UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
STAG Industrial, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
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One Federal Street, 23rd Floor
Boston, Massachusetts 02110
Boston, Massachusetts 02110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL25, 202329, 2024
TO BE HELD ON APRIL
To our stockholders:
You are cordially invited to attend the 20232024 annual meeting of stockholders of STAG Industrial, Inc., a Maryland corporation, that will be held on April 25, 2023,29, 2024, at 1:00 p.m., Eastern Time, in a virtual-only meeting format. You will be able to attend the annual meeting by visiting www.virtualshareholdermeeting.com/STAG2023STAG2024. Please follow the instructions in this proxy statement to join the virtual annual meeting. At the meeting, stockholders will consider and vote on the following matters:
1.
the election of 10 directors to hold office until the 20242025 annual meeting of stockholders and until their successors are duly elected and qualified;
2.
the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2023;2024;
3.
the approval, by non-binding vote, of our executive compensation.compensation; and
4.
the recommendation, by non-binding vote, on the frequency of executive compensation votes.
In addition, stockholders will consider and vote on such other business as may properly come before the annual meeting, including any adjournments or postponements of the meeting.
If you owned shares of our common stock as of the close of business on February 27, 2023,March 4, 2024, you can vote those shares by proxy or at the virtual annual meeting. Pursuant to rules promulgated by the Securities and Exchange Commission, we are providing access to our proxy materials over the internet. On or about March 16, 2023,20, 2024, we expect to mail our stockholders either (i) a copy of this proxy statement, the accompanying proxy card, our annual report and the notice of internet availability of proxy materials (the “Notice”) or (ii) the Notice only, each in connection with the solicitation of proxies by the boardBoard of directorsDirectors for use at the annual meeting and any adjournments or postponements thereof. If you received only the Notice by mail, you will not receive a printed copy of the proxy materials other than as described herein. The Notice contains instructions for how to access our proxy materials over the internet, how to authorize your proxy to vote online and how to request a paper copy of our proxy materials.
It is very important that your shares be represented and voted at the annual meeting. You may authorize your proxy to vote your shares over the internet as described in the Notice. Alternatively, if you received a paper copy of the proxy card by mail, please complete, date, sign and promptly return the proxy card in the self-addressed stamped envelope provided. You also may vote by telephone as described in your proxy card. If you vote your shares over the internet, by mail or by telephone before the annual meeting, you may nevertheless revoke your proxy and cast your vote at the virtual annual meeting.
By order of the boardBoard of directors:Directors:
JEFFREY M. SULLIVAN
Executive Vice President, General Counsel and Secretary
Executive Vice President, General Counsel and Secretary
Boston, Massachusetts
March16, 202320, 2024
March
TABLE OF CONTENTS
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PROXY SUMMARY
We are a real estate investment trust (“REIT”) focused on the acquisition, ownership and operation of industrial properties throughout the United States. Our primary business objective is to own and operate a balanced and diversified industrial real estate portfolio that maximizes cash flows and enhances stockholder value over time. Our business strategy has resulted in a consistent track record of creating strong operational and financial performance and long-term value for our stockholders.
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Total stockholder return (“TSR”) is defined as common stock price appreciation plus dividends, assuming reinvestment of dividends into additional shares of common stock.
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Funds from operations (“FFO”) and net operating income (“NOI”) meet the definition of “non-GAAP financial measures” as set forth in Item 10(e) of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”). Please refer to Appendix A attached hereto for an explanation of why we consider these measures and reconciliations of the measures to the nearest measure under generally accepted accounting principles (“GAAP”).
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Executive Compensation Highlights
Below are certain features of our executive compensation program, which reflect our commitment to a pay-for-performance compensation structure:
| | | ✔ We pay for performance. | | |
| | | • Approximately | | |
| | | • Annual base salaries are intended to be less than 25% of total compensation. | | |
| | | • We do not guarantee annual base salary increases, but consider increases when merited. | | |
| | | ✔ Our | | |
| | | • Bonuses are based on | | |
| | | • Our | | |
| | | • We do not guarantee bonuses of a minimum amount (bonuses can be zero) and do not provide uncapped bonuses. | | |
| | | ✔ Our | | |
| | | • Performance award share units (“performance units”) granted under the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the | | |
| | | • Performance units will have zero value (no payout) for performance below the | | |
| | | • We target outperformance; target payouts under the performance units are achieved at the 55th percentile. | | |
| | | ✔ Stockholders have expressed support for our executive compensation practices. | | |
| | | • At the | | |
For more information, see “Executive Officer Compensation Discussion and Analysis” below.
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Snapshot of Corporate Governance Practices
The table below presents a snapshot of our corporate governance policies.
| | Annual election of directors to the | | | ✔ | |
| | Majority voting standard for the election of directors (with a director resignation policy) | | | ✔ | |
| | Regular executive sessions of independent directors | | | ✔ | |
| | Independent | | | ✔ | |
| | Designation of an independent | | | ✔ | |
| | All members of the | | | ✔ | |
| | | | ✔ | | |
| | Diverse | | | ✔ | |
| | Annual | | | ✔ | |
| | Regular | | | ✔ | |
| | Stockholder ability to amend | | | ✔ | |
| | No stockholder rights plan (i.e., “poison pill”) without stockholder approval or ratification | | | ✔ | |
| | Opted out of Maryland control share acquisition and business combination statutes and may not opt back in without stockholder approval | | | ✔ | |
| | Robust | | | ✔ | |
| | Anti-hedging and anti-pledging policies | | | ✔ | |
| | Recovery policy for incentive-based executive compensation (“Clawback Policy”) | | | ✔ | |
| | Code of | | | ✔ | |
Corporate Responsibility Highlights
We have a robust corporate responsibility program that incorporates environmental, social and governance (“ESG”) initiatives into our overall business, investment and asset management strategies to increase both the sustainability and the value of our portfolio. InSince December 2021, we have published our inaugural 2020-2021an annual Environmental, Social and Governance Report (our “Sustainability Report”), which includes information regarding our ESG policies and programs, historic results and performance targets, including aour long-term greenhouse gas (“GHG”)(GHG) reduction goal as approved by the Science-Based Targets Initiative (SBTi). While our tenants maintain operational control of the properties under triple-net leases, we seek to (i) identify, assess and manage environmental risks and opportunities at our properties, (ii) collaborate with
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our tenants on sustainable strategies to optimize property performance, and (iii) partner with our tenants to improve the efficiency of our properties through the implementation of environmentally focused practices and solutions.
During 2022,2023, we enhanced our environmental programs and achieved the following milestones and accomplishments:
| | | GRESB “A” Score | | |
| | | • In October | | |
| | | Solar Panel Installations | | |
| | | • We pursue solar energy opportunities in our portfolio nationwide and have executed contracts for solar development or leasing in multiple states. As of December 31, | | |
| | | Green Lease Leader—Gold Level | | |
| | | • In 2020, we were recognized by the Institute for Market Transformation as a Green Lease Leader at the “Gold” level. This Gold level recognition was renewed in 2023. We achieved this recognition by modifying our standard form of lease to require sharing of tenant utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption. | | |
| | | Reflective Roofing | | |
| | | • Since 2015, the majority of our roof replacements utilized reflective roofing, which typically is a white membrane that reflects sunlight and reduces building heat load and utility consumption. As of December 31, | | |
| | | Lighting Conversions | | |
| | | • As of December 31, | | |
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During 2022,2023, we continued to support several local and national charities with a focus on child welfare, youth empowerment, equality and social justice:
| | | Charitable Action Committee | | |
| | | • We established our Charitable Action Committee (the “CAC”) to promote quality interaction with our local community in Boston. The CAC is funded by our | | |
| | | Charitable Action Fund | | |
| | | • As an expression of our commitment to good corporate citizenship, we established the STAG Industrial Charitable Action Fund (the “Charitable Action Fund”) in cooperation with the Boston Foundation. The Charitable Action Fund supports our social responsibility endeavors, including promoting equality and inspiring children and young adults—particularly those at risk—to realize their potential and benefit future generations. | | |
Other 20222023 ESG Highlights
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Stockholder engagement. We provide institutional investors with many opportunities and events to provide feedback directly to our management team throughout the year, including formal events, one-on-one sessions and group meetings. During 2022,2023, our management team attended (in-person and virtually) six investor conferences and numerous other individual investor meetings, where they met with more than 95120 institutional investors. These meetings covered a range of topics, including our financial condition and results of operations, our investment, finance and operation strategies, our stock price performance, economic, industry and market trends, our ESG and executive compensation policies and other matters. In addition to, and apart from, our regular investor meetings, we speak exclusively about our ESG and executive compensation policies with a number of our investors each year.
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Board diversity. We are committed to diversity and recognize the benefits of having a diverse board. WomenBoard and minorities currently represent 30% of the board. We remain focused on appointing women and other diverse candidates to the board in the futureBoard as opportunities arise.
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Board leadership. Since our formation in 2010, Mr. Butcher has served as our chairman ofPursuant to the board, including as executive chairman since July 1, 2022. Larry T. Guillemette has served as our lead independent director since 2015. Onpreviously announced Board leadership succession plan, on June 30, 2023, Mr.Benjamin S. Butcher will completeretired as Executive Chairman and began his term and retireservice as executive chairman. Subject to re-election at the annual meeting, effectivea non-management director. Effective as of July 1, 2023, Larry T. Guillemette, who has served as our Lead Independent Director since 2015, become our independent Chairman of the Board.
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Clawback Policy. In accordance with applicable laws and NYSE listing standards, effective as of November 1, 2023, the Board adopted our Clawback Policy that requires the of certain “incentive-based compensation” (as defined in the policy) received by our current or former executive officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the U.S. securities laws.
For more information, see “Board of Directors and Its Committees” and “Corporate Responsibility” below. Additional information regarding our corporate responsibility program is included in our Sustainability
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Report, which is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com. The information located on, or accessible from, our website is not, and should not be deemed to be, part of this proxy statement or incorporated into any other filing that we submit to the SEC.
Matters to be Voted On at the 20232024 Annual Meeting
| | | Proposal | | | Board Recommendation | | |
| | | Proposal 1: Election of Directors | | | FOR | | |
| | | Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm | | | FOR | | |
| | | Proposal 3: | | | FOR | | |
| | | Proposal 4: Advisory (Non-Binding) Vote on Frequency of Executive Compensation Votes | | | FOR | | |
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Q:
Why did I receive these proxy materials?
A:
The boardBoard is soliciting proxies to be voted at the 20232024 annual meeting of stockholders. You received these materials because you were a stockholder as of February 27, 2023,March 4, 2024, the record date fixed by the board,Board, and are therefore entitled to receive notice of the annual meeting and to vote on matters presented at the annual meeting, which will be held virtually on April 25, 2023.29, 2024.
Pursuant to rules promulgated by the SEC, we are providing access to our proxy materials over the internet. On or about March 16, 2023,20, 2024, we are mailing to our stockholders of record as of February 27, 2023,March 4, 2024, either (i) a copy of this proxy statement, the accompanying proxy card, our annual report and the notice of internet availability of proxy materials (the “Notice”) or (ii) the Notice only. The Notice and this proxy statement summarize the information you need to know in order to vote by proxy or at the virtual annual meeting.
Q:
When was the Notice mailed?
A:
The Notice was mailed to stockholders beginning on or about March 16, 2023.20, 2024.
Q:
When and where is the annual meeting being held?
A:
The annual meeting will be held on Tuesday,Monday, April 25, 2023,29, 2024, at 1:00 p.m., Eastern Time, in a virtual-only meeting format. You will be able to attend the annual meeting by visiting www.virtualshareholdermeeting.com/STAG2023STAG2024. Note that the decision to proceed with a virtual-only meeting again this year will not mean we will utilize a virtual-only format or any means of remote communication for future annual meetings.
Q:
Who can attend the annual meeting?
A:
You are entitled to attend the annual meeting if you were a common stockholder of record (i.e., stockholders holding shares of common stock directly in their name with our transfer agent) as of the close of business on February 27, 2023,March 4, 2024, the record date for the annual meeting, or hold a duly authorized proxy for the meeting provided by your broker, bank or other nominee. You do not need to attend the annual meeting in order to vote.
Q:
How do I attend the annual meeting?
A:
You will be able to attend the annual meeting online through live audio webcast at www.virtualshareholdermeeting.com/STAG2023STAG2024. Online registration will begin 30 minutes before the meeting. To attend and vote at the annual meeting, you must login with your 16-digit control number included on your proxy card, voting instruction form or the Notice you previously received.
