risks to achieve its objectives. As a result of the foregoing and other factors, the Company's ability to manage risk is subject to substantial limitations.
To learn more about the risks facing the Company, you can review the matters discussed in Part I, "Item 1A. Risk Factors" and "Warning Concerning Forward Looking Statements" in our Annual Report. The risks described in the Annual Report are not the only risks facing the Company. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company's business, financial condition or results of operations in future periods.
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The Board has established a process to facilitate communication by shareholders and other interested parties with Directors. Communications should be addressed to Directors in care of the Secretary, The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@rmrgroup.com.
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The Company has adopted the Code to, among other things, provide guidance to its Directors, officers and employees to ensure compliance with applicable laws and regulations.
The Company's shareholders, Directors, executive officers and persons involved in the Company's business can ask questions about the Code and other ethics and compliance issues, or report potential violations as follows: by writing to the Director of Internal Audit at The RMR Group Inc., Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458; by calling toll free (866) 511-5038 or by filling out a report by visiting the Company's website,www.rmrgroup.com, clicking "Investors & Media," clicking "Corporate Governance" and then clicking "Governance Hotline." We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code that apply to the principal executive officer, principal financial officer or controller, or persons performing similar functions, by posting such information on our website.
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Pursuant to the Company's insider trading policy, Directors and executive officers are required to obtain pre-approval from at least two designated individuals before trading or agreeing to trade in, including by entering into a share trading plan such as a 10b5-1 trading plan, any Company security, except for regular reinvestments in the Company's securities made pursuant to a dividend reinvestment plan.
The Company's insider trading policy generally prohibits (i) the Company's Directors and officers, (ii) the directors and officers of the Company's subsidiaries and (iii) other employees of the Company and its subsidiaries, from, directly or indirectly through family members or others, purchasing or selling Class A Common Shares or the Company's other equity or debt securities while in possession of material, non-public information concerning the Company. Similar prohibitions also apply to trading in the securities of other public companies to which the Company provides management or advisory services on the basis of material, non-public information learned in the course of performing services for those companies.
30 THE RMR GROUP INC. 2019 Proxy Statement
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The Company's business strategy incorporates and values sustainability principles. The Company seeks to build, improve and operate its business and assets in a manner that maximizes efficiency and operations. The Company considers ways to improve our internal working environment and culture and the communities in which we operate without sacrificing performance. Our engagement and sustainability strategy is primarily implemented by our operating subsidiary, RMR LLC, and focuses on a complementary set of objectives, including the following:
To learn more about our sustainability initiatives, visitwww.rmrgroup.com/corporate-sustainability.
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Deadline to Submit Nominations and Proposals for the 2020 Annual Meeting of Shareholders for Purposes of Rule 14a-4(c)(1): To be timely for purposes of Rule 14a-4(c)(1) under the Exchange Act, shareholder nominations and proposals intended to be made at the 2020 annual meeting of shareholders must be received by the Company not later than December 9, 2019;provided, that, if the date of the 2020 annual meeting of shareholders is more than 30 days earlier or later than April 3, 2020, then a shareholder's notice must be so delivered a reasonable time before the Company sends its proxy materials for the 2020 annual meeting of shareholders.
Deadline to Submit Proposals for the 2020 Annual Meeting of Shareholders for Purposes of Rule 14a-8: Shareholder proposals pursuant to Rule 14a-8 under the Exchange Act must be received at the Company's principal executive offices on or before September 25, 2019 in order to be eligible to be included in the proxy statement for the 2020 annual meeting of shareholders;provided, that, if the date of the 2020 annual meeting of shareholders is more than 30 days before or after April 3, 2020, such a proposal must be submitted within a reasonable time before the Company begins to print its proxy materials. Under Rule 14a-8, the Company is not required to include shareholder proposals in its proxy materials in certain circumstances or if conditions specified in the rule are not met.
THE RMR GROUP INC. 2019 Proxy Statement 31
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In this "Related“Related Person Transactions"Transactions” section, unless the context requires otherwise, references to "RMR“RMR Inc."”, "we," "us"“we,” “us” and "our"“our” refer solely to The RMR Group Inc., a Maryland corporation, and not any of our subsidiaries. The description of agreements in this "Related“Related Person Transactions"Transactions” section do not purport to be complete and are subject to, and qualified in their entirety by, reference to the actual agreements, copies of certain of which are filed as exhibits to our Annual Report.
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”). Related Rights may be granted either at or after the time of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Share Appreciation Rights shall be made. Each Participant who is granted a Share Appreciation Right shall be provided with an Award Agreement, containing such terms and conditions as the Administrator shall determine, in its sole discretion, which Award
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32 THE RMR GROUP INC. 2019 Proxy Statement
15,229,687 15,485,011 class A membership units (“Class A Units”) of RMR LLC and 1,000,000 class B membership units of RMR LLC.
As of January 16, 2019, HPT, OPI and SNH owned 2,503,777, 2,801,061, and 2,637,408 of our Class A Common Shares, respectively, and Adam D. Portnoy beneficially owned, in aggregate, including through ABP Trust, 1.1% of HPT's outstanding common shares, 1.2% of ILPT's outstanding common shares, 1.5% of OPI's outstanding common shares and 1.1% of SNH's outstanding common shares.
5, 2021, RMRM received an order from the SEC declaring that RMRM ceased to be an investment company under the Investment Company Act of 1940 and subsequently terminated its investment advisory agreement with RMR Advisors and entered into a new management agreement with Tremont Realty Capital.
THE RMR GROUP INC. 2019 Proxy Statement 33
partnership unitstrustees of each of the Open End FundManaged Equity REITS, and RMR LLC owned no limited partnership units, but has committed to contributing $100 million toSEVN (together with TRMT until September 30, 2021, the Open End Fund.
Adam D. Portnoy is a director“Managed REITs” or “Managed Public Real Estate Capital clients”), the chair of AICthe board of directors of each of FVE and the majority owner and a director of Sonesta. Adam D. Portnoy is alsoTA, a managing trustee or managing
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement B-1 | |
7.4% of SEVN’s outstanding common shares (including through Tremont Realty Capital).
managing trustees of certain of the Managed REITs and Managed Operating Companies.
