UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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BOSTON PROPERTIES, INC.

 

 

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LOGOLOGO

LOGOLOGO

April 5, 20192021

DearTo My Fellow Stockholder:BXP Stockholders,

You are cordially invited

LOGO

On behalf of the entire Board of Directors, I want to thank you for your continued support of Boston Properties and invite you to attend our 2021 Annual Meeting of Stockholders. In view of the continuing health risks related to the COVID-19 pandemic, we have determined that our annual meeting this year will once again be a virtual meeting, conducted solely via audio webcast. You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions by visiting www.virtualshareholdermeeting.com/BXP2021.

Over the course of our 50-year history, Boston Properties has proven its resilience through a variety of global, national, secular and BXP-specific challenges. These included financial recessions, wars, terrorist attacks on the cities in which we operate, and the sudden passing of

one of our co-founders. In every instance, although we endured some short-term pain and uncertainty, we adjusted to attend the 2019 annual meetingconditions and emerged stronger. That said, by any measure, 2020 was a remarkably challenging year, one in which we experienced three mega-events simultaneously: (1) the most serious worldwide health crisis of stockholdersour generation; (2) a collective reawakening to the sad reality that the road to achieving racial justice in our country remains long and difficult; and (3) a much-heightened awareness of the importance of environmental and sustainability issues.

In view of these remarkable events, I want to change course this year. Instead of using this letter to summarize and highlight financial information that is contained in the accompanying Annual Report and proxy statement, I want to talk about how Boston Properties Inc. The annualresponded to these challenges and where we stand as we move into the second quarter of 2021. Spoiler alert: under the strong leadership of our CEO, Owen Thomas, and our President, Doug Linde, the Company acted thoughtfully and responsibly, successfully meeting will bethese complex challenges with compassion and in a manner consistent with our recognition by Newsweek as one of America’s Most Responsible Companies.

COVID-19 Pandemic

Needless to say, the COVID-19 pandemic presented unprecedented and outsized challenges for everyone – people died, lives were disrupted, and the economy suffered massive dislocation. In addition, because COVID restrictions kept people out of offices, retail stores, restaurants and hotels for most of the past year, it presented special challenges to our business. That reality, in turn, brought front-and-center one of our Board’s most important responsibilities – risk oversight. Of course, the Board is always aware that, as one of the largest publicly traded owners of Class A office properties in the United States, BXP operates in a challenging environment, and attention to risk is a constant staple of our work. But COVID – and the consequent temporary shift in the locus of work (from office to home) – took that recognition to a new level, as the world and our company navigated uncharted waters with no idea as to how long they would persist.

Right from the outset, therefore, the Board changed its usual way of operating in order to ensure that we remained fully abreast, in real time, of the risks posed by the pandemic and management’s responses to them. In particular, the Board and several of its committees held a significant number of additional meetings in 2020 to analyze and act on Tuesday, May 21, 2019 at 9:00 a.m., Eastern Time, at 599 Lexington Avenue, New York, New York 10022.

The proxy statement,these matters, while all of the directors engaged with management even more frequently in informal settings. We wrestled with the accompanying formal noticeunpredictability of the meeting, describespandemic, the matters expecteduncertainty of its duration, its effect on our business as well as on the businesses of our tenants, what it would mean for our stockholders and stock price, how we would conduct public reporting in the face of uncertainty, whether work-from-home would be a short-term blip or have longer-term consequences, how we would ensure the safety of our tenants as they began to be acted uponreturn to our offices in greater numbers, and perhaps, most importantly, what effect all of this would have on our employees, the lifeblood of our company. When appropriate, we also brought in outside experts to help us address these vexing matters.

LOGO

 |  2021 Proxy Statement

We also took special precautions to protect employees and tenants from exposure to COVID. We worked with our own property management teams and brought in world-renowned health security experts to develop a Health Security Plan for operating our properties. The plan is now widely viewed as a world-class, market-leading safety protocol. Most importantly, as a result of this extraordinary work, we kept our commitment to our tenants by providing them with clean and safe buildings that remained open for business throughout the pandemic. In this regard, the Board wishes to express special thanks to BXP’s property-management teams, who were instrumental in helping us meet our tenants’ needs.

Although there were some inevitably choppy waters, especially at the meeting.outset, under the leadership of Owen and Doug, the Company moved forward with confidence and a focus on our long-term objectives, even when doing so may have had short-term negative implications. We urge yourefinanced a significant amount of debt, approved several development opportunities, effectively husbanded our assets, and dealt fairly with our tenants, many of whom faced their own serious economic challenges. I am pleased to review these materials carefully andreport that positive results are beginning to use this opportunity to take part in the affairs of Boston Properties by voting on the matters described in the proxy statement. Following the formalshow. Our stock has recovered a substantial portion of the early losses experienced throughout our industry, our buildings are now being safely reoccupied, and our employees remain committed and highly motivated.