Q:
May stockholders ask questions at the annual meeting?
A:
Yes. Stockholders will be able to submit live questions during the virtual annual meeting online at www.virtualshareholdermeeting.com/STAG2023STAG2024. All live questions will be subject to time restrictions, but we will do our best to accommodate as many as possible.
Q:
What if I have trouble accessing the annual meeting virtually?
A:
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet connection wherever they intend to participate in the annual meeting. We encourage you to access the virtual meeting platform prior to the start time. Please allow ample time for online check-in, which will begin at 12:30 p.m. Eastern Time. If you encounter any difficulties accessing the virtual meeting platform during the check-in time or during the annual meeting, please call the technical support number that will be posted on www.virtualshareholdermeeting.com/STAG2023STAG2024.
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Q:
Who is entitled to vote at the annual meeting?
A:
All holders of common stock as of the close of business on the record date, February 27, 2023,March 4, 2024, are entitled to vote at the annual meeting.
Q:
What is the quorum for the meeting?
A:
A quorum at the annual meeting will consist of a majority of the votes entitled to be cast by the holders of outstanding shares of common stock. No business may be conducted at the meeting if a quorum is not present. As of the record date, 179,372,871181,834,658 shares of common stock were issued and outstanding. If less than a majority of outstanding shares entitled to vote are represented at the annual meeting, the chairmanchair of the meeting may adjourn the annual meeting to another date, time or place, not later than 120 days after the original record date of February 27, 2023.March 4, 2024. Notice need not be given of the new date, time or place if announced at the meeting before an adjournment is taken.
Q:
How many votes do I have?
A:
You are entitled to one vote for each share of common stock you held as of the record date. Our stockholders do not have the right to cumulate their votes for directors.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares are registered in your name with our transfer agent, Continental Stock Transfer & Trust Company, LLC, you are the “stockholder of record” of those shares.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares. The Notice and proxy statement and any accompanying documents have been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares by following the instructions provided by the institution holding your shares for voting on the internet or by telephone or mail.
Q:
How do I vote?
A:
If you are the stockholder of record:
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On the internet: You may submit your proxy over the internet by following the instructions in the Notice, proxy card or voting instruction card that you received.
•
By telephone: You may submit your proxy by telephone by following the instructions in the Notice, proxy card or voting instruction card that you received.
•
By mail: If you received a paper copy of a proxy card or voting instruction card by mail, you may submit your proxy by completing, signing and dating your proxy card or voting instruction card and mailing it in the accompanying self-addressed stamped envelope. No postage is necessary if mailed in the United States.
•
At the virtual annual meeting: You may vote during the virtual annual meeting by following the instructions available on the meeting website during the meeting.
If you are the beneficial owner of shares held by a broker, bank or other nominee, you may instruct your broker, bank or other nominee to vote your shares by following the instructions that the institution holding the shares provides to you. If you are the beneficial owner and want to vote during the meeting, you must obtain a duly authorized proxy executed in your favor, from the institution holding the shares in order to vote your shares at the virtual annual meeting.
Properly completed and submitted proxy cards and voting instruction cards, as well as proxies properly completed and submitted on the internet or by telephone prior to the annual meeting, will be voted at the annual meeting in accordance with the instructions provided as long as they are received in time for voting and not revoked.
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Whether or not you plan to attend the annual meeting, we recommend that you authorize a proxy in advance as described above so that your vote will be counted if you later decide not to attend the annual
meeting. Authorizing your proxy over the internet, or by telephone or mail, will not limit your right to attend the annual meeting and vote your shares.
Q:
Can I change my vote after I have voted?
A:
Yes. If you are the stockholder of record, you may revoke a proxy at any time prior to its exercise by filing with our corporate secretarySecretary a duly executed revocation of proxy, by properly submitting, either on the internet or by telephone or mail, a proxy bearing a later date or by attending the virtual annual meeting and voting. Attendance at the annual meeting will not by itself constitute revocation of a proxy.
If you are the beneficial owner of shares held by a broker, bank or other nominee, please follow the instructions provided by the institution holding the shares regarding how to revoke your voting instructions.
Q:
What am I voting on?
A:
You will be voting on:
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Proposal 1: the election of 10 directors to hold office until the 20242025 annual meeting of stockholders and until their successors are duly elected and qualified;
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Proposal 2: the ratification of the appointment of PricewaterhouseCoopers LLP to act as our independent registered public accounting firm for year ending December 31, 2023;2024;
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Proposal 3: the approval, by non-binding vote, of an amendment to the 2011 Equity Incentive Plan (the “Amendment to the 2011 Equity Incentive Plan”);our executive compensation; and
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Proposal 4: the approval,recommendation, by non-binding vote, on the frequency of our executive compensation.compensation votes.
In addition, you will be voting on such other business as may properly come before the annual meeting, including any adjournments or postponements thereof.
Q:
What vote is required to approve the proposals assuming that a quorum is present at the annual meeting?
| A: | Proposal 1: | The election of the director nominees must be approved by a majority of the votes cast. |
Proposal 2:
The ratification of the appointment of the independent registered public accounting firm requires a majority of the votes cast.
Proposal 3:
The approval of the Amendment to the 2011 Equity Incentive Planadvisory vote approving executive compensation requires an affirmative vote of a majority of the votes cast.
Proposal 4:
The advisory vote approvingon the frequency of the vote on executive compensation requires an affirmative votereceiving the greatest number of a majority ofvotes (every one, two or three years) will be considered the votes cast.frequency recommended by the stockholders.
Q:
What is a broker non-vote?
A:
If you are the beneficial owner of shares held by a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares. A “broker non-vote” occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If your shares are held by a broker, bank or other nominee, your broker, bank or other nominee has discretionary voting authority under NYSE rules to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm even if the institution does not receive voting instructions from you. However, your broker, bank or other nominee does not have discretionary authority to vote on the election of directors, the advisory vote on the approval of the Amendment to the 2011 Equity Incentive Planapproving our executive compensation or the advisory vote approvingon the frequency of the vote on our executive compensation, in which case a broker non-vote will occur and your shares will not be voted on these matters.
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Q:
How are abstentions and broker non-votes treated?
A:
Pursuant to Maryland law, abstentions and broker non-votes are counted as present for purposes of determining the presence of a quorum.
For purposes of the election of directors and the votes on Proposals 23 and 3,4, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
For purposes of the vote on Proposal 4,2, abstentions will not be counted as votes cast and will have no effect on the result of the vote.
Q:
Will there be any other items of business on the agenda?
A:
The boardBoard does not know of any other matters that may be brought before the annual meeting nor does it foresee or have reason to believe that proxy holders will have to vote for substitute or alternate nominees for election to the board.Board. If any other matter should come before the annual meeting or any nominee is not available for election, the persons named in the enclosed proxy will have discretionary authority to vote all proxies with respect to such matters in accordance with their discretion.
Q:
What happens if I submit my proxy without providing voting instructions on all proposals?
A:
Proxies properly submitted via the internet, mail or telephone will be voted at the annual meeting in accordance with your directions. If the properly-submitted proxy does not provide voting instructions on a proposal, the proxy will be voted as follows:
•
if you are a stockholder of record, to elect (FOR) each of the director nominees listed in “Proposal 1: Election of Directors;” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur;
•
if you are a stockholder of record or a beneficial owner of shares held by a broker, bank or other nominee, in favor of (FOR) “Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm;”
•
if you are a stockholder of record, in favor of (FOR) “Proposal 3: Amendment to the 2011 Equity Incentive Plan;Advisory (Non-Binding) Vote on Executive Compensation;” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur; and
•
if you are a stockholder of record, in favor of (FOR) an advisory vote on executive compensation every year (box “1 YEAR” on the proxy card) under “Proposal 4: Advisory (Non-Binding) Vote on Frequency of Executive Compensation;”Compensation Votes” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur.
Q:
Where can I find the voting results after the annual meeting?
A:
We will announce the preliminary voting results at the annual meeting and will report the final voting results in a current report on Form 8-K (or quarterly report on Form 10-Q) filed with the SEC within four business days after the annual meeting.
Q:
Will anyone contact me regarding this vote?
A:
No arrangements or contracts have been made with any solicitors as of the date of this proxy statement, although we reserve the right to engage solicitors at any time if we deem them necessary. Such solicitations may be made by mail, telephone, facsimile, e-mail or personal interviews.
Q:
Who has paid for this proxy solicitation?
A:
We have paid the entire expense of preparing, printing and mailing the Notice and, to the extent requested by our stockholders, the proxy materials and any additional materials furnished to stockholders. Proxies may be solicited by our directors, officers or employees personally or by telephone without additional compensation for such activities. We also will request persons, firms and corporations holding shares in their names or in the names of their nominees, which are beneficially owned by others, to send appropriate solicitation materials to such beneficial owners. We will reimburse such holders for their reasonable expenses.
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send appropriate solicitation materials to such beneficial owners. We will reimburse such holders for their reasonable expenses.
Q:
How many copies should I receive if I share an address with another stockholder?
The SEC has adopted rules that permit companies and intermediaries, such as a broker, bank or other nominee, to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our proxy materials, unless the affected stockholder has provided us with contrary instructions. This procedure provides extra convenience for stockholders and cost savings for companies.
We and brokers, banks or other nominees may be householding our proxy materials. A single Notice and, if applicable, a single set of our proxy materials, including this proxy statement, the accompanying proxy card, our annual report and the Notice, will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker, bank or other nominee that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. Stockholders may revoke their consent at any time by contacting Broadridge ICS, either by calling toll-free (800) 542-1061 or by writing to Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, a single set of our proxy materials, to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice and, if applicable, our proxy materials, you may send a written request to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, CorporateExecutive Vice President, General Counsel and Secretary. In addition, if you are receiving multiple copies of the Notice and, if applicable, our proxy materials, you can request householding by contacting our corporate secretarySecretary in the same manner.
Q:
What does it mean if I receive more than one Notice?
A:
It means that you have multiple accounts at the transfer agent or with brokers, banks or other nominees. Please submit all of your proxies over the internet, or by telephone or mail pursuant tofollowing the instructions provided in the Notice, by mail or by telephone to ensure that all of your shares are voted.
Q:
Can I find additional information on the company’sCompany’s website?
A:
Yes. Our website is www.stagindustrial.com. You can view additional information on the website, such as our corporate responsibility and ESG policies, including our Sustainability Report, our corporate governance guidelines,Corporate Governance Guidelines, our codeCode of business conductBusiness Conduct and ethics,Ethics, our stock ownership guidelines,Stock Ownership Guidelines, charters of the boardBoard committees and reports that we file with the SEC. However, the information located on, or accessible from, our website is not, and should not be deemed to be, part of this proxy statement or incorporated into any other filing that we submit to the SEC.
A copy of our corporate governance guidelines,Corporate Governance Guidelines, our codeCode of business conductBusiness Conduct and ethics,Ethics, our stock ownership guidelinesStock Ownership Guidelines and each of the charters of the boardBoard committees may be obtained free of charge by writing to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, CorporateExecutive Vice President, General Counsel and Secretary.
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PROPOSAL 1:
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The boardBoard currently consists of 10 members with directors serving one-year terms and until their successors are duly elected and qualified. The term for each director expires at each annual meeting of stockholders. At the 20232024 annual meeting, 10 directors will be elected to serve until the 20242025 annual meeting and until their successors are duly elected and qualified. The boardBoard has nominated the following current directors (the “nominees”) to serve as directors: Benjamin S. Butcher, Jit Kee Chin, Virgis W. Colbert, William R. Crooker, Michelle S. Dilley, Jeffrey D. Furber, Larry T. Guillemette, Francis X. Jacoby III, Christopher P. Marr and Hans S. Weger. The boardBoard anticipates that each nominee will serve, if elected, as a director. However, if anyone nominated by the boardBoard is unable to accept election, the proxies will be voted for the election of such other person or persons as the boardBoard may recommend.
Vote Required
The affirmative vote of a majority of the votes cast at a meeting at which a quorum is present is required for the election of the nominees. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
Recommendation
The boardBoard recommends a vote FOR each nominee.