34 THE RMR GROUP INC. 2019 Proxy Statement
| B-2 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
| For the Fiscal Year Ended September 30, 2018 | |||
---|---|---|---|---|
Managed Equity REITs:(1) | | |||
HPT(2) | $ | 118,596 | ||
ILPT(5) | | 10,935 | ||
OPI(3)(4) | 53,954 | |||
SIR(2)(3)(5) | | 62,321 | ||
SNH(2) | 118,301 | |||
| | | | |
| | 364,107 | ||
| | | | |
Managed Operators: | ||||
FVE(1) | | 9,840 | ||
Sonesta | 2,847 | |||
TA(1) | | 15,357 | ||
| | | | |
28,044 | ||||
| | | | |
Other: | | |||
ABP Trust | 4,865 | |||
AIC | | 240 | ||
Open End Fund | 608 | |||
RIF | | 2,888 | ||
TRMT | 2,505 | |||
| | | | |
| | 11,106 | ||
| | | | |
$ | 403,257 | |||
| | | | |
| | | | |
| | | | |
| | | | |
| | For the Fiscal Year Ended September 30, 2021 | | | | | |
Managed Public Real Estate Capital: | | | | | | | |
DHC | | | $171,518 | | | | |
ILPT | | | 37,839 | | | | |
OPI | | | 243,602 | | | | |
SVC | | | 79,406 | | | | |
Total Managed Equity REITs | | | 532,365 | | | | |
SEVN(1) | | | 4 ,927 | | | | |
TRMT(1) | | | 5,398 | | | | |
| | | 542,690 | | | ||
Managed Private Real Estate Capital: | | | | | | ||
ABP Trust | | | 27,619 | | | ||
Other private entities | | | 9,777 | | | ||
| | | 37,396 | | | ||
Managed Operating Companies: | | | | | | ||
FVE | | | 7,491 | | | ||
Sonesta | | | 4,693 | | | ||
TA | | | 14,501 | | | | |
| | | 26,685 | | | | |
| | | $606,771 | | | (2) | |
management agreements with RMR LLC. This table presents the management services and reimbursable payroll and related cost revenues from SIR separately as they relate to periods prior to the merger with OPI.
Our Management Agreements with the Managed Equity REITs
The base management fee is payable monthly in arrears.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement B-3 | |
Managed Equity REITs | | | Through July 31, 2021 | | | On and After August 1, 2021 | |
DHC | | | SNL U.S. REIT Healthcare Index | | | MSCI U.S. REIT/Health Care Index | |
ILPT | | | SNL U.S. Industrial REIT Index | | | MSCI U.S. REIT/Industrial REIT Index | |
OPI | | | SNL U.S. Office REIT Index | | | MSCI U.S. REIT/Office REIT Index | |
SVC | | | SNL U.S. REIT Hotel Index | | | MSCI U.S. REIT/Hotel & Resort REIT Index | |
36 THE RMR GROUP INC. 2019 Proxy Statement
the SNL U.S. Office REIT Index for periods beginning on and after January 1, 2019; and for SNH, the SNL U.S. REIT Healthcare Index.
| B-4 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Under each business management agreement, the Managed Equity REIT pays or reimburses RMR LLC for all of the expenses relating to the Managed Equity REIT's activities and RMR LLC bears its general and administrative expenses relating to its performance of its obligations under the agreement, including expenses of its personnel, rent and other office expenses, unless otherwise agreed. Also, the allocable cost of internal audit services is reimbursed by each Managed Equity REIT to RMR LLC; for the fiscal year ended September 30, 2018, the Managed Equity REITs cumulatively reimbursed RMR LLC approximately $1.1 million for such services. These amounts are included
Property Management Fees and Expense Reimbursement. Nolast two sentences of this paragraph, no property management fees are payable by a Managed Equity REIT to RMR LLC for any hotels, senior living communities or travel centers which are leased to, or managed by, a Managed OperatorOperating Company or another operating business such as a hotel management company or a senior living or healthcare services provider. For other properties, each property management agreement between RMR LLC and a Managed Equity REIT provides for (1) a management fee equal to 3.0% of the gross rents collected from tenants and (2) a construction supervision fee equal to 5.0% of the cost of any construction, renovation or repair activities at the
THE RMR GROUP INC. 2019 Proxy Statement 37
Managed Equity REIT'sREIT’s properties, other than ordinary maintenance and repairs. In June 2021, RMR LLC and DHC and SVC amended the respective property management agreements to, among other things, provide for RMR LLC’s oversight of any major capital projects and repositionings at DHC’s senior living communities, including DHC’s senior living communities managed by FVE, and SVC’s hotels, including SVC’s hotels managed by Sonesta, as DHC or SVC, as applicable, may request from time to time. RMR LLC receives the same fee previously paid to FVE and Sonesta, respectively, for these services, which is equal to 3.0% of the cost of any such major capital project or repositioning.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement B-5 | |
Termination of SIR
| B-6 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Our Management Agreement with TRMT
Tremont AdvisorsRealty Capital Clients
38 THE RMR GROUP INC. 2019 Proxy Statement
Fees and Expense Reimbursements.Reimbursements. Under the management agreement, TRMTagreements, SEVN is responsible to pay Tremont AdvisorsRealty Capital the following:
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement B-7 | |
THE RMR GROUP INC. 2019 Proxy Statement 39
Advisors Realty Capital a termination fee equal to (a) three times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee, in each case paid or payable to Tremont AdvisorsRealty Capital during the 24 month period immediately preceding the most recently completed calendar quarter prior to the date of termination or, if such termination occurs within 24 months of its initial commencement, the base management fee and the incentive fee will be annualized for such two year period based on such fees earned by Tremont AdvisorsRealty Capital during such period, plus (b) an amount equal to$1.6 million. In addition, the initial organizational costs related to TRMT'sTRMT’s formation and the costs of the TRMT IPOits initial public offering and the concurrent private placement that Tremont Realty Capital had paid bypursuant to its management agreement with TRMT will be included in the “Termination Fee” under and as defined in SEVN’s management agreement with Tremont Advisors.Realty Capital. No termination fee will be payable if the management agreement is terminated by TRMTSEVN for a cause event or by Tremont Advisors without TRMT'sRealty Capital for SEVN’s material breach.
| B-8 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
40 Other ProvisionsTHE RMR GROUP INC. 2019 Proxy Statement
Other Provisions. TRMT. SEVN has agreed to indemnify Tremont AdvisorsRealty Capital and its affiliates, including RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of such party with respect to the provision of services to TRMT,SEVN, except to the extent such provision of services was in bad faith or was grossly negligent. In addition, the management agreement provides that any disputes, as defined in the agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration in accordance with procedures provided in the agreement.