As I write this letter, a year since the outbreak of COVID, remarkably the U.S. is now providing its citizens with vaccines. Consequently, although the pandemic is not yet over, and we continue to adapt our day-to-day operations to respond to its effects and our tenants’ needs, as we move into the spring of 2021 there is no doubt that renewed hope and optimism are in the air. We expect that in a few months everyone that wants to be vaccinated will have had the opportunity to do so, and that our buildings will return to most of their pre-pandemic operations.

Nevertheless, as a leading company in the office business, we will inevitably face continuing questions and uncertainties over the impact of the “work-from-home” experience of the past year on our business going-forward. For our part, based on extensive internal analysis, external outreach and our directors’ own experience in leading organizations, we continue to believe that there is no better way for a company to support its own success than by fostering the necessary culture, collaboration, mentorship, training and creativity, all of which result from bringing people together to work in teams in a person-to-person collaborative environment. These are the essentials that the modern office provides, and we believe that this core foundational view will soon be reaffirmed by companies throughout the nation.

Social Justice

This past year, Americans also witnessed major social-justice movements that spotlighted the racial injustices and economic inequities that continue to plague our society. In response, and despite the separate challenges of COVID, the Company decided that we needed to expand and accelerate our longstanding commitment to diversity, equity and inclusion. Owen immediately set the tone-at-the-top by signing on to the CEO Action for Diversity and Inclusion campaign, the largest collective business commitment ever made on this issue. The Company also took internal steps to address these issues by establishing the BXP Diversity and Inclusion Committee in early 2020. The mission of this new committee is two-fold: (1) to promote and ingrain diversity, inclusion, equality and transparency as a cornerstone of BXP’s culture, business activities and decision-making practices; and (2) to provide a priority mechanism for developing specific D&I-based programs that will have a positive impact on the Company as well as in the broader community. In addition, the Board expressly committed to engaging with management to identify other ways by which we can drive further change, and, for the first time, our Compensation Committee has included goals and objectives to ensure that our executives are held accountable for progress on these issues. To be fully transparent, we intend to provide periodic updates on the results of these efforts.

LOGO

 |  2021 Proxy Statement

Commitment to ESG

Lastly, responding further to the past year’s challenges, the Company has stepped up its Environmental, Social and Governance (ESG) efforts, which you will be able to see in detail in the accompanying proxy statement. Our investment and operating philosophies are both shaped by our core strategy of long-term ownership and our commitment to making our communities the centers of commerce and civic life that make them thrive. We are increasingly focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas emissions, and climate change. To these ends, we have publicly adopted long-term energy, emissions, water and waste goals containing aggressive reduction targets that are aligned with the United Nations Sustainable Development Goals. Indeed, as you will see more about in our proxy statement, Boston Properties is recognized as an international leader in sustainability and ESG, and our management and Board firmly intend to preserve and enhance those achievements. For transparency, we have committed to provide high-quality ESG data and information for evaluation by independent third parties and, as new ESG assessments, ratings and frameworks emerge, we intend to engage fully with our stakeholders to make sure that we remain nimble and responsive.

The accompanying proxy statement contains a great deal of other important information about Boston Properties, and we hope you will take the time to read it and vote at the annual meeting. Whether or not you are able to participate in the “virtual” annual meeting, we will provide a brief report on the operations ofwelcome your interest in our companyaffairs and our directors and management team will be available to answer appropriate questions from stockholders.

Your vote is important. Your proxy or voting instruction card includes specific information regarding the several ways to vote your shares. We encourage you to vote as soon as possible, even if you plan to attend the meeting. You may vote over the internet, by telephone or by mail.

Thankthank you for your continued support of Boston Properties.support.

Sincerely,

 

 

LOGOLOGO

Owen D. ThomasJoel I. Klein

Chief Executive OfficerChairman of the Board

LOGO

 |  2021 Proxy Statement

Boston Properties, Inc.

800 Boylston Street

Suite 1900

Boston, MA 02199-8103

LOGO

Notice of 2019 Annual Meeting of StockholdersNOTICE OF 2021 ANNUAL

MEETING OF STOCKHOLDERS

 

Date:Tuesday, May 21, 2019
Time:

DATE AND TIME

  Thursday, May 20, 2021, at 9:00 a.m., Eastern Time
Place:

LOCATION

  599 Lexington Avenue, New York, New York 10022www.virtualshareholdermeeting.com/BXP2021
Record Date:

RECORD DATE

  Wednesday, March 27, 201924, 2021. Only stockholders of record at the close of business on the record date are entitled to receive notice of, and to vote at, the annual meeting.

ITEMS OF BUSINESS

1.
Items of Business:        1.  

To elect the eleven (11) nominees for director named in the proxy statement, each to serve for aone-year term and until their respective successors are duly elected and qualified.

2.

To hold anon-binding, advisory vote on named executive officer compensation.

3.

To approve the Boston Properties, Inc.Non-Employee Director Compensation 2021 Stock Incentive Plan.

4.

To ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2021.

5.