Snapshot of Board Composition
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Director Nominees for Election to Term Expiring 20242025
The following tables and biographical descriptions set forth certain information with respect to each nominee, including the specific experience, qualifications, attributes and skills that led to the conclusion by the boardBoard that such person should continue to serve as a director.
| | Director Nominees | | Age | | Principal Occupation | | Director Since | | Director Nominees | | Age | | Principal Occupation | | Director Since | | ||||||||||||||||||
| | Benjamin S. Butcher | | | | 69 | | | Executive Chairman of the Board | | | | 2010 | | | Benjamin S. Butcher | | | | 70 | | | Retired Chief Executive Officer | | | | 2010 | | | ||||||
| | Jit Kee Chin | | | | 44 | | | Executive Vice President, Chief Data Officer and Chief Innovation Officer at Suffolk Construction | | | | 2020 | | | Jit Kee Chin | | | | 45 | | | Executive Vice President and Chief Technology Officer at Suffolk Construction | | | | 2020 | | | ||||||
| | Virgis W. Colbert | | | | 83 | | | Retired Executive Vice President of Miller Brewing Company | | | | 2014 | | | Virgis W. Colbert | | | | 84 | | | Retired Executive Vice President of Miller Brewing Company | | | | 2014 | | | ||||||
| | William R. Crooker | | | | 43 | | | President and Chief Executive Officer | | | | 2022 | | | William R. Crooker | | | | 44 | | | President and Chief Executive Officer | | | | 2022 | | | ||||||
| | Michelle S. Dilley | | | | 51 | | | Chief Executive Officer of Awesome Leaders, NFP | | | | 2018 | | | Michelle S. Dilley | | | | 52 | | | Chief Executive Officer of Awesome Leaders, NFP | | | | 2018 | | | ||||||
| | Jeffrey D. Furber | | | | 64 | | | Global Chairman of AEW | | | | 2011 | | | Jeffrey D. Furber | | | | 65 | | | Chairman Emeritus of AEW | | | | 2011 | | | ||||||
| | Larry T. Guillemette | | | | 67 | | | Retired Chairman, Chief Executive Officer and President of Amtrol | | | | 2011 | | | Larry T. Guillemette | | | | 68 | | | Chairman of the Board / Retired Chief Executive Officer and President of Amtrol | | | | 2011 | | | ||||||
| | Francis X. Jacoby III | | | | 61 | | | Chief Financial Officer and Executive Vice President of Leggat McCall Properties, LLC | | | | 2011 | | | Francis X. Jacoby III | | | | 62 | | | Chief Financial Officer and Executive Vice President of Leggat McCall Properties, LLC | | | | 2011 | | | ||||||
| | Christopher P. Marr | | | | 58 | | | President and Chief Executive Officer of CubeSmart | | | | 2012 | | | Christopher P. Marr | | | | 59 | | | President and Chief Executive Officer of CubeSmart | | | | 2012 | | | ||||||
| | Hans S. Weger | | | | 59 | | | Strategic Consultant | | | | 2011 | | | Hans S. Weger | | | | 60 | | | Strategic Consultant | | | | 2011 | | | ||||||
Director Qualifications
| | | | | Butcher | | | Chin | | | Colbert | | | Crooker | | | Dilley | | | Furber | | | Guillemette | | | Jacoby | | | Marr | | | Weger | | ||||||||||||||||||||||||||||||
| | CEO/public company executive | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | |
| | Data analytics | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Finance/accounting | | | | | | | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
| | Industrial operations | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | |
| | Logistics | | | | | • | | | | | | • | | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Real estate / construction / development / finance | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | |
| | Real estate or property technology | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Risk management | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | |
| | Strategic planning | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
| | Supply chain management | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Director Nominees
| | | Benjamin S. Butcher Committees: • Investment (Chair) Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | Mr. Butcher In light of his extensive | | |
| | | Jit Kee Chin Independent Director Committees: • Audit Diversity Information: • Gender: Female • Race/Ethnicity: Asian | | | | Dr. Jit Kee Chin has served since 2023 as In light of her extensive data, analytics and technology infrastructure expertise, including the development and implementation of strategic initiatives, the | | |
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| | | Virgis W. Colbert Independent Director Committees: • Compensation • Nominating and Corporate Governance Diversity Information: • Gender: Male • Race/Ethnicity: Black/African American | | | | Mr. Colbert served in a variety of key leadership positions with Miller Brewing Company from 1979 until his retirement in 2005, including In light of his extensive public company board and corporate governance experience and his significant operational experience, including logistics, plant operations and other issues common to our tenants, the | | |
| | | William R. Crooker President, Committees: • Investment Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | Mr. Crooker has served as our In light of his extensive | | |
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| | | Michelle S. Dilley Independent Director Committees: • Compensation • Nominating and Corporate Governance Diversity Information: • Gender: Female • Race/Ethnicity: White | | | | Ms. Dilley has served as the In light of her significant supply chain, finance and operational experience, including experience in the development and implementation of strategic initiatives, and her recent experience with diversity initiatives in the supply chain industry, the | | |
| | | Jeffrey D. Furber Independent Director Committees: • Compensation (Chair) • Investment Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | In light of his significant leadership, corporate governance and capital markets experience and his more than 30 years of real estate investment experience, including 22 years as | | |
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| | | Larry T. Guillemette Committees: • Audit • Compensation Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | Mr. Guillemette served as In light of his extensive leadership experience through his senior officer and director positions and his accounting and real estate experience, the | | |
| | | Francis X. Jacoby III Independent Director Committees: • Audit • Investment • Nominating and Corporate Governance Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | Since 2016, and from 1995 to 2001, Mr. Jacoby has served as In light of his extensive investment and capital markets experience and his significant financial and real estate investment experience, including structuring, negotiating and closing complex transactions, the | | |
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| | | Christopher P. Marr Independent Director Committees: • Audit • Nominating and Corporate Governance (Chair) Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | Mr. Marr has served as In light of his public company leadership, financial reporting and operations experience as an executive officer of several publicly-traded REITs, including chief executive officer experience, the | | |
| | | Hans S. Weger Independent Director Committees: • Audit (Chair) • Compensation • Investment Diversity Information: • Gender: Male • Race/Ethnicity: White | | | | Mr. Weger provides consulting services to real estate and other companies. Prior to that, Mr. Weger served as In light of his real estate and real estate financing knowledge and his financial reporting and operations experience as the chief financial officer of a publicly-traded REIT and a privately held company, the | | |
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Biographical Information Regarding Executive Officers Who Are Not Directors
The biographical descriptions below set forth certain information with respect to each of our current executive officers, other than Messrs.Mr. Crooker and Butcher whose information appears above.
| | | Matts S. Pinard Executive Vice President, Chief Financial Officer and Treasurer Age: | | | | Mr. Pinard has served as our | | |
| | | Jeffrey M. Sullivan Executive Vice President, General Counsel and Secretary Age: | | | | Mr. Sullivan has served as our | | |
| | | Steven T. Kimball Executive Vice President—Real Estate Operations Age: 57 | | | | Mr. Kimball has served as our Executive Vice President—Real Estate Operations since March 2023. From 2021 to 2023, Mr. Kimball served as an Executive Director at PGIM Real Estate (“PGIM”), where he oversaw the asset management of a Northeastern industrial property portfolio, including active joint venture development projects. Before joining PGIM, Mr. Kimball held various positions at Prologis, Inc. (NYSE: PLD) (formerly AMB Property Corporation until 2011) from 1995 to 2021, including serving as Managing Director, Head of Operations, East Region from 2014 to 2021, as Senior Vice President, Head of Operations, East Region from 2005 to 2014, and as Senior Vice President, Regional Manager, Chicago from 2000 to 2005. Before joining AMB Property Corporation in 1995, Mr. Kimball held positions with financial and insurance companies involving real estate assets. Mr. Kimball holds a Bachelor of Science degree from University of Vermont and a Master of Business Administration from University Colorado Boulder. | | |
| | | Michael C. Chase Executive Vice President, and Chief Investment Officer Age: | | | | Mr. Chase has served as our | | |
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BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
Our business is managed through the oversight and direction of the board.Board. A majority of the boardBoard is “independent,” as determined by the board,Board, consistent with the rules of the NYSE. The two members of the boardBoard who are not independent are Mr. Crooker, our chief executive officerChief Executive Officer, and executive chairman.Mr. Butcher, our former Chief Executive Officer.
Board Meetings and Executive Sessions
Our directors stay informed about our business by attending meetings of the boardBoard and its committees and through supplemental reports and communications. In 2022,2023, the boardBoard held sevensix meetings and each director attended at least 75% of the aggregate of the boardBoard meetings and his or her respective committee meetings. The boardBoard does not have a policy with respect to directors’ attendance at annual meetings of stockholders. Nevertheless, all of our directors attended the 20222023 annual meeting of stockholders.
As required by the NYSE rules, the independent directors of the boardBoard regularly meet in executive session, without the presence of management or non-independent directors. Generally, these executive sessions follow after each quarterly meeting. In 2022,2023, the independent directors of the boardBoard met in executive session without management or non-independent directors present fivefour times (atat each quarterly meeting, and one special meeting), the audit committeeAudit Committee met in executive session without management or non-independent directors present four times (atat each quarterly meeting),meeting, the compensation committeeCompensation Committee met in executive session without management or non-independent directors present threefour times (at twoat each quarterly meetings and(except one special meeting)session included our General Counsel), and the nominatingNominating and corporate governance committeeCorporate Governance Committee met in executive session without management or non-independent directors present two times (atat two quarterly meetings)meetings (except one session included our General Counsel). Our lead independent director or independent chairmanChairman of the board,Board or Lead Independent Director, as applicable, presides over such independent, non-management sessions of the board.Board. Executive sessions of the audit, compensationAudit, Compensation and nominatingNominating and corporate governance committeesCorporate Governance Committees are presided over by the respective chairpersonChair of each committee.
Director Independence
Under the enhanced corporate governance standards of the NYSE, at least a majority of our directors, and all of the members of the audit committee, compensation committeeAudit Committee, Compensation Committee and nominatingNominating and corporate governance committee,Corporate Governance Committee, must meet the test of “independence.” The NYSE standards provide that, to qualify as an “independent” director, in addition to satisfying certain bright-line criteria, the boardBoard must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company)Company). The boardBoard has affirmatively determined that each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger satisfies the bright-line independence criteria of the NYSE and that none has a relationship with us that would interfere with such person’s ability to exercise independent judgment as a member of the board.Board. Therefore, we believe that all of these directors, who constitute a majority of the board,Board, are independent under the NYSE rules.
We have implemented procedures for interested parties, including stockholders, to communicate directly with our independent directors. We believe that providing a method for interested parties to communicate directly with our independent directors, rather than with the full board,Board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. See “Corporate Responsibility—Other Corporate Governance Matters—Communication with the Board of Directors, Independent Directors and the Audit Committee.”
Board Committees
The boardBoard has established an investment committee,Investment Committee, an audit committee,Audit Committee, a compensation committeeCompensation Committee and a nominatingNominating and corporate governance committeeCorporate Governance Committee and has adopted a written charter for each of these committees. Each of the audit committee,Audit Committee, the compensation committeeCompensation Committee and the nominatingNominating and corporate governance committee
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Corporate Governance Committee is composed exclusively of independent directors, as required by and defined in the rules and listing qualifications of the NYSE and, with respect to the members of the audit committee,Audit Committee, Rule 10A-3 promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
| | Director | | Investment Committee | | Audit Committee | | Compensation Committee | | Nominating and Corporate Governance Committee | | Director | | Investment Committee | | Audit Committee | | Compensation Committee | | Nominating and Corporate Governance Committee | | ||||||||
| | Benjamin S. Butcher | | Chair | | | | | | | | Benjamin S. Butcher | | Chair | | | | | | | | ||||||||
| | Jit Kee Chin | | | | • | | | | | | Jit Kee Chin | | | | • | | | | | | ||||||||
| | Virgis W. Colbert | | | | | | • | | • | | William R. Crooker | | • | | | | | | | | ||||||||
| | William R. Crooker | | • | | | | | | | | Virgis W. Colbert | | | | | | • | | • | | ||||||||
| | Michelle S. Dilley | | | | | | • | | • | | Michelle S. Dilley | | | | | | • | | • | | ||||||||
| | Jeffrey D. Furber | | • | | | | Chair | | | | Jeffrey D. Furber | | • | | | | Chair | | | | ||||||||
| | Larry T. Guillemette | | | | • | | • | | | | Larry T. Guillemette | | | | • | | • | | | | ||||||||
| | Francis X. Jacoby III | | • | | • | | | | • | | Francis X. Jacoby III | | • | | • | | | | • | | ||||||||
| | Christopher P. Marr | | | | • | | | | Chair | | Christopher P. Marr | | | | • | | | | Chair | | ||||||||
| | Hans S. Weger | | • | | Chair | | • | | | | Hans S. Weger | | • | | Chair | | • | | | | ||||||||
| | Meetings Held in 2022 | | 2 | | 4 | | 6 | | 2 | | Meetings Held in 2023 | | 4 | | 4 | | 7 | | 4 | | ||||||||
Investment Committee
The boardBoard has established an investment committeeInvestment Committee composed of five directors, three of whom are independent directors. The investment committee’sInvestment Committee’s primary function is to review, evaluate and ultimately approve acquisitions and dispositions with an individual purchase or sale price of more than $50 million and up to $100 million, as well as development and redevelopment projects with a development cost of more than $25 million and up to $100 million. Proposed acquisitions, dispositions and development and redevelopment projects with an individual purchase or sale price or development cost of more than $100 million require approval by the board.Board. The board,Board, in its discretion, may change the investment committee’sInvestment Committee’s authority to approve acquisitions, dispositions and development and redevelopment projects from time to time, including the dollar thresholds.
