UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the SecuritiestheSecurities
Exchange Act of 1934 (Amendment No. )
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Industrial Logistics Properties Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of 20192021 Annual Meeting
of Shareholders and Proxy Statement
Monday,Wednesday, June 3, 20192, 2021 at 9:30 a.m., Eastern time
Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458
BusinessLive Webcast Accessible at a Glance
https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/
LETTER TO OUR SHAREHOLDERS FROM OUR
YOUR BOARD OF TRUSTEES
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Dear Fellow Shareholders:
Please join us for our first annual meeting as a public company2021 Annual Meeting of Shareholders, which will be held virtually at 9:30 a.m. on Monday,Wednesday, June 3, 2019.2, 2021. The business to be conducted at the meeting is explained in the attached Notice of Meeting and Proxy Statement. We believe furnishing these materials over the internet expedites shareholders'your receipt of these important materials while loweringreducing the cost and reducing the environmental impact of our annual meeting.
AlthoughDespite the COVID-19 pandemic, we aresuccessfully advanced our business strategies, making steady progress on our key priorities to reduce leverage, expand the portfolio and create value for our shareholders and other stakeholders. In 2020, we entered into new and renewal leases for approximately 1.1 million square feet, resulting in weighted average rental rates that were 14.7% higher than prior rental rates with a young company, please be assuredweighted average lease term of 11.4 years. Our portfolio occupancy remained stable at 98.5%, demonstrating the strong demand for our high quality industrial and logistics properties. We closed on our first joint venture, which has reduced our leverage and demonstrated the value of our mainland portfolio. We also added strategic properties to our portfolio.
We believe that our Board takes seriouslyliquidity and financial resources position us well to weather and take advantage of market disruptions resulting from the COVID-19 pandemic. As of December 31, 2020, we had:
We continue to monitor changing events and circumstances with an eye to managing for the global good, mitigating the negative impact on our business and best positioning us for stability and long term business strategy, which is the best path to long term value creation for you, our shareholders. With this in mind, we have begun what we expect to be a multiyear process of examining our fundamental governance policies as we understand that good governance is critical to building and keeping shareholder confidence and to long term value creation. Shareholder engagement and feedback have been critical components of this examination. Our initial steps include engaging an executive search consulting firm to help us identify and vet qualified and diverse board candidates so that we can expand and, as appropriate, refresh our Board, adopting a proxy access bylaw and asking you to approve an amendment to our Declaration of Trust so that we will have a plurality vote standard for contested elections. We discuss our plans in more detail in the accompanying Proxy Statement.growth.
We thank you for your investment in Industrial Logistics Properties Trustour Company and for the confidence you put in this Board to oversee your interests in our business.
April 5, 2019March 29, 2021
Bruce M. Gans Lisa Harris Jones Joseph L. Morea | John G. Murray Kevin C. Phelan Adam D. Portnoy |
NOTICE OF 20192021 ANNUAL MEETING OF SHAREHOLDERS
Monday, June 3, 2019
9:30 a.m., Eastern time
Two Newton Place, 255 Washington Street, Suite 100Newton, Massachusetts 02458
ITEMS OF BUSINESS
RECORD DATE
You can vote if you were a shareholder of record as of the close of business on January 31, 2019.
PROXY VOTING
Shareholders as of the record date are invited to attend the 2019 Annual Meeting. If you cannot attend in person, please vote in advance of the 2019 Annual Meeting by using one of the methods described in the accompanying Proxy Statement.
April 5, 2019Newton, Massachusetts
By Order of the Board of Trustees,Jennifer B. ClarkSecretaryINDUSTRIAL LOGISTICS PROPERTIES TRUST
![]() | | Agenda: • Elect the Trustee nominee identified in the accompanying Proxy Statement to our Board of Trustees; • Advisory vote to approve executive compensation; • Ratify the appointment of Deloitte & Touche LLP as our independent auditors to serve for the 2021 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 March 24, 2021. Attending Our 2021 Annual Meeting: Due to the public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders and other stakeholders, our 2021 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 record date who holds shares directly, you may participate in our 2021 Annual Meeting via internet webcast by visiting the following website and following the registration and participation instructions contained therein: https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/. Please have the control number located on your proxy card or voting information form available. • Beneficial Owners: If you are a shareholder as of the record date who holds shares indirectly through a brokerage firm, bank or other nominee, you must register in advance to attend our 2021 Annual Meeting. You will need to present evidence of your beneficial ownership of shares. You will not be able to vote your shares at our 2021 Annual Meeting without a legal proxy. Beneficial owners should complete the registration process at least three days in advance of our 2021 Annual Meeting to ensure that all documentation and verifications are in order. |
Please 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 "Proxy Materials and Voting Information" section on page 31 for information about how to authorize a proxy by telephone or internet or how to attend the 2019 Annual Meeting and vote your shares in person.
| Please see the accompanying Proxy Statement for additional information. By Order of our Board of Trustees,
Jennifer B. Clark March 29, 2021 |
TABLE OF CONTENTS
PLEASE VOTE | 1 | |
PROXY | 2 | |
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS |
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Review of Corporate Governance Policies and Shareholder Engagement | ||
Board Composition, Expansion and Refreshment | ||
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| 6 | |
Key Responsibilities of Our Board | 8 | |
Our Board's Role in Oversight of Risk Management | ||
Trustee Independence | ||
Executive Sessions of Independent Trustees | ||
Board Leadership Structure | ||
Lead Independent Trustee | 11 | |
Code of Business Conduct and Ethics and Committee Governance | ||
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Nominations for Trustees | ||
Communications with | ||
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Shareholder Nominations and Other Proposals | ||
PROPOSAL 1: ELECTION OF TRUSTEES |
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Trustee | ||
Continuing Trustees | ||
Executive Officers | ||
BOARD COMMITTEES |
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BOARD MEETINGS |
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TRUSTEE COMPENSATION |
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Compensation of Trustees | ||
Trustee Share Ownership Guidelines | ||
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OWNERSHIP OF OUR EQUITY SECURITIES |
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Trustees and Executive Officers | ||
Principal Shareholders | ||
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COMPENSATION DISCUSSION AND ANALYSIS | 28 | |
Compensation Overview | 28 | |
Compensation Philosophy | 31 | |
Overview of 2020 Compensation Actions | 31 | |
Analysis of 2020 Awards under the Share Award Plan | 32 | |
Frequency of Say on Pay | 34 | |
REPORT OF OUR COMPENSATION COMMITTEE | 35 | |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
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EXECUTIVE COMPENSATION |
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Summary Compensation Table | ||
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2020 Outstanding Equity Awards at Fiscal Year End | ||
2020 Stock Vested | 38 | |
Potential Payments upon Termination or Change in Control | ||
Pay Ratio | 38 |
PROPOSAL |
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Audit Fees and All Other Fees | ||
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors | ||
Other Information | ||
REPORT OF |
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FREQUENTLY ASKED QUESTIONS |
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RELATED PERSON TRANSACTIONS |
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OTHER INFORMATION |
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ANNEX A—CERTAIN RELATED PERSON TRANSACTIONS | A-1 |
The Board of Trustees (our "Board") of Industrial Logistics Properties Trust (the "Company," "we," "us" or "our") is furnishing this proxy statement and accompanying proxy card (or voting instruction form) to you in connection with the solicitation of proxies by our Board for our 2021 annual meeting of shareholders. Due to the public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders and other stakeholders, our annual meeting will be held virtually via live webcast on Wednesday, June 2, 2021, at 9:30 a.m., Eastern time, subject to any adjournments or postponements thereof (the "2021 Annual Meeting"). We are first making these proxy materials available to shareholders on or about March 29, 2021.
Only owners of record of our common shares of beneficial interest ("Common Shares") as of the close of business on March 24, 2021, the record date for our 2021 Annual Meeting, are entitled to notice of, and to vote at, the meeting and at any postponements or adjournments of the meeting. Holders of Common Shares are entitled to one vote for each Common Share held on the record date. Our Common Shares are listed on The Nasdaq Stock Market LLC ("Nasdaq"). On March 24, 2021, there were approximately 65,301,088 Common Shares issued and outstanding.
The mailing address of our principal executive office is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR OUR 2021
ANNUAL MEETING TO BE HELD ON WEDNESDAY, JUNE 2, 2021.
The Notice of 2021 Annual Meeting, Proxy Statement and Annual Report to Shareholders for the fiscal year ended December 31, 2020 are available at www.proxyvote.com.
It is very important that youPlease vote to play a part in the future of our Company. Thefuture. Nasdaq Stock Market LLC (the "Nasdaq") rules do not allow a broker, bank or other nominee who holds shares on your behalf to vote on nondiscretionary matters without your instructions.
PROPOSALS THAT REQUIRE YOUR VOTE
PROPOSAL | MORE INFORMATION | BOARD RECOMMENDATION | VOTES REQUIRED FOR APPROVAL | ||||||||
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1 | Election of | Page | ✓FOR | Plurality of all votes cast | |||||||
2 | Page | ✓FOR | Majority of all votes cast | ||||||||
3 | Page | ✓FOR | Majority of all votes | ||||||||
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You can vote in advance in one of three ways:
via the internet ![]() | Visitwww.proxyvote.com and enter your 16 digit control number provided in your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form before 11:59 p.m., Eastern time, on June | |
by phone ![]() | 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 June | |
by mail ![]() | 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 |
If the meeting is postponed or adjourned, these times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting.
PLEASE VISIT:www.proxyvote.com
20192021 Proxy Statement 1
April 5, 2019
The Board of Trustees (the "Board") of Industrial Logistics Properties Trust (the "Company," "we," "us" or "our") is furnishingThis proxy summary highlights information which may be provided elsewhere in this proxy statement and accompanying proxy card (or voting instruction form) to you in connection with the solicitation of proxies by the Board for the 2019 annual meeting of shareholdersProxy Statement. This summary does not contain all of the Company. The meeting will be held at Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458 on Monday, June 3, 2019, at 9:30 a.m., Eastern time,information that you should consider, and any adjournments or postponements thereof (the "2019 Annual Meeting"). Weyou should read the entire Proxy Statement carefully before voting. Page references are first making these proxy materials availablesupplied to shareholders on or about April 5, 2019.help you find further information in this Proxy Statement.
Only ownersELIGIBILITY TO VOTE
You can vote if you were a shareholder of record of common shares of beneficial interest of the Company ("Common Shares") as ofat the close of business on January 31, 2019,March 24, 2021, the record date for our 2021 Annual Meeting.
HOW TO CAST YOUR VOTE (Page 43)
You can vote by any of the meeting, are entitled to noticefollowing methods:
The mailing address of the Company's principal executive offices is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALSFOR THE 2019 ANNUAL MEETING TO BE HELD ON MONDAY, JUNE 3, 2019.
The Notice of 2019our 2021 Annual Meeting Proxy Statementif they have a legal proxy.
CORPORATE GOVERNANCE PRINCIPLES (Page 4)
We pride ourselves on continuing to observe and Annual Reportimplement best practices in our corporate governance.
SUSTAINABILITY (Page 6)
We have a long-standing commitment to Shareholders for the year ended December 31, 2018 are available atour shareholders and stakeholders to conduct our business in an environmentally and socially responsible manner.
www.proxyvote.com.VOTING (Pages 1, 15, 27 and 39)
PROPOSAL | BOARD RECOMMENDATION | VOTES REQUIRED FOR APPROVAL | ||||
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1 | Election of Trustee | ✓ FOR | Plurality of all votes cast | |||
2 | Advisory vote to approve executive compensation* | ✓ FOR | Majority of all votes cast | |||
3 | Ratification of independent auditors* | ✓ FOR | Majority of all votes cast | |||
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20192021 Proxy Statement
PROPOSAL 1: ELECTION OF TRUSTEES (Page 15)
Upon the recommendation of our Nominating and Governance Committee, our Board has nominated Joseph L. Morea as an Independent Trustee. Presented below is the expected composition of our Board immediately following our 2021 Annual Meeting, assuming the election of Joseph L. Morea as a Trustee.
NAME OF TRUSTEES | INDEPENDENT | COMMITTEE MEMBERSHIP | ||
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Bruce M. Gans, M.D. | ✓ | Audit Compensation (Chair) Nominating and Governance | ||
Lisa Harris Jones | ✓ | Audit Compensation Nominating and Governance (Chair) | ||
Joseph L. Morea | ✓ | Audit (Chair) Compensation Nominating and Governance | ||
John G. Murray | None | |||
Kevin C. Phelan | ✓ | Compensation Nominating and Governance | ||
Adam D. Portnoy | None | |||
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PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (Page 27)
COMPENSATION DISCUSSION AND ANALYSIS (Page 28)
Our compensation structure is unique because of our relationship with our manager, The RMR Group LLC ("RMR LLC"). Our business management agreement with RMR LLC is designed to incentivize RMR LLC to provide the highest quality services to us. Our Compensation Committee believes that our executive compensation program is appropriately designed to incentivize strong performance over the long term.
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS (Page 39)
2021 Proxy Statement 3
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Review of Corporate Governance Policies and Shareholder Engagement |
Our Board is committed to upholding the values of good corporate governance. In recognition of the relationship between corporate governance and long term performance, and as a result of our ongoing engagement with and feedback from our shareholders, theour Board has embarked on a review of the Company'scontinues to proactively evaluate our corporate governance principles. The Board expects that corporate governance reform will be a multi-year process and, as it weighs various alternatives, the Board is prioritizing its consideration based on a review of best practices and input from our shareholders. Based on these principles, the Board has established the following priorities and taken the following steps:last year our Board:
This year, our Board continued to our Declarationengage with Korn Ferry regarding board refreshment and expansion and conducted another shareholder outreach to all of Trust so that in a contested election our Trustees are elected by a plurality of the votes cast by our shareholders (see page 30).
The Board has also instituted a numberwho hold 1% or more of complementary mechanisms to allow shareholders to communicate their points of view, including:
As theour Board continues on the path to enhanced good governance practices, we appreciate your support of theour Board and these initiatives.
Board Composition, Expansion and Refreshment |
We are currently governed by a fivesix member Board of Trustees, including four Independent Trustees and two Managing Trustees, and our Board is currently divided into three classes. In 2020, Laura A. Wilkin resigned as an Independent Trustee, effective as of September 7, 2020, to accept an executive position at one of our major tenants whose policies did not permit her to continue to serve as a member of our Board. As a result of Ms. Wilkin's resignation, our Board reduced its size from seven to six Trustees.
In 2020, with the support of more than 85% of our shareholders, our Board amended our Declaration of Trust to declassify our Board. Beginning with our 2021 Annual Meeting, the Trustees whose terms expire at an annual meeting will stand for election at the meeting for one-year terms and all Trustees will stand for election at the 2023 annual meeting of shareholders and, thereafter, for one-year terms.
Ensuring theour Board is comprised of Trustees who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds and effectively represent the long-termlong term interests of shareholders is a top priority of theour Board and theour Nominating and Governance Committee. TheOur Board iscontinues to actively seeking to expandevaluate its composition for several reasons, including to increasecomposition. Our Board's expansion and refreshment activities have increased the ratio of Independent Trustees to Managing Trustees, createcreated more skill mix and diversity ensure
4 2021 Proxy Statement
and ensured a smooth transition ifas Trustees retire from our Board. Our Nominating and when a Trustee decides to retire or otherwise leaves theGovernance Committee and our Board and ensure that the Board is comprised of individualshave an ongoing engagement with a diverse set of backgrounds, perspectives and skills. The Board believes that continuity is important to the effective conduct of our business and expects the expansion process will take place over several years. To facilitate these efforts, the Board has retained Korn Ferry, a leading executive search and consulting firm, to act as an advisor and to assist theour Nominating and Governance Committee in:
Process for Selecting Trustees |
Our Nominating and Governance Committee screens and recommends candidates for nomination by our full Board. Our Nominating and Governance Committee is assisted with its recruitment efforts by its ongoing engagement with Korn Ferry, which recommends candidates that satisfy our Board's criteria. They also provide research and pertinent information regarding candidates, as requested.