Fees.Investment Company Act, and RMR LLC provides services and earns feesAdvisors was compensated by RMRM pursuant to a business managementRMR Advisors’s agreement with each of the Managed Operators. Under these agreements, RMR LLC provides services to the Managed Operators relating to, or assists them with, among other things, their compliance with various laws and rules applicable to them, capital markets and financing activities, maintenance of their properties, selection of new business sites and evaluation of other business opportunities, accounting and financial reporting, internal audit, investor relations and general oversight of the company's daily business activities, including legal and tax matters, human resources, insurance programs and management information systems.
Each Managed Operator pays RMR LLC a fee under its business management agreement in an amount equal to 0.6% of: (i) for FVE, FVE's revenues from all sources reportable under GAAP other than revenues reportable by FVE with respect to properties for which FVE provides management services, plus the gross revenues of properties managed by FVE determined in accordance with GAAP; (ii) for Sonesta, Sonesta's revenues from all sources reportable under GAAP, other than any revenues reportable by Sonesta with respect to hotels for which Sonesta provides management services, plus the revenues of hotels managed by Sonesta (except to the extent such managed hotel revenues are included in Sonesta's gross revenues under GAAP); and (iii) for TA, the sum of TA's gross fuel margin, determined as TA's fuel sales revenues less its cost of fuel sales, plus TA's total nonfuel revenues. In addition, the business management agreement with each Managed Operator provides that the compensation of senior executives of the Managed Operator, who are also employees or officers of RMR LLC, is the responsibility of the party to or on behalf of which the individual renders services. In the past, becauseRMRM at least 80.0% of each of these executives' business time was devoted to services to the Managed Operator, 80.0% of these executives' total cash compensation was paid by the Managed Operator and the remainder was paid by RMR LLC. Also, the allocable cost of internal audit services is reimbursed by each Managed Operator to RMR LLC; for the fiscal year ended September 30, 2018, the Managed Operators cumulatively reimbursed RMR LLC approximately $484 thousand for such services. We record these reimbursed internal costs as management services revenue.
Term and Termination. The terms of the business management agreements with each Managed Operator end on December 31, 2019, and automatically extend for successive one year terms, unless RMR LLC or the applicable Managed Operator gives notice of non-renewal before the expiration of the applicable term. Also, a Managed Operator may terminate its business management agreement at any time (i) for FVE and TA, on 60 days' notice and RMR LLC may terminate such agreements at any time on 120 days' notice and (ii) for Sonesta, on 30 days' notice and RMR LLC may terminate its agreement with Sonesta on 30 days' notice. If FVE or TA terminates or elects not to renew its agreement, other than for cause as defined in each agreement, the Managed Operator is obligated to pay RMR LLC a termination fee equal to 2.875 times the sum of the annual base management fee and the annual internal audit services expense, which amounts are based on averages during the 24 consecutive calendar months prior to the date of notice of nonrenewal or termination.
Other Provisions. Each Managed Operator has agreed to indemnify RMR LLC, its members, officers, employees and affiliates against liabilities relating to acts or omissions of RMR LLC with respect to the provision of services by RMR LLC, except to the extent such provision was in bad faith or was grossly negligent. In addition, each agreement provides that any disputes, as defined in those agreements, arising out of or relating to the agreement or the provision of services pursuant thereto, upon the demand of a party to the dispute, shall be subject to mandatory arbitration in accordance with procedures provided in the agreement.
THE RMR GROUP INC. 2019 Proxy Statement 41
Our Advisory Agreement with RIF
RMR Advisors is party to an investment advisory agreement with RIF, pursuant to which it provides RIF with a continuous investment program, makes day to day investment decisions and generally manages the business affairs of RIF in accordance with its investment objectives and policies. RMR Advisors is compensated pursuant to that agreement at an annual rate of 0.85% of RIF'sRMRM’s average daily managed assets, as defined in the agreement.assets. Average daily managed assets includesincluded the net asset value attributable to RIF'sRMRM’s outstanding common shares and cash on hand, plus the liquidation preference of RIF'sRMRM’s outstanding preferred shares plusand the principal amount of any borrowings, including from banks or evidenced by notes, commercial paper or other similar instruments issued by RIF. Also, the allocable costsRMRM.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement B-9 | |
The investment advisory agreement continues until September 7, 2020 and continues thereafter from year to year or for such longer term as may be approved by RIF's board of trustees, as permitted by the Investment Company Act. So long as required by the Investment Company Act, the agreement is terminable by RIF on 60 days' notice and automatically in the event of an assignment, as defined in the Investment Company Act.
RMR Advisors LLC is also responsible for certain administrative functions of RIF pursuant to an administration agreement with RIF. RMR Advisors has entered into a sub-administration agreement with State Street Bank and Trust Company, ("State Street"), to perform substantially all fund accounting and other administrative services for RIF. RIF paid State Street directly, and no additional administrative services fee was paid to RMR Advisors.
Our Management Agreements with AIC, ABP Trust and the Open End Fund
RMR LLC provides businesspursuant to its property management agreements, which include third party costs related to matters such as maintenance and repairs, security and cleaning services, a significant portion of which are charged or passed through to AIC for a fee calculated as 3.0%and were paid by tenants of the total premiums paid for insurance arranged by AIC.our clients. RMR LLC also provides business and property management services to our controlling shareholder, ABP Trust,recognized other reimbursable expenses for which it receives, depending upon the services provided, a business management fee in an annual amount equal to 0.6%fiscal year ended September 30, 2021 of ABP Trust's revenues from all sources reportable under GAAP, a property management fee in an amount equal to 3.0% of rents collected from managed properties and a construction supervision fee in an amount equal to 5.0% of the cost of any construction, renovation or repair activities at the managed properties, other than ordinary maintenance and repairs. RMR LLC manages the Open End Fund and receives annual fund administration fees equal to 1.0% of the Open End Fund's net asset value, property management fees equal to 3.0% of all rents collected from commercial real estate investments, and 5.0% of costs of construction or any improvement at commercial real estate investments held by the Open End Fund.
$370.0 million.
Clients
42 THE RMR GROUP INC. 2019 Proxy Statement
| B-10 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
THE RMR GROUP INC. 2019 Proxy Statement 43
obligations of its members. Through our status as the managing member of RMR LLC, we exercise control over RMR LLC and are responsible for all operational and administrative decisions of RMR LLC and the day to day management of RMR LLC'sLLC’s business.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement B-11 | |
44 THE RMR GROUP INC. 2019 Proxy Statement
behalf of the individual or entity in question in such capacity, with an exception for certain matters for which it is established that the person received an improper benefit or undertook active and deliberate dishonesty.