The investment committeeInvestment Committee has adopted a written charter that outlines certain specified responsibilities of the investment committee.Investment Committee. A copy of the investment committeeInvestment Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Audit Committee
The boardBoard has established an audit committee,Audit Committee, which is composed exclusively of independent directors. Four members of the audit committee,Audit Committee, Messrs. Guillemette, Jacoby, Marr and Weger, qualify as audit committeeAudit Committee financial experts, as defined by the SEC, and all members are financially literate and able to read and understand fundamental financial statements. The audit committeeAudit Committee assists the boardBoard in overseeing, among other things:
•
our system of internal controls;
•
our accounting and financial reporting processes;
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the integrity and audits of our consolidated financial statements;
•
our compliance with legal and regulatory requirements;
•
our risk exposures and policies to assess and manage risks (including financial risks);
•
the qualifications and independence of our independent auditors; and
•
the performance of our independent auditors and any internal auditors.
The audit committeeAudit Committee also is responsible for engaging our independent public accountants, reviewing with the independent public accountants the plans and results of the audit engagement, approving professional services provided by the independent public accountants, reviewing the independence of the independent public accountants, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The audit committeeAudit Committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate.
The audit committeeAudit Committee has adopted a written charter that outlines certain specified responsibilities of the audit committeeAudit Committee and complies with the rules of the SEC and the NYSE. A copy of the audit committeeAudit Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Compensation Committee
The boardBoard has established a compensation committee,Compensation Committee, which is composed exclusively of independent directors. The principal functions of the compensation committeeCompensation Committee are to:
•
evaluate the performance and compensation of our chief executive officer;Chief Executive Officer;
•
review and approve the compensation and benefits of our executive officers and members of the board;Board;
•
administer the 2011 Equity Incentive Plan, as well as any other compensation, stock option, stock purchase, incentive or other benefit plans;
•
produce an annual report on executive compensation for inclusion in our proxy statement after reviewing our compensation discussion and analysis;
•
oversee and monitor our executive officer and director compensation policies and practices, including our stock ownership guidelinesStock Ownership Guidelines for executive officers and non-management directors;
•
annually review and assess our compensation policies and practices to assess whether they could encourage unnecessary risk taking behavior, and discuss the relationship between risk management policies and practices, business strategy and compensation arrangements;
•
•
collaborate with the nominatingNominating and corporate governance committeeCorporate Governance Committee on human capital management, which may include executive diversity, pay equity, inclusion, recruiting, retention, career development and succession planning.
The compensation committeeCompensation Committee is primarily responsible for establishing and implementing our compensation program and policies. To fulfill its responsibilities, the compensation committeeCompensation Committee may engage, oversee and provide appropriate funding for advisors and consultants to advise the committee on executive compensation matters.
The compensation committeeCompensation Committee has adopted a written charter that outlines certain specified responsibilities of the compensation committeeCompensation Committee and complies with the rules of the SEC and the NYSE. A copy of the compensation committeeCompensation Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
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Nominating and Corporate Governance Committee
The boardBoard has established a nominatingNominating and corporate governance committee,Corporate Governance Committee, which is composed exclusively of independent directors. The principal functions of the nominatingNominating and corporate governance committeeCorporate Governance Committee include:
•
seeking, considering and recommending to the full boardBoard qualified candidates for election as directors;
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recommending a slate of nominees for election as directors at the annual meeting of stockholders;
•
annually recommending to the boardBoard nominees for each committee of the board;Board;
•
annually facilitating the assessment of the board’sBoard’s performance as a whole and of each committee and the individual directors;
•
reviewing and making recommendations on matters involving the general operation of the boardBoard and our corporate governance, including our ESG policies and practices (and related policies for tenants, communities and vendors);
•
reviewing our ESG risk oversight and management and related governance reporting; and
•
reviewing our performance metrics concerning ESG matters.
The nominatingNominating and corporate governance committeeCorporate Governance Committee has adopted a written charter that outlines certain specified responsibilities of the nominatingNominating and corporate governance committeeCorporate Governance Committee and complies with the rules of the SEC and the NYSE. A copy of the nominatingNominating and corporate governance committeeCorporate Governance Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committeeCompensation Committee is or has been employed by us. None of our executive officers currently serves, or in the past three years has served, as a member of the boardBoard or compensation committeeCompensation Committee of another entity that has one or more executive officers serving on the boardBoard or compensation committee.Compensation Committee. No member of the compensation committeeCompensation Committee has any other business relationship or affiliation with us other than his or her service as a director.
Board and Committee Evaluations
The boardBoard performs an annual performance evaluation, with each director performing a self-evaluation of his or her boardBoard and committee experiences. The nominatingNominating and corporate governance committeeCorporate Governance Committee oversees the evaluation process and considers all methods of performing these evaluations. To assist the boardBoard in its 20222023 performance evaluations, we engaged outside counsel to conduct one-on-one interviews of each director, which are designed, among other purposes, to identify any areas in which the boardBoard would be better served by adding new members with different skills, backgrounds or areas of experience. We believe using outside counsel fosters candor, facilitates participation in the evaluation process and enables individual assessments of each director. Generally, the evaluation process described below is managed by outside counsel with assistance from our corporate secretaryGeneral Counsel and oversight by the chairChair of the nominatingNominating and corporate governance committeeCorporate Governance Committee to ensure the process remains as thorough and transparent as possible. The boardBoard discusses the self-evaluation process each year to ensure the process remains relevant, thorough and transparent.
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| | | The | | |
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Organization and membership
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Key responsibilities
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Accountability and independence
•
Meetings, information and resources
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Board Refreshment and Nomination Process
Board refreshment is important to our company.Company. Before each annual meeting of stockholders, the nominatingNominating and corporate governance committeeCorporate Governance Committee (i) assesses the composition and needs of the boardBoard as a whole, including with respect to diversity (and such matters are also the subject of full boardBoard discussions annually), (ii) rigorously evaluates all current directors, and (iii) considers the nomination of all directors whose terms expire at the next annual meeting of stockholders. The nominatingNominating and corporate governance committeeCorporate Governance Committee also considers new candidates whenever there is a vacancy on the boardBoard or whenever a vacancy is anticipated due to a change in the size or composition of the board,Board, a retirement of a director or for any other reason. In addition to considering incumbent directors, the nominatingNominating and corporate governance committeeCorporate Governance Committee may identify director candidates based on recommendations from the directors and executive officers and may engage the services of third-party search firms to assist in identifying or evaluating director candidates.
The boardBoard considers director candidates based on a number of factors including:
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whether the boardBoard member will be “independent,” as such term is defined by the NYSE listing standards;
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whether the candidate possesses the highest personal and professional ethics, integrity and values;
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whether the candidate has demonstrated leadership ability, with broad experience, diverse perspectives, and the ability to exercise sound business judgment;
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whether the candidate has experience in areas important to the operations of our company;Company;
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whether the candidate has an inquisitive and objective perspective, practical wisdom and mature judgment; and
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whether the candidate provides a diversity of viewpoints, background, experience and demographics as compared to the current members of the board.Board.
Candidates also are evaluated based on their understanding of our business and willingness to devote adequate time to carrying out their duties. The nominatingNominating and corporate governance committeeCorporate Governance Committee monitors the mix of skills, experience and background to assure that the boardBoard has the necessary composition to effectively perform its oversight function. While diversity characteristics of a candidate are just one of several factors considered by the committee when evaluating director candidates, we believe that diversity is a valuable component of an effective and dynamic boardBoard and will continue to make diversity an integral part
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The nominatingNominating and corporate governance committeeCorporate Governance Committee will consider appropriate nominees for directors whose names are submitted in writing by a stockholder of our company.Company. Director candidates submitted by our stockholders will be evaluated by the nominatingNominating and corporate governance committeeCorporate Governance Committee on the same basis as any other director candidates. We did not receive any nominations of directors by stockholders for the 20232024 annual meeting. Nominations must be addressed to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, CorporateExecutive Vice President, General Counsel and Secretary, indicating the nominee’s qualifications and other relevant biographical information and providing confirmation of the nominee’s consent to serve as director, if elected. To be considered for the next annual election of directors, any such written request must comply with the requirements set forth in our bylawsBylaws and below under “Other Matters—Stockholder Proposals.”
Board Leadership
The boardBoard recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure to provide independent oversight of management. The boardBoard understands that there is no single, generally accepted approach to providing boardBoard leadership and the right boardBoard leadership structure may vary as circumstances warrant. Consistent with this understanding, our independent directors consider the board’sBoard’s leadership structure on an annual basis.
The boardBoard annually elects a chairmanChairman of the board,Board, who may or may not be our chief executive officer. Since our formation in 2010, Mr. Butcher has served as our chairman of the board.Chief Executive Officer. Pursuant to our previously announced management succession plan, on July 1, 2022, Mr. Butcher was appointed executive chairman of the board and Mr. Crooker was appointed chief executive officer and joined the board. As executive chairman of the board, Mr. Butcher’s responsibilities include managing the business of the board, regularly consulting with Mr. Crooker on key corporate matters and liaising between the board and the management team. On June 30, 2023, Mr. Butcher will complete his term and retire as executive chairman. Subject to re-election at the annual meeting, effective as of July 1, 2023, the board expects that (i) Mr. Butcher will continueretired as Executive Chairman and Mr. Guillemette became the Chairman of the Board. Mr. Butcher continues to serve on the boardBoard as a non-management director and (ii) Mr. Guillemette, our current lead independent director, will become the chairman of the board.non-executive director.
If the chairmanChairman of the boardBoard is not an independent director, the boardBoard will annually elect a non-management and independent director to serve in a lead capacity, to coordinate the activities of the other non-management and independent directors and to perform any other duties and responsibilities that the boardBoard may determine are advisable. Although this position is elected annually, it is generally expected that he or she will serve for more than one year. Mr. Guillemette has served as our lead independent director since 2015. The responsibilities of the lead independent directorLead Independent Director will include (i) serving as liaison between the chairmanChairman of the Board and the independent directors, (ii) reviewing the type of information sent to the board,Board, (iii) reviewing, in consultation with the chairmanChairman of the Board and others, agendas and boardBoard meeting schedules to determine whether sufficient time is allocated to agenda items, and (iv) holding the authority to call meetings of the independent directors.
In considering its leadership structure, the boardBoard has taken a number of factors into account. The board,Board, which consists of a majority of independent directors (eight of the 10 members), exercises a strong, independent oversight function. This oversight function is enhanced by the audit, compensationAudit, Compensation and nominatingNominating and corporate governance committeesCorporate Governance Committees being comprised entirely of independent directors. A number of boardBoard and committee processes and procedures, including regular executive sessions of independent directors and a regular review of our executive officers’ performance, provide substantial independent oversight of our management’s performance. Finally, under our bylawsBylaws and corporate governance guidelines,Corporate Governance Guidelines, the boardBoard has the ability to change its structure, should that be deemed appropriate and in the best interest of our companyCompany and our stockholders. The boardBoard believes that these factors provide the appropriate balance between the authority of those who oversee our companyCompany and those who manage it on a day-to-day basis.