To consider and act upon any other matters that are properly brought by or at the direction of the Board of Directors before the annual meeting and at any adjournments or postponements thereof.

Proxy Voting:If you do not plan to attend the meeting and vote your shares of common stock in person, we urge you to vote your shares as instructed in the proxy statement. If you received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the postage-paid envelope provided.

If your shares of common stock are held by a broker, bank or other nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares of common stock voted.

Any proxy may be revoked at any time prior to its exercise at the annual meeting.

IMPORTANT INFORMATION REGARDING OUR VIRTUAL ANNUAL MEETING

Due to the continuing public health concerns relating to the coronavirus, or COVID-19, Boston Properties’ 2021 annual meeting will be a “virtual” meeting conducted by live audio webcast. Stockholders will not be able to attend the meeting in person, but will be able to listen, vote and submit questions during the virtual annual meeting from any remote location that has internet connectivity. You or your proxyholder may participate and vote by visiting www.virtualshareholdermeeting.com/BXP2021 and using your 16-digit control number on your proxy card, voting instruction form, or the Notice of Internet Availability you previously received. For more information, see “Information about the Annual Meeting — Attending the Virtual Annual Meeting” on page 105 in the proxy statement.

A list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose relevant to the meeting for at least ten days prior to May 20, 2021. The stockholder list will be available in electronic form during the annual meeting online at www.virtualshareholdermeeting.com/BXP2021.

Since becoming a public company in 1997 until 2020, we always held our annual meetings in person. However, due to COVID-19, we held a virtual annual meeting last year for the first time. We intend to hold our future annual meetings in person when it is safe to do so.

PROXY VOTING

Whether or not you plan to attend the meeting and vote your shares of common stock virtually in person, we urge you to vote your shares as instructed in the proxy statement. If you received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the postage-paid envelope provided.

If your shares of common stock are held by a broker, bank or other nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares of common stock voted.

Any proxy may be revoked at any time prior to its exercise at the annual meeting.

By Order of the Board of Directors,

LOGO

Frank D. Burt, ESQ.

Secretary

April 5, 2021

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 21, 2019. 20, 2021.The proxy statement and our 20182020 annual report to stockholders areavailableare available atwww.edocumentview.com/bxp.www.proxyvote.com.

By Order of the Board of Directors

LOGO

FRANK D. BURT, ESQ.

Secretary

April 5, 2019

Table of Contents

 

PROXY SUMMARY 1LOGO 

 |  2021 Proxy Statement

TABLE OF CONTENTS

   Proxy Summary  1
 1  ›  Proposal 1: Election of Directors  7
   Nominees for Election  9
   Director Independence  21
   Consideration of Director Nominees  22
 2  ›  Corporate Governance  25
   Board Leadership Structure  25
   Board and Committee Meetings  26
   Board Refreshment and Evaluations  26
   Board Committees  28
   Board’s Role in Risk Oversight  31
   Other Governance Matters  33
 3  ›  Human Capital and Sustainability  35
   Human Capital  35
   Sustainability  36
 4  ›  Executive Officers  40
 5  ›  Principal and Management Stockholders  44
 6  ›  Compensation of Directors  48
   Components of Director Compensation  48
   Deferred Compensation Program  49
   Director Stock Ownership Guidelines  49
   Director Compensation Table  50
 7�� ›  Compensation Discussion and Analysis  51
   Executive Overview  51
   Executive Compensation Program  55
   Determining Executive Compensation  70
   Other Compensation Policies  72
 8  ›  Compensation of Executive Officers  77
   Summary Compensation Table  77
   Grants of Plan-Based Awards in 2020  78
   Outstanding Equity Awards at 2020 Fiscal Year-End  79
   2020 Option Exercises and Stock Vested  81
   Nonqualified Deferred Compensation in 2020  81
   Employment Agreements  83
   Potential Payments upon Termination or Change in Control  85
   Pay Ratio Disclosure  90
         Compensation Committee Report  91
 9  ›  Proposal 2: Advisory Vote on Named Executive Officer Compensation  92
   Vote Required  92
 10   ›   Proposal 3: Approval of the Boston Properties, Inc. 2021 Stock Incentive Plan   93 
   Shares Available for Issuance and Outstanding Awards   94 
   Burn Rate   94 
   Summary of 2021 Plan   96 
   United States Tax Consequences – Options and Stock Appreciation Rights   99 
   New Plan Benefits   100 
   Vote Required   100 
   Equity Compensation Plan Information   100 
 11   ›   Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm   102 
   Fees to Independent Registered Public Accounting Firm   103 
   Audit and Non-Audit Services Pre-Approval Policy   103 
   Vote Required   103 
   Audit Committee Report   104 
 12   ›   Information about the Annual Meeting   105 
   Attending the Virtual Annual Meeting   105 
   Notice of Internet Availability of Proxy Materials   106 
   Purpose of the Annual Meeting   106 
   Presentation of Other Matters at the Annual Meeting   106 
   Stockholders Entitled to Vote   106 
   Quorum for the Annual Meeting   106 
   How to Vote   107 
   Revoking Proxy Instructions   108 
   Accessing Boston Properties’ Proxy Materials Electronically   108 
   Householding   108 
           Expenses of Solicitation   108 
 13   ›   Other Matters   109 
   Certain Relationships and Related Person Transactions   109 
   Stockholder Nominations for Director and Proposals for the 2022 Annual Meeting of Stockholders   109 
 A   ›   Appendix A   A-1 
   Boston Properties, Inc. 2021 Stock Incentive Plan   A-1 