On August 31, 2018, ABP Trust, which is controlled by Adam Portnoy, formed the Open End Fund. A subsidiary of ABP Trust is the general partner of the Open End Fund. In connection with the formation of the Open End Fund, ABP Trust contributed 15 properties to the Open End Fund with an aggregate value of $206.3 million in exchange for 206,300 limited partnership units in the Open End Fund and RMR LLC committed to contribute up to $100.0 million to the Open End Fund when called by the general partner in exchange for 100,000 limited partnership units in the Open End Fund. The valuation of the 15 properties contributed to the Open End Fund by ABP Trust was agreed to by a special committee of our Board consisting of members that were unaffiliated with ABP Trust and with the assistance of an independent third-party appraiser. This same special committee also approved RMR LLC's $100.0 million capital commitment to the Open End Fund. RMR LLC provides management and administrative services to the Open End Fund pursuant to management agreements. Pursuant to those agreements, in return for providing these services, RMR LLC receives annual fees equal to 1.0% of the Open End Fund's net asset value, fees equal to 3.0% of all rents collected from commercial real estate investments and 5.0% of costs of construction or any improvement at commercial real estate investments held by the Open End Fund. The terms of these management agreements continue until the earlier of (i) the date on which the Open End Fund is liquidated and (ii) the date that the current general partner of the Open End Fund is removed from that position.
Leases
As of September 30, 2018,2021, RMR LLC leased office space for use as its headquarters and other offices under various lease agreements with ABP Trust and certain Managed Equity REITs. For the fiscal year ended September 30, 2018,2021, RMR LLC incurred rental expense under these leases aggregating $4.8$5.7 million. Generally, the rents RMR LLC pays the Managed Equity REITs were set at the average building rent for third party tenants in the same buildings at the time the leases were entered and the leases were approved by the independent trustees of the applicable Managed Equity REIT. The rents RMR LLC pays to ABP Trust were set based upon a survey of comparable market rents at the time the leases were entered. These leases have various termination dates and several have renewal options. Also, some of these leases allow RMR LLC to terminate suchthe lease early if RMR LLC'sLLC’s management agreements applicable to the buildings in which RMR LLC leases space are terminated.
Thomas
THE RMR GROUP INC. 2019 Proxy Statement 45
payable to him by TA and other terms and conditions, including as to cooperation, confidentiality, non-solicitation, non-competition and other covenants, including a waiver and release. Under his retirement agreement, Mr. O'Brien granted to TA, in the first instance, and RMR LLC, in the second instance, a right of first refusal in the event he determined to sell any of his shares of TA. On October 10, 2018, RMR LLC purchased 1,492,691 TA common shares from Mr. O'Brien for an aggregate purchase price of approximately $8.38 million, pursuant to its exercise of its right of first refusal and the terms of the retirement agreement.
Pursuant to the terms of his share award agreements, upon Barry M. Portnoy's death on February 25, 2018, all 11,200 of his then unvested Class A Common Shares were immediately vested. In September 2018, the Company paid the estate of Barry M. Portnoy a $2.6 million cash bonus for services he provided in fiscal year 2018.
David J. Hegarty resigned from his positions as an Executive Vice PresidentOPI, executive vice president of RMR Advisors LLC through December 31, 2020 and as president and chief operating officera managing trustee of SNH effective April 30, 2018, and he retiredOPI until June 17, 2021. In addition, Mr. Blackman served as an employee of RMR LLC on Septemberthrough June 30, 2018. In connection with his2021. Under Mr. Blackman’s retirement
| B-12 THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
John C. Popeo resigned from his positions as an Executive Vice President of RMR LLC, as managing trustee, president and chief executive officer of ILPT, as chief financial officer and treasurer of SIR and as treasurer and assistant secretary of AIC effective November 30, 2018. In connection with his retirement, RMR LLC
Mark L. Kleifges resigned from his positions as an Executive Vice President of RMR LLC, as managing trustee, chief financial officer and treasurer of GOV and RIF, as chief financial officer and treasurer of
46 THE RMR GROUP INC. 2019 Proxy Statement
HPT and as president and chief executive officer of RMR Advisors effective December 31, 2018. In connection with his retirement, RMR LLC entered into a retirement agreement with Mr. Kleifges on October 24, 2018 pursuant to which RMR LLC agreed to pay Mr. Kleifges his then current annual base salary until December 31, 2018 and RMR LLC made a cash payment to him in the amount of approximately $1.59$3.2 million in January 2019 and agreed to make another cash payment to him in the amount of approximately $1.59 million following his retirement from RMR LLC on June 30, 2019. In addition, in connection with Mr. Kleifges's retirement agreement, RMR LLC agreed to recommend to the Boardresignations and the boardsretirements of trustees and boards of directors of each Managed REIT, TA and FVE that all of Mr. Kleifges's unvested share awards of those companies vest in full upon his retirement from RMR LLC. Our compensation committee has approved the accelerated vesting of all unvested Class A Common Shares previously awarded to Mr. Kleifges on June 30, 2019, subject to conditions. Pursuant to his retirement agreement, Mr. Kleifges agreed that, as long as he owns shares in the Company, he will vote those shares at shareholders' meetings in favor of nominees for director and proposals recommended by the Board and he made similar agreements, for the benefit of the Managed REITs, TA and FVE, regarding voting of his shares of those companies. Mr. Kleifges's retirement agreement contains other terms and conditions, including cooperation, confidentiality, non-solicitation, non-competition and other covenants, and a waiver and release.
Bruce J. Mackey Jr. resigned from his position as an Executive Vice President of RMR LLC and as president and chiefour executive officer of FVE effective December 31, 2018. In connection with his resignation, FVE and RMR LLC entered into a letter agreement with Mr. Mackey on December 11, 2018, pursuant to which Mr. Mackey continued to receive his then current annual base salary through December 31, 2018. Mr. Mackey will continue to be a non-executive employee of FVE and RMR LLC through December 31, 2019, if not earlier accelerated, or the separation date, to assist in transitioning his duties and responsibilities to his successors. In connection with this letter agreement, Mr. Mackey will receive, subject to Mr. Mackey signing a customary release, a cash payment to him in the amount of $0.6 million and release payments in the aggregate amount of $0.55 million. RMR LLC will pay 20% and FVE will pay 80% of the transition payments and release payments payable to Mr. Mackey pursuant to the letter agreement. In addition, in connection with Mr. Mackey's letter agreement, all of Mr. Mackey's existing share awards in FVE will vest immediately in full on the separation date, and RMR LLC agreed to recommend to the Board and the boards of trustees and boards of directors of the Company, each Managed REIT and TA that all of Mr. Mackey's unvested share awards of those companies vest in full upon the separation date. Pursuant to his letter agreement, Mr. Mackey agreed that, as long as he owns shares in the Company and FVE, he will vote those shares at shareholders' meetings in favor of nominees for director and proposals recommended by the Board and the board of directors of FVE. Mr. Mackey also made similar agreements, for the benefit of the Managed REITs and TA, regarding voting of his shares of those companies. Mr. Mackey's letter agreement contains other terms and conditions, including cooperation, confidentiality, non-solicitation, non-competition and other covenants, and a waiver and release.
officers.