The chairmanChairman of the boardBoard presides over all meetings of the stockholders and the boardBoard as a whole.whole, including executive sessions of the independent directors. The chairmanChairman performs such other duties, and exercises such powers, as from time to time shall be prescribed in our bylawsBylaws or by the board.
Director Resignation Policy
We have a majority voting standard for uncontested election of directors and a plurality standard for elections in which the number of director nominees exceeds the number of directors to be elected. Pursuant
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to our bylaws,Bylaws, director nominees in uncontested elections of directors will be elected by the vote of a majority of the votes cast with respect to the director, which means that the number of votes cast for a director must exceed the number of votes cast against the director.
Our corporate governance guidelinesCorporate Governance Guidelines require incumbent director nominees who fail to receive a majority of the votes cast to submit promptly a written offer to resign from the board.Board. The nominatingNominating and corporate governance committeeCorporate Governance Committee will make a recommendation to the boardBoard on whether to accept or reject the resignation. Taking into account the recommendation of the nominatingNominating and corporate governance committee,Corporate Governance Committee, the boardBoard will determine whether to accept or reject any such resignation within 90 days after the certification of the voting results, and we will report such decision in a current report on Form 8-K furnished to the SEC. A copy of our corporate governance guidelinesCorporate Governance Guidelines is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Role of the Board in Risk Oversight
Overview
While risk management is primarily the responsibility of our senior management team, the boardBoard plays an active role in overseeing our risk management processes and controls. The boardBoard administers this oversight function directly, with support from the audit committee,Audit Committee, the compensation committeeCompensation Committee and the nominatingNominating and corporate governance committee,Corporate Governance Committee, each of which addresses risks specific to their respective areas of oversight. While the committees assume responsibilities to evaluate certain risks and oversee management’s plan regarding such risks, the full boardBoard keeps itself regularly informed regarding such risks through committee and management reports.
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| | | BOARD OF DIRECTORS | | | ||||||||
| | | One of the key functions of the • Strategic and operational risk management • Information security risks, including cybersecurity and data privacy risks (see “—Information Security” below) • Management and In addition, as discussed above under “—Board and Committee Evaluations,” the | | | ||||||||
| | | Audit Committee | | | | Compensation Committee | | | | Nominating and Corporate Governance Committee | | |
| | | • Financial risks, including our guidelines and policies to govern the process by which risk assessment and management is undertaken • Compliance with legal and regulatory requirements • Internal audit function | | | | • Risks related to our compensation policies and practices, including whether any of our compensation policies and practices has the potential to encourage excessive risk taking | | | | • Corporate governance risks, including our • ESG risks, including environmental sustainability risks, corporate social responsibility and related governance reporting | | |
| | | SENIOR MANAGEMENT TEAM | | | ||||||||
| | | Our senior management team reviews and prioritizes significant risks, allocates resources for mitigation and provides the | | | ||||||||
| | | Information Security Risks | | | | Disclosure Risks | | | | Environmental Risks | | |
| | | Our | | | | Our disclosure committee, consisting of certain executives and senior employees, reports to our | | | | Our senior vice president— | | |
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Information Security
As discussed above, the boardBoard has the primary responsibility for overseeing our information security risk management. management, including cybersecurity and data privacy risks.
We use third-party experts to review and test our information security systems, including regular penetration tests of our network. We also use third-party systems to monitor our information security continually. We maintain a cybersecurity insurance policy, and we conduct mandatory information security training for all employees several times a year and regularly test our employees for information security awareness and adherence to our information security recommendations.
To our knowledge, we have not experienced an information security breach in the last three years or otherwise.
Please see our Annual Report on Form 10-K for the year ended December 31, 2023 for more information on our processes and procedures for addressing and managing cybersecurity and data privacy risks.
Management Succession Plans
The boardBoard oversees the recruitment, development and retention of executive talent and reviews or discusses our management succession plans at least annually. Management succession is generally discussed throughout the year with the chief executive officerChief Executive Officer at boardBoard meetings and in executive sessions. Management succession discussions generally focus on the chief executive officerChief Executive Officer and other senior executive roles, but also include broader discussions about our employee workforce. The boardBoard has regular and direct exposure to senior leadership and high-potential employees at boardBoard meetings held throughout each year. Pursuant to our previously announced management succession plan, on July 1, 2022, Mr. Butcher was appointed executive chairman of the board and Mr. Crooker was appointed chief executive officer and joined the board. During the next few months, Mr. Butcher worked closely with Mr. Crooker on his transition to chief executive officer. In addition, in connection with the management succession plan, the board (i) promoted Mr. Pinard to serve as our executive vice president, chief financial officer and treasurer, effective as of January 10, 2022, (ii) promoted Mr. Chase to serve as our executive vice president, in addition to his role as our chief investment officer, effective as of July 1, 2022, and (iii) recently appointed Mr. Kimball to serve as our executive vice president—real estate operations, subject to his commencement of employment. Effective as of December 31, 2022, Mr. Mecke, our former executive vice president and chief operating officer, retired. The boardBoard has framed and continues to evolve plans with an adaptable timeframe for orderly management succession of other key positions.
In addition, in order to minimize the potential disruption to our companyCompany upon the unexpected resignation, termination, death, disability or other form of absence of our chief executive officer,Chief Executive Officer, the boardBoard has approved a chief executive officerChief Executive Officer emergency succession policy (the “CEO Emergency Succession Policy”). The CEO Emergency Succession Policy is general in nature and is intended to provide the boardBoard and the nominatingNominating and corporate governance committeeCorporate Governance Committee with contingency procedures upon a sudden succession of our chief executive officer.Chief Executive Officer.
Board Compensation for 20222023
The compensation committeeCompensation Committee is responsible for reviewing the compensation of our non-management directors and may revise director compensation in its discretion. If a director is also one of our officers, we will not pay any compensation for services rendered as a director. Non-management director compensation in 20222023 consisted of an annual cash fee and an annual grant of equity for services as a director and an additional annual cash fee for each of the lead independent director, the chairChairman of the audit committee,Board or Lead Independent Director, as applicable, and the chairChairs of the compensation committeeAudit, Compensation and the chair of the nominatingNominating and corporate governance committeeCorporate Governance Committees in amounts set forth in the table below. All members of the boardBoard are reimbursed for their costs and expenses in attending boardBoard meetings.
| | Position Held | | Annual Cash Fee(1) | | Annual Equity Grant(2) | | Position Held | | Annual Cash Fee(1) | | Annual Equity Grant(2) | | ||||||||||||||||
| | Non-Management Director | | | $ | 55,000 | | | | $ | 110,000 | | | Non-Management Director | | | $ | 55,000 | | | | $ | 110,000 | | | ||||
| | Lead Independent Director | | | $ | 25,000 | | | | | — | | | Independent Chairman of the Board | | | $ | 75,000 | | | | | — | | | ||||
| | Audit Committee Chair | | | $ | 20,000 | | | | | — | | | Lead Independent Director | | | $ | 25,000 | | | | | — | | | ||||
| | Compensation Committee Chair | | | $ | 15,000 | | | | | — | | | Audit Committee Chair | | | $ | 20,000 | | | | | — | | | ||||
| | Nominating and Corporate Governance Committee Chair | | | $ | 15,000 | | | | | — | | | Compensation Committee Chair | | | $ | 15,000 | | | | | — | | | ||||
| | Nominating and Corporate Governance Committee Chair | | | $ | 15,000 | | | | | — | | | ||||||||||||||||
(1)
Our directors have the option to receive fees in shares of common stock rather than in cash. The value of such shares of common stock is based on the 10-day average closing price of our common stock
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determined three days prior to the quarterly fee payment date. All of our independent directors elected to receive shares of our common stock in lieu of cash for payment of the fees payable to them in 2022.
(2)
Represents the value of the 20222023 annual grant of equity at the time of grant. Any non-management director who joins the boardBoard in the future receives an initial grant of LTIP units (“LTIP units”) of our operating partnership, STAG Industrial Operating Partnership, L.P. (our “Operating Partnership”), upon the commencement of his or her service. The LTIP units granted annually vest on January 1 of the following year, subject to the recipient’s continued service as a director. LTIP units can be converted to common units (“common units”) of our operating partnership, STAG Industrial Operating Partnership L.P. (our “operating partnership”), on a one for one basis once a material equity transaction has occurred that results in the accretion of the member’s capital account to the economic equivalent of the common unit.
The following table summarizes the compensation that we paid to our non-management directors in 2022:2023:
| | Name | | Fees Earned(1) | | Stock Awards(2)(3) | | Total | | Name | | Fees Earned(1) | | Stock Awards(2)(3) | | Total | | ||||||||||||||||||||||||
| | Jit Kee Chin | | | $ | 55,000 | | | | $ | 110,013 | | | | $ | 165,013 | | | Benjamin S. Butcher(4) | | | $ | 27,500 | | | | $ | — | | | | $ | 27,500 | | | ||||||
| | Virgis W. Colbert | | | $ | 55,000 | | | | $ | 110,013 | | | | $ | 165,013 | | | Jit Kee Chin | | | $ | 55,000 | | | | $ | 109,989 | | | | $ | 164,989 | | | ||||||
| | Michelle S. Dilley | | | $ | 55,000 | | | | $ | 110,013 | | | | $ | 165,013 | | | Virgis W. Colbert | | | $ | 55,000 | | | | $ | 109,989 | | | | $ | 164,989 | | | ||||||
| | Jeffrey D. Furber | | | $ | 70,000 | | | | $ | 110,013 | | | | $ | 180,013 | | | Michelle S. Dilley | | | $ | 55,000 | | | | $ | 109,989 | | | | $ | 164,989 | | | ||||||
| | Larry T. Guillemette | | | $ | 80,000 | | | | $ | 110,013 | | | | $ | 190,013 | | | Jeffrey D. Furber | | | $ | 70,000 | | | | $ | 109,989 | | | | $ | 179,989 | | | ||||||
| | Francis X. Jacoby III | | | $ | 55,000 | | | | $ | 110,013 | | | | $ | 165,013 | | | Larry T. Guillemette | | | $ | 105,000 | | | | $ | 109,989 | | | | $ | 214,989 | | | ||||||
| | Christopher P. Marr | | | $ | 70,000 | | | | $ | 110,013 | | | | $ | 180,013 | | | Francis X. Jacoby III | | | $ | 55,000 | | | | $ | 109,989 | | | | $ | 164,989 | | | ||||||
| | Hans S. Weger | | | $ | 75,000 | | | | $ | 110,013 | | | | $ | 185,013 | | | Christopher P. Marr | | | $ | 70,000 | | | | $ | 109,989 | | | | $ | 179,989 | | | ||||||
| | Hans S. Weger | | | $ | 75,000 | | | | $ | 109,989 | | | | $ | 184,989 | | | |||||||||||||||||||||||
(1)
All of our independentnon-management directors elected to receive shares of our common stock in lieu of cash for payment of the fees payable to them for their service in 2022.2023. The aggregate numbers of shares of common stock earned by the independent directors for their service in 20222023 were as follows: Mr. Butcher, 752; Dr. Chin, 1,680;1,546; Mr. Colbert, 1,680;1,546; Ms. Dilley, 1,680;1,546; Mr. Furber, 2,137;1,967; Mr. Guillemette, 2,444;2,933; Mr. Jacoby, 1,680;1,546; Mr. Marr, 2,137;1,967; and Mr. Weger, 2,292.2,108. These shares were issued based on the calculation previously disclosed in this proxy statement and are not indicative of the fair market value on the date the directors received the shares.
(2)
As of December 31, 2022,2023, Mr. Butcher held an aggregate of 48,146 unvested LTIP units and each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger held an aggregate of 2,6153,299 unvested LTIP units. As of December 31, 2022,2023, the aggregate number of LTIP units held by each independentnon-management director was as follows: Mr. Butcher, 740,215; Dr. Chin, 9,563;12,862; Mr. Colbert, 30,081;9,469; Ms. Dilley, 17,321;20,620; Mr. Furber, 45,222;48,521; Mr. Guillemette, 45,222;48,521; Mr. Jacoby, 45,222;48,521; Mr. Marr, 37,812;41,111; and Mr. Weger, 45,222.48,521.
(3)
Represents 2,6153,299 LTIP units granted to each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger on January 10, 2022.11, 2023. The dollar value is computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718, Compensation—Stock Compensation (“ASC Topic 718”). See Note 7 to our consolidated financial statements included in our annual reportAnnual Report on Form 10-K for the year ended December 31, 2022,2023, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on January 10, 202211, 2023 was $42.07.$33.34.