ISG Corporate Governance Framework |
We follow the Investor Stewardship Group's ("ISG") Corporate Governance Framework for U.S. Listed Companies, as summarized below:
ISG Principle | Our Practice | |
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Principle 1: Boards are accountable to shareholders. | • We amended our Declaration of Trust to declassify our Board. Beginning in 2023, all of our Trustees will stand for election annually. • We adopted a proxy access bylaw. | |
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Principle 2: Shareholders should be entitled to voting rights in proportion to their economic interest. | • We do not have a dual class structure; each shareholder gets one vote per share. | |
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20192021 Proxy Statement 35
THE BOARD BELIEVES THAT ITS MEMBERS SHOULD:
ISG Principle | Our Practice | |
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Principle 3:
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In addition, the Board has determined that the Board, as a whole, should strive to have the right mix of characteristics and skills necessary to effectively perform its oversight responsibilities. The Board believes that Trustees with one or more of the following professional skills or experiences can assist in meeting this goal:
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Principle 4:
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Principle 5: Boards should adopt structures and | • 66.7% of Board members are independent. •
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• Our Trustees then in office attended at least 75% of all Board and applicable committee meetings in 2020, and each of our Trustees then in office attended the 2020 annual meeting of shareholders. | |
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Principle 6: Boards should develop management incentive structures that are aligned with the | • Our Compensation Committee annually reviews and • Although we do not pay any cash compensation directly to our officers and have no employees, we have adopted our 2018 Equity Compensation Plan (the "Share Award Plan") to reward our named executive officers and other employees of RMR LLC who provide services to us and to align their interests with those of our |
The Nominating and Governance Committee
Sustainability |
Overview. Our business strategy incorporates a focus on sustainable approaches to operating our properties in a manner that benefits our shareholders, tenants and the Board considercommunities in which we are located. We seek to operate our properties in ways that improve the qualifications, characteristicseconomic performance of their operations, while simultaneously ensuring tenant comfort and skills of Trusteessafety, managing energy and Trustee candidates individually and in the broader context of the Board's overall composition when evaluating potential nominees for electionwater consumption, as Trustee. The Nominating and Governance Committee and the Board also expect to ask Korn Ferry to assist in considering the qualifications of, and evaluating, potential nominees.well as greenhouse gas emissions.
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20192021 Proxy Statement
Our environmental, social and governance initiatives are primarily implemented by our manager, RMR LLC, and focus on a complementary set of objectives, including the following:
In 2020, RMR LLC was recognized by The Boston Globe as a "Top Place to Work", by Fortune magazine as one of the "100 Fastest Growing Companies", by the EPA as an "ENERGY STAR Partner of the Year", by the Boston Business Journal as the "Fastest Growing Middle Market Company in Massachusetts," and it ranked 9th on Commercial Property Executive's Top Commercial Property Management Companies. Last year, RMR LLC also received the Real Estate Management Excellence Award for Employee & Leadership Development from the Institute of Real Estate Management.
RMR LLC's recruiting programs, on-boarding, retention programs and its development and training programs currently include the following:
2021 Proxy Statement 7
RMR LLC has made diversity and inclusion an important part of its hiring, retention and development programs. In 2020, RMR LLC has enhanced its hiring policies to support increasing diversity within its workforce. For every open position not filled by internal candidates, hiring managers are required to have at least one qualified woman or member of underrepresented community candidate in the final round interviews before an offer is extended to fill the position. An RMR LLC manager who is a woman and/or member of an underrepresented community is required to be part of the final round interview team. In addition, RMR LLC works with strategic industry partners like Commercial Real Estate Women (CREW) and The Partnership Inc. for posting new positions and supporting multicultural professionals.
To learn more about RMR LLC's and our sustainability initiatives, visit www.rmrgroup.com/corporate-sustainability.
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Oversight of Strategy | Oversight of Risk | Succession Planning | ||||||||||||||||
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| Our Board oversees and monitors strategic planning. | ![]() | Our Board oversees risk management. | ![]() | Our Board oversees succession planning and talent development for senior executive positions. | |||||||||||||
![]() | Business strategy is a key focus | ![]() | Board committees, which meet regularly and report back to our full Board, play significant roles in carrying out the risk oversight function. | ![]() | Our Nominating and Governance Committee makes an annual report to our Board on succession planning. | |||||||||||||
![]() | Company management is charged with executing business strategy and provides regular performance updates to |
| Company management is charged with managing risk, through robust internal processes and effective internal controls. |
| In the event of a succession, | |||||||||||||
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20192021 Proxy Statement 5
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TheOur Board is elected by our shareholders to oversee the Company'sour business and long term strategy. As part of fulfilling its responsibilities, theour Board oversees the safeguarding of the Company'sour assets, the maintenance of appropriate financial and other internal controls and the Company'sour compliance with applicable laws and regulations. Inherent in these responsibilities is theour Board's understanding and oversight of the various risks the Company faces. Thewe face. Our 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'sour business strategy.
TheOur Board oversees risk as part of its general oversight of theour 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. TheOur day to day business of the Company is conducted by our manager, The RMR Group LLC, ("RMR LLC"), and RMR LLC and the Company'sour officers and Director of Internal Audit are responsible for incorporating risk management in their activities. The Company'sOur Director of Internal Audit reports to theour Audit Committee and provides the Companyus with advice and assistance with the Company'sour risk management function.
In discharging their oversight responsibilities, theour Board and Board committees review regularly a wide range of reports provided by RMR LLC and other service providers, provide, including:
TheOur Board and Board committees discuss these matters among themselves and with representatives of RMR LLC, our officers, of the Company, theour Director of Internal Audit, legal counsel, the Company'sour independent auditors and other professionals, as appropriate.
TheOur Audit Committee takes a leading role in helping theour Board fulfill its responsibilities for oversight of the Company'sour financial reporting, internal audit function, risk management, including cybersecurity, and the Company'sour compliance with legal and regulatory requirements. TheOur Board and Audit Committee review periodic reports from the Company'sour independent auditors regarding potential risks, including risks related to the Company'sour internal control over financial reporting. TheOur Audit Committee also reviews, approves and oversees an internal audit plan developed by the Company'sour Director of Internal Audit with the goal of helping the Companyus systematically evaluate the effectiveness of itsour risk management, control and governance processes on an annual basis. The Audit Committee considers risks relating to cybersecurity, receiving regular reports 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. TheOur Audit Committee meets at least quarterly and reports its findings to theour Board. TheOur Audit Committee also meets periodically with the Company'sour Director of Internal Audit to review the results of the Company'sour internal audits, and directs or recommends to theour Board actions or changes it determines appropriate to enhance or improve the effectiveness of the Company'sour risk management.
TheOur Audit Committee considers risks related to cybersecurity and receives regular reports from our management regarding cybersecurity risks and countermeasures being undertaken or considered by us,
2021 Proxy Statement 9
including updates on the internal and external cybersecurity landscape and relevant technical developments.
Our Compensation Committee whose duties are detailed in its charter, among other duties, evaluates the performance of the Company'sour Director of Internal Audit and RMR LLC's performance under the Company'sour business and property management agreements, including any perceived risks created by compensation arrangements. Also, theour Compensation Committee and theour Board consider that the
6
2019 Proxy Statement
Company haswe have a share award program that requires share awards to executive officers to vest over a period of years. The Company believesWe believe that the use of share awards vesting over time rather than stock options mitigates the incentives for the Company'sour management to undertake undue risks and encourages management to make longerlong term and appropriately risk balanced decisions.
It is not possible to identify all of the risks that may affect the Companyus 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 Companyus to bear certain risks to achieve itsour objectives. As a result of the foregoing and other factors, the Company'sour ability to manage risk is subject to substantial limitations.
To learn more about the risks facing the Company,we face, you can review the matters discussed in Part I, "Item 1A. Risk Factors" and "Warning Concerning Forward LookingForward-Looking Statements" in our Annual Report to Shareholders for the fiscal year ended December 31, 2018 ("Annual2020 (the "Annual Report"). The risks described in the Annual Report are not the only risks facing the Company.we face. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company'sour business, financial condition or results of operations in future periods.
Trustee Independence |
Under the corporate governance listing standards of the Nasdaq theand our governing documents, our Board must consist of a majority of Independent Trustees. Our governing documents also require that a majority of the Board be Independent Trustees. Under our governing documents, Independent Trustees are Trustees who are not employees of RMR LLC, are not involved in the Company'sour day to day activities and who meet the qualifications for independence under the applicable rules of the Nasdaq and the SEC.Securities and Exchange Commission (the "SEC").
TheOur Board affirmatively determines whether Trustees have a direct or indirect material relationship with the Company,us, including the Company'sour subsidiaries, other than serving as the Company'sour Trustees or trustees or directors of the Company'sour subsidiaries. In making independence determinations, theour Board observes the Nasdaq and SEC criteria, as well as the criteria set forth in our governing documents. When assessing a Trustee's relationship with the Company, theus, our Board considers all relevant facts and circumstances, not merely from the Trustee's standpoint, but also from that of the persons or organizations with which the Trustee has an affiliation. Based on this review, theour Board has determined that Bruce M. Gans, Lisa Harris Jones, and Joseph L. Morea and Kevin C. Phelan currently qualify as independent trustees under applicable Nasdaq and SEC criteria and as Independent Trustees under our governing documents. In making these independence determinations, theour Board reviewed and discussed additional information provided by the Trusteesus and the CompanyTrustees with regard to each of the Trustees' relationships with the Company, us, RMR LLC or The RMR Group Inc. ("RMR Inc. or"), the managing member of RMR LLC, and the other companies to which RMR LLC or its subsidiaries provide management services. TheOur Board has concluded that none of these threefour Trustees possessed or currently possesses any relationship that could impair his or her judgment in connection with his or her duties and responsibilities as a Trustee or that could otherwise be a direct or indirect material relationship under applicable Nasdaq and SEC standards.
10 2021 Proxy Statement
Executive Sessions of Independent Trustees |
Pursuant to the Company'sour Governance Guidelines, our Independent Trustees are expected to meet at least twice per year in regularly scheduled meetings at which only Independent Trustees are present. Our Independent Trustees also meet separately with the Company'sour officers, with the Company'sour Director of Internal Audit and with the Company'sour independent auditors. The presiding Trustee for purposes of leading Independent Trustee sessions will be the Chair of the Audit Committee,Lead Independent Trustee, unless the Independent Trustees determine otherwise.
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Board Leadership Structure |
In accordance with our governing documents, the Board is comprised of five Trustees, including three Independent Trustees and two Managing Trustees, and our Board is divided into three classes, with each Trustee of each class elected at an annual meeting of shareholders serving for a term that continues until the third annual meeting of shareholders following his or her election and until his or her successor is elected and qualifies. All Trustees play an active role in overseeing the Company'sour business both at theour Board and committee levels. As set forth in the Company'sour Governance Guidelines, the core responsibility of our Trustees is to exercise sound, informed and independent business judgment in overseeing theour Company and itsour strategic direction. Our Trustees are skilled and experienced leaders and currently serve or have served as members of senior management in public and private for profit organizations and law firms, and have also served in academia. Our Trustees may be called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of the Company'sour officers and advisers. TheOur Board is small, which facilitates informal discussions and communication from management to theour Board and among Trustees. We do not have a Chairman
Adam D. Portnoy serves as Chair of theour Board. Our Board or a lead Independent Trustee.believes that Mr. Portnoy's leadership of RMR LLC and extensive familiarity with our day to day business provide valuable insight for our Board.
Our Chief Financial Officer and Treasurer and our Director of Internal Audit regularly attend Board and Board committee meetings. Special meetings of the Board may be called at any time by any Managing Trustee, the President or pursuant to the request of any two Trustees then in office. Our Managing Trustees, in consultation with the Company's management and the Director of Internal Audit, set the agenda for Board meetings. Other Trustees may suggest agenda items as well. Discussions at Board meetings are led by the Managing Trustee or Independent Trustee who is most knowledgeable on a subject.
ThreeFour of our Trustees, including one of our nomineesTrustee nominee for election at the 2019our 2021 Annual Meeting, are independent under the applicable Nasdaq and SEC criteria and our governing documents. All of the members of theour Audit Committee, Nominating and Governance Committee and Compensation Committee are independent under the applicable listing requirements and rules of the Nasdaq and other applicable laws, rules and regulations, including those of the SEC. As set forth in our governing documents, two of our Trustees are Managing Trustees, persons who have been employees, officers or directors of RMR LLC or its parent or who have been involved in the Company'sour day to day activities for at least one year prior to his, her or hertheir election as Trustees.
Lead Independent Trustee |
We have a Lead Independent Trustee who is selected annually by the vote of a majority of our Independent Trustees. Currently, Dr. Gans serves as our Lead Independent Trustee. Our Lead Independent Trustee has well-defined, substantive responsibilities that include:
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Code of Business Conduct and Ethics and Committee Governance |
TheOur Board is committed to corporate governance that promotes the long term interests of our shareholders. TheOur Board has established Governance Guidelines that provide a framework for effective governance. TheOur Board regularly reviews developments in corporate governance and updates our Governance Guidelines and other governance materials as it deems necessary and appropriate.
The Company hasWe have also adopted a Code of Business Conduct and Ethics (the "Code") to, among other things, provide guidance to our Trustees and RMR LLC's (and its subsidiaries') board members, officers and in the case of RMR LLC, its officers and employees, and its parent's and subsidiaries' directors, officers and employees to ensure compliance with applicable laws and regulations.
TheOur Board has an Audit Committee, Compensation Committee and Nominating and Governance Committee. TheOur Audit Committee, Compensation Committee and Nominating and Governance Committee each have adopted a written charter, and each Board committee reviews its written charter on an annual basis to consider whether any changes are required.
Our corporate governance materials are available for review in the governance section of our website, including our 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 Trustees, individually or as a group.Trustees. To access these documents on the Company'sour website visit www.ilptreit.com.
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2019 Proxy Statementwww.ilptreit.com
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In uncontested electionsOur Insider Trading Policies and Procedures expressly prohibit members of our Trustees are elected by a pluralityBoard and our officers from engaging in hedging transactions involving our securities and those of the votes cast by our shareholders. If the amendmentRMR Inc. or any other public company to our Declaration of Trust described in Proposal 3 is approved by our shareholders, our Trustee nominees will also be elected by a plurality of the votes cast by our shareholders in contested elections (i.e., elections in which the number of nominees standing for election as Trustees exceeds the number of Trustees to be elected at the meeting).RMR LLC or its affiliates provide management services.
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In March 2019, after extensive analysis and shareholder engagement, the Nominating and Governance Committee recommended, and the Board adopted, a proxy access bylaw pursuant to which a shareholder, or a group of up to 20 shareholders, owning at least three percent of the outstanding Common Shares continuously for at least three years, may nominate and include in the Company's proxy materials for an annual meeting Trustee nominees constituting up to the greater of two nominees or 20% of the number of Trustees on the Board that holders of our Common Shares are entitled to elect, provided that for so long as the Company has a classified Board of less than nine Trustees, such number of Trustee nominees will be reduced so that for any annual meeting it does not exceed one-half of the number of Trustees to be elected at the meeting as noticed by the Company rounded down to the nearest whole number (but not rounded down as a result of this proviso to less than one). Shareholders making such a nomination and their nominees must also satisfy the informational, documentation and other requirements specified by Section 2.17 of our Bylaws.
Nominations for Trustees |
The Nominating and Governance Committee is responsible for identifying and evaluating nominees for Trustee 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 Trustees, officers or shareholders or by others. Shareholders who would like to recommend a Trustee nominee for the position of Trustee should submit their recommendations in writing by mail to the Chair of theour Nominating and Governance Committee, c/o Industrial Logistics Properties Trust, Secretary, at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@ilptreit.com. Any such recommendation shallshould include a description of the candidate's qualifications for Board service, the candidate's written consent to be considered for nomination and to serve if nominated and elected, as well as the addresses and telephone numbers for contacting the shareholder and the candidate for more information. TheOur 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 theour Nominating and Governance Committee in its discretion using the same criteria as other candidates it considers.
As noted above, a12 2021 Proxy Statement
A shareholder, or a group of up to 20 shareholders, owning at least three percent (3%) of the outstanding Common Shares continuously for at least three years may utilize our proxy access bylaw to nominate and include in the Company'sour proxy materials Trustee candidate(s) for election at an annual meeting of shareholders provided that the shareholder(s) and the nominee(s) satisfy the informational, documentation and other requirements specified by Section 2.17 of our Bylaws.
Shareholders seeking to nominate one or more individuals as a Trustee candidate without relying on our proxy access bylaw shallmust comply with the advance notice requirements for shareholder nominations set forth in Section 2.13 of our Bylaws, which include, among other things, requirements as to the proposing shareholder's timely delivery of advance notice, continuous requisite ownership of Common Shares and submission of specified documentation and information.
2019 Proxy Statement 9
Communications with |
TheOur Board has established a process to facilitate communication by shareholders and other interested partiesstakeholders with our Trustees. Communications should be addressed to Trustees in care of the Secretary, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@ilptreit.com.