THE RMR GROUP INC. 2019 Proxy Statement 47
We conduct a Leadership Development Program for which certain of our employees take part in a two year rotational program, working at each of RMR LLC, FVE, TA and Sonesta. The employee remains on our payroll during this rotational program and the Managed OperatorsOperating Companies reimburse us for the applicable employee costs for the period of time that the employee works for it.
48 THE RMR GROUP INC. 2019 Proxy Statement
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers, Directors and certain persons who own more than 10% of the outstanding Common Shares are required by Section 16(a) of the Exchange Act and related regulations:
To the Company's knowledge, based solely on review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended September 30, 2018, our executive officers, Directors and greater than 10% beneficial owners timely filed all required Section 16(a) reports.
THE RMR GROUP INC. 2019 Proxy Statement 49
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
The following table sets forth information regarding the beneficial ownership of then outstanding Common Shares by each person the Company knows to be the beneficial owner of more than 5% of the respective classes of Common Shares, each Director and Director Nominee, each of our named executive officers, and our Directors and executive officers as a group, all as of January 16, 2019. Unless otherwise noted, to the Company's knowledge, voting power and investment power in Class A Common Shares are exercisable solely by the named person, all percentages of ownership for Class A Common Shares are based on approximately 15,229,687 Class A Common Shares outstanding as of January 16, 2019, and the principal business address of the named beneficial owner is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
| Class A Common Shares* | Class B-1 Common Shares | Class B-2 Common Shares | Combined Voting Power | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name of Beneficial Owner | Number | % | Number | % | Number | % | % | |||||||||||||||
Office Properties Income Trust | | 2,801,061 | | 18.4 | % | | — | | — | | — | | — | | 1.6% | |||||||
Senior Housing Properties Trust | 2,637,408 | 17.3 | % | — | — | — | — | 1.5% | ||||||||||||||
Hospitality Properties Trust | | 2,503,777 | | 16.4 | % | | — | | — | | — | | — | | 1.4% | |||||||
ABP Trust | 1,090,564 | (1) | 6.7 | % | 1,000,000 | 100.0 | % | 15,000,000 | 100.0 | % | 91.9% | |||||||||||
Directors, Director Nominees and Executive Officers: | | | | | | | | |||||||||||||||
Adam D. Portnoy | 1,132,002 | (1)(2) | 7.0 | % | 1,000,000 | (2) | 100.0 | % | 15,000,000 | (2) | 100.0 | % | 92.0% | |||||||||
Jennifer B. Clark | | 14,894 | | ** | % | | — | | — | | — | | — | | **% | |||||||
Mark L. Kleifges | 11,688 | ** | % | — | — | — | — | **% | ||||||||||||||
Ann Logan | | 7,692 | | ** | % | | — | | — | | — | | — | | **% | |||||||
Walter C. Watkins, Jr. | 7,000 | ** | % | — | — | — | — | **% | ||||||||||||||
Rosen Plevneliev | | 4,250 | | ** | % | | — | | — | | — | | — | | **% | |||||||
All executive officers and directors as a group (9 persons) | 1,206,976 | (1) | 7.4 | % | 1,000,000 | 100.0 | % | 15,000,000 | 100 | % | 92.0% | |||||||||||
50 THE RMR GROUP INC. 2019 Proxy Statement
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Adam Portnoy, our Managing Director, President and Chief Executive Officer, currently serves and has served during the fiscal year ended September 30, 2018 as a member of our Compensation Committee. Before his death, Barry Portnoy, our former Managing Director, also served during the fiscal year ended September 30, 2018 as a member of our Compensation Committee. The executive compensation of Adam Portnoy is, and the executive compensation of Barry Portnoy was, determined by a subcommittee of the Compensation Committee comprised of the Committee's other members, all of whom are Independent Directors. For more information regarding the relationships of Adam Portnoy and Barry Portnoy with us and our client companies, see "Certain Relationships and Related Person Transactions."
THE RMR GROUP INC. 2019 Proxy Statement 51
EXECUTIVE COMPENSATION
The following tables and footnotes summarize the total compensation of our principal executive officer, our two other most highly compensated executive officers who were serving as executive officers as of September 30, 2018 and one individual who would have been one of our two other most highly compensated executive officers but for the fact that he was not serving as an executive officer at the end of the fiscal year, or our "named executive officers." The compensation set forth below includes compensation paid by us and compensation paid by our client companies to our named executive officers in their capacity as our executive officers.
| THE RMR GROUP INC. | | | | | 2022 Proxy Statement | |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Adam D. Portnoy | | 2018 | $ | 300,000 | $ | 2,650,000 | $ | 1,012,250 | $ | 22,000 | $ | 3,984,250 | |||||||
Managing Director, President and Chief Executive Officer | | 2017 | | 300,000 | | 2,600,000 | | 644,850 | | 17,115 | | 3,561,965 | |||||||
Jennifer B. Clark | 2018 | $ | 300,000 | $ | 2,650,000 | $ | 1,504,945 | $ | 127,893 | $ | 4,582,838 | ||||||||
Managing Director, Executive Vice President, General Counsel and Secretary | 2017 | 300,000 | 2,600,000 | 1,010,700 | 120,541 | 4,031,241 | |||||||||||||
Mark L. Kleifges(4)(5) | | 2018 | $ | 300,000 | $ | 2,250,000 | $ | 678,475 | $ | 43,976 | $ | 3,272,451 | |||||||
Executive Vice President | | | | | | | |||||||||||||
Barry M. Portnoy(6) | 2018 | $ | 126,923 | $ | 2,600,000 | $ | — | $ | 18,815 | $ | 2,745,738 | ||||||||
Managing Director | 2017 | 300,000 | 2,600,000 | 528,900 | 17,200 | 3,446,100 | |||||||||||||
The amounts presented in this column exclude shares of our client companies awarded to our named executive officers for services as a managing trustee, managing director or named executive officer of a client company.