(4)
Effective as of July 1, 2023, Mr. Butcher retired as Executive Chairman and began to receive compensation for his service as a non-management director.
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Board Compensation for 2024
In 2023, the Compensation Committee engaged its independent compensation consultant, Ferguson Partners Consulting (“FPC”), to evaluate the structure and competitiveness of our non-management director compensation and recommend changes, as appropriate. Based on this review, effective for 2024 and later, the Compensation Committee recommended and the Board approved the annual cash fee and annual grant of equity for services as a non-management director and the additional annual cash fees for the chair of the Audit, Compensation and Nominating and Corporate Governance Committees in the amounts set forth in the table below. All other components of the non-management director compensation program, including the additional annual cash fee paid to the Independent Chairman of the Board, remained unchanged.
| | Position Held | | | Annual Cash Fee | | | Annual Equity Grant | | ||||||
| | Non-Management Director | | | | $ | 65,000 | | | | | $ | 120,000 | | |
| | Audit Committee Chair | | | | $ | 25,000 | | | | | | — | | |
| | Compensation Committee Chair | | | | $ | 20,000 | | | | | | — | | |
| | Nominating and Corporate Governance Committee Chair | | | | $ | 17,500 | | | | | | — | | |
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CORPORATE RESPONSIBILITY
We have a robust corporate responsibility program that incorporates ESG initiatives into our overall business, investment and asset management strategies to increase both the sustainability and the value of our portfolio. During 2022,2023, we continued to enhance and refine our corporate responsibility program and related initiatives.
To provide a board-guidedBoard-guided leadership structure to oversee and drive our ESG initiatives, the charter of the nominatingNominating and corporate governance committeeCorporate Governance Committee sets forth certain boardBoard oversight responsibilities, including (i) reviewing and making recommendations on our ESG policies and practices (and related policies for tenants, communities and vendors), (ii) reviewing our ESG risk oversight and management and related governance reporting and (iii) reviewing our performance metrics concerning ESG matters. For more information, see “Board of Directors and Its Committees—Board Committees—Nominating and Corporate Governance Committee” and “—Role of the Board in Risk Oversight” above.
Environmental Sustainability
As the long-term owner of industrial buildings, we have a vested interest in making investments and working with our tenants to create a portfolio of industrial buildings with modern sustainable features that will continue to meet tenant demand and help our tenants run their operations as efficiently as possible. While our tenants maintain operational control of the properties under triple-net leases, we seek to (i) identify, assess and manage environmental risks and opportunities at our properties, (ii) collaborate with our tenants on sustainable strategies to optimize property performance, and (iii) partner with our tenants to improve the efficiency of our properties through the implementation of environmentally focused practices and solutions. We have made progress on environmental issues in four primary areas:
(1)
Energy Savings—With respect to our investments to garner energy savings, we are working with our tenants to accelerate the replacement of inefficient equipment, including modernization of lighting and HVAC equipment, and, in doing so, generate significant electrical and natural gas cost savings, decrease resource consumption and increase the value of and return on our properties. These cost savings initially accrue to the tenants under our triple-net leases, but will make our buildings more competitive and attractive to potential tenants when exposed to market conditions in future lease negotiations. In addition, when one of our buildings becomes vacant, we advance these cost-saving modernization efforts on our own initiative.
(2)
Alternative Energy—With respect to alternative energy systems, the most promising technology for local power generation at our industrial sites is solar (photovoltaic). We have been aggressively pursuing solar panel installations in the states that are most receptive to these installations.
(3)
Energy Consumption—With respect to energy consumption, through the terms in our standard lease agreement, we are working with our tenants to develop more transparency in the energy consumption at our buildings. In 2020, we were recognized by the Institute for Market Transformation as a Green Lease Leader at the “Gold” level. We achieved this recognition by modifying ourOur standard form of lease requires tenants to require sharing of tenantshare utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption. Our capital decisions are then prioritized based on where deployment would yield maximum utility savings.
(4)
Reflective Roofing—With respect to the conversion of our portfolio from non-reflective to reflective roofing, we continue to use white membranes in the majority of our re-roof projects.
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These white, or cool, roofs reflect sunlight and reduce the heat load on our buildings, which allows our tenants to keep the buildings at comfortable temperatures while minimizing utility usage.
During 2022,2023, we enhanced our environmental programs and achieved the following milestones and accomplishments:
| | | GRESB “A” Score | | |
| | | • In October | | |
| | | Solar Panel Installations | | |
| | | • We pursue solar energy opportunities in our portfolio nationwide and have executed contracts for solar development or leasing in multiple states. As of December 31, | | |
| | | Green Lease Leader—Gold Level | | |
| | | • In 2020, we were recognized by the Institute for Market Transformation as a Green Lease Leader at the “Gold” level. This Gold level recognition was renewed in 2023. We achieved this recognition by modifying our standard form of lease to require sharing of tenant utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption. | | |
| | | Reflective Roofing | | |
| | | • Since 2015, the majority of our roof replacements utilized reflective roofing, which typically is a white membrane that reflects sunlight and reduces building heat load and utility consumption. As of December 31, | | |
| | | Lighting Conversions | | |
| | | • As of December 31, | | |
Environmental Sustainability Policy
The boardBoard has adopted an Environmental Sustainability Policy, which outlines our practices regarding understanding environmental risks and opportunities in our business and promoting greater tenant engagement and awareness and responsibility among our employees. A copy of our Environmental Sustainability Policy is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
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Tenant Engagement on Environmental Policies
With respect to the properties in our existing portfolio, we are committed to appropriate environmental stewardship, monitoring the performance of our responsible investments and measuring our progress toward improving the environmental footprint of our properties through the implementation of targeted environmental efficiency projects and equipment upgrades, such as solar panel systems and LED lighting. Each year, weWe regularly conduct a tenant survey to provide an opportunity for tenants to provide feedback on their properties that they did not communicate during our physical visits each year. We also use the survey as an opportunity to remind tenants that we are willing to finance capital improvements that lead to energy savings and to promote our capital investment program, where we invest additional capital in the building and, to pay for the project, receive monthly payments from the tenant that are less than or equal to the monthly savings realized through execution of the project. This program allows for a more efficient building at similar or reduced monthly operational cost.
Environmental Considerations in Investment Decisions
We are a growth-oriented company, and much of our growth comes from acquisitions. Accordingly, we believe our environmental strategies are most effective if they influence how we price and purchase a building, rather than being restricted to incremental improvement of already-owned real estate. We employ responsible investing practices as part of our acquisition due diligence process. Where feasible, in considering potential acquisitions, we evaluate and underwrite building systems, equipment and technologies that improve efficiency and conserve natural resources.
Social Responsibility and Human Rights
We are committed to good corporate citizenship. This commitment to social responsibility and human rights extends to all, including employees, tenants, communities, investors, suppliers and visitors. Our mission is to extend our financial resources, time and core values and principles to improve our communities and to provide a work environment that attracts, develops and retains high-performing individuals and that treats employees with dignity and respect.
Human Rights Policy
To evidence our commitment to maintaining a work environment where every employee is treated with dignity and respect, is free from discrimination and harassment, and is allowed to devote their full attention and best efforts to performing their job to the best of their respective abilities, the boardBoard has adopted a Human Rights Policy. This policy solidifies our core principles regarding equal opportunity, competitive compensation, ethical behavior, workplace safety, open and risk-free communication and legal compliance. These commitments align seamlessly with our pledge to provide a work environment that attracts, develops and retains top talent by affording our employees an engaging work experience that allows for career development and opportunities for meaningful civic involvement. A copy of our Human Rights Policy is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
Employee Engagement
We continually assess and strive to enhance employee satisfaction and engagement. Since our initial public offering in 2011, our employee headcount has increased from 26 employees to 9395 employees at year-end 2022,2023, an increase of approximately 258%265%, while maintaining a low attrition rate. Our 9395 employees as of December 31, 2022,2023, have an average tenure of approximately six years.
We recognize that our employees, more than any other stakeholder, best understand our employee engagement and culture. Since 2018, we have participated in or conducted external and internal employee surveys that provided employees an opportunity to share their perspectives on what is and is not working within our organization. For example, we have participated in a third-party survey of our employees designed to identify opportunities for improving employee engagement and business success. The results of the survey included benchmarking scores against comparably-sized businesses. In addition, we previously conducted an internally-developed survey of our employees centered on culture (as opposed to engagement).
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We created the survey based on professional frameworks to assess how our employees view our culture by archetype and gain insight on what makes certain employees successful. The results of this survey helped us better understand employee morale, satisfaction and engagement and have informed our strategies for improving our culture and communications with employees.
Diversity and Inclusion
We offer equal employment opportunities to all of our employees and seek to foster a diverse and vibrant workplace with employees who possess a broad range of experiences, backgrounds and skills. We are committed to promoting diversity and inclusion within our companyCompany culture and throughout our operations. We believe diversity in the workplace contributes to a more positive and inclusive environment. We are further committed to creating a respectful environment in which our employees can flourish. As part of that commitment, we endeavor to maintain a workplace free from discrimination and harassment on the basis of race, color, religion, creed, gender, gender identity or expression, sexual orientation, genetic information, national origin, ancestry, age, disability, military or veteran status, and political affiliation or activities, among others. We conduct training to prevent discrimination and harassment and monitor and address employee conduct.
Employee Compensation and Benefit Programs
We are committed to compensating our employees at competitive industry rates while, at the same time, monitoring our compensation programs to ensure that we are continuously attracting and retaining top talent. We also provide our employees with highly competitive health and wellness benefits, including medical, dental, vision, life and short-term disability insurance, with the premiums therefor entirely paid by us. We also offer flexible spending accounts for medical care, a program to pay commuting and office parking costs with pre-tax income and a competitive vacation policy, including paid holidays, personal time off and a variety of leave benefits.
Employee Training and Development
We believe that our employees’ training and development is critical to our long-term success. Our employees are offered regular opportunities to participate in personal growth and professional development programs and social or team building events. We believe that developing our employees through skill building, mentorship and educational opportunities fosters a more collaborative and sustainable work environment. We also recognize the importance of preparing employees for upward mobility and ensuring employees are capable of assuming other roles and responsibilities within the organization. We seek to identify and develop future leaders within our companyCompany and periodically review with our chief executive officerChief Executive Officer and the boardBoard the identity, skills and characteristics of those persons who could succeed to senior and executive positions. For additional information on our management succession plans, see “Board of Directors and Its Committees—Role of the Board in Risk Oversight—Management Succession Plans” above.
Corporate Donations and Volunteering
We strive to collaborate with local non-profit organizations that provide opportunities to inspire and empower children and young adults. Our employees demonstrate their personal commitment by volunteering time and resources into these organizations that we believe will help children and young adults realize their potential and make an impact to future generations.
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During 2022,2023, we continued to support several local and national charities with a focus on child welfare, youth empowerment, equality and social justice:
| | | Charitable Action Committee | | |
| | | • We established the CAC to promote quality interaction with our local community in Boston. The CAC is funded by our | | |
| | | Charitable Action Fund | | |
| | | • As an expression of our commitment to good corporate citizenship, we established the Charitable Action Fund in cooperation with the Boston Foundation. The Charitable Action Fund supports our social responsibility endeavors, including promoting equality and inspiring children and young adults—particularly those at risk—to realize their potential and benefit future generations. The Charitable Action Fund was formed to be the predominant channel for our monetary charitable giving and augments our ongoing | | |
More information about our corporate donations and volunteer activities is available under “Social Responsibility” in the “Corporate Responsibility” section of our website at www.stagindustrial.com.
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Corporate Governance and Ethical Business Practices
Corporate Governance Overview
We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:
| | Annual election of directors to the | | | ✔ | |
| | Majority voting standard for the election of directors (with a director resignation policy) | | | ✔ | |
| | Regular executive sessions of independent directors | | | ✔ | |
| | Independent | | | ✔ | |
| | Designation of an independent | | | ✔ | |
| | All members of the audit, compensation and | | | ✔ | |
| | | | ✔ | | |
| | Diverse | | | ✔ | |
| | Annual | | | ✔ | |
| | Regular | | | ✔ | |
| | Stockholder ability to amend | | | ✔ | |
| | No stockholder rights plan (i.e., “poison pill”) without stockholder approval or ratification | | | ✔ | |
| | Opted out of Maryland control share acquisition and business combination statutes and may not opt back in without stockholder approval | | | ✔ | |
| | Robust | | | ✔ | |
| | Anti-hedging and anti-pledging policies | | | ✔ | |
| | Clawback Policy for incentive-based executive compensation | | | ✔ | |
| | Code of | | | ✔ | |
For more information about the boardBoard and its committees, including boardBoard elections, board leadership, director independence and board policies related to annual self-evaluations and oversight of risk management, see “Board of Directors and Its Committees” above.