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Our business strategy incorporates and values environmental sustainability principles. We seek to operate our properties in a manner that improves the environmental efficiency of their operations. We regularly consider ways to improve our internal culture and the communities in which we operate. Our environmental sustainability and community engagement strategies are primarily implemented by our manager, RMR LLC, and focus on a complementary set of objectives, including the following:
To learn more about the Company's and RMR LLC's sustainability initiatives, visitwww.rmrgroup.com/corporate-sustainability.
Shareholder Nominations and Other Proposals |
Deadline to Submit Proposals pursuant to Rule 14a-8 for the 20202022 Annual Meeting of Shareholders:Shareholders: Shareholder proposals pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), must be received at our principal executive officesoffice on or before December 7, 2019November 29, 2021 in order to be eligible to be included in the proxy statement for the 20202022 annual meeting of shareholders; provided, that, if the date of the 20202022 annual meeting of shareholders is more than 30 days before or after June 3, 2020,2, 2022, such a proposal must be submitted within a reasonable time before we begin to print itsour proxy materials. Under Rule 14a-8, the Company iswe are not required to include shareholder proposals in itsour proxy materials in certain circumstances or if conditions specified in the rule are not met.
Deadline to Submit Trustee Proxy Access Nominations for the 2022 Annual Meeting of Shareholders: Under our proxy access bylaw, a shareholder or a group of up to 20 shareholders owning at least three percent of our outstanding Common Shares continuously for at least three years may nominate and include in our proxy materials for the 2022 annual meeting of shareholders Trustee nominees constituting up to the greater of two nominees or 20% of the number of Trustees on our Board that holders of our Common Shares are entitled to elect; provided that, as we declassify our Board, such number of Trustee nominees will be reduced so that for the 2022 annual meeting of shareholders it does not exceed one-half of the number of Trustees to be elected at the 2022 annual meeting of shareholders as noticed by us (so long as our Board consists of less than nine Trustees) rounded down to the nearest whole number (but not rounded down as a result of this proviso to less than one). In addition, the shareholder(s) and nominee(s) must satisfy the informational, documentation and other requirements specified by Section 2.17 of our Bylaws. Notice of a proxy access nomination for consideration at our 2022 annual meeting of shareholders must be received at our principal executive office not later than 5:00 p.m., Eastern time, on November 29, 2021 and not earlier than October 30, 2021.
Deadline to Submit Other Nominations and Proposals for the 20202022 Annual Meeting of Shareholders under our Bylaws:Bylaws: To be timely, shareholder nominations and proposals intended to be made outside of Rule 14a-8 under the Exchange Act and outside of the proxy access bylaw at the 2022 annual meeting of shareholders must be received by our Secretary at our principal executive offices,office, in accordance with the requirements of our Declaration of Trust and Bylaws, not later than 5:00 p.m., Eastern time, on December 7, 2019November 29, 2021 and not earlier than November 7, 2019;October 30, 2021; provided, that, if the date of the 20202022 annual meeting of shareholders is more than 30 days earlier or later than June 3, 2020,2, 2022, then a shareholder's notice must be so delivered not later than 5:00 p.m., Eastern time, on the tenth day following the earlier of the day on which (i) notice of the date of the 20202022 annual meeting of shareholders is mailed or
2021 Proxy Statement 13
otherwise made available or (ii) public announcement of the date of the 20202022 annual meeting of shareholders is first made by the Company.us. Shareholders making such a nomination or proposal must comply with the advance notice and other requirements set forth in our Declaration of Trust and Bylaws, which include, among other things,
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2019 Proxy Statement
requirements as to the shareholder's timely delivery of advance notice, continuous requisite ownership of Common Shares, holding of a share certificate for such shares at the time of the advance notice and submission of specified information.
The foregoing description of the deadlines and other requirements for a shareholdershareholders to submit a nomination for election to theour Board or a proposal of other business for consideration at an annual meeting of shareholders is only a summary and is not a complete listing of all requirements. Copies of our Declaration of Trust and Bylaws, including the requirements for proxy access or other shareholder nominations and other shareholder proposals, may be obtained by writing to the Company'sour Secretary at Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, or from the SEC's website,www.sec.gov. Any shareholder considering making a nomination or other shareholder proposal should carefully review and comply with those provisions.
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20192021 Proxy Statement 11
PROPOSAL 1: ELECTION OF TRUSTEES
Upon the recommendation of theour Nominating and Governance Committee, theour Board has nominated Lisa Harris Jones for electionJoseph L. Morea as an Independent Trustee in Class I and John G. Murray for election as a Managing Trustee in Class I. Ms. Harris Jones andTrustee. Mr. MurrayMorea currently serveserves on theour Board. If elected, Ms. Harris Jones and Mr. MurrayMorea would serve until the Company'sour 2022 annual meeting of shareholders and until his or her successor is duly elected and qualifies, subject to the individual'shis earlier death, resignation, retirement, disqualification or removal.
We expect each nominee for election as Trusteethat Mr. Morea will be able to serve if elected. However, if a nomineeMr. Morea should become unable or unwilling to serve, proxies may be voted for the election of a substitute nominee designated by theour Board.
AssumingBoard of Trustees' Qualifications and Experience
Our Trustees have a quorumgreat diversity of experience and bring to our Board a wide variety of skills, qualifications, viewpoints and backgrounds that strengthen their ability to carry out their oversight role on behalf of our shareholders.
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Snapshot of 2021 Board Nominees
Presented below is present ata snapshot of the meeting, aexpected composition of our Board immediately following our 2021 Annual Meeting, assuming the election of Joseph L. Morea. Our Board of Trustees believes that, collectively, our Trustees exhibit an effective mix of qualifications, experience and diversity.
A plurality of all the votes cast is required to elect a Trustee at the 2019our 2021 Annual Meeting.
The names,name, principal occupationsoccupation and certain other information andregarding the nominees for Trustees, as well as a summary of the key experiences, qualifications, attributes and skillsTrustee nominee that led theour Nominating and Governance Committee and theour Board to conclude that such persons areMr. Morea is currently qualified to serve as Trustees,a Trustee are set forth on the following pages.
TheOur Board of Trustees recommends a vote "FOR" the election of bothour Trustee nominees.nominee.
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Trustee |
| | | Joseph L. Morea Age: 66 Independent Trustee since 2018 Expected Term: Annual term expiring at the 2022 annual meeting of shareholders | | | Board Committees: • Audit (Chair) • Compensation • Nominating and Governance | | | Other RMR Managed Public Company Boards(1): • TravelCenters of America Inc. (since 2016) • Tremont Mortgage Trust (since 2017) Other Non-RMR Managed Public Company Boards: • First Eagle Senior Loan Fund (since 2013) • Portman Ridge Finance Corporation (since 2020) | | ||||
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| | | Specific Qualifications, Attributes, Skills and Experience: • Experience in and knowledge of the investment banking industry and public capital markets • Demonstrated leadership and management abilities • Experience in capital raising and strategic business transactions • Experience as a public company trustee and director and board committee member • Professional training, skills and expertise in, among other things, finance matters • Institutional knowledge earned through prior service on our Board since shortly after our formation • Identifies as Caucasian and as male • Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents | |
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Continuing Trustees |
| | Bruce M. Gans, M.D. Age: 74 Independent Trustee since 2018
Term:
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Audit • Compensation (Chair) • Nominating and Governance | | | Other RMR Managed Public Company Boards(1): • Five Star Senior Living Inc. (since 2001) Other Non-RMR Managed Public Company | | |||||
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| Dr. Gans has been executive vice president and chief medical officer at the Kessler Institute for Rehabilitation since 2001 and national medical director for Rehabilitation Select Medical, the parent company of the Kessler Institute, since 2003, and will be retiring from such positions effective March 31, 2021. He is also a professor of physical medicine and rehabilitation at Rutgers University—New Jersey Medical School. Dr. Gans was an independent trustee of Service Properties Trust from 2009 until 2015. Dr. Gans has also served as president and chief executive officer of the Rehabilitation Institute of Michigan. In Dr. Gans's extensive academic career, he has served as professor of physical medicine and rehabilitation at a number of universities, in addition to his current position at Rutgers University—New Jersey Medical School. Dr. Gans has also served as president of the American Academy of Physical Medicine and Rehabilitation, a medical society with more than 7,500 members, and as a leader in numerous other professional organizations. | | | Specific Qualifications, Attributes, Skills and Experience: • Demonstrated leadership capability, including through his service in many healthcare management, professional, academic and civic leadership positions • Business experience as the chief executive of a large medical organization • Experience in, and knowledge of, the CRE industry and REITs • Work on public company boards and board committees • Many academic and professional achievements • Institutional knowledge earned through prior service on our Board since shortly after our formation • Identifies as Caucasian and as male • Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents | |
| | | Lisa Harris Jones Age: 53 Independent Trustee since 2018 Term: Term expiring at the 2022 annual meeting of shareholders | | | Board Committees: • Audit • Compensation • Nominating and Governance (Chair) | | | Other RMR Managed Public Company Boards(1): • TravelCenters of America Inc. (since 2013) • Diversified Healthcare Trust (since 2015) Other Non-RMR Managed Public Company Boards: None | | ||||
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| Ms. Harris Jones is the founding member of Harris Jones & Malone, LLC, a law firm based in Maryland. Since founding Harris Jones & Malone, LLC in 2000, Ms. Harris Jones has represented a wide range of clients, focusing her practice in government relations and procurement at both the state and local levels. Prior to founding Harris Jones & Malone, LLC, Ms. Harris Jones was associated with other Maryland law firms from 1993 to 1999, and she has represented the City of Baltimore and many of its agencies and related quasi-public entities in various real estate development and financing transactions. In addition to her professional accomplishments, Ms. Harris Jones has held leadership positions in many community service and civic organizations for which she has received recognitions and awards, including being the recipient of the YWCA Greater Baltimore Special Leadership Award in 2012. | | | Specific Qualifications, Attributes, Skills and Experience:
Professional skills and experience in legal and business finance
Experience in public policy
Experience in real estate
Demonstrated leadership capability as an entrepreneur and founding member of a law
Work on public company boards and board
Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing | |
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| | | John G. Murray Age: 60 Managing Trustee since 2018 President and Chief Executive Officer since 2018 Term: Term expiring at the 2022 annual meeting of shareholders | | | Board Committees: None | | | Other RMR Managed Public Company Boards(1): • Service Properties Trust (since 2018) Other Non-RMR Managed Public Company Boards: None | | ||||
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| Mr. Murray has been the president of | | | Specific Qualifications, Attributes, Skills and Experience:
Leadership position with
Extensive experience in, and knowledge of, the CRE industry and
Institutional knowledge earned through prior service as an officer of
Professional skills and expertise in accounting and financing and experience as a chief executive officer and chief operating
Identifies as Caucasian and as male • Qualifying as a Managing Trustee in accordance with the requirements of our governing | |
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| | | Kevin C. Phelan Age: 76 Independent Trustee since 2020 Term: Term expiring at the 2022 annual meeting of shareholders | | | Board Committees: • Compensation • Nominating and Governance | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: • BNY Mellon Funds Trust (since 2000) | | ||||
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| Mr. Phelan has been co-chairman of the Boston office of Colliers International Group, Inc. (formerly known as Meredith & Grew, or M&G), a full service commercial real estate firm, since 2010. Prior to that he served as president since 2007 and prior to that as executive vice president of the executive committee, and director and partner of M&G. Mr. Phelan joined M&G in 1978 and established the finance and capital markets group. Prior to joining M&G, Mr. Phelan was a vice president at State Street Bank & Trust Co., where he was responsible for commercial lending. Mr. Phelan serves on the board of directors of A.D. Makepeace Co., a privately owned cranberry grower and real estate development company. Mr. Phelan also serves on several non-profit boards. | | | Specific Qualifications, Attributes, Skills and Experience: • Professional skills and experience in business finance matters • Experience in and knowledge of the public capital markets • Service as a trustee of an investment company • Demonstrated leadership and management abilities • Experience in real estate matters • Experience in capital raising and strategic business transactions • Identifies as Caucasian and as male • Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents | |
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| | | Adam D. Portnoy Age: 50 Managing Trustee since 2017 Chair of our Board since 2019 Term: Term expiring at the 2023 annual meeting of shareholders | | |
Board Committees: | | | Other RMR Managed Public Company Boards(1): •
• Diversified Healthcare Trust (since 2007) • Office Properties Income Trust (since 2009) • RMR Mortgage Trust, including its predecessor funds (formerly known as RMR Real Estate Income Fund, since 2009) • The RMR Group Inc. (since 2015) • Tremont Mortgage Trust (since 2017) • Five Star Senior Living Inc. (since • TravelCenters of America Inc. (since 2018) Other Non-RMR Managed Public Company Boards: None | | ||||
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| Mr. Portnoy has been president and chief executive officer of | | | Specific Qualifications, Attributes, Skills and Experience:
Extensive experience in, and knowledge of, the CRE industry and
Leadership position with RMR LLC and demonstrated management
Public company trustee and director
Experience in investment banking and private
Experience in starting a telecommunications company and serving as its senior
Institutional knowledge earned through prior service on
Identifies as Caucasian and as male • Qualifying as a Managing Trustee in accordance with the requirements of our governing | ||||||||||
Our Nominating and Governance Committee and | |
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Our executive officers serve at the discretion of our Board. There are no family relationships among any of our Trustees or executive officers.
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John G. Murray
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2019 Proxy Statement 15
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The Company's executive officers serve at the discretion of the Board. There are no family relationships among any of the Company's Trustees or executive officers.
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President and Chief Executive Officer since 2018
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| Additional information regarding Mr. Murray's background and qualifications are described above. | |
| | | Richard W. Siedel, Jr. Age: 41 | | | Chief Financial Officer and Treasurer since 2018 | | |||
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| Mr. Siedel has been a senior vice president of RMR LLC since 2016 and was a vice president of RMR LLC | |
| | Yael Duffy Age: 41 | | | Chief Operating Officer since 2020 Vice President since 2019 | | ||||
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| Ms. Duffy has been a vice president of The RMR Group LLC ("RMR LLC") since 2019 and has served in various finance and accounting leadership roles with RMR LLC and its subsidiaries since 2006, including currently being responsible for asset management oversight for a portfolio of office, industrial and retail properties managed by RMR LLC. Ms. Duffy identifies as Caucasian and as female. | |
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20192021 Proxy Statement 21
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Members Joseph L. Morea (Chair) Bruce M. Gans Lisa Harris Jones
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Members Bruce M. Gans (Chair) Lisa Harris Jones Joseph L. Morea Kevin C. Phelan 5 meetings during |
Mr. Phelan was appointed to our Compensation Committee on February 21, 2020. |
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Members Lisa Harris Jones (Chair) Bruce M. Gans Joseph L. Morea
2 meetings during |
Mr. Phelan was appointed to our Nominating and Governance Committee on February 21, 2020. |
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20192021 Proxy Statement 17
In 2018, the2020, our Board held 7seven meetings. In 2018,2020, each then Trustee attended 75% or more of the aggregate of all meetings of theour Board and the committees on which he, she or shethey served or that were held during the period in which the Trustee served as a Trustee or committee member. The Company'sAll of the then Trustees attended last year's annual meeting of shareholders. Our policy with respect to Board members' attendance at meetings of theour Board and annual meetings of shareholders can be found in the Company'sour Governance Guidelines, the full text of which appears at the Company'sour website,www.ilptreit.com.
Compensation of Trustees |
TheOur Board of Trustees believes that competitive compensation arrangements are necessary to attract and retain qualified Independent Trustees. On May 23, 2018, after conducting a market review with respect to leading companies of similar size to
Under the Company as well as an industry peer group and other companies managed by RMR LLC or its subsidiaries, upon the recommendation of the Compensation Committee, the Board approved the Company'scurrently effective Trustee compensation arrangements, for Independent Trustees of the Company.
The Company will continue to compensate its Independent Trustees through the use of annual retainers plus fees for meetings attended. Effective May 23, 2018, each Independent Trustee receives an annual fee of $50,000$75,000 for services as a Trustee, plus a fee of $1,250 for each Board or Board committee meeting attended. Trustees also received a proratedTrustee. The annual fee for 2018 of $13,333. Up to two $1,250 fees are paid if a Board meeting and one or more Board committee meetings, or two or more Board committee meetings, are held onany new Independent Trustee is prorated for the same date.initial year. Each Independent Trustee who serves as a committee chair of the Board'sour Audit Committee, Compensation Committee or Nominating and Governance CommitteesCommittee also receives an additional annual fee of $17,500, $12,500 and $12,500, respectively, and our Lead Independent Trustee also receives an additional annual cash retainer fee of $15,000 $10,000 and $10,000, respectively. The committee chairs of the Board's Audit, Compensation or Nominating and Governance Committees also received a prorated annual fee for 2018 of $5,000, $3,333 and $3,333, respectively.serving in this role. Trustees are reimbursed for travel expenses they incur in connection with their duties as Trustees and for out of pocket costs they incur in connection with their attending certain continuing education programs.