PROXY STATEMENT 9
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERSLOGO 9

The Board of Directors |  2021 Proxy Statement

 9

Board Leadership

10

Board Committees

12

Board’s Role in Risk Oversight

14

Director Independence

15

Consideration of Director Nominees

17

Proxy AccessBy-Law Provisions

19

Code of Business Conduct and Ethics and Other Policies

20

Communications with the Board

20
PROPOSAL 1: ELECTION OF DIRECTORS22

Vote Required

22

Information Regarding the Nominees and Executive Officers

23
PRINCIPAL AND MANAGEMENT STOCKHOLDERS34

Section 16(a) Beneficial Ownership Reporting Compliance

37
COMPENSATION DISCUSSION AND ANALYSIS38

Executive Summary

38

Compensation Governance

42

Assessing Performance

43

Performance-Based Equity Awards; Three-Year TSR Drives Actual Earned Pay

55

Alignment of Pay with Performance

58

Allocation of LTI Equity Awards

60

Benchmarking Peer Group and Compensation Advisor’s Role

61

Role of Management in Compensation Decisions

63

Other Compensation Policies

63
COMPENSATION COMMITTEE REPORT69
COMPENSATION OF EXECUTIVE OFFICERS70

Summary Compensation Table

70

2018 Grants of Plan-Based Awards

72

Outstanding Equity Awards at December 31, 2018

74

2018 Option Exercises and Stock Vested

76

Nonqualified Deferred Compensation

77

Employment Agreements

78

Potential Payments Upon Termination or Change in Control

80

Pay Ratio Disclosure

88
PROPOSAL 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION90

Proposal

90

Vote Required

90

COMPENSATION OF DIRECTORS› 91

Director Compensation Table

92

Director Stock Ownership Guidelines

93
PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC.NON-EMPLOYEE PROXY SUMMARY DIRECTOR COMPENSATION PLAN95

Proposal

95

Background

95

Summary of the Director Compensation Plan

96

New Plan Benefits

98

Vote Required

98
EQUITY COMPENSATION PLAN INFORMATION99
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION100
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM101

Proposal

101

Fees to Independent Registered Public Accounting Firm

102

Audit andNon-Audit ServicesPre-Approval Policy

102

Vote Required

102
AUDIT COMMITTEE REPORT103
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS104
INFORMATION ABOUT THE ANNUAL MEETING105
OTHER MATTERS109

Expenses of Solicitation

109

Stockholder Nominations for Director and Proposals for the 2020 Annual Meeting

109
APPENDIX AA-1

Reconciliation of Net Income Attributable to Boston Properties, Inc. Common Shareholders to BXP’s Share of Same Property Net Operating Income (NOI) (excluding termination income)

A-1

Reconciliation of Net Income Attributable to Boston Properties, Inc. Common Shareholders to BXP’s Share of Same Property Net Operating Income (NOI) - Cash (excluding termination income)

A-3

Consolidated Joint Ventures

A-5

Unconsolidated Joint Ventures

A-7
APPENDIX BB-1

Boston Properties, Inc.Non-Employee Director Compensation Plan

B-1

PROXY SUMMARY

This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. References to “we,” “us,” “our,” “Boston Properties,” “BXP” and the “Company” in this summary refer to Boston Properties, Inc. and references to “BPLP” in this summary refers to Boston Properties Limited Partnership, our operating partnership.

2021 ANNUAL MEETING INFORMATION

Date and TimeLocationRecord Date

Thursday, May 20, 2021

9:00 a.m., Eastern Time

The meeting will be held virtually at

www.virtualshareholdermeeting.com/BXP2021

March 24, 2021

VOTING MATTERS AND RECOMMENDATIONS

Board voting
recommendation		Where to find
more information

Proposal 1

Election of Eleven (11) Directors✓ FOR each nomineePage 7

Proposal 2

Non-binding, Advisory Vote on Named Executive Officer Compensation✓ FORPage 92

Proposal 3

Approval of the Boston Properties, Inc. 2021 Stock Incentive Plan✓ FORPage 93

Proposal 4

Ratification of Appointment of Independent Registered Public Accounting Firm✓ FORPage 102

 

 

LOGO

 |  2021 Proxy Statement

1

Voting Matter› Board’s Voting
Recommendation

Page Reference for

more Information

Proposal 1:

Election of Directors

FOR each nominee

22

Proposal 2:

Non-binding, PROXY SUMMARY Advisory Vote on Named Executive Officer Compensation

FOR

90

Proposal 3:

Approval of the Boston Properties, Inc.Non-Employee Director Compensation Plan

FOR

95

Proposal 4:

Ratification of Appointment of Independent Registered Public Accounting Firm

FOR

101

 

BOARD AND GOVERNANCE HIGHLIGHTS

DIRECTOR SUCCESSION

Led by our lead independent director and Nominating and Corporate Governance (“NCG”) Committee, our Board of Directors remains focused on ensuring a smooth transition if and when directors decide to retire or otherwise leave our Board and that the composition of our Board is systematically refreshed so that, taken as a whole, the Board has the desired mix of skills, experience, reputation and diversity relevant to our strategic direction and operating environment, as well as the knowledge, ability and independence to continue to deliver the high standard of governance expected by investors. For more information on this process, see“Corporate Governance Principles and Board Matters – The Board of Directors – Director Succession Planning” beginning on page 9 of the proxy statement.

Consistent with this approach, between 2016 and 2018 our Board nominated, and our stockholders elected, three new directors (Senator Kelly A. Ayotte, Ms. Karen E. Dykstra and Mr. Bruce W. Duncan), and our Board of Directors is delighted to nominate two new candidates – Ms. Diane J. Hoskins and Mr. William H. Walton, III – for election to our Board of Directors at the 2019 annual meeting of stockholders. Mr. Martin Turchin, a director of Boston Properties since 1997, and Dr. Jacob A. Frenkel, a director of Boston Properties since 2010, are not standing forre-election. The Board of Directors extends its gratitude and appreciation to them for their dedication and contributions to Boston Properties.

Assuming the election of the eleven nominees for director at the 2019 annual meeting of stockholders, the average tenure for our independent directors will be approximately 5.9 years and the average age of our independent directors will be approximately 63.4 years. In addition, we added three female directors since May 2015, and we are nominating four women for election to our Board at the 2019 annual meeting of stockholders.

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    1

PROXY SUMMARY

The following summarizes the changes to our Board composition over the past four years, assuming the election of the eleven nominees for director at the 2019 annual meeting of stockholders:

LOGO

APPOINTMENT OF INDEPENDENT,NON-EXECUTIVE CHAIRMAN

Our Board of Directors selected Mr. Joel I. Klein to serve as our independent,non-executive Chairman of the Board effective immediately following the 2019 annual meeting of stockholders. Mr. Klein has served as a director of Boston Properties, Inc. since 2013 and as lead independent director since 2016. See“Corporate Governance Principles and Board Matters – Board Leadership”beginning on page 10 of the proxy statement.

NON-EMPLOYEE DIRECTOR COMPENSATION

On February 26, 2019, our Board of Directors approved the Boston Properties, Inc.Non-Employee Director Compensation Plan (the “Director Compensation Plan”), which sets forth the cash and equity compensation that is to be paid to ournon-employee directors in a specific, formulaic manner. Although we are not legally required to seek or receive stockholder approval for the Director Compensation Plan, we are submitting the plan to stockholders for approval. Our Compensation Committee and Board of Directors last reviewed ournon-employee director compensation in 2016, or three years ago.

2    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PROXY SUMMARY

The Director Compensation Plan implements recommendations that our Compensation Committee made to our full Board of Directors based on a comprehensive review of the structure and amounts of our existing compensation fornon-employee directors. For the 2019 review, our Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) to help ensure that ournon-employee director compensation remains competitive and is generally consistent with “best” practices. Our Compensation Committee also sought recommendations from FPL Associates, L.P. regarding compensation for the role ofnon-executive chairman.

Because of the interests that ournon-employee directors have in the establishment of the compensation they receive, our Board determined to submit the plan for stockholder approval. See“Proposal 3 – Approval of the Boston Properties, Inc.Non-Employee Director Compensation Plan” beginning on page 95 of the proxy statement for more detail.

NEW DIRECTOR STOCK OWNERSHIP GUIDELINES

Based on FW Cook’s recommendations, our Board of Directors also approved new stock ownership guidelines fornon-employee directors to better align their interests with those of our stockholders and conform to “best” practices. The effectiveness of these guidelines is conditioned upon stockholder approval of the Director Compensation Plan at the 2019 annual meeting of stockholders. Under the new guidelines, eachnon-employee director is generally expected to retain an aggregate number of shares of our common stock and its equivalents, including deferred stock units and units in Boston Properties Limited Partnership (the “Operating Partnership”), whether vested or not, having an aggregate value equal to at least five (5) times the value of the then-current annual cash retainer paid tonon-employee directors. The current stock ownership guidelines require ownership of an aggregate number of shares and units that the director received as an annual retainer during the first three years following his or her election. See“Compensation of Directors – Director Stock Ownership Guidelines” beginning on page 93 of the proxy statement for more detail.

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    3

PROXY SUMMARY

BOARD NOMINEES

Following the recommendation of the NCGNominating and Corporate Governance (“NCG”) Committee, our Board of Directors has nominated the following eleven (11) candidates for election as directors at the 20192021 annual meeting of stockholders.