Vendor Code of Conduct
We encourage all our vendors to join our commitment to moral and ethical standards in conducting their businesses, and to refrain from engaging in or tolerating any unethical, improper or immoral business practices, including, but not limited to, bribery, corruption, extortion, fraud or misrepresentation. To promote
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that effort, the boardBoard has adopted a Vendor Code of Conduct, which sets vendor standards for fair and ethical business practices, safe labor conditions, respect for human rights and environmental stewardship. A
copy of our Vendor Code of Conduct is available under the “Corporate Responsibility” tab of our website at www.stagindustrial.com.
Stockholder Engagement
Our management team participates in an active stockholder engagement process each year:
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We provide institutional investors with many opportunities and events to provide feedback directly to our management team throughout the year, including formal events, one-on-one sessions and group meetings. During 2022,2023, our management team attended (in-person and virtually) six investor conferences and numerous other individual investor meetings, where they met with more than 95120 institutional investors. These meetings covered a range of topics, including our financial condition and results of operations, our investment, finance and operation strategies, our stock price performance, economic, industry and market trends, our ESG and executive compensation policies and other matters. In addition to, and apart from, our regular investor meetings, we speak exclusively about our ESG and executive compensation policies with a number of our investors each year.
We engage with stockholders throughout the year in order to:
•
provide visibility and transparency into our business, performance and corporate practices;
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hear from our stockholders about issues that are important to them and their expectations for our company;Company; and
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assess emerging issues that may affect our business, inform our decision making, enhance our public disclosures and help shape our practices.
Our management team recognizes the benefits that come from this dialogue with our stockholders. Stockholder feedback is thoughtfully considered and has led to modifications in our ESG practices, executive compensation program and public disclosures.
Enhancing Board Diversity
We are committed to diversity and recognize the benefits of having a diverse board.Board. We view increasing diversity at the boardBoard level as essential to maintaining our competitive advantage and supporting the attainment of our strategic objectives. Not only does diversity promote the inclusion of different perspectives
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attainment of our strategic objectives. Not only does diversity promote the inclusion of different perspectives and ideas, and ensure that we have the opportunity to benefit from all available talent, but the promotion of a diverse boardBoard also makes prudent business sense and makes for better corporate governance. We believe that a truly diverse boardBoard will include and make good use of differences in the skills, regional and industry experience, background, race, gender, cultural and other distinctions between directors. These differences are considered in determining the optimum composition of the board.Board. All boardBoard appointments are based on merit, in the context of the skills, experience, independence and knowledge which the boardBoard as a whole requires to be effective.
We remain focused on appointing women and other diverse candidates to the Board as opportunities arise. Women and minorities currently represent 30% of the Board. As part of the annual performance evaluation of the effectiveness of the board, boardBoard, Board committees and individual directors (described above under “Board of Directors and Its Committees—Board and Committee Evaluations”), the nominatingNominating and corporate governance committeeCorporate Governance Committee considers the balance of skills, experience, independence and knowledge of our company,Company, the diversity representation of the board,Board, including gender, ethnicity and race, how the boardBoard works together as a unit, and other factors relevant to its effectiveness. Beginning in 2023, the Board started an initiative, led by the Nominating and Corporate Governance Committee, to determine the needed skill set and experience for an additional director and identify qualified nominees with a focus on female candidates. In connection with this initiative, the Board has engaged a search firm to help identify director candidates and bring additional diversity to the Board.
Stock Ownership Guidelines
The compensation committeeCompensation Committee monitors the stock ownership guidelinesStock Ownership Guidelines that apply to all of our executive officers and non-management directors. The stock ownership guidelinesOur Stock Ownership Guidelines require that our executive officers and non-management directors own qualified securities as follows:
| | Stock Ownership Guidelines | | |||||||||||||||||||||
| | Chief Executive Officer | | | • | | | • | | | • | | | • | | | • | | | • | | | 6x base salary | |
| | Other Executive Officers | | | • | | | • | | | • | | | | | | | | | | | | 3x base salary | |
| | Non-Management Directors | | | • | | | • | | | • | | | • | | | • | | | | | | 5x | |
Qualified securities include common stock, preferred stock, common units and LTIP units, whether owned directly or indirectly. Newly appointed executive officers and non-management directors will have up to five years to comply with the stock ownership guidelines.our Stock Ownership Guidelines. As of the date hereof, all of our executive officers and non-management directors are in compliance with the stock ownership guidelines.our Stock Ownership Guidelines.
Prohibition Against Hedging and Pledging
Our insider trading policy prohibits our officers, directors, employees and their respective family members from, among other prohibited activities, engaging in short-term, speculative and other transactions in our securities that may lead to inadvertent violations of insider trading laws, including, (i) directly or indirectly engaging in strategies using puts, calls, equity swaps or other derivative securities on an exchange or in any other market in order to hedge or offset any decreases in the market value of any directly or indirectly owned securities of the company,Company, (ii) engaging in short sale or forward sale transactions or any short-term, speculative or other transactions in our securities that may lead to inadvertent violations of insider trading laws and (iii) pledging our securities as collateral for a loan or otherwise using our securities to secure a debt, including through the use of traditional margin accounts with a broker.
Clawback Policy
In accordance with applicable laws and NYSE listing standards, effective as of November 1, 2023, the Board adopted our Clawback Policy that requires the recovery of certain “incentive-based compensation” (as defined in the policy) received by our current or former executive officers (as defined in Rule 16a-1(f) under the Exchange Act) in the event that we are required to prepare an accounting restatement due to material
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noncompliance with any financial reporting requirement under the U.S. securities laws. Under this policy, unless an exception applies, we will seek to recover the portion of incentive-based compensation paid to our current or former executive officers during a specified look-back period that would not have been earned had our restated financial statements been used in the determination of the amount of incentive-based compensation originally awarded.
Other Corporate Governance Matters
Code of Business Conduct and Ethics and Corporate Governance Guidelines
We have adopted a codeCode of business conductBusiness Conduct and ethicsEthics and corporate governance guidelinesCorporate Governance Guidelines that apply to all of our executive officers and employees and each member of the board.Board. The corporate governance guidelinesCorporate Governance Guidelines provide the framework for the governance of our companyCompany and represent the board’sBoard’s current views with respect to selected corporate governance issues considered to be of significance to our stockholders. The corporate governance guidelinesCorporate Governance Guidelines direct the board’sBoard’s actions with respect to, among other things, boardBoard composition and director qualifications, selection of our chief executive officer, chairmanChief Executive Officer, Chairman of the boardBoard and lead independent director,Lead Independent Director (as applicable), composition of the board’sBoard’s standing committees, director resignation policy, executive sessions, stockholder communications with the board,Board, management succession planning and the board’sBoard’s annual performance evaluation.
Within the time period required by the SEC, we will disclose on our website any amendment to the codeCode of business conductBusiness Conduct and ethicsEthics and any waiver applicable to any director, executive officer or senior financial officer of any provision of the codeCode of business conductBusiness Conduct and ethicsEthics that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.
Copies of the codeCode of business conductBusiness Conduct and ethicsEthics and corporate governance guidelinesCorporate Governance Guidelines are available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com. Copies of such documents are also available in print to any stockholder who requests them. Requests should be sent STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, CorporateExecutive Vice President, General Counsel and Secretary.
Related Party Transactions
The boardBoard has adopted a policy for the review and approval of related party transactions requiring disclosure under Rule 404(a) of Regulation S-K promulgated by the SEC. The policy provides that the nominatingNominating and corporate governance committeeCorporate Governance Committee is responsible for reviewing and approving or disapproving all related party transactions, including any transaction, arrangement or relationship in which (i) the amount involved may be expected to exceed $120,000 in any fiscal year, (ii) we will be a participant and (iii) a “related person” has a direct or indirect material interest. A “related person” is defined as an executive officer, director or nominee for election as director, or a greater than 5% beneficial owner of our common stock, or an immediate family member of the foregoing. See “Certain Relationships and Related Party Transactions.”
Conflicts of Interests
Our codeCode of business conductBusiness Conduct and ethicsEthics expressly prohibits the continuation of any conflict of interest by an employee, officer or director except under guidelines approved by the board.Board. Our policies provide that any transaction involving us in which any of our directors or officers has a material interest must be approved by a vote of a majority of our disinterested directors. Our codeCode of business conductBusiness Conduct and ethicsEthics requires any employee, officer or director to report any actual conflict of interest to our compliance officer, who will then seek guidance from the board.Board. In addition, our corporate governance guidelinesCorporate Governance Guidelines require that each member of the boardBoard consult the chairmanChairman of the boardBoard in advance of accepting an invitation to serve on another company’s board should there be a possible conflict and notify the nominatingNominating and corporate governance committeeCorporate Governance Committee in writing of the outcome. Because the facts and circumstances regarding potential conflicts are difficult to predict, the boardBoard has not adopted a written policy for evaluating conflicts of interests. If a conflict of interest arises, the boardBoard will review, among other things, the facts
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and circumstances of the conflict, our applicable corporate governance policies, the effects of any potential waivers of those policies, applicable state law, and applicable NYSE rules, and will consider the advice of counsel before making any decisions regarding the conflict.
Communication with the Board of Directors, Independent Directors and the Audit Committee
The boardBoard may be contacted by any party via mail or e-mail at the addresses listed below:
Board of Directors
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
boardofdirectors@stagindustrial.com
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
boardofdirectors@stagindustrial.com
We believe that providing a method for interested parties to communicate directly with our independent directors, rather than to the full board,Board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. The presiding director of independent executive sessions of directors is the lead independent director or independent chairmanChairman of the board, as applicable,Board and may be contacted by any party via mail or e-mail at the addresses listed below:
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
leadindependentdirector@stagindustrial.com
The audit committeeAudit Committee has adopted a process for anyone to send communications to the audit committeeAudit Committee with concerns or complaints concerning our regulatory compliance, accounting, audit or internal controls. The audit committeeAudit Committee may be contacted by any party via mail or e-mail at the addresses listed below:
Chair
Audit Committee
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
auditcommittee@stagindustrial.com
Audit Committee
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
auditcommittee@stagindustrial.com
Alternatively, anyone may call our whistleblower hotline toll-free at (877) 472-2110. A copy of our whistleblower policy is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Relevant communications are distributed to the board,Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the boardBoard has requested that certain items that are unrelated to the duties and responsibilities of the boardBoard should be excluded or redirected, as appropriate, including, among others, business solicitations or advertisements, junk mail, spam, surveys and other mass mailings, and resumes and other forms of job inquiries. In addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded; however, any communication that is excluded will be made available to any outside director upon request.
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EXECUTIVE OFFICER COMPENSATION DISCUSSION AND ANALYSIS
This section discusses the principles underlying the material components of our compensation program for our executive officers who are named in the “Summary Compensation Table” below and the factors relevant to an analysis of our compensatory policies and decisions. The name and current title of each of our “named executive officers” for 20222023 are set forth below:
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William R. Crooker, President and Chief Executive Officer
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Matts S. Pinard, Executive Vice President, Chief Financial Officer and Treasurer
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Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary
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Michael C. Mecke,Chase, Executive Vice President and Chief OperatingInvestment Officer (until December 31, 2022)
Executive Summary
During 2022,2023, we continued to deliver strong operating and financial results, while creating significant long-term value for our stockholders. Key highlights include the following:
| | | Our acquisition platform and process create significant external growth. | | |
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Since our initial public offering in 2011, as of December 31, 2022,2023, we have deployed approximately $7.4$7.7 billion of capital, representing the acquisition of 587603 buildings, land parcels and buildings under development, totaling approximately 118.7120.9 million rentable square feet.
•
During 2022,2023, we acquired 2616 buildings totaling approximately 4.72.2 million rentable square feet for a total purchase price of approximately $472.6$322.0 million, including land parcels and one land parcel.building under development.