In 2018, eachEach Independent Trustee and Managing Trustee also receivedreceives an award of 1,000Common Shares annually, which was 3,500 Common Shares in connection with the Company's initial public offering ("IPO") and an annual award of 3,000 Common Shares.2020. Managing Trustees do not receive cash compensation for their services as Trustees.
Trustee Share Ownership Guidelines |
TheOur Board believes it is important to align the interests of our Trustees with those of our shareholders, and for our Trustees to hold equity ownership positions in theour Company. Accordingly, each Trustee is expected to holdretain at least 20,000 Common Shares by: (a) in the case of Trustees elected on or before March 27, 2018, the date of the 2023 annual meeting of shareholders of the Company and (b) in the case of Trustees elected after March 27, 2018,within five years fromfollowing: (i) if elected by shareholders, the annual meeting of shareholders of theour Company at which thesuch Trustee was initially elected, or (ii) if earlier,appointed by our Board, the first annual meeting of shareholders of theour Company following the initial appointment of thesuch Trustee to theour Board. Compliance with these ownership guidelines is measured as of the end of each fiscal year.annually. Any Trustee who is prohibited by law or by applicable regulation of his, her or hertheir employer from owning equity in theour Company is exempt from this requirement. TheOur Nominating and Governance Committee may consider whether exceptions should be made for any Trustee on whom this requirement could impose a financial hardship.
As of January 31, 2019,March 24, 2021, all Trustees have met or, within the applicable period, are expected to meet, these share ownership guidelines.
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The following table details the total compensation of the Trustees for the fiscal year ended December 31, 20182020 for services as a Trustee.
Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | All Other Compensation ($) | | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||
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Bruce M. Gans | | 96,666 | | 83,660 | | — | | 180,326 | | 102,500 | | 65,695 | | — | | 168,195 | |||||
Lisa Harris Jones | | 95,416 | | 83,660 | | — | | 179,076 | 87,500 | 65,695 | — | 153,195 | |||||||||
Joseph L. Morea | | 103,333 | | 83,660 | | — | | 186,993 | | 92,500 | | 65,695 | | — | | 158,195 | |||||
John G. Murray | | — | | 60,900 | | — | | 60,900 | — | 65,695 | — | 65,695 | |||||||||
Adam D. Portnoy(3) | | — | | 83,660 | | — | | 83,660 | | — | | 65,695 | | — | | 65,695 | |||||
John C. Popeo(3)(4)(5) | | — | | 83,660 | | — | | 83,660 | |||||||||||||
Barry M. Portnoy(3)(5) | | — | | — | | — | | — | |||||||||||||
Kevin C. Phelan(4) | 93,750 | 136,315 | — | 230,065 | |||||||||||||||||
Laura A. Wilkin(4)(5) | | 93,750 | | 136,315 | | — | | 230,065 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
24
20192021 Proxy Statement 19
OWNERSHIP OF OUR EQUITY SECURITIES OF THE COMPANY
Trustees and Executive Officers |
The following table sets forth information regarding the beneficial ownership of the outstanding Common Shares by each Trustee nominee, each Trustee, each of our named executive officers and our Trustees, Trustee nominees, named executive officers and other executive officers as a group, all as of January 31, 2019.March 24, 2021. Unless otherwise noted, to the Company'sour knowledge, voting power and investment power in the Common Shares are exercisable solely by the named person and the principal business address of the named person is c/o Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
Name and Address | | Aggregate Number of Shares Beneficially Owned* | | Percent of Outstanding Shares** | | Additional Information | Aggregate Number of Shares Beneficially Owned* | Percent of Outstanding Shares** | Additional Information | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | ||||
Adam D. Portnoy | | | 758,465 | | | 1.17% | | Includes 745,672 Common Shares owned by ABP Trust. Voting and investment power with respect to Common Shares owned by ABP Trust may be deemed to be shared by Adam D. Portnoy as ABP Trust's sole trustee. | | 810,208 | | 1.24 | % | Includes 745,672 Common Shares owned by ABP Trust. Voting and investment power with respect to Common Shares owned by ABP Trust may be deemed to be shared by Adam D. Portnoy as ABP Trust's sole trustee. | ||||
John C. Popeo | | | 28,122 | | | Less than 1% | | |||||||||||
John G. Murray | | | 7,791 | | | Less than 1% | | | 40,739 | Less than 1 | % | |||||||
Richard W. Siedel, Jr. | | | 6,130 | | | Less than 1% | | | 14,335 | | Less than 1 | % | | |||||
Lisa Harris Jones | | | 4,057 | | | Less than 1% | | | 11,488 | Less than 1 | % | |||||||
Bruce M. Gans | | | 4,000 | | | Less than 1% | | | 10,500 | | Less than 1 | % | | |||||
Joseph L. Morea | | | 4,000 | | | Less than 1% | | | 10,500 | Less than 1 | % | |||||||
Kevin C. Phelan | | 6,500 | | Less than 1 | % | | ||||||||||||
Yael Duffy | 6,450 | Less than 1 | % | |||||||||||||||
| | | | | | | | | | | | | | | ||||
All Trustees, named executive officers and other executive officers as a group (seven persons) | | | 812,565 | | | 1.25% | | |||||||||||
All Trustees, the Trustee nominees, named executive officers and other executive officers as a group (eight persons) | | 910,720 | | 1.39 | % | | ||||||||||||
| | | | | | | | | | | | | | |
20
20192021 Proxy Statement 25
Principal Shareholders |
Set forth in the table below is information about the number of Common Shares held by persons the Company knowswe know to be the beneficial owners of more than 5.0% of the outstanding Common Shares.
Name and Address | | Aggregate Number of Shares Beneficially Owned* | | Percent of Outstanding Shares** | | Additional Information | Aggregate Number of Shares Beneficially Owned* | Percent of Outstanding Shares** | Additional Information | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | |||||
BlackRock, Inc. ("BlackRock") 55 East 52nd Street New York, New York 10055 | | 11,786,380 | | 18.0% | Based on a Schedule 13G filed with the SEC on January 25, 2021 by BlackRock reporting that, at December 31, 2020, BlackRock beneficially owned and had sole dispositive power over 11,786,380 Common Shares and sole voting power over 11,548,117 Common Shares. | |||||||||||||
The Vanguard Group, Inc. ("Vanguard") 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | 9,345,354 | | | 14.4% | | Based on a Schedule 13G filed with the SEC on January 10, 2019 by Vanguard reporting that, at December 31, 2018, Vanguard beneficially owned 9,345,354 Common Shares and had sole voting power over 105,696 Common Shares, shared voting power over 60,689 Common Shares, sole dispositive power over 9,228,091 Common Shares and shared dispositive power over 117,263 Common Shares. | 9,995,731 | 15.3% | 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 9,995,731 Common Shares and had shared voting power over 214,593 Common Shares, sole dispositive power over 9,733,206 Common Shares and shared dispositive power over 262,525 Common Shares. | |||||||
BlackRock, Inc. ("BlackRock") 55 East 52nd Street New York, New York 10055 | | | 5,787,354 | | | 8.9% | | Based on a Schedule 13G filed with the SEC on February 8, 2019 by BlackRock reporting that, at December 31, 2018, BlackRock beneficially owned and had sole dispositive power over 5,787,354 Common Shares and sole voting power over 5,550,639 Common Shares. | ||||||||||
Massachusetts Financial Services Company ("MFS") 111 Huntington Avenue, Boston MA 02199 | | | 3,475,394 | | | 5.3% | | Based on a Schedule 13G filed with the SEC on February 13, 2019 by MFS reporting that, at December 31, 2018, MFS beneficially owned and had sole dispositive power over 3,475,394 Common Shares and sole voting power over 3,394,510 Common Shares. | | 4,607,899 | | 7.1% | Based on a Schedule 13G/A filed with the SEC on February 11, 2021 by MFS reporting that, at December 31, 2020, MFS beneficially owned and had sole dispositive power over 4,607,899 Common Shares and sole voting power over 4,560,830 Common Shares. | |||||
Cohen & Steers, Inc. ("Cohen") 280 Park Avenue, 10th Floor New York, NY 10017 | | | 5,473,649 | | | 8.4% | | Based on a Schedule 13G filed with the SEC on February 14, 2019 by Cohen reporting that, at December 31, 2018, Cohen beneficially owned and had sole dispositive power over 5,473,649 Common Shares and sole voting power over 4,809,302 Common Shares. | ||||||||||
| | | | | | | | | | | | | |
26 2021 Proxy Statement
PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, we are seeking a non-binding advisory vote from our shareholders to approve the compensation of our named executive officers as described in the "Compensation Discussion and Analysis" section beginning on page 28 and the "Executive Compensation" section beginning on page 36.
Our Board recommends that shareholders vote "FOR" the following resolution:
RESOLVED: That the shareholders of the Company approve, on a non-binding, advisory basis, the compensation paid by the Company to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the "Compensation Discussion and Analysis" in this Proxy Statement.
Because your vote is advisory, it will not be binding upon our Board or Compensation Committee. However, our Board values shareholders' opinions and our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.
Approval of the advisory vote to approve executive compensation requires the affirmative vote of a majority of all the votes cast, in person or by proxy, at our 2021 Annual Meeting.
Our Board of Trustees recommends a vote "FOR" the advisory vote to approve executive compensation.
2021 Proxy Statement 27
COMPENSATION DISCUSSION AND ANALYSIS
|
Section 16(a)Our compensation structure is unique because of our relationship with our manager, RMR LLC. Our business management agreement with RMR LLC is designed to incentivize RMR LLC to provide the highest quality services to us. RMR LLC's base business management fee is paid based on the lower of the Securities Exchange Acthistorical cost of 1934, as amended (the "Exchange Act"), requires our Trustees, executive officersproperties and beneficial owners of more than 10%our market capitalization. RMR LLC may earn an incentive management fee based on the three year total return of our Common Shares relative to file reportsan index of ownershipour peers. Because they are employees of RMR LLC and not our Company, RMR LLC, and not our Company, determines the cash compensation payable to our named executive officers. We do not reimburse RMR LLC for compensation RMR LLC paid or pays to our executive officers and our management agreements with RMR LLC do not require RMR LLC to allocate or pay a specific amount or percentage of RMR LLC's management fees to the named executive officers or require those officers to dedicate a specified amount of their time to our business. Last year, in response to feedback in connection with our shareholder engagement program, we endeavored to better explain to our shareholders our arrangements with RMR LLC and how cash compensation to our named executive officers relates to the aggregate fees paid to RMR LLC. Based on our shareholder engagement and the fact that more than 80% of our shareholders approved our 2020 Say on Pay proposal, our Compensation Committee believes these disclosure changes addressed past concerns regarding shareholder approval of ownershipSay on Pay.
RMR LLC and RMR Inc. Compensation Practices. In order to enable our shareholders to make an informed Say on Pay decision, RMR LLC has provided the following information about the compensation it paid in 2020 to our named executive officers for services provided by those officers to RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries:
Our named executive officers are officers and employees of RMR LLC and, as officers and employees of RMR LLC, also provide services to RMR LLC and other companies managed by RMR LLC or its subsidiaries. RMR LLC has informed us that the cash compensation paid by RMR LLC to our named executive officers is for services provided by the officers to RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries. RMR LLC has also informed us that it is not able to allocate with reasonable certainty or provide a reasonable estimate of the compensation paid by RMR LLC to our named executive officers for their services to us for a number of reasons, including that:
28 2021 Proxy Statement
Summary of 2020 Named Executive Officer Compensation.
Named Executive Officer Compensation Philosophy and Process.
The key principle of RMR LLC's compensation philosophy for all employees, including our named executive officers, is to pay for performance. RMR LLC maintains a rigorous and thorough talent and compensation review process to ensure that its employees are in appropriate roles that maximize their full potential. This process also ensures that there is strong leadership guiding employees and that there is a succession and development plan for each role. RMR LLC's goal is to make employee and leadership development an integral part of its culture, supporting each employee and the continued success of RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries. RMR LLC's named executive officer compensation planning process incorporates key areas of evaluation, including: • external market data; • internal benchmarking; and | ![]() |
2021 Proxy Statement 29
Named Executive Officer Compensation Practices. RMR LLC's pay for performance compensation philosophy is reflected in its compensation practices:
Components of the Named Executive Officers' Compensation. RMR LLC's compensation program includes both a base salary and a cash bonus. The cash bonuses RMR LLC pays to our named executive officers are discretionary in amount and are based on a performance evaluation. The evaluation involves an analysis of both (i) the overall performance of RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries, and (ii) the performance of the individual officer and his, her or their contributions, and services provided, to RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries. RMR LLC believes this evaluation process allows RMR LLC to link pay with performance in the closest way possible and provide RMR LLC with the flexibility necessary to take all relevant factors into account in determining the bonus amounts, including the named executive officer's ability to react to changing circumstances that impact the businesses of RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries, including this year, the impact of the COVID-19 pandemic on RMR LLC's business.
RMR Inc. also awards shares of Class A common stock of RMR Inc. to our named executive officers. One fifth of the shares awarded vests on the award date and an additional one fifth vests on each of the next four anniversaries of the award date, subject to the applicable named executive officer continuing to render significant services, whether as an employee or otherwise, to RMR LLC or a public client company managed by RMR LLC or their respective affiliates and to accelerated vesting under certain circumstances.
The table below describes the objectives supported by each of RMR LLC's and RMR Inc.'s primary compensation elements, along with an overview of the key design features of each element.
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; may be adjusted up to a cap of $350,000 or down | • Experience, duties and scope of responsibility • Internal and external market factors, including the COVID-19 pandemic |
30 2021 Proxy Statement
Compensation Element | What It Does | Key Measures | ||
---|---|---|---|---|
| | | | |
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 • Impact of the COVID-19 pandemic | ||
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 the compensation committee of RMR Inc. |
Named Executive Officer Pay Mix. As discussed above, RMR LLC's compensation program is designed so that the majority of compensation is performance based to promote alignment of our named executive officers' interests with those of shareholders. During 2020, Messrs. Murray and Siedel and Ms. Duffy received aggregate performance based discretionary cash bonuses of $2,590,000 from RMR LLC.
The base salary payments for our named executive officers (which represent the fixed portion of their compensation packages) are reviewed annually and may be increased, subject to RMR LLC's salary cap, or decreased as RMR LLC deems appropriate. RMR LLC adjusts salary payments on October 1, the first day of its fiscal year. During 2020, Messrs. Murray and Siedel and Ms. Duffy received aggregate base salary payments of $946,875 from RMR LLC. Because of the COVID-19 pandemic, base salary increases for named executive officers who earn below RMR LLC's salary cap were limited to 3%. On an aggregated basis, in 2020, Messrs. Murray and Siedel and Ms. Duffy received 27% of their total cash compensation in the form of base salary payments and the remaining 73% in the form of performance-based discretionary bonuses.
For information regarding the compensation paid by RMR LLC and RMR Inc. to the named executive officers of RMR Inc., please see the documents filed by RMR Inc. with the SEC, including its Annual Report on Form 10-K for the fiscal year ended September 30, 2020 and its Proxy Statement on Schedule 14A for its 2021 Annual Meeting of Shareholders. RMR Inc.'s filings with the SEC are not incorporated by reference into this Proxy Statement.
Compensation Philosophy |
Our compensation program for our executive officers consists of Common Share awards under the Share Award Plan. Our Compensation Committee believes that these share awards recognize our executive officers' scope of responsibilities, reward demonstrated performance and leadership, motivate future performance and further align the interests of the executive officers with those of our shareholders.