 

               Current Committee Membership
Name and Principal Occupation  Age   Independent   

Director

Since

   Audit(1)   Compensation   NCG(1)

 

Kelly A. Ayotte

            

Former United States Senator for the State of New Hampshire

 

  

 

 

 

50

 

 

   ✓   

 

 

 

2018

 

 

     ●   ●

 

Bruce W. Duncan(2)(3)

            

Chairman and former Chief Executive Officer of First Industrial Realty Trust, Inc.

 

   67    ✓   

 

 

 

2016

 

 

     ●   ●

 

Karen E. Dykstra(3)

            

Former Chief Financial and Administrative Officer of AOL, Inc.

 

   60    ✓    

 

2016

 

 

 

   ●     

 

Carol B. Einiger

   69    ✓   

 

 

 

 

2004

 

 

 

 

     Chair   

President of Post Rock Advisors, LLC

 

    

 

Diane J. Hoskins(4)

      

 

 

 

 

New

Nominee

 

 

 

 

 

      

Chair andCo-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc.

 

   61    ✓       

 

Joel I. Klein(5)

            

Chief Policy and Strategy Officer of Oscar Health Corporation

 

   72    ✓    

 

2013

 

 

 

   †    †   †

 

Douglas T. Linde

   55     

 

 

 

 

2010

 

 

 

 

      

President of Boston Properties, Inc.

 

        

 

Matthew J. Lustig

            

Head of North America Investment Banking and Head of Real Estate & Lodging at Lazard Fréres & Co.

 

   58    ✓    

 

2011

 

 

 

      Chair

 

Owen D. Thomas

   57     

 

 

 

 

2013

 

 

 

 

      

Chief Executive Officer of Boston Properties, Inc.

 

 

David A. Twardock(3)

            

Former President of Prudential Mortgage Capital Company, LLC

 

   61    ✓    

 

2003

 

 

 

   Chair    ●   

 

William H. Walton, III(4)

      

 

 

 

 

New

Nominee

 

 

 

      

Managing Member &Co-Founder of Rockpoint Group, LLC

 

   67    ✓              

  Name

 Principal Occupation Age(1)  Director
Since		  Independent  Current Committee
Memberships

Joel I. Klein

Chairman of the Board

 Chief Policy and Strategy Officer of Oscar Health Corporation 74  2013  Yes  (2)

Kelly A. Ayotte

 Former United States Senator for the State of New Hampshire 52  2018  Yes  Compensation (Chair); NCG

Bruce W. Duncan(3)

 President and Chief Executive Officer and a Director of CyrusOne Inc. 69  2016  Yes  Audit; NCG

Karen E. Dykstra(3)

 Former Chief Financial and Administrative Officer of AOL, Inc. 62  2016  Yes  Audit

Carol B. Einiger

 President of Post Rock Advisors, LLC 71  2004  Yes  Compensation; NCG

Diane J. Hoskins

 Chair and Co-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc. 63  2019  Yes  NCG; Sustainability (Chair)

Douglas T. Linde

 President of Boston Properties, Inc. 57  2010  No  Sustainability

Matthew J. Lustig

 Chairman of North America Investment Banking and Head of Real Estate & Lodging at Lazard Frères & Co. 60  2011  Yes  NCG (Chair); Sustainability

Owen D. Thomas

 Chief Executive Officer of Boston Properties, Inc. 59  2013  No  Sustainability

David A. Twardock(3)

 Former President of Prudential Mortgage Capital Company, LLC 64  2003  Yes  Audit (Chair); Compensation

William H. Walton, III

 Co-Founder and Managing Member of Rockpoint Group, LLC 69  2019  Yes  Compensation

 

(1)

Mr. Turchin currently serves onAges are as of May 20, 2021, the Audit Committee and Dr. Frenkel currently serves ondate of the NCG Committee. Messrs. Turchin and Frenkel are not standing for re-election.annual meeting.

 

(2)

Assuming his re-election toMr. Klein serves as our Boardindependent, non-executive Chairman of Directors, the Board expects to appoint Mr. Duncan toand as an ex officio member of each of the Audit Committee and that Mr. Duncan will cease serving on the Compensation Committee following the 2019 annual meeting.Board’s committees.

 

(3)

Our Board of Directors determined that each of Ms. Dykstra Mr.and Messrs. Duncan and Mr. Twardock qualifies as an “audit committee financial expert” as that term is defined in the rules of the SEC.

(4)

Assuming their elections to our Board of Directors, the Board expects to appoint Ms. Hoskins to the NCG CommitteeSecurities and Mr. Walton to the Compensation Committee.

(5)

Mr. Klein currently serves as our lead independent director and, assuming his re-election, will become our independent,non-executive Chairman of the Board immediately following the 2019 annual meeting.

†

Mr. Klein serves as anex officio member of each committee.Exchange Commission.