Five-Year Acquisition Volume
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| | | Our balance sheet enables capital access and liquidity and facilitates our strategic growth. | | |
•
As of December 31, 2022,2023, our ratio of net debt to total real estate cost basis was approximately 36.0%36.3% and our ratio of total long-term indebtedness to total enterprise value was approximately 29.9%26.6%.
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•
During the year ended December 31, 2022:
◦
We sold eight10 buildings for a total sales price of approximately $137.6$108.1 million, including a portfolio sale of two properties for gross proceeds of approximately $82.0$26.8 million.
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We maintained two investment grade ratings from nationally recognized statistical rating agencies.
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We paid a monthly dividend on shares of our common stock at an annualized rate of $1.46$1.47 per share, which represents a dividend yield of approximately 4.5%3.7% based on the year-end closing stock price of $32.31.$39.26.
| | | We continue to execute on our operational goals and maintained strong occupancy during the year. | | |
•
As of December 31, 2022,2023, we achieved an occupancy rate of 98.5%98.2% on the total portfolio and 99.0%98.4% on the operating portfolio.
| | | Our operating and financial performance has translated into significant long-term stockholder returns. | | |
•
We believe that the value creation produced from an investment in real estate should be assessed over a long-term period, and our strategy has focused on long-term value creation.
•
As of December 31, 2022,2023, our TSR performance has been +16.5%+41.70% over three years, +49.2%+96.60% over five years and +148.6%+128.20% over seven years. We have outperformed the MSCI US REIT Index over the three-year, five-year and seven-year periods.
Cumulative TSR (2020-2022)(2021-2023)
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Our TSR for 2022, while negative,2023 placed us at approximately the 68th percentile, the 22nd74th percentile and the 38th83rd percentile in our 20222023 industry peer group, our 2022 size-based peer group and the group of companies constituting the MSCI US REIT Index, respectively.
| | | Our investment strategy and execution generate significant cash flow and earnings growth. | | |
•
For the year ended December 31, 2022:2023:
◦
Net income was approximately $182.2$197.2 million as compared to net income of approximately $196.4$182.2 million in 2021, a decrease2022, an increase of approximately 7.2%8.2%. These amounts included approximately $54.1 million and $57.5 million, respectively, of gain from sales of properties in 2023 and 2022. Excluding gain from sales of properties, our net income increased by approximately 14.8% from 2022 to 2023.
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FFO was approximately $421.3 million as compared to FFO of approximately $401.4 million in 2022, an increase of approximately 5.0%.
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NOI was approximately $568.2 million as compared to NOI of approximately $531.6 million in 2022, an increase of approximately 6.9%.
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•
During 2022,2023, we continued to increase our annual revenue by, among other matters, actively managing our portfolio, completing acquisitions in our robust investment pipeline and executing build-to-suit transactions.
Five-Year Annual Revenue & Year-Over-Year Revenue Growth
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Please refer to Appendix A attached hereto for certain definitions and reconciliations of FFO and NOI to the nearest measure under GAAP.
At the 20222023 annual meeting of stockholders, approximately 96.2%96.0% of the votes cast in the advisory vote on the 20212022 compensation of theour named executive officers were in favor. We have consistently received strong support for our annual say-on-pay proposal and positive stockholder feedback since we revised our executive compensation program in 2019. As a result, our 20222023 executive compensation program maintains a similar construct to our recent programs.
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Executive Compensation Program Highlights
Our executive compensation program is designed to provide a total compensation package intended to attract and retain high-caliber executive officers and employees and incentivize employee contributions that are consistent with our corporate objectives and stockholder interests. It is our policy to provide a competitive total compensation package and share our success with the named executive officers, as well as our other employees, when our objectives are met.
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Below are certain key features of our current executive compensation practices—both the practices we believe drive performance and the practices we have not implemented because we do not believe they would serve the stockholders’ long-term interests:
| | | What We Do | | | | What We Don’t Do | | |
| | | ✔ We mitigate undue risk, including utilizing retention provisions, multiple performance targets, and robust | | | | ✘ We do not believe the executive compensation program creates risks that are reasonably likely to pose a material adverse impact to our | | |
| | | ✔ A substantial majority of compensation is tied to performance based on | | | | ✘ We do not guarantee annual base salary increases or bonuses of a minimum amount (bonuses can be zero). | | |
| | | ✔ We measure performance against multiple metrics and indices to avoid the risk of poor correlation of performance and reward. | | | | ✘ We do not provide uncapped bonuses. | | |
| | | ✔ We require positive TSR (25% or greater) as a condition to higher payouts under the performance units; relative TSR below the | | | | ✘ We do not reprice stock options or stock appreciation rights without stockholder approval; exercise or base prices may not be less than grant date fair market value of our common stock. | | |
| | | ✔ The | | | | ✘ We prohibit liberal share recycling; we may not reuse shares withheld or delivered for tax withholdings or exercise prices or use “net share counting” for stock appreciation rights. | | |
| | | ✔ We have reasonable severance provisions and generally provide for cash payments after a change of control only if an employee is also terminated within one year (a double-trigger). | | | | ✘ Our employment agreements do not include tax gross-up provisions with respect to payments contingent upon a change of control. We do not have pension plans. | | |
| | | ✔ We provide modest perquisites that have a sound benefit to our business. | | | | ✘ We do not distribute dividends on unearned performance unit awards. | | |
| | | ✔ The | | | | ✘ The compensation consulting firm did not provide any services to us not related to compensation, succession planning or executive assessments. | | |
| | | ✔ We have | | | | ✘ We prohibit hedging and pledging of our common stock by executive officers and directors. | | |
Executive Compensation Objectives and Philosophy
Objectives of Our Executive Compensation Program
The compensation committee’sCompensation Committee’s overarching goal is to attract and maintain an excellent executive management team that enhances stockholder value over the long term. The executive compensation program is, therefore, designed to provide substantial incentives to focus executive management’s efforts accordingly. The compensation program also is designed to encourage and reward executives who contribute to our financial, operational and TSR performance by successfully executing our business strategy, providing thoughtful and creative stewardship and exhibiting outstanding performance. The specific objectives of
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the compensation program are to:
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align the interests of executive officers with the interests of stockholders;
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encourage and maintain a performance-driven companyCompany culture;
•
provide the compensation committeeCompensation Committee with the flexibility and discretion to adjust executive compensation to appropriately reflect both individual circumstances and variable business conditions; and
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attract and retain talented and experienced executive officers.
Pay-for-Performance Philosophy
A substantial majority of executive compensation is tied to our performance and is not guaranteed. The compensation committeeCompensation Committee sets clear goals for companyCompany performance and differentiates certain elements of compensation based on individual achievement. Consistent with these objectives, executive compensation for 20222023 was heavily weighted toward (i) companyCompany financial and operational performance metrics for annual cash incentive bonuses and (ii) TSR performance for long-term equity incentives. We believe that the executive compensation program supports these objectives by providing the named executive officers with a multi-faceted compensation package that includes a base salary, the opportunity to earn an annual cash incentive bonus and equity awards under the 2011 Equity Incentive Plan.
The diagram below depicts the expected 2023 cash and equity compensation of Mr. Crooker, as chief executive officer (at target levels).our Chief Executive Officer. The diagram demonstrates that a substantial majority of our chief executive officer’s targetChief Executive Officer’s 2023 compensation (approximately 83%81%) is strongly aligned with the interests of our stockholders because either it will bewas determined by or dependsdepended on performance or its value will fluctuate asfluctuates with the price of our common stock increases or decreases.stock. Approximately 16%19% of our chief executive officer’s targetChief Executive Officer’s 2023 compensation iswas fixed base salary that iswas not dependent on our stock price performance. All other compensation is variable.
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(1)
“At Risk”Performance based and/or at risk” means the applicable compensation is either determined by or depends on company and individual performance goals (including TSR) or its value fluctuates with the price of our common stock (as in the case of LTIP units subject to forfeiture).
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Final Results of 20202021 Performance Units—Alignment of Pay and Performance
In January 2020,2021, we issued performance units under the 2011 Equity Incentive Plan, which provided each executive officer the opportunity to earn a target number of awards as determined by our relative and absolute TSR performance over a three-year performance period compared to pre-established quantitative performance metrics. The following table shows the performance metrics and ultimate 129.7%191.6% achievement for the performance units at the completion of the three-year performance period from January 1, 20202021 through December 31, 2022.2023.
| | | | Performance Metrics | | | | Performance Result(1) | | Metric Payout Percentage | | | | Weighting | | Calculated Payout Percentage(2) | | | | | | | | Performance Metrics | | | | Performance Result(1) | | Metric Payout Percentage | | | | Weighting | | Calculated Payout Percentage(2) | | | | | | ||||||||||||||||||||||||
| | Benchmark | | 30th Percentile | | 50th Percentile | | 75th Percentile | | 95th Percentile | | | | Benchmark | | 30th Percentile | | 50th Percentile | | 75th Percentile | | 95th Percentile | | | | ||||||||||||||||||||||||||||||||||||||||
| | Size-Based Peer Group | | 50% earned | | 100% earned | | 200% earned | | N/A | | | | 77% | | 200.0% | | | | 25% | | 50.0% | | | | Size-Based Peer Group | | 50% earned | | 100% earned | | 200% earned | | N/A | | | | 68% | | 166.1% | | | | 25% | | 41.5% | | | | ||||||||||||||||
| | Industry Peer Group | | 50% earned | | 100% earned | | 200% earned | | N/A | | | | 59% | | 118.8% | | | | 25% | | 29.7% | | | | Industry Peer Group | | 50% earned | | 100% earned | | 200% earned | | N/A | | | | 81% | | 200.0% | | | | 25% | | 50.0% | | | | ||||||||||||||||
| | MSCI US REIT Index(3) | | 50% earned | | 100% earned | | 200% earned | | 300% earned | | | | 80% | | 100.0% | | | | 50% | | 50.0% | | | | MSCI US REIT Index(3) | | 50% earned | | 100% earned | | 200% earned | | 300% earned | | | | 75% | | 200.1% | | | | 50% | | 100.1% | | | | ||||||||||||||||
| | | | | | | | | | | | | | Total Calculated Payout Percentage: | | 129.7% | | | | | | | | | | | | | | | | Total Calculated Payout Percentage: | | 191.6% | | | | ||||||||||||||||||||||||||||
(1)
Rounded to the nearest whole percentile.
(2)
Excludes deemed dividend shares.
(3)
Awards above 100% for this benchmark require us to achieve a minimum absolute TSR of 25%. Our absolute TSR for the performance period from January 1, 20202021 through December 31, 20222023 was 21.0%39.3%.
A comparison of this result to prior years illustrates the true variability of our long-term equity incentive compensation program. The total percentage of target achieved for the 2017-2019, 2018-2020, 2019-2021 and 2019-20212020-2022 performance units was 166%141%, 141%193% and 193%130%, respectively.
How We Determine Executive Compensation
The compensation committeeCompensation Committee determines compensation for the named executive officers and currently has five independent directors, Ms. Dilley and Messrs. Colbert, Furber, Guillemette and Weger. The compensation committeeCompensation Committee exercises independent discretion with respect to executive compensation matters and administers our equity incentive programs, including reviewing and approving equity grants to the named executive officers pursuant to the 2011 Equity Incentive Plan. The compensation committeeCompensation Committee operates under a written charter adopted by the board,Board, a copy of which is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
The initial compensation arrangements with the named executive officers were determined in negotiations with each individual executive officer and were formalized in the executive officers’ employment agreements, as described below in “Potential Payments Upon Termination or Change in Control—Employment Agreements.” In making compensation decisions for 2022,2023, the compensation committeeCompensation Committee evaluated the performance of our chief executive officerChief Executive Officer and, together with our chief executive officer,Chief Executive Officer, assessed the individual performance of the other named executive officers. The compensation committeeCompensation Committee also reviewed market-based compensation data provided its independent compensation consultant, Ferguson Partners Consulting (“FPC”),FPC, and from data publicly available from other sources such as the National Association of Real Estate Investment Trusts (“Nareit”).
Engagement of Compensation Consultant
The compensation committeeCompensation Committee is authorized to retain the services of one or more executive compensation consultants, in its discretion, to assist with the establishment and review of our compensation programs and related policies. The compensation committeeCompensation Committee has sole authority to hire, terminate and set the terms of any future engagement of FPC or any other compensation consultant.
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