52 THE RMR GROUP INC. 2019 Proxy Statement
The following table shows the total shares awarded by us and our public client companies to our named executive officers in fiscal year 2018, including vested and unvested portions of each award.
Name | Company | Grant Date | Number of Shares | Grant Date Fair Value of Share Awards ($)(a) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Adam D. Portnoy | RMR | | 9/13/2018 | | 10,500 | $ | 932,750(b) | ||||||
| FVE | | 12/13/2017 | | 15,000 | | 22,500 | ||||||
| TA | | 11/29/2017 | | 12,000 | | 57,000 | ||||||
| | | | | | | | | | | | | |
| | | | | | $ | 1,012,250 | ||||||
Jennifer B. Clark | RMR | 9/13/2018 | 6,500 | $ | 552,750(b) | ||||||||
GOV | 9/13/2018 | 7,000 | 118,650 | ||||||||||
HPT | 9/13/2018 | 8,500 | 246,245 | ||||||||||
ILPT | 9/13/2018 | 5,000 | 116,650 | ||||||||||
SIR | 9/13/2018 | 7,000 | 141,050 | ||||||||||
SNH | 9/13/2018 | 10,000 | 191,100 | ||||||||||
FVE | 12/13/2017 | 15,000 | 22,500 | ||||||||||
TA | 11/29/2017 | 12,000 | 57,000 | ||||||||||
TRMT | 9/13/2018 | 5,000 | 59,000 | ||||||||||
| | | | | | | | | | | | | |
$ | 1,504,945 | ||||||||||||
Mark L. Kleifges | RMR | | 9/13/2018 | | 4,000 | $ | 380,000 | ||||||
| ILPT | | 9/13/2018 | | 2,500 | | 58,325 | ||||||
| SIR | | 9/13/2018 | | 4,000 | | 80,600 | ||||||
| SNH | | 9/13/2018 | | 5,000 | | 95,550 | ||||||
| FVE | | 12/13/2017 | | 4,000 | | 6,000 | ||||||
| TA | | 11/29/2017 | | 6,000 | | 28,500 | ||||||
| TRMT | | 9/13/2018 | | 2,500 | | 29,500 | ||||||
| | | | | | | | | | | | | |
| | | | | | $ | 678,475 | ||||||
Barry M. Portnoy | — | — | — | — | |||||||||
THE RMR GROUP INC. 2019 Proxy Statement 53
Outstanding Equity Awards at 2018 Fiscal Year End
| | | Stock Awards | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Client Company | Date Granted | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | ||||||||
Adam D. Portnoy | RMR | | 9/13/2018 | | 6,400 | $ | 593,920 | |||||
| RMR | | 9/14/2017 | | 4,800 | | 445,440 | |||||
| RMR | | 9/15/2016 | | 3,200 | | 296,960 | |||||
| FVE | | 12/13/2017 | | 12,000 | | 10,320 | |||||
| FVE | | 12/7/2016 | | 9,000 | | 7,740 | |||||
| FVE | | 12/14/2015 | | 6,000 | | 5,160 | |||||
| FVE | | 12/15/2014 | | 2,500 | | 2,150 | |||||
| TA | | 11/29/2017 | | 9,600 | | 54,720 | |||||
| TA | | 11/30/2016 | | 7,200 | | 41,040 | |||||
| TA | | 12/8/2015 | | 4,800 | | 27,360 | |||||
| TA | | 12/2/2014 | | 2,400 | | 13,680 | |||||
| | | | | | | | | | | | |
| | | | | | $ | 1,498,490 | |||||
Jennifer B. Clark | RMR | 9/13/2018 | 3,200 | $ | 296,960 | |||||||
RMR | 9/14/2017 | 2,400 | 222,720 | |||||||||
RMR | 9/15/2016 | 1,600 | 148,480 | |||||||||
GOV | 9/13/2018 | 5,600 | 63,224 | |||||||||
GOV | 9/14/2017 | 4,200 | 47,418 | |||||||||
GOV | 9/15/2016 | 2,800 | 31,612 | |||||||||
GOV | 9/2/2015 | 1,400 | 15,806 | |||||||||
HPT | 9/13/2018 | 6,800 | 196,112 | |||||||||
HPT | 9/14/2017 | 4,500 | 129,780 | |||||||||
HPT | 9/15/2016 | 3,000 | 86,520 | |||||||||
HPT | 9/2/2015 | 1,500 | 43,260 | |||||||||
ILPT | 9/13/2018 | 4,000 | 92,040 | |||||||||
SIR | 9/13/2018 | 5,600 | 122,864 | |||||||||
SIR | 9/14/2017 | 4,200 | 92,148 | |||||||||
SIR | 9/15/2016 | 2,800 | 61,432 | |||||||||
SIR | 9/2/2015 | 1,400 | 30,716 | |||||||||
SNH | 9/13/2018 | 8,000 | 140,480 | |||||||||
SNH | 9/14/2017 | 5,700 | 100,092 | |||||||||
SNH | 9/15/2016 | 3,800 | 66,728 | |||||||||
SNH | 9/2/2015 | 1,900 | 33,364 | |||||||||
FVE | 12/13/2017 | 12,000 | 10,320 | |||||||||
FVE | 12/7/2016 | 9,000 | 7,740 | |||||||||
FVE | 12/14/2015 | 6,000 | 5,160 | |||||||||
FVE | 12/15/2014 | 2,500 | 2,150 | |||||||||
TA | 11/29/2017 | 9,600 | 54,720 | |||||||||
TA | 11/30/2016 | 7,200 | 41,040 | |||||||||
TA | 12/8/2015 | 4,800 | 27,360 | |||||||||
TA | 12/2/2014 | 2,400 | 13,680 | |||||||||
TRMT | 9/13/2018 | 4,000 | 47,000 | |||||||||
| | | | | | | | | | | | |
$ | 2,230,926 | |||||||||||
54 THE RMR GROUP INC. 2019 Proxy Statement
| | | Stock Awards | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Client Company | Date Granted | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | ||||||||
Mark L. Kleifges(2) | RMR | | 9/13/2018 | | 3,200 | $ | 296,960 | |||||
| RMR | | 9/14/2017 | | 2,400 | | 222,720 | |||||
| RMR | | 9/15/2016 | | 1,600 | | 148,480 | |||||
| ILPT | | 9/13/2018 | | 2,000 | | 46,020 | |||||
| SIR | | 9/13/2018 | | 3,200 | | 70,208 | |||||
| SIR | | 9/14/2017 | | 2,400 | | 52,656 | |||||
| SIR | | 9/15/2016 | | 1,400 | | 30,716 | |||||
| SIR | | 9/2/2015 | | 700 | | 15,358 | |||||
| SNH | | 9/13/2018 | | 4,000 | | 70,240 | |||||
| SNH | | 9/14/2017 | | 2,400 | | 42,144 | |||||
| SNH | | 9/15/2016 | | 1,600 | | 28,096 | |||||
| SNH | | 9/2/2015 | | 800 | | 14,048 | |||||
| FVE | | 12/13/2017 | | 3,200 | | 2,752 | |||||
| FVE | | 12/7/2016 | | 2,400 | | 2,064 | |||||
| FVE | | 12/14/2015 | | 1,600 | | 1,376 | |||||
| FVE | | 12/15/2014 | | 700 | | 602 | |||||
| TA | | 11/29/2017 | | 4,800 | | 27,360 | |||||
| TA | | 11/30/2016 | | 3,600 | | 20,520 | |||||
| TA | | 12/8/2015 | | 2,400 | | 13,680 | |||||
| TA | | 12/2/2014 | | 1,200 | | 6,840 | |||||
| TRMT | | 9/13/2018 | | 2,000 | | 23,500 | |||||
| | | | | | | | | | | | |
| | | | | | $ | 1,136,340 | |||||
Barry M. Portnoy | — | — | — | — | ||||||||
THE RMR GROUP INC. 2019 Proxy Statement 55
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From time to time, we and our public client companies have entered into arrangements with our former employees in connection with the termination of their employment with us, providing for the acceleration of vesting of shares previously awarded and, in certain instances, payments for future services to us as a consultant or employee and continuation of health care and other benefits. Although neither we nor such client companies have a formal policy, plan or arrangement for payments to our employees in connection with their termination of employment with us, we and such client companies may in the future provide on a discretionary basis for similar payments depending on various factors we or they then consider relevant and if we or such client company believes it is in its best interests to do so.