Overview of 2020 Compensation Actions |
In September 2020, the Chair of our Compensation Committee met with one of our Managing Trustees, Adam D. Portnoy, and the Nasdaq. Based on our recordschairs of the compensation committees of RMR Inc. and of the other information, we believe that duringpublic companies to which RMR LLC or its subsidiaries provide management services, which included: Diversified Healthcare Trust ("DHC"); Office Properties Income Trust ("OPI"); Service Properties Trust ("SVC"); Tremont Mortgage Trust ("TRMT" and, together with DHC, OPI and SVC, the year ended December 31, 2018 all applicable Section 16(a) filing requirements"Other RMR Managed REITs"); RMR Mortgage Trust ("RMRM"); Five Star Senior Living Inc. ("FVE"); and TravelCenters of America Inc. ("TA"). The purposes of this meeting were, met.among other things, to discuss
20192021 Proxy Statement 2131
compensation philosophy and factors that may affect compensation decisions, to consider the compensation payable to our Director of Internal Audit (who provides services to us and to other companies to which RMR LLC or its subsidiaries provide management services), to consider the allocation of internal audit and related services costs among RMR Inc., our Company and other companies to which RMR LLC or its subsidiaries provide such services, to provide a comparative understanding of potential share awards by us and the other companies to which RMR LLC or its subsidiaries provide management services and to hear and consider recommendations from RMR LLC concerning potential share awards and the vesting of those shares, which were in part based on the results of RMR LLC's review of current market practices with respect to executive compensation, and specifically of the companies' peer groups, and shareholder feedback received during shareholder outreach with respect to the percentage of executive officer compensation received in share awards. The share awards made by the other companies managed by RMR LLC or its subsidiaries are considered to be appropriate comparisons because of the similarities between certain services we require from our share awardees and the services provided by awardees providing similar services to these other companies. Subsequent to this meeting, the members of our Compensation Committee held a meeting at which our Compensation Committee Chair provided a report of the information discussed with Mr. Portnoy and others, and made recommendations for share awards to our named executive officers. Our Compensation Committee then discussed these recommendations and other factors, including the following factors for the 2020 share awards: (i) the value of the proposed share awards; (ii) the historical awards previously awarded to these named executive officers and the corresponding values at the time of the awards; (iii) the recommendations of RMR LLC as presented by Mr. Portnoy, president and chief executive officer of RMR LLC; (iv) the value of share awards to executive officers providing comparable services at the applicable Other RMR Managed REITs and companies to which RMR LLC or its subsidiaries provide management services; (v) the scope of, and any changes to, the responsibilities assigned to, or assumed by, these named executive officers during the past year and on a going forward basis; (vi) the length of historical services by these named executive officers; (vii) our Compensation Committee's perception regarding the quality of the services provided by these named executive officers in carrying out those responsibilities; and (viii) our financial and operating performance in the past year and our perceived future prospects. Our Compensation Committee considered these multiple factors in determining whether to increase or decrease the amounts of the prior year's awards. There was no formulaic approach in the use of these various factors in determining the number of shares to award to each named executive officer. The share amounts were determined on a subjective basis, using the various factors in our Compensation Committee's sole discretion. These named executive officers did not participate in these meetings and were not involved in determining or recommending the amount or form of named executive officer compensation they received from us.
Analysis of 2020 Awards under the Share Award Plan |
Although we do not pay any cash compensation directly to our officers and have no employees, we adopted the Share Award Plan to reward our named executive officers and other RMR LLC employees who provide services to us and to align their interests with those of our shareholders. We award shares under the Share Award Plan to recognize our named executive officers' scope of responsibilities, reward demonstrated performance and leadership, motivate future performance, align the interests of our executives with those of our other shareholders and motivate the executives to remain employees of RMR LLC and to continue to provide services to us through the term of the awards.
Under its charter, our Compensation Committee evaluates, approves and administers our equity compensation plans, which currently consist solely of the Share Award Plan. Our Compensation Committee has historically determined to use awards of Common Shares under the Share Award Plan rather than seek to issue stock options as equity compensation. Because the value of the Common Shares may be determined in part by reference to its dividend yield relative to market interest rates rather than by its potential for capital appreciation, we believe a conventional stock option plan might not provide appropriate incentives for management for a business like ours, but a share award plan may create a better identity of interests between management and other shareholders. Also, because we believe a
32 2021 Proxy Statement
stock option plan could have the potential to encourage excessive short term risk taking, we have historically granted share awards rather than issue stock options.
Our Compensation Committee uses comparative information about the applicable Other RMR Managed REITs as additional data to help it determine whether it is awarding share amounts that are reasonable based on the characteristics of those REITs and their respective officers. Our Compensation Committee also considers the size and structure of the applicable Other RMR Managed REITs and other companies managed by RMR LLC or its subsidiaries, and the experience, length of service and scope of duties and responsibilities of the officers at these other companies to assess the appropriateness of the value of the share awards proposed for our officers in light of the proposed awards for officers with comparable roles at the other companies. Our Compensation Committee reviewed the compensation data regarding the applicable Other RMR Managed REITs and their officers, together with the other factors discussed above in "Overview of 2020 Compensation Actions," but our Compensation Committee did not undertake a detailed comparison of the named executive officers across the applicable Other RMR Managed REITs or other companies managed by RMR LLC or assign weight to any particular characteristic of these other companies or their officers because our Compensation Committee determines the share amounts in its sole discretion on a non-formulaic basis. In 2020, our Compensation Committee considered the foregoing factors and decided to award the same number of Common Shares to Mr. Murray that was awarded in 2019, the same number of Common Shares to Mr. Siedel that was awarded in 2019, and a greater number of Common Shares to Ms. Duffy than was awarded in 2019 in light of her promotion to the office of Chief Operating Officer in May 2020, in accordance with the recommendation of RMR LLC and the Chair of our Compensation Committee. Our Compensation Committee also determined that it would be appropriate to provide that such share awards would vest upon the occurrence of certain corporate "change in control" or termination events.
We determine the fair market value of the shares awarded based on the closing price of the Common Shares on the date of the award. Our Compensation Committee has imposed, and may impose, vesting and other conditions on the awarded Common Shares because it believes that time based vesting encourages the recipients of the share awards to remain employed by RMR LLC and to continue to provide services to us. Our Compensation Committee currently uses a vesting schedule under which one fifth of the shares vest immediately and the remaining shares vest in four equal, consecutive annual installments commencing on the first anniversary of the date of the award. Our Compensation Committee utilizes a four year time based vesting schedule to provide an incentive to provide services for a long term and in consideration of the tax treatment of the share awards to us and to the recipients. In the event a recipient who received a share award ceases to perform duties for us or ceases to be an officer or an employee of RMR LLC or any company that RMR LLC or its subsidiaries manage during the vesting period, we may cause the forfeiture of the Common Shares that have not yet vested. As with other issued Common Shares, vested and unvested shares awarded under the Share Award Plan are entitled to receive distributions that we make, if any, on the Common Shares.
Because the consideration of share awards by our Compensation Committee and our Board is determined on a regular schedule (i.e., in September for our officers and employees of RMR LLC and at the first meeting of our Board after the annual meeting of shareholders for the Trustees), any proximity of any awards to earnings announcements or other market events is coincidental.
Our Compensation Committee believes that its compensation philosophy and programs are designed to foster a business culture that aligns the interests of its named executive officers with those of its shareholders. Our Compensation Committee believes that the equity compensation of its named executive officers is appropriate to the goal of providing shareholders dependable, long term returns.
2021 Proxy Statement 33
Frequency of Say on Pay |
Our current policy, consistent with the prior vote of our shareholders, is to provide shareholders with an opportunity to approve, on an advisory basis, our compensation of our named executive officers each year at the annual meeting of shareholders. Accordingly, we are providing shareholders with an opportunity to approve this compensation. As noted above, our only compensation to our named executive officers is Common Share awards. None of our named executive officers are employed by us. Our manager, RMR LLC, provides services that otherwise would be provided by employees and employs and compensates our named executive officers directly and in RMR LLC's sole discretion in connection with their services rendered to us and to RMR LLC and the other companies managed by RMR LLC or its subsidiaries as discussed above.
In evaluating our compensation process for 2020, our Compensation Committee generally considered the results of the most recent advisory vote of our shareholders on the compensation of the executive officers named in the proxy statement for our 2020 annual meeting of shareholders.
34 2021 Proxy Statement
REPORT OF OUR COMPENSATION COMMITTEE
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, our Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2020.
Bruce M. Gans, Chair Lisa Harris Jones Joseph L. Morea Kevin C. Phelan |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
TheOur Compensation Committee is comprised entirely of the threefour Independent Trustees listed above. No member of theour Compensation Committee is a current, or during 20182020 was a former, officer or employee of the Company.ours. In 2018,2020, none of the Company'sour executive officers served (i) on the compensation committee of any entity that had one or more of its executive officers serving on theour Board or theour Compensation Committee of the Company or (ii) on the board of directors or board of trustees of any entity that had one or more of its executive officers serving on theour Compensation Committee of the Company.Committee. Members of theour Compensation Committee serve as independent trustees or independent directors and compensation committee members of other public companies to which RMR LLC or its subsidiaries provide management services. Mr.Dr. Gans serves as an independent director of Five Star Senior Living Inc. ("FVE").FVE. Ms. Harris Jones serves as an independent trusteedirector of Senior Housing Properties Trust ("SNH")TA and an independent directortrustee of TravelCenters of America LLC ("TA").DHC. Mr. Morea serves as an independent trustee of Tremont Mortgage Trust ("TRMT") and RMR Real Estate Income Fund ("RIF")TRMT and an independent director of TA. In addition, eachTA and served as an independent trustee of our Independent Trustees serves as a director of Affiliates Insurance Company ("AIC").RMRM until May 2020. The disclosures regarding our relationships with these foregoing entities and certain transactions with or involving them under the section entitled "Certain Related Person Transactions" are incorporated by reference herein.
22
20192021 Proxy Statement 35
The following tables and footnotes summarize the total compensation of the Company'swe paid to our President and Chief Executive Officer, andour Chief Financial Officer and Treasurer and our Vice President and Chief Operating Officer who were serving as such officers as of December 31, 2018, and the Company's former2020. As of December 31, 2020, our "named executive officers" were our President and Chief Executive Officer, who served during the fiscal year ended December 31, 2018, or the Company's "named executive officers." None of the Company'sour Chief Financial Officer and Treasurer and our Vice President and Chief Operating Officer. Our named executive officers are employed by the Company. The Company's manager, RMR LLC, provides services that otherwise would be provided by employees,were our only executive officers during 2020. Please see "Compensation Discussion and employs and compensates the Company'sAnalysis—Compensation Overview" above for an explanation of why we pay our named executive officers directly and in RMR LLC's sole discretion in connection with their services rendered to the Company and to RMR LLC and the other companies managed by RMR LLC or its subsidiaries.no cash compensation. For information regarding the compensation paid by the CompanyRMR LLC and RMR Inc. to RMR LLC,our named executive officers, please see the below "Related Person Transactions"above "RMR LLC and RMR Inc. Compensation Practices" section. For information regarding the compensation paid by RMR LLC and RMR Inc. to the named executive officers of RMR Inc., please see the documents filed by RMR Inc. with the SEC, including its Annual Report on Form 10-K for the fiscal year ended September 30, 20182020 and its Proxy Statement on Schedule 14A for its 20192021 Annual Meeting of Shareholders. RMR Inc.'s filings with the SEC are not incorporated by reference into this Proxy Statement. The Company does not pay the Company's named executive officers salaries or bonuses or provide other compensation or employee benefits except for the awards of Common Shares under the 2018 Equity Compensation Plan (the "Share Award Plan").
Summary Compensation Table |
| | | | | | | | | | | | | | | | | | | | | |||||||
Name and Principal Position | | Year | | Stock Awards ($)(1) | | All Other Compensation ($)(2) | | Total ($) | Year | Salary | Bonus | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
John G. Murray(3) | | 2018 | | | 60,900 | | | — | | | 60,900 | ||||||||||||||||
John G. Murray | 2020 | —(4) | —(4) | 405,445 | 20,625 | 426,070 | |||||||||||||||||||||
President and Chief | 2019 | —(4) | —(4) | 381,540 | 6,435 | 387,975 | |||||||||||||||||||||
Executive Officer | 2018 | —(4) | —(4) | 60,900 | — | 60,900 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |||||||
Richard W. Siedel, Jr. | | 2018 | | | 116,650 | | | 1,320 | | | 117,970 | ||||||||||||||||
| 2017 | | | — | | | — | | | — | |||||||||||||||||
Richard W. Siedel, Jr. | 2020 | —(4) | —(4) | 113,250 | 9,900 | 123,150 | |||||||||||||||||||||
Chief Financial Officer and | 2019 | —(4) | —(4) | 108,450 | 6,270 | 114,720 | |||||||||||||||||||||
Treasurer | 2018 | —(4) | —(4) | 116,650 | 1,320 | 117,970 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |||||||
John C. Popeo(3) | | 2018 | | | 200,310 | | | 1,320 | | | 201,630 | ||||||||||||||||
Yael Duffy(3) | 2020 | —(4) | —(4) | 113,250 | 3,023 | 116,273 | |||||||||||||||||||||
Vice President and Chief Operating Officer | 2019 | —(4) | —(4) | 32,535 | 693 | 33,228 | |||||||||||||||||||||
| | 2017 | | | — | | | — | | | — | | | | | | | | | | | | | ||||
| | | | | | | | |
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20192021 Proxy Statement 23
|
The following table shows the total Common Shares awarded by us to our named executive officers in their capacity as our officers in 2020.
| | | | | | |
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(1) | |||
---|---|---|---|---|---|---|
John G. Murray | 9/17/2020 | 15,000 | 339,750 | |||
Richard W. Siedel Jr. | 9/17/2020 | 5,000 | 113,250 | |||
Yael Duffy | 9/17/2020 | 5,000 | 113,250 | |||
| | | | | | |
2020 Outstanding Equity Awards at Fiscal Year End |
Share awards granted byThe agreements governing the CompanyCommon Shares we awarded to theour named executive officers in 20182020 in their capacity as our officers of the Company provideprovided that one fifth of each award vested on the date of the award grant and an additional one fifth vests on each of the next four anniversaries of the award date, subject to the applicable named executive officer continuing to render significant services, whether as an employee or otherwise, to the Company,us, RMR LLC or any company to which RMR LLC provides management services or their respective affiliates and to accelerated vesting under certain circumstances. Holders of vested and unvested Common Shares awarded under the Share Award Plan receive distributions that the Company makes,we make, if any, on itsour shares on the same terms as other holders of the Common Shares.
The following table shows the total Common Shares awarded by the Companyus in 20182020 and prior years to the Company'sour named executive officers that were unvested as of December 31, 2018.2020.
| | | | | | | | | | | | |
| | | | Stock Awards | Stock Awards | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | ||||||
Name | | Year Granted | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Year Granted | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | |||
John G. Murray(3) | | 2018 | | 2,000 | | 39,340 | 2020 | 12,000 | 279,480 | |||
| 2019 | 9,000 | 209,610 | |||||||||
| 2018 | 1,000 | 23,290 | |||||||||
| | | | | | | ||||||
Richard W. Siedel, Jr. | | 2018 | | 4,000 | | 78,680 | 2020 | 4,000 | 93,160 | |||
John C. Popeo(4) | | 2018 | | 4,000 | | 78,680 | ||||||
2019 | 3,000 | 69,870 | ||||||||||
2018 | 2,000 | 46,580 | ||||||||||
| | | | | | | | | | | | |
Yael Duffy(4) | 2020 | 4,000 | 93,160 | |||||||||
| 2019 | 900 | 20,961 | |||||||||
| 2018 | 120 | 2,795 | |||||||||
| | | | | | |
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20192021 Proxy Statement 37
2020 Stock Vested |
The following table shows Common Share awards made in 2020 and prior years to our named executive officers that vested in 2020.
| | | | |
Stock Awards | ||||
| | | | |
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||
---|---|---|---|---|
John G. Murray(2) | 6,500 | 146,085 | ||
Richard W. Siedel Jr. | 3,000 | 66,820 | ||
Yael Duffy(3) | 1,360 | 30,681 | ||
| | | | |
Potential Payments upon Termination or Change in Control |
The form of share award agreement for awards made to our named executive officers provides for acceleration of vesting of all share awards upon the occurrence of certain change in control or termination events (each, a "Termination Event").
The following table describes the potential payments to our named executive officers upon a Termination Event, if such event had occurred, as of December 31, 2018.2020.
| | | | | | | | |
Name | | Number of Shares Vested Upon Termination Event (#) | | Value Realized on Termination Event as of December 31, 2018 ($)(1) | Number of Shares Vested Upon Termination Event (#) | Value Realized on Termination Event as of December 31, 2020 ($)(1) | ||
---|---|---|---|---|---|---|---|---|
John G. Murray(2) | | 2,000 | | 39,340 | 22,000 | 512,380 | ||
Richard W. Siedel, Jr. | | 4,000 | | 78,680 | ||||
John C. Popeo(3) | | 4,000 | | 78,680 | ||||
Richard W. Siedel Jr. | 9,000 | 209,610 | ||||||
Yael Duffy(3) | 5,020 | 116,916 | ||||||
| | | | | | | | |
From time to time we have approved, and may in the future approve, the acceleration of vesting of Common Shares previously awarded under the Share Award Plan to former employees of RMR LLC, which may include individuals who are our executive officers, when their employment with RMR LLC is terminated.