 

4    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

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PROXY SUMMARY

› PROXY SUMMARY

 

SNAPSHOT OF 20192021 BOARD NOMINEES

Presented below is a snapshot of the expected composition of our Board of Directors immediately following the 20192021 annual meeting of stockholders, assuming the election of the eleven (11) nominees named in the proxy statement. Our Board of Directors believes that, collectively, the nominees exhibit an effective mix of skills,qualifications, experience, diversity and diversity.tenure. For comparison purposes, we have also presented comparable metrics for the constituents of the S&P 500 Index, of which Boston Properties is a member. Data for the S&P 500 Index is based on theSpencer Stuart Board Index2018.2020.

 

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Tenure age gender diversity BXP average tenure: 6.2 years S&P 500 average tenure: 8.4 years BXP average age of all nominees: 62.2 years BXP average age of independent nominees: 63.4 years S&P 500 average age of independent directors : 63.0 years BXP % of female directors: 36% S&P 500 % of female directors: 24% S&P 500 average # of female directors: 2.6

The following chart summarizes the qualifications and experience and skills possessed by ourof the eleven (11) nominees for election to our Board:

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Summary of Qualifications and Experience (11 Nominees) REIT and/or Real Estate Capital Markets and Investment Banking CEO/ Executive management Strategic Planning and leadership Risk oversight Other Public Company Board expertise Financial Expertise Financial literacy Government and Public Policy Academia Teleology International Corporate Government Insurance Talent Management Sustainability

as directors. For a more detailed description of the above qualifications and experiences,additional information, see “Proposal 1: Election of Directors – Information Regarding the Nominees and Executive Officers”for Election” beginning on page 239 of the proxy statement.

 

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    5

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PROXY SUMMARY

› PROXY SUMMARY

 

ENVIRONMENTAL, SOCIAL & GOVERNANCE AND COMPENSATION POLICIES AND KEY DATA

Environmental, social and governance (“ESG”) considerations continue to evolve and influence how we conduct our business. Our core strategy is long-term ownership of commercial real estate; therefore, sustainable development and responsible growth are fundamental to our investment philosophy. As stakeholder interest in issues like healthy buildings, climate resilience, diversity and inclusion, health and wellness, social equity and community involvement continues to grow, it reinforces just how intertwined our work is with many important aspects of people’s lives. It also means BXP has a unique opportunity to provide leadership in crafting solutions, and we intend to continue making efforts to improve ESG performance and conduct our business in a manner that contributes to positive economic, social and environmental outcomes for our customers, stockholders, employees and the communities we serve.

 

 Director ENVIRONMENTAL

 Independence and

 Compliance

  

We are focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas emissions and climate change. For additional information, see “Human Capital and Sustainability” beginning on page 35.

•Sustainability Highlights   Eleven (11) directors

 

 

•   82% independent

•   Regular executive sessions of independent directors

•   All directors and officers are subject to a Code of Business Conduct and Ethics

•   All directors attended 75% or more of Board and committee meetings

 

 Director

 Qualifications•  Corporate member of the U.S. Green Building Council®

•  Fitwel Champion through partnership with Fitwel, a leading healthy building certification system, to support healthy building design and operational practices across our portfolio

•  In 2017, shortly after the U.S. announced its withdrawal from the Paris Agreement, we proudly signed the We Are Still In declaration

•  Between 2018-2021, BPLP issued an aggregate of $2.7 billion of green bonds in three separate offerings;
use of proceeds restricted to “eligible green projects”

 

•  Annual self-evaluation process forThe Science Based Targets initiative (SBTi) Target Validation Team classified BXP’s emissions reduction target as in line with a 1.5°C trajectory, currently the Boardmost ambitious designation available; BXP is one of six North American real estate companies with this distinction and each committee,the only office company in that group

•  27.7 million square feet LEED certified, of which 96% is certified at the highest Gold and bi-annual interviews with individual directors; process overseenPlatinum levels

•  We publish an annual sustainability report, which is available on our website at http://www.bxp.com under the heading “Sustainability,” but it is not incorporated by our NCG Committeereference into this proxy statement

 

2020 Awards and Recognitions

•  Retirement age:Ranked among the top real estate companies in the Global Real Estate Sustainability Benchmark (“GRESB”) assessment, earning a fifth consecutive 5-Star rating; earned GRESB “Green Star” designation for the ninth consecutive year

75-year•  maximum age limit at timeRecognized by the EPA as a 2020 ENERGY STAR Partner of nominationthe Year

•  2020 Best in Building Health award winner

 

 

•  Currently, three directors are women; assuming all nominees are elected, our Board will have four women directorsNamed one of America’s Most Responsible Companies by Newsweek magazine; ranked 56th overall out of 400 companies and one African-American directorthe highest of any office REIT

 

•  Named a Green Lease Leader at the highest Gold level by the Institute for Market Transformation and the U.S. Department of Energy

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 Board Leadership› PROXY SUMMARY

  SOCIAL

Boston Properties’ success depends on human capital and the prosperities of the communities we serve. We therefore focus on social performance and positive externalities, including diversity and inclusion in our workforce, the well-being of our employees, their training and professional development and making positive contributions to our communities. For additional information, see “Human Capital and Sustainability” beginning on page 35.