On September 13, 2018, the Equity Plan Committee approved awards of 8,000 Class A Common Shares to Mr. Adam Portnoy and 4,000 Class A Common Shares to each of Ms. Jennifer Clark and Mr. Mark Kleifges in their capacities as our executive officers. These awards were valued at $95.00 per Class A Common Share, the closing price of the Class A Common Shares on the Nasdaq on the date the awards were made under our Equity Plan. The form of award agreement for each of these awards provides for vesting of the Class A Common Shares in five equal annual installments beginning on the date of the award and acceleration of vesting of all share awards upon the occurrence of certain change in control or employment termination events (each, a "Termination Event").
The following table describes the potential payments to our named executive officers upon a Termination Event, if such event had occurred, as of September 30, 2018.
Name | Number of Shares Vested Upon Termination Event (#) | Value Realized on Termination Event as of September 30, 2018 ($)(1) | |||||
---|---|---|---|---|---|---|---|
Adam D. Portnoy | | 14,400 | $ | 1,336,320 | |||
Jennifer B. Clark | 7,200 | 668,160 | |||||
Mark L. Kleifges(2) | | 7,200 | | 668,160 | |||
Barry M. Portnoy | — | — | |||||
|
Each of our named executive officers was provided with the following material elements of compensation in fiscal year 2018:
Base Salary
In fiscal year 2018 we paid an annual base salary of $300,000 to each of our named executive officers. For our fiscal year 2019, we will pay an annual base salary of $325,000 to each of our named executive officers.
56 THE RMR GROUP INC. 2019 Proxy Statement
Annual Cash Bonuses
Annual cash bonuses are a key component of our named executive officer compensation and represented the majority of compensation we paid to each of our named executive officers for our 2018 fiscal year. We did not provide guaranteed cash bonuses to any of our named executive officers for fiscal year 2018 and did not set specific performance targets on which bonuses would be payable. Instead, the annual cash bonuses we paid to our named executive officers with respect to fiscal year 2018 were discretionary in amount and were based on a performance evaluation conducted by, in the case of Adam Portnoy and Barry Portnoy, the Equity Plan Committee, and in the case of other named executive officers, our Compensation Committee. The evaluation involved an analysis of both (i) our overall performance and (ii) the performance of the individual officer and his or her contributions to us. We believe this evaluation process allowed us to link pay with performance in the closest way possible and provided us with the flexibility necessary to take all relevant factors into account in determining the bonus amounts, including our named executive officers' ability to react to changing circumstances that impact our business. We believe our compensation process provided us with a better compensation structure than a formulaic bonus structure based solely on the achievement of specific pre-established performance targets which may not capture all appropriate factors that materially impacted our or the individual named executive officer's performance.
Equity Awards
Under the Equity Plan, an aggregate of 600,000 Class A Common Shares are available for grants of options to acquire stock, restricted or unrestricted stock, contractual rights to receive stock in the future, stock appreciation rights, other rights to receive compensation in amounts determined by the value of the Class A Common Shares and cash based awards. Employees, Directors, independent contractors and consultants of the Company or any affiliate of the Company are eligible to receive awards under the Equity Plan. Equity awards we make to our employees (including our named executive officers) are made by our Equity Plan Committee. Equity awards made to our employees (including our named executive officers) by our public client companies are made to them by the compensation committees of the boards of such companies.
401(k) Plans
We maintain a 401(k) plan for eligible employees, including our named executive officers and provide matching contributions equal to 100.0% of the first 3.0% and 50.0% of the next 2.0% of an employee's cash compensation contributed to the plan up to stated maximums. We do not maintain a defined pension plan or any nonqualified deferred compensation plans.
Employee Benefits
Eligible employees, including our named executive officers, participate in broad based and comprehensive employee benefit programs, including medical, dental, vision, life and disability insurance. Our named executive officers participate in these programs on the same basis as other eligible employees.
Employment Agreements
We have no employment agreements with our named executive officers or any of our other employees.
THE RMR GROUP INC. 2019 Proxy Statement 57
REPORT OF THE AUDIT COMMITTEE
In the course of the Audit Committee's oversight of the Company's financial reporting process, the Audit Committee has: (i) reviewed and discussed with management the audited financial statements for the fiscal year ended September 30, 2018; (ii) discussed with Ernst & Young LLP, the Company's independent auditors, the matters required to be discussed under PCAOB Auditing Standard No. 1301; (iii) received the written disclosures and the letter from the auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors' communications with the Audit Committee concerning independence; (iv) discussed with the independent auditors their independence; and (v) considered whether the provision of non-audit services by the independent auditors is compatible with maintaining their independence and concluded that it is compatible at this time.