For a discussion of the consequences of a Termination Event under the Company'sour business and property management agreements with RMR LLC, see the below "Related Person Transactions" section.
Pay Ratio |
Pay ratio disclosure under Item 402(u) has not been provided because we do not have any employees.
38
20192021 Proxy Statement 25
PROPOSAL 2:3: RATIFICATION OF THE APPOINTMENT OF ERNSTDELOITTE & YOUNGTOUCHE LLP AS INDEPENDENT AUDITORS
TheOur 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 theour independent auditors. TheOur Audit Committee is responsible for approving the audit and permissible non-audit services provided by theour independent auditors and the associated fees.
TheOur Audit Committee evaluates the performance of our independent auditors annually and determines whether to re-engage the current independent auditors or consider other audit firms. In doing so, theour 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 inspections by the Public Company Accounting and Oversight Board ("PCAOB") and peer quality reviews of the auditors and the auditors' reputation in the marketplace. In connection with the mandated rotation of theour independent auditors' lead engagement partner, theour Audit Committee and its chairChair consider the selection of the new lead engagement partner identified by theour independent auditors.
Based on this evaluation, theour Audit Committee has appointed ErnstDeloitte & YoungTouche LLP ("Deloitte") to serve as the Company'sour independent auditors for the fiscal year ending December 31, 2019. Ernst & Young LLP has served as the Company's independent auditors since2021. On June 12, 2020, our formation in 2017 and is considered by management and the Audit Committee to be well qualified. Further,approved the Audit Committee and the Board believe that the continued retentionengagement of Ernst & Young LLP to serveDeloitte as theour independent registered public accounting firm, iseffective as of such date. During the fiscal years ended December 31, 2018 and December 31, 2019, and the subsequent interim period through June 12, 2020, we did not, nor did anyone on our behalf, consult with Deloitte with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and no written report or oral advice was provided to us that Deloitte concluded was an important factor that we consider in reaching a decision as to any accounting, auditing or financial reporting issue or (b) any matter that was either the best interestssubject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K). Contemporaneous with our Audit Committee's determination to engage Deloitte, our Audit Committee dismissed Ernst & Young LLP ("Ernst & Young") as our independent registered public accounting firm, effective as of such date.
The reports of Ernst & Young on our financial statements for each of the Companytwo fiscal years ended December 31, 2018 and its shareholders.December 31, 2019, did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audits of our financial statements for the fiscal years ended December 31, 2018 and December 31, 2019, and during the subsequent interim period through June 12, 2020, there were no "disagreements" (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) between us and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of Ernst & Young would have caused Ernst & Young to make reference to the subject matter of the disagreement in their report. During the fiscal years ended December 31, 2018 and December 31, 2019 and the subsequent interim period through June 12, 2020, there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
TheWe provided Ernst & Young with a copy of this disclosure and requested that Ernst & Young furnish us with a letter addressed to the SEC stating whether it agrees with the statements contained herein. A copy of Ernst & Young's letter, dated June 15, 2020, is filed as Exhibit 16.1 to our Current Report on Form 8-K filed on June 15, 2020.
2021 Proxy Statement 39
Our Audit Committee has determined to submit its selection of theour independent auditors to our shareholders for ratification. This vote will ratify prior action by theour Audit Committee and will not be binding upon theour Audit Committee. However, theour Audit Committee may reconsider its prior appointment of theour independent auditors or consider the results of this vote when it determines who to appoint as our independent auditors in the future.
Audit Fees and All Other Fees |
The following table shows the fees for audit and other services provided to the Companyus by Ernst & Young LLPDeloitte for the fiscal yearsyear ended December 31, 2018 and 2017.2020.
| | | | |
| | 2018 Fees ($) | | 2017 Fees ($) |
---|---|---|---|---|
Audit Fees(1) | | 824,462 | | 2,265,913 |
Audit Related Fees | | — | | — |
Tax Fees | | — | | — |
All Other Fees | | 720 | | — |
| | | | |
| | |
2020 Fees ($)(1) | ||
---|---|---|
Audit Fees | 619,552 | |
Audit Related Fees | — | |
Tax Fees | — | |
All Other Fees | 948 | |
| | |
The following table shows the fees for audit and other services provided to us by Ernst & Young LLP includingfor the fiscal years ended December 31, 2020 and 2019, in connection with the audit of the Company's 2018 financial statements, prior to that date. The final amount of the fees for those services may vary from the estimate provided. The amount of audit fees for 2017 includes $1,900,000 of fees associated with the IPO which were incurred by SIR and for which we reimbursed SIR.
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2019 Proxy Statement
| | | | |
| 2020 Fees ($) | 2019 Fees ($) | ||
---|---|---|---|---|
Audit Fees | 52,000 | 1,060,395 | ||
Audit Related Fees | — | — | ||
Tax Fees | 7,000 | 18,800 | ||
All Other Fees | 992 | 787 | ||
| | | | |
Audit Fees. This category includes fees associated with the annual financial statements audit and related audit procedures, the audit of internal control over financial reporting, 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'sour 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 matters, audits in connection with proposed or consummated acquisitions, information systems audits and other attest services.
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 amountamounts for 2018 reflects2019 and 2020 relating to fees for audit and other services provided to us by Ernst & Young and Deloitte, in each case, at such times they served as our independent auditors, reflect annual subscription fees for Ernst & Young LLP'seach independent auditor's online accounting research application.
40 2021 Proxy Statement
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors |
TheOur 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, our independent auditors may not undertake any services unless the engagement is specifically approved by theour Audit Committee or the services are included within a category that has been approved by theour Audit Committee. The maximum charge for services is established by theour Audit Committee when the specific engagement or the category of services is approved. In certain circumstances, our management is required to notify theour Audit Committee when approved services are undertaken and theour 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 theour Audit Committee regarding compliance with these policies and procedures.
TheOur Audit Committee will not approve engagements of theour independent auditors to perform non-audit services for the Companyus if doing so will cause theour independent auditors to cease to be independent within the meaning of applicable SEC or Nasdaq rules. In other circumstances, theour 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 PCAOB's rules.
All services for which the Companywe engaged its independent auditorsDeloitte in fiscal 20182020 and 2017Ernst & Young in fiscal 2020 and 2019, in each case, at such times they served as our independent auditors, were approved by theour Audit Committee. The total fees for audit and non-audit services provided by Deloitte in fiscal 2020 and Ernst & Young LLP in fiscal 20182020 and fiscal 20172019, in each case, at such times they served as our independent auditors, are set forth above.above and include estimated fee amounts. Our or SIR's Audit Committee approved the engagement of Deloitte in fiscal 2020 and Ernst & Young LLPin fiscal 2020 and 2019 to provide the non-audit services described above because it determined that Deloitte in fiscal 2020 and Ernst & Young LLPin fiscal 2020 and 2019 providing these services would not compromise Ernst & Young LLP'seach independent auditor's independence and that theeach firm's familiarity with our record keeping and accounting systems would permit the firm to provide these services with equal or higher quality, more efficientlyquickly and at a lower cost than the Companywe could obtain these services from other providers.
2019 Proxy Statement 27
Other Information |
The Company hasWe have been advised by Ernst & Young LLPDeloitte that neither the firm, nor any member of the firm, has any material interest, direct or indirect, in any capacity in the Companyus or itsour subsidiaries.
One or more representatives of Ernst & Young LLPDeloitte will be present at the 2019our 2021 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.
Assuming a quorum is present at the meeting, ratificationRatification of the appointment of theour independent auditors requires the affirmative vote of a majority of all the votes cast, in person or by proxy, at the 2019our 2021 Annual Meeting.
TheOur Board of Trustees recommends a vote "FOR" the ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors.
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20192021 Proxy Statement 41
REPORT OF THEOUR AUDIT COMMITTEE
In the course of theour Audit Committee's oversight of the Company'sour financial reporting process, theour Audit Committee has: (i) reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2018;2020; (ii) discussed with ErnstDeloitte & YoungTouche LLP, the Company'sour independent auditors, the matters required to be discussed under PCAOB Auditing Standard No. 1301; (iii) received the written disclosures and the letter from theour auditors required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding theour independent auditors' communications with theour Audit Committee concerning independence; (iv) discussed with theour independent auditors their independence; and (v) considered whether the provision of non-audit services by theour independent auditors is compatible with maintaining their independence and concluded that it is compatible at this time.
Based on the foregoing review and discussions, theour Audit Committee recommended to theour Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2020, for filing with the SEC.
Joseph L. Morea, Chair Bruce M. Gans Lisa Harris Jones |
42
20192021 Proxy Statement 29
PROPOSAL 3: APPROVAL OF AN AMENDMENT TO OUR DECLARATION OF TRUST SO THAT IN A CONTESTED ELECTION OUR TRUSTEES ARE ELECTED BY A PLURALITY OF THE VOTES CAST BY OUR SHAREHOLDERS
The Board has approved, and we are seeking shareholder approval for, an amendment to our Declaration of Trust so that in contested elections our Trustees are elected by a plurality of the votes cast by our shareholders. A plurality voting standard in contested elections of our Trustees will ensure that if the number of Trustee nominees proposed by the Board and our shareholders exceeds the total number of Trustees to be elected at a meeting, those Trustee nominees who receive the largest number of votes are elected to the Board. Plurality voting in contested elections of Trustees would align the Company's voting practices for contested elections with the guidelines of many institutional shareholders and proxy advisory firms and is consistent with best practices.
If the amendment proposed by the Board is not approved, in a contested election (which is an election in which the total number of nominees for election to the Board at a meeting of shareholders exceeds the total number of Trustees to be elected at such meeting), nominees must receive a majority of all votes entitled to be cast in order to be elected by shareholders. As a result, it is possible that in a contested election, due to abstentions and against votes, no Trustee would be elected by shareholders or less than the number of Trustees up for election would be elected, in which event the incumbent Trustee(s) would holdover or, if the incumbent Trustee(s) resign(s), the vacancies on the Board would be filled by the remaining Trustees rather than our shareholders. If the amendment proposed by the Board is approved by our shareholders, in a contested election, the Trustee nominees gaining the largest number of votes would be elected by our shareholders, more accurately reflecting the desires of shareholders.
Set forth immediately below is the text of the amendment proposed by the Board to the first sentence of Section 5.3(e) of our Declaration of Trust, marked to show the changes proposed. Words that are crossed out are proposed to be deleted.
Except as may be mandated by any applicable law or the listing requirements of the principal securities exchange on which the Shares are listed, and subject to the provisions of any class or series of Shares hereafter authorized and then outstanding,(1) the affirmative vote ofa plurality of all of the votes cast for the election of a Trustee at a meeting of shareholders of the Trust duly called and at which a quorum is present is required to elect a Trustee in an uncontested election of Trustees, and (2) the affirmative vote of a majority of all the votes entitled to be cast for the election of Trustees at a meeting of shareholders of the Trust duly called and at which a quorum is present is required to elect a Trustee in a contested election (which is an election at which the number of nominees exceeds the number of Trustees to be elected at such meeting).
Proposal 3 asks shareholders to approve the above described amendment to the first sentence of Section 5.3(e) of our Declaration of Trust so that in a contested election Trustees are elected by plurality voting. As indicated above, our Declaration of Trust currently provides a plurality vote standard for uncontested Trustee elections. As required under our Declaration of Trust, assuming a quorum is present at the meeting, the proposed amendment to our Declaration of Trust requires the approval of holders of shares representing a majority of the total number of votes authorized to be cast in respect of shares then outstanding and entitled to vote thereon.
The Board of Trustees recommends a vote "FOR" the approval of the amendment to our Declaration of Trust so that in a contested election our Trustees are elected by a plurality of the votes cast by our shareholders.
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2019 Proxy Statement
Proxy Materials and Voting Information
1. What is included in the proxy materials? What is a proxy statement and what is a proxy?
1. What is included in the proxy materials? What is a proxy statement and what is a proxy? |
The proxy materials for the 2019our 2021 Annual Meeting include the Notice Regarding the Availability of Proxy Materials, Notice of 20192021 Annual Meeting, this Proxy Statement and theour Annual Report for the fiscal year ended December 31, 2020 (collectively, the "proxy materials"). If you request a paper copy of these materials, the proxy materials will also include a proxy card or voting instruction form.
A proxy statement is a document that the SEC regulations require the Companyus to give you when it askswe ask you to return a proxy designating individuals to vote on your behalf. A proxy is your legal designation of another person to vote the shares you own. That other person is called your proxy. We are asking you to designate the following three persons as your proxies for the 2019 Annual Meeting: Jennifer B. Clark, Secretary; John G. Murray, Managing Trustee, President and Chief Executive Officer; and Adam D. Portnoy, Managing Trustee.
2. What is the difference between holding shares as a shareholder of record and as a beneficial owner?
2. What is the difference between holding shares as a shareholder of record and as a beneficial owner? |
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 Common Shares you hold, whether in certificate form and inor book entry form.
If your shares are held in an account you own at a bank or brokerage or you hold shares through another nominee, you are considered the "beneficial owner" of those shares. If you are a beneficial owner, you will receive voting instruction information from the bank, broker or other nominee through which you own your Common Shares.
If you hold some shares of record and some shares beneficially, you should receive a notice or proxy card for all the Common Shares you hold of record and a separate voting instruction form for the shares from the bank, broker or other nominee through which you own Common Shares.
3. What different methods can I use to vote?
3. What different methods can I use to vote? By Telephone or Internet. All shareholders of record 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 June 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 June 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. 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 proxy card. Beneficial owners may authorize a proxy by telephone or internet if their bank, broker or other
2019 Proxy Statement 312, 20191, 2021 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.
2021 Proxy Statement 43
In Person.By Written Proxy. All shareholders of record also 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 June 1, 2021 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.
Electronically at our 2021 Annual Meeting.
A shareholder may revoke a proxy at any time before it is voted at our 2021 Annual Meeting, subject to the proxy voting deadlines described above, by authorizing a proxy again on a later date by internet or by telephone, by signing and returning a later dated proxy card or by attending the meeting and voting electronically or by sending an original written statement revoking the prior proxy to our Secretary at our principal executive office (or by hand delivery to the Secretary before the taking of the vote at our 2021 Annual Meeting).
Beneficial owners who wish to change their votes should contact the organization that holds their shares.
If you have any questions or need assistance in voting your shares or authorizing your proxy, please call the firm assisting the Companyus in the solicitation of proxies:
Morrow SodaliAlliance Advisors LLC470 West Avenue200 Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003Stamford, Connecticut 06902Shareholders Call Toll Free: (800) 662-5200Banks and Brokers Call Collect: (203) 658-9400(855) 200-8233
4. Who may vote at the 2019 Annual Meeting?
4. Who may vote at our 2021 Annual Meeting? |
Holders of record of Common Shares as of the close of business on January 31, 2019,March 24, 2021, the record date, may vote at the meeting. Holders of Common Shares are entitled to one vote for each Common Share held on the record date.
5. What if I authorize a proxy and do not specify how my shares are to be voted?
5. What if I authorize a proxy and do not specify how my shares are to be voted? |
If you submit a signed proxy card or authorize a proxy by internet or telephone, but do not indicate how your Common Shares should be voted on one or more proposals, then the proxies will vote your shares as theour Board of Trustees recommends on those proposals. Other than the proposals listed on pages 12, 2615, 27 and 30,39, we do not know of any other matters to be presented at the meeting. If any other matters are properly presented at the meeting, the proxies may vote your shares in accordance with their best judgment.discretion.
44 2021 Proxy Statement
6. What is a quorum? How are abstentions and broker non-votes counted?
6. What is a quorum? How are abstentions and broker non-votes counted? |
A quorum of shareholders is required for shareholders to take action at the 2019our 2021 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 2021 Annual Meeting constitutes a quorum.
Abstentions and broker non-votes (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owner or the persons entitled to vote and (ii) the broker does not have discretionary voting power on a particular matter), if any, are included in determining whether a quorum is present. Abstentions are not votes cast and, therefore, will not be included in vote totals and will have no effect on the outcome of any Proposal 1 or Proposal 2.to be acted upon at the 2021 Annual Meeting. Broker non-votes are not votes cast and, therefore, will not be included in vote totals and will have no effect on the outcome of Proposal 1.1 or 2. There can be no broker non-votes on Proposal 23 as it is a matter on which, if you hold your shares in street name and do not provide voting instructions to the broker, bank or other nominee that holds your shares, the nominee has discretionary
32
2019 Proxy Statement
authority to vote on your behalf. Abstentions and broker non-votes will have the same effect as votes against Proposal 3.
7. What if I change my mind after I authorize a proxy to vote my shares?
7. Can I access the proxy materials on the internet? How can I sign up for the electronic proxy delivery service? The Notice of Instead of receiving future copies of 8. How are proxies solicited and what is the cost? Shareholders have the right to revoke a proxy at any time before it is voted at the 2019 Annual Meeting, subject to the proxy voting deadlines described above. Shareholders may revoke a 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 12.A 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 Industrial Logistics Properties Trust, 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.8. Can I access the proxy materials on the internet? How can I sign up for the electronic proxy delivery service?20192021 Annual Meeting, this Proxy Statement and the Annual Report are available atwww.proxyvote.com. You may access these proxy materials on the internet through the conclusion of the 2019our 2021 Annual Meeting.the Company'sour proxy materials by mail, shareholders of record and most beneficial owners may elect to receive these materials electronically. Opting to receive your future proxy materials electronically will reduce the environmental impact of our annual meeting, save us the cost of printing and mailing documents, and also will give you an electronic link to our proxy voting site. Your Notice Regarding the Availability of Proxy Materials instructs you as to how you may request electronic delivery of future proxy materials.9. How are proxies solicited and what is the cost?
The Company bearsWe bear all expenses incurred in connection with the solicitation of proxies. The Company hasWe have engaged Morrow SodaliAlliance Advisors LLC ("Morrow Sodali"Alliance Advisors") to assist with the solicitation of proxies for an estimated fee of $15,000$13,000 plus reimbursement of expenses. The Company hasWe have agreed to indemnify Morrow SodaliAlliance Advisors against certain liabilities arising out of the Company'sour agreement with Morrow Sodali.Alliance Advisors. We will request banks, brokers and other nominees to forward proxy materials to the beneficial owners of Common Shares and to obtain their voting instructions. We will reimburse those firms for their expenses of forwarding proxy materials.
Proxies may also be solicited, without additional compensation, by the Company'sour Trustees and officers, and by RMR LLC, its officers and employees and its parent's and subsidiaries' directors, trustees, officers and employees, by mail, telephone or other electronic means or in person.
As permitted by the Exchange Act, we may deliver only one copy of the Notice Regarding the Availability of Proxy Materials, Notice of 20192021 Annual Meeting, this Proxy Statement and the Annual Report to shareholders residing at the same address, unless the shareholders have notified us of their desire to receive multiple copies of those documents. This practice is known as "householding."
2021 Proxy Statement 45
We will deliver a separate copy of any of those documents to you if you write to the Companyus at Investor Relations, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, or call the Companyus at (617) 219-1489. If you want to receive separate copies of our notices regarding the availability of proxy materials, notices of annual meetings, proxy statements and annual reports in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee, or you may contact us at the above address or telephone number.
20192021 Annual Meeting Information
10. Why is our 2021 Annual Meeting being held virtually? |
Because of the 2019COVID-19 pandemic, we believe hosting our 2021 Annual Meeting in person?virtually will help ensure the health and well-being of our shareholders and other stakeholders. Shareholders attending our 2021 Annual Meeting virtually will be afforded the same rights and opportunities to participate as they would have had at an in-person meeting.
11. How do I attend our virtual 2021 Annual Meeting? |
Attendance at the meeting is limited to the Company'sour Trustees and officers, shareholders as of the record date (January 31, 2019)(March 24, 2021) or their duly authorized representatives or proxies, and other persons permitted by the ChairmanChair of the meeting. All attendees need photo identification for admission.
To register, you must submit proof of your beneficial ownership of shares and legal proxy, as applicable, along with your name and address, to virtualmeeting@viewproxy.com. Upon successful preregistration, you will receive a confirmation email from customercare@gotowebinar.com confirming registration and providing further instructions regarding attending our 2021 Annual Meeting. Beneficial owners should complete the registration process noted above at least three days in advance of our 2021 Annual Meeting to ensure that all documentation and verifications are in order.
If you have questions regarding these admission procedures, please call Investor Relations at (617) 219-1489.
12.46 How can I vote in person at the meeting if I am a beneficial owner? 2021 Proxy Statement
12. How can I vote electronically at our 2021 Annual Meeting if I am a beneficial owner? |
If you are a beneficial owner and want to vote your shares at the 2019our 2021 Annual Meeting, you need to first obtain a valid legal proxy from your bank, broker or other nominee. You also neednominee and then register in advance to attend our 2021 Annual Meeting. Please follow the procedures described in the response toquestion 11questions 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.
You will not be able to vote your shares at the meeting without a legal proxy. If you do not have a legal proxy, you can still attend the meeting by following the procedures described in the response toquestion 11. However, you will not be able to vote your shares at the meeting without a legal proxy. The Company encouragesWe encourage you to vote your shares in advance, even if you intend to attend the meeting.
13. How can I ask questions at our 2021 Annual Meeting? |
Shareholders as of the record date who attend and participate in our 2021 Annual Meeting at
2019 Proxy Statementhttps://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/
Table will have an opportunity to submit questions live via the internet during a designated portion of Contentsthe program. Shareholders must have available their control number provided on their proxy card or voting instruction form.
If you experience any technical difficulties accessing our 2021 Annual Meeting or during the meeting, please call the toll-free number that will be available on our virtual shareholder login site for assistance. We will have technicians ready to assist you with any technical difficulties you may have beginning 15 minutes prior to the start of our 2021 Annual Meeting.
Company Documents, Communications and Shareholder Proposals
13. How can I view or request copies of the Company's SEC filings and other documents?
14. How can I view or request copies of our SEC filings and other documents? |
You can visit our website to view our Governance Guidelines, Board committee charters and the Code. To view these documents, go towww.ilptreit.com, click on "Investors" and then click on "Governance." To view the Company'sour SEC filings and Forms 3, 4 and 5 filed by the Company'sour Trustees and executive officers, go towww.ilptreit.com, click on "Investors," and then click on "Financial Information" and then click on "SEC Filings."
We will deliver free of charge, upon request, a copy of the Company'sour Governance Guidelines, Board committee charters, Code or Annual Report to any shareholder requesting a copy. Requests should be directed to Investor Relations at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
14. How can I communicate with the Company's Trustees?
15. How can I communicate with our Trustees? |
Any shareholder or other interested person who wants to communicate with the Company'sour Trustees individually or as a group, should write to the party for whom the communication is intended,such Trustee(s), c/o Secretary, Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or email secretary@ilptreit.com. The communication will then be delivered to the appropriate party or parties.Trustee(s).
2021 Proxy Statement 47
15. How do I submit a proposal for action at the 2020 annual meeting of shareholders?
16. How do I submit a nomination or other proposal for action at the 2022 annual meeting of shareholders? |
A nomination or proposal for action to be presented by any shareholder at the Company's 2020our 2022 annual meeting of shareholders must be submitted as follows:
Proposals should be sent to the Company'sour Secretary at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
For additional information regarding how to submit a shareholder proposal, see page 1013 of this Proxy Statement.
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20192021 Proxy Statement 35
The descriptions of agreements in this "Related Person 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 the Annual Report.
A "related person transaction" is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which (i) the Company was, iswe were, are or will be a participant, (ii) the amount involved exceeds $120,000 and (iii) any related person had, has or will have a direct or indirect material interest.
A "related person" means any person who is, or at any time since January 1, 20182020 was:
The Company hasWe have adopted written Governance Guidelines that describe the consideration and approval of related person transactions. Under these Governance Guidelines, the Companywe may not enter into a transaction in which any Trustee or executive officer, any member of the immediate family of any Trustee or executive officer or other related person, has or will have a direct or indirect material interest unless that transaction has been disclosed or made known to theour Board and theour Board reviews and approves or ratifies the transaction by the affirmative vote of a majority of the disinterested Trustees, even if the disinterested Trustees constitute less than a quorum. If there are no disinterested Trustees, the transaction must be reviewed, authorized and approved or ratified by both (i) the affirmative vote of a majority of theour Board and (ii) the affirmative vote of a majority of the Independent Trustees. In determining whether to approve or ratify a transaction, theour Board, or disinterested Trustees or Independent Trustees, as the case may be, also act in accordance with any applicable provisions of the Company'sour Declaration of Trust and Bylaws, and consider all of the relevant facts and circumstances and approve only those transactions that they determine are fair and reasonable to the Company.us. All related person transactions described belowin Annex A to this Proxy Statement were reviewed and approved or ratified by a majority of the disinterested Trustees or otherwise in accordance with the Company'sour policies, Declaration of Trust and Bylaws, each as described above. In the case of any transactions with the Companyus by employees of RMR Inc.LLC and its subsidiaries who are subject to the Code but who are not our Trustees or executive officers, of the Company, the employee must seek approval from an executive officer who has no interest in the matter for which approval is being requested. Copies of the Company'sour Governance Guidelines and the Code are available on the Company'sour website,www.ilptreit.com.
Certain Related Person Transactionsrelated person transactions are set forth in Annex A to this Proxy Statement.
2021 Proxy Statement 49
At this time, we know 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. Clark
Secretary
Newton, Massachusetts
March 29, 2021
50 2021 Proxy Statement
ANNEX A—CERTAIN RELATED PERSON TRANSACTIONS
Relationships with RMR LLC and Others Related to It. The Company hasWe have relationships and historical and continuing transactions with RMR LLC, RMR Inc., and others related to them. Onethem, including other companies to which RMR LLC or its subsidiaries provide management services and some of the Company'swhich have trustees, directors or officers who are also our Trustees or officers. RMR LLC is a majority owned subsidiary of RMR Inc. The chair of our Board and one of our Managing Trustees, Adam D. Portnoy, asis the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Barry M. Portnoy, Adam Portnoy's father, was the Company'sJohn G. Murray, our other Managing Trustee and a managing directorour President and an officer of RMR Inc. andChief Executive Officer, also serves as an officer and employee of RMR LLC, until his death on February 25, 2018. John G. Murray, who succeeded John C. Popeo as the
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Company's other Managing Trustee and President and Chief Executive Officer effective December 1, 2018, and each of the Company'sour other officers is also an officer and employee of RMR LLC and, until November 30, 2018, John Popeo was an officerLLC. Some of RMR LLC and will be an employee of RMR LLC until March 31, 2019. The Company'sour Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees or boards of directors of several of these public companies and until his death, Barry Portnoy served, as a managing director or managing trustee of these companies and otherpublic companies. Other officers of RMR LLC, including Mr. Murray and certain of our other officers, serve as managing trustees, or managing directors or officers of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as the Company's officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.
RMR LLC or its subsidiaries provide management services to four other Nasdaq listed REITs: Hospitality Properties Trust, which owns hotels and travel centers; Office Properties Income Trust (formerly known as Government Properties Income Trust, "OPI"), which owns buildings primarily leased to single tenants and those with high credit quality characteristics, such as government tenants; SNH, which primarily owns healthcare, senior living and medical office buildings; and TRMT, which primarily originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. RMR LLC also provides services to other publicly and privately owned companies, including: FVE, which is listed on the Nasdaq and operates senior living communities; TA, which is listed on the Nasdaq and operates and franchises travel centers and restaurants; and Sonesta International Hotels Corporation ("Sonesta"), which operates, manages and franchises hotels, resorts and cruise ships. A subsidiary of RMR LLC is an investment adviser to RIF, a closed end investment company listed on the NYSE American, which invests in securities of real estate companies that are not managed by RMR LLC.
The Company hasWe have no employees. The personnel and various services the Company requireswe require to operate the Company'sour business are provided to the Companyus by RMR LLC. Upon completion of the IPO on January 17, 2018, the Company enteredWe have two agreements with RMR LLC to provide management services to the Company:us: (i) a business management agreement, which relates to the Company'sour business generally, and (ii) a property management agreement, which relates to the Company'sour property level operations. Both of these management agreements are described below, see "—Management Agreements with RMR LLC.LLC."
Management Agreements with RMR LLC. The Company'sOur management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:
2019 Proxy Statement 37
The average aggregate historical cost of the Company'sour real estate investments includes the Company'sour consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.
2021 Proxy Statement A-1
For purposes of the total return per share of the holders of Common Shares, share price appreciation for a measurement period is determined by subtracting (1) if the measurement period ends on or before December 31, 2020, $24.00 per Common Share (the Company's(our unadjusted initial share price, as defined under the business management agreement, based on the Company'sour IPO price of the Common Shares), if the measurement period ends after December 31, 2020, the closing price of the Common Shares on the Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period from (2) the average closing price of the Common Shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.
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2019 Proxy Statement
share is between 200 basis points and 500 basis points below the applicable market index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, the Company'sour total return per share is more than 500 basis points below the applicable market index.
A-2 2021 Proxy Statement
Pursuant to the Company'sour business management agreement with RMR LLC, the Companywe recognized net business management fees of approximately $7.3$13.0 million for the period from January 17, 2018 throughyear ended December 31, 2018.2020. The Companynet business management fees we recognized for the year ended December 31, 2020 include approximately $1.0 million of management fees paid to RMR LLC by our joint venture that was a consolidated subsidiary of ours until November 2020. We did not incur an incentive management fee pursuant to the Company'sour business management agreement for the period ended December 31, 2018.2020.
Pursuant to the Company'sour property management agreement with RMR LLC, the Companywe recognized aggregate property management and construction supervision fees of approximately $4.7$7.5 million for the period from January 17, 2018 throughyear ended December 31, 2018.2020.
2019 Proxy Statement 39
defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.
2021 Proxy Statement A-3
Financing.Management Agreements between Our Joint Venture and RMR LLC. PursuantIn the first quarter of 2020, we entered into agreements related to a side letterjoint venture for 12 of our properties in the Companymainland United States with an Asian institutional investor. We contributed 11 of these properties to our joint venture in February 2020 and the remaining property in March 2020. We received proceeds from the investor in an aggregate amount of approximately $107.9 million, which includes approximately $734,000 of costs associated with the formation of our joint venture, for a 39% equity interest in our joint venture and we retained the remaining 61% equity interest in our joint venture. In November 2020, we sold an additional 39% equity interest from our remaining 61% equity interest in our joint venture to a second unrelated third party institutional investor for approximately $108.8 million, which includes certain costs associated with the sale of equity to the second investor. After giving effect to the sale, we continue to own a 22% equity interest in our joint venture. In November 2020, our joint venture entered into (1) an amended and restated asset management agreement with RMR LLC, on January 29, 2019, the Companywhich provides for an asset management fee of 1.0% of average invested capital for our joint venture, and RMR LLC each acknowledged that RMR LLC(2) an amended and one or more of the Company's subsidiaries may enter into property specific management agreements to accommodate secured financings and that the terms and conditions of therestated master property management agreement will controlwith RMR LLC, which provides for a property management fee of 3% of gross collected rents and 5% of construction costs supervised by RMR LLC for our joint venture. Prior to November 2020, our joint venture was our consolidated subsidiary and, as such, we were obligated to pay fees under our management agreements with RMR LLC regarding our joint venture; however, any fees paid by that joint venture were credited against the rightsfees payable by us to RMR LLC. Starting in November 2020, our joint venture is no longer our consolidated subsidiary and, obligationsas a result, we are no longer required to pay management fees to RMR LLC with respect to our joint venture and fees our joint venture pays to RMR LLC are no longer credited against amounts we owe to RMR LLC.
Our Joint Venture. As of the Company and RMR LLC.December 31, 2020, our joint venture owed to us approximately $2.7 million for post-closing adjustments relating to our sale of some of our equity interests to a second third party institutional investor in November 2020.
A-4 2021 Proxy Statement
Share Awards to RMR LLC Employees. The Company awardsWe award Common Shares to the Company'sour officers and other employees of RMR LLC annually. Generally, one fifth of these awards vests on the date of the awards and one fifth vests on each of the next four anniversaries of the dates of the awards. During 2018, the Company2020, we awarded to the Company'sour officers and other employees of RMR LLC annual awards of 54,400108,600 Common Shares, valued at approximately $1.3$2.5 million, in aggregate, based upon the closing price of the Common Shares on the Nasdaq on the date the awards were made under the Company'sour equity compensation plan. These share awards to RMR LLC employees are in addition to the share awards made to the Company's current and formerour Managing Trustees, as Trustee compensation, and the fees the Companywe paid to RMR LLC. During 2018, the Company2020, we purchased 2,36918,060 Common Shares, at the applicable closing price of the Common Shares on the Nasdaq on the datedates of purchase, from certain of the Company'sour officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of Common Shares.