Based on the foregoing review and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2018, for filing with the SEC.
58 THE RMR GROUP INC. 2019 Proxy Statement
RATIFICATION OF THEAPPOINTMENT OF ERNST & YOUNG LLPAS INDEPENDENT AUDITORS (ITEM 2)
The Audit Committee has the sole authority and responsibility to hire, evaluate and, when appropriate, replace our independent auditors and is directly responsible for the appointment, compensation and general oversight of the work of the independent auditors. The Audit Committee is responsible for approving the audit and permissible non-audit services provided by the independent auditors and the associated fees.
The Audit Committee evaluates the performance of our independent auditors annually and determines whether to reengage the current independent auditors or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the auditors, the auditors' technical expertise and knowledge of our operations and industry, the auditors' independence, legal proceedings involving the auditors, the results of PCAOB inspections and peer quality reviews of the auditors and the auditors' reputation in the marketplace. In connection with the mandated rotation of the independent auditors' lead engagement partner, the Audit Committee and its chair consider the selection of the new lead engagement partner identified by the independent auditors.
Based on this evaluation, the Audit Committee has appointed Ernst & Young LLP to serve as the Company's independent auditors for the fiscal year ending September 30, 2019. Ernst & Young LLP has served as the Company's independent auditors since our formation in 2015 and is considered by management and the Audit Committee to be well qualified. Further, the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as the independent registered public accounting firm is in the best interests of the Company and its shareholders.
The Audit Committee has determined to submit its selection of the independent auditors to the Company's shareholders for ratification. This vote will ratify prior action by the Audit Committee and will not be binding upon the Audit Committee. However, the Audit Committee may reconsider its prior appointment of the independent auditors or consider the results of this vote when it determines to appoint our independent auditors in the future.
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The following table shows the fees for audit and other services provided to us by Ernst & Young LLP for the fiscal years ended September 30, 2018 and 2017.
| 2018 Fees | 2017 Fees | ||
---|---|---|---|---|
Audit Fees | $ 798,500 | $ 994,000 | ||
Audit Related Fees | — | 268,121 | ||
Tax Fees | — | — | ||
All Other Fees | 720 | 456 | ||
Audit Fees. This category includes fees associated with the annual financial statements audit and related audit procedures, work performed in connection with any registration statements and any applicable Current Reports on Form 8-K and the review of any of the Company's Quarterly Reports on Form 10-Q.
Audit Related Fees. This category consists of services that are reasonably related to the performance of the audit or review of financial statements and are not included in "Audit Fees." These services principally include due diligence in connection with acquisitions, consultation on accounting and internal control
THE RMR GROUP INC. 2019 Proxy Statement 59
matters, audits in connection with proposed or consummated acquisitions, information systems audits and other attest services. The decrease in audit related fees from 2017 to 2018 reflects additional audit fees in 2017 in connection with the initial public offering of TRMT that was completed in January 2018 and the RIF rights offering that was completed in September 2017 and which fees were paid by Tremont Advisors and RMR Advisors, respectively.
Tax Fees. This category consists of fees for tax services, including tax compliance, tax advice and tax planning.
All Other Fees. This category consists of services that are not included in the above categories. The amounts for 2018 and 2017 reflect annual subscription fees for Ernst & Young LLP's online accounting research application.
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The Audit Committee has established policies and procedures that are intended to control the services provided by our independent auditors and to monitor their continuing independence. Under these policies, no services may be undertaken by our independent auditors unless the engagement is specifically approved by the Audit Committee or the services are included within a category that has been approved by the Audit Committee. The maximum charge for services is established by the Audit Committee when the specific engagement or the category of services is approved. In certain circumstances, our management is required to notify the Audit Committee when approved services are undertaken and the Audit Committee or its Chair may approve amendments or modifications to the engagement or the maximum fees. Our Director of Internal Audit is responsible for reporting to the Audit Committee regarding compliance with these policies and procedures.
The Audit Committee will not approve engagements of the independent auditors to perform non-audit services for the Company if doing so will cause the independent auditors to cease to be independent within the meaning of applicable SEC or Nasdaq rules. In other circumstances, the Audit Committee considers, among other things, whether our independent auditors are able to provide the required services in a more or less effective and efficient manner than other available service providers and whether the services are consistent with the Public Company Accounting Oversight Board Rules.
All services for which the Company engaged its independent auditors in fiscal 2018 and 2017 were approved by the Audit Committee. The total fees for audit and non-audit services provided by Ernst & Young LLP in fiscal 2018 and fiscal 2017 are set forth above. The Audit Committee approved the engagement of Ernst & Young LLP to provide these non-audit services because it determined that Ernst & Young LLP providing these services would not compromise Ernst & Young LLP's independence and that the firm's familiarity with our record keeping and accounting systems would permit the firm to provide these services with equal or higher quality, more efficiently and at a lower cost than the Company could obtain these services from other providers.
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The Company has been advised by Ernst & Young LLP that neither that firm, nor any member of the firm, has any material interest, direct or indirect, in any capacity in the Company or its subsidiaries.
One or more representatives of Ernst & Young LLP will be present at the 2019 Annual Meeting. The representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Ratification of the appointment of the independent auditors requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the 2019 Annual Meeting. If shareholders fail to approve the proposal, the Board may reconsider its prior appointment of the independent auditors or consider the results of this vote when it determines to appoint our independent auditors in the future.
The Board of Directors recommends a vote "FOR" the ratification of the appointment of Ernst & Young LLP as independent auditors.
60 THE RMR GROUP INC. 2019 Proxy Statement
OTHER INFORMATION
At this time, the Company knows of no other matters that will be brought before the meeting. If, however, other matters properly come before the meeting or any postponement or adjournment thereof, the persons named in the accompanying proxy card intend to vote the shares for which they have been appointed or authorized as proxy in accordance with their discretion on such matters to the maximum extent that they are permitted to do so by applicable law.
Jennifer B. ClarkManaging Director, Executive Vice President, General Counsel and Secretary
Newton, MassachusettsJanuary 23, 2019
THE RMR GROUP INC. 2019 Proxy Statement 61
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3.D64878-P65779 THE RMR GROUP INC.ANNUAL MEETING OF SHAREHOLDERSMarch 10, 2022, 9:30 a.m., Eastern Time Proxy Important | ||||||||||
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