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2019 Proxy Statement
On occasion, the Company haswe have entered into arrangements with former employees of RMR LLC in connection with the termination of their employment with RMR LLC, providing for the acceleration of vesting of Common Share awards previously awarded to them under the Company'sour equity compensation plans. The Company did not accelerateaggregate value of the vesting of any Common Share awards we so accelerated, measured as of the effective dates of acceleration, was approximately $89,049, in 2018.aggregate, for the year ended December 31, 2020. Additionally, each of the Company'sour executive officers during 20182020 received share awards of RMR Inc. and other companies to which RMR LLC or its subsidiaries provide management services in their capacities as officers or employees of RMR LLC.
Other. The Company has in the past held, and likely will in the future hold, business meetings at hotels operated by Sonesta, which is majority owned by one of the Company's Managing Trustees, Adam Portnoy, and the remainder was owned by Barry Portnoy until his death, and the Company's Trustees and officers have in the past stayed, and are likely in the future to stay, overnight at hotels operated by Sonesta when traveling for Company business. The Company pays Sonesta for the use of meeting space and related services and pays Sonesta or reimburses the Company's Trustees and officers for the costs of these hotel stays.
Relationship with SIR.SIR and OPI. Until January 17, 2018, when the Company completed the IPO, the Company was a wholly owned subsidiary of SIR. SIR was the Company's largest shareholder until December 27, 2018, when SIR distributed to its shareholders of record as of the close of business on December 20, 2018, all 45,000,000 Common Shares that SIR then owned. Effective December 31, 2018, SIRSelect Income REIT ("SIR") merged with and into a wholly owned subsidiary of OPI. Adam Portnoy oneis also a managing trustee of the Company's Managing Trustees,OPI and was also a managing trustee of SIR prior to its merger intowith OPI's subsidiary. John Popeo, before he resigned on November 30, 2018, was the Company's other Managing Trustee and the Company's President and Chief Executive Officer, and he also served as the chief financial officer and treasurer of SIR. RMR LLC provided management services to SIR until its merger intowith OPI's subsidiary and continues to provide management services to OPI and it provides management services to the Company.us. On December 27, 2018, SIR distributed all 45,000,000 of our common shares that SIR owned to SIR's shareholders of record on December 20, 2018. As a result of the merger, OPI succeeded to all of SIR's rights and obligations, including with respect to SIR's agreements with the Company.us.
Pre-IPO RMR LLC Management Fees. For periodsOPI and SIR owed us approximately $1.5 million as of December 31, 2019 for rents that they collected on our behalf from certain of our tenants. A predecessor of OPI owned those properties and those tenants first became tenants at those properties prior to the completionour ownership. OPI paid these amounts due to us or collected on our behalf in January 2020. As of the IPO on January 17, 2018, base management fees payable by SIR under SIR's business management agreement with RMR LLC were calculated based on the historical costs of the Initial Properties and incentive management fees payable by SIR and allocated to the Company were based on the percentage of the base management fees allocated to the Company compared to the total base management fees paid by SIR. Base management fees paid by SIR and allocated to the Company by SIR for the period from January 1, 2018 to January 16, 2018 were approximately $0.3 million. The incentive management fee allocated to the Company by SIR for the year ended December 31, 2017 and paid by SIR2020, OPI has no obligations to RMR LLC in January 2018 was approximately $7.7 million. General and administrative expenses incurred by SIR, which include costs of the internal audit function provided by RMR LLC to the companies it or its subsidiaries manage, were allocated to the Company by SIR for periods prior to the IPO based on the percentage of the base management fees allocated to the Company compared to the total base management fees paid by SIR. The amounts allocated to the Company by SIR for internal audit costs for the period from January 1 to January 16, 2018 was approximately $4,000.
RMR LLC was paid by SIR property management fees equal to 3.0% of gross collected rents and construction supervision fees equal to 5.0% of construction costs. The aggregate property management and construction supervision fees allocated to the Company by SIR for the period from January 1 to January 16, 2018 was approximately $0.2 million. This amount was calculated based upon gross collected rents and construction supervision services provided at or for the Initial Properties.
Under SIR's management agreements with RMR LLC, SIR was generally responsible for all of the Company's operating expenses, including certain expenses incurred by RMR LLC on the Company's behalf. The Company's property level operating costs are generally incorporated into rents charged to the Company's tenants, including certain payroll and related costs incurred by RMR LLC. The total of these property management related reimbursements paid by SIR to RMR LLC for costs incurred by RMR LLC related to the Initial Properties for the period from January 1 to January 16, 2018 was approximately $0.1 million. The Company also paid or reimbursed SIR for the Company's allocated portion of certain
2019 Proxy Statement 41
insurance policies. The total of these insurance related reimbursements paid to SIR for costs for the period from January 1 to January 16, 2018 was approximately $4,000.
IPO Related Agreements with SIR. In connection with the Company's IPO on January 17, 2018, the Company and SIR entered a transaction agreement (the "Transaction Agreement") to govern the Company's relationship with SIR. OPI is the successor to SIR under the Transaction Agreement. Pursuant to the Transaction Agreement:
On January 17, 2018, the Company and SIR also entered a registration rights agreement, which granted SIR registration rights with respect to the Common Shares it owned, subject to certain limitations, with respect to the Common Shares then owned by SIR. This registration rights agreement expiredrents collected on December 27, 2018 due to SIR no longer beneficially owning any of Common Shares following SIR's pro rata distribution of the Common Shares that it then held to its shareholders on such date.
The Company also reimbursed SIR for approximately $7.3 million of costs that SIR incurred in connection with the Company's formation and preparation for the IPO.our behalf.
Relationship with AIC. On December 28, 2018, the Company and SIR entered a stock purchase agreement (the "AIC Stock Purchase Agreement") pursuant to which the Company purchased all of SIR's shares of common stock of AIC, effective December 31, 2018 for a purchase price of $8.6 million. As a result of this purchase, the Company,Until its dissolution on February 13, 2020, we, ABP Trust, and five other companies to which RMR LLC provides management services currently ownowned AIC an Indiana insurance company, in equal amountsamounts. Certain of our Trustees and are parties to a shareholders agreement regarding AIC. All the Company's Trustees (other than John Murray) and all the independentcertain directors or trustees and independent directors of the other AIC shareholders currently serveserved on the board of directors of AIC. RMR LLC provides management and administrative services to AIC pursuant tountil its dissolution. We recorded a management and administrative services agreement with AIC. Pursuant to this agreement,partial liquidating distribution from AIC pays RMR LLC a service fee equal to 3.0% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC's business.
The Company and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. Historically, the Company participated in this program through SIR, as SIR's subsidiary, and SIR allocated to the Company the portion of the premiums for this insurance program, including taxes and fees, covering the Initial Properties, which allocation was approximately $0.3 million for the policy year ending June 30, 2019, which amount may be adjusted from time to time as the Company acquires or disposes of properties included in this insurance program. The Company paid or reimbursed SIR approximately $0.3 million in respect of this insurance program for the policy year ending June 30, 2019.
Directors' and Officers' Liability Insurance.2020. The Company, RMR Inc. and certain other companies to which RMR LLC or its subsidiaries provide management services participate in a combined directors' and officers' liability insurance policy. The current combined policy expires in September 2020. Prior to SIR's
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2019 Proxy Statement
distribution of the Common Shares it owned to its shareholders, as a majority owned subsidiary of SIR, the Company was provided coverage under this policy and SIR allocated a portion of its cost of the policy to the Company. The cost of this insurance SIR allocated to, and which was paid by, the Company was approximately $0.1 million for the year ended December 31, 2018.
The foregoing descriptions of the Company'sour agreements with RMR LLC SIR/OPI, AIC and other related persons are summaries and are qualified in their entirety by the terms of the agreements. A further description of the terms of certain of those agreements is included in the Annual Report. In addition, copies of certain of the agreements evidencing these relationships are filed with the SEC and may be obtained from the SEC's website,www.sec.govwww.sec.gov.. The Company We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.
20192021 Proxy Statement 43
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. ClarkSecretary
Newton, MassachusettsApril 5, 2019
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2019 Proxy StatementA-5
THANK YOU
Thank you for being a shareholder of Industrial Logistics Properties Trust.
AUTHORIZE YOUR PROXY BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern time, on June 2, 2019.1, 2021. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to submit your voting instructions. AUTHORIZE YOUR PROXY BY TELEPHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern time, on June 2, 2019.1, 2021. Have your proxy card in hand when you call and then follow the instructions. INDUSTRIAL LOGISTICS PROPERTIES TRUST C/O BROADRIDGE FINANCIAL SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 If the meeting is postponed or adjourned, the above times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting. AUTHORIZE YOUR PROXY BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Industrial Logistics Properties Trust, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE BY VIRTUALLY ATTENDING THE MEETING DuringtheMeeting-Goto https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/ You may attend the meeting via the Internet and vote during the meeting. Have your proxy card in hand when you access the website and follow the instructions provided on the website. ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Industrial Logistics Properties Trust in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically by email or over the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. INDUSTRIAL LOGISTICS PROPERTIES TRUST C/O BROADRIDGE FINANCIAL SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E70798-Z74330D46114-P54114 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. INDUSTRIAL LOGISTICS PROPERTIES TRUST 1. Election of Trustees.Trustee. For Withhold Nominee (for Independent Trustee in Class I)Trustee): Lisa Harris Jones Nominee (for Managing Trustee in Class I): John G. Murray For Withhold ! !Joseph L. Morea ! ! For Against Abstain ! ! ! ! ! ! 2. Advisory vote to approve executive compensation. 3. Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors to serve for the 20192021 fiscal year. 3. Approval of an amendment to the Company's Declaration of Trust so that in a contested election the Company's Trustees are elected by a plurality of the votes cast by the Company's shareholders. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR BOTH NOMINEESTHE NOMINEE FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE PROXIES, IN THEIR DISCRETION, ARE AUTHORIZED TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. ! For address changes, please check this box and write them on the back where indicated. (NOTE: Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name, by authorized officer, indicating title. If a partnership, please sign in partnership name by authorized person indicating title.) Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date The Board of Trustees Recommends a Vote FOR both Nomineesthe Nominee for Trustee in Proposal 1 and FOR Proposals 2 and 3.
INDUSTRIAL LOGISTICS PROPERTIES TRUST ANNUAL MEETING OF SHAREHOLDERS June 3, 2019,2, 2021, 9:30 a.m., Eastern time Industrial Logistics Properties Trust Two Newton Place, 255 Washington Street, Suite 100 Newton, Massachusetts 02458 Upon arrival, please present photo identificationVirtually via the Internet at the registration desk.https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/ Please see the Proxy Statement for additional attendance instructions. The 20192021 Annual Meeting of Shareholders of Industrial Logistics Properties Trust will address the following items of business: 1. 2. 3. Election of the TrusteesTrustee named in the Proxy Statement to the Company's Board of Trustees;Trustees. Advisory vote to approve executive compensation. Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors to serve for the 20192021 fiscal year; Approval of an amendment to the Company's Declaration of Trust so that in a contested election the Company's Trustees are elected by a plurality of the votes cast by the Company's shareholders; and Transaction of such other business as may properly come before the meeting and at any postponements or adjournments of the meeting. 2. 3. 4.year. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR BOTH NOMINEESTHE NOMINEE FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. E70799-Z74330D46115-P54114 INDUSTRIAL LOGISTICS PROPERTIES TRUST Two Newton Place, 255 Washington Street, Suite 300 Newton, MA 02458ANNUAL MEETING OF SHAREHOLDERS June 2, 2021, 9:30 a.m., Eastern time Proxy Important Notice Regarding Internet Availability of Proxy Materials: The proxy materials for the 20192021 Annual Meeting of Shareholders of Industrial Logistics Properties Trust (the "Company"), including the Company’s annual report and proxy statement, are available on the Internet. To view the proxy materials or vote online or by telephone, please follow the instructions on the reverse side hereof. This proxy is solicited on behalf of the Board of Trustees of Industrial Logistics Properties Trust. The undersigned shareholder of the Company hereby appoints Jennifer B. Clark John G. Murray and Adam D. Portnoy, or anyeither of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the 20192021 Annual Meeting of Shareholders of the Company to be held virtually via the Internet at Industrial Logistics Properties Trust, Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458,https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/, on June 3, 2019,2, 2021, at 9:30 a.m., Eastern time, and any postponement or adjournment thereof, to cast on behalf of the undersigned all the votes that the undersigned is entitled to cast at the meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the annual report and the proxy statement, which includes the Notice of 20192021 Annual Meeting of Shareholders, each of which is incorporated herein by reference, and revokes any proxy heretofore given with respect to the meeting. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE HEREOF. IF THIS PROXY IS EXECUTED, BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR BOTH NOMINEESTHE NOMINEE FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. ADDITIONALLY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST BY THE PROXIES, IN THEIR DISCRETION, ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF. See reverse for instructions on how to authorize a proxy. (If
AUTHORIZE YOUR PROXY BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern time, on June 1, 2021. Have your proxy card in hand when you notedaccess the website and follow the instructions to obtain your records and to submit your voting instructions. AUTHORIZE YOUR PROXY BY TELEPHONE - 1-800-690-6903 Use any Address Changes/Commentstouch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern time, on June 1, 2021. Have your proxy card in hand when you call and then follow the instructions. INDUSTRIAL LOGISTICS PROPERTIES TRUST C/O BROADRIDGE FINANCIAL SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 If the meeting is postponed or adjourned, the above times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting. AUTHORIZE YOUR PROXY BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Industrial Logistics Properties Trust, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE BY VIRTUALLY ATTENDING THE MEETING DuringtheMeeting-Goto https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/ You may attend the meeting via the Internet and vote during the meeting. Have your proxy card in hand when you access the website and follow the instructions provided on the website. ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Industrial Logistics Properties Trust in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically by email or over the Internet. To sign up for electronic delivery, please mark corresponding boxfollow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D46114-P54114 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. INDUSTRIAL LOGISTICS PROPERTIES TRUST 1. Election of Trustee. For Withhold Nominee (for Independent Trustee): Joseph L. Morea ! ! For Against Abstain ! ! ! ! ! ! 2. Advisory vote to approve executive compensation. 3. Ratification of the appointment of Deloitte & Touche LLP as independent auditors to serve for the 2021 fiscal year. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE NOMINEE FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE PROXIES, IN THEIR DISCRETION, ARE AUTHORIZED TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. (NOTE: Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name, by authorized officer, indicating title. If a partnership, please sign in partnership name by authorized person indicating title.) Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date The Board of Trustees Recommends a Vote FOR the Nominee for Trustee in Proposal 1 and FOR Proposals 2 and 3.
INDUSTRIAL LOGISTICS PROPERTIES TRUST ANNUAL MEETING OF SHAREHOLDERS June 2, 2021, 9:30 a.m., Eastern time Industrial Logistics Properties Trust Virtually via the Internet at https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/ Please see the Proxy Statement for attendance instructions. The 2021 Annual Meeting of Shareholders of Industrial Logistics Properties Trust will address the following items of business: 1. 2. 3. Election of the Trustee named in the Proxy Statement to the Company's Board of Trustees. Advisory vote to approve executive compensation. Ratification of the appointment of Deloitte & Touche LLP as independent auditors to serve for the 2021 fiscal year. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE NOMINEE FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. D46115-P54114 INDUSTRIAL LOGISTICS PROPERTIES TRUST ANNUAL MEETING OF SHAREHOLDERS June 2, 2021, 9:30 a.m., Eastern time Proxy Important Notice Regarding Internet Availability of Proxy Materials: The proxy materials for the 2021 Annual Meeting of Shareholders of Industrial Logistics Properties Trust (the "Company"), including the Company’s annual report and proxy statement, are available on the Internet. To view the proxy materials or vote online or by telephone, please follow the instructions on the reverse side.) Address Changes/Comments:side hereof. This proxy is solicited on behalf of the Board of Trustees of Industrial Logistics Properties Trust. The undersigned shareholder of the Company hereby appoints Jennifer B. Clark and Adam D. Portnoy, or either of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the 2021 Annual Meeting of Shareholders of the Company to be held virtually via the Internet at https://www.viewproxy.com/IndustrialLogisticsPropertiesTrust/2021/, on June 2, 2021, at 9:30 a.m., Eastern time, and any postponement or adjournment thereof, to cast on behalf of the undersigned all the votes that the undersigned is entitled to cast at the meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the annual report and the proxy statement, which includes the Notice of 2021 Annual Meeting of Shareholders, each of which is incorporated herein by reference, and revokes any proxy heretofore given with respect to the meeting. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE HEREOF. IF THIS PROXY IS EXECUTED, BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR THE NOMINEE FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. ADDITIONALLY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST BY THE PROXIES, IN THEIR DISCRETION, ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF. See reverse for instructions on how to authorize a proxy.