 Diversity & Inclusion Initiatives in 2020

 

• Health, Safety & Wellness   Our Board has determined that its leadership structure should include either an independent, non-executive Chairman of the Board or a lead independent director, providing the Board flexibility to determine the best leadership structure and best candidate for position

 

•  SubjectLaunched the BXP Diversity & Inclusion (“D&I”) Committee with the mission of promoting diversity, inclusion, equality and transparency as part of our culture, business activities and decision-making practices

•  Our Chief Executive Officer signed the CEO ActionforDiversity&Inclusionpledge, the largest CEO-driven business commitment to hisadvance diversity and inclusion
in the workplace

re-election,•  Offered Unconscious/ImplicitBiastraining as part of our current leadcommitment to mitigate unconscious bias in the work environment and foster an inclusive workforce

•  The following is a snapshot of the diversity of our workforce as of December 31, 2020:

•  We offer our employees benefits and other programs designed to support physical health, mental health, work-life balance and financial well-being

•  In early 2020, we established a Health and Security Task Force to develop the BXP Heath Security Plan, a comprehensive set of building operational measures, including cleaning and disinfection, air and water.

 Total Workforce(1)

 Employee Engagement & Development(2)

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•  We invest significant resources in our employees’
personal growth by providing a range of development opportunities including training, tuition reimbursement and seminars and conferences

•  The success of our efforts is demonstrated by the satisfaction and long tenure of our employees:

• 2020 employee engagement survey with 93% responsiveness and an overall rating of “very favorable”

• average tenure is 9.8 years for employees and
18.2 years for our executive leadership

• 32% of our employees worked at BXP for more than
10 years

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 Managers & Above(1)

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 (1)  We determine race and gender based on our employees’ self-identification. Ethnic minorities are defined as those included in the EEO Ethnicity and Race Categories: Asian, Black/African American, Hispanic/Latino, Native American or Pacific Islander, or multiracial background. Total workforce includes all of our employees except union employees for which the union controls the hiring process.

 (2)  Data as of December 31, 2020

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› PROXY SUMMARY

  GOVERNANCE

Boston Properties is committed to strong corporate governance policies and practices that not only reflect regulatory requirements, NYSE listing standards and broadly recognized governance practices, but also foster effective leadership and independent director,oversight by our Board of Directors. Our governance is intended to help us execute our long-term strategy, and therefore we believe it is aligned with our stockholders’ interests. Notable features of our governance framework include:

 Board Leadership

 Stockholder Rights

•  Mr. Joel I. Klein will becomeserves as our independent,non-executive Chairman of the Board

 

 

 Strong

 Stockholder

 Rights

•  Incorporated in Delaware; the Maryland Unsolicited Takeovers Act does not apply to us

 

•  Proxy AccessBy-law right

 

•  Annual election of all directors

 

•  Majority voting standard in uncontested director
elections

 

•  Stockholder right to amend By-laws

 

•  No Stockholder Rights Plan (or “poison pill”)

 

•  Disclosure of Policy on Company Political Spending

 

Board Composition and Independence

•  Eleven (11) directors

•  Four directors are women and one director is African-American

•  Three of the five (60%) new directors elected since 2016 are women

•  82% independent

 Director Qualifications and Policies

•  Retirement age: 75-year maximum age limit at time of nomination

•  Regular executive sessions of independent directors

•  All directors, officers and employees are subject to a Code of Business Conduct and Ethics

•  Each director attended more than 75% of the meetings of the Board and committees on which he or she served in 2020; in the aggregate, our directors attended more than 99% of the total number of meetings held in 2020

•  Annual self-evaluation for the Board and each committee, and bi-annual interviews of individual directors by our Chairman of the Board; process overseen by our NCG Committee

 

 Compensation

 Compensation 

•  89% of votes cast FOR our “Say-on-Pay” proposal at the 2020 annual meeting

•  Stock ownership requirements for executives (for CEO, 6x base salary)

 

•  Double-Trigger vesting for time-based equity awards

•  Compensation Clawback Policy

•  Policy against tax gross-up provisions

•  Non-employee directors are compensated under a stockholder-approved plan

•  Stock ownership requirements for directors (5x annual retainer)

 

•  Anti-hedging, anti-pledging and anti-short-sale policies

 

•   “Double-Trigger” vesting for time-based equity awards

•   Compensation Clawback Policy

•   No future taxgross-up provisions

•   We do not target compensation above median

 

6    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PROXY SUMMARY

SUSTAINABILITY

We pride ourselves as a global leader in sustainability and continue to implement sustainability initiatives that improve transparency and performance outcomes. Our sustainability strategy is broadly focused on the economic, social and environmental aspects of our activities, which include the design and construction of our new developments and the operation of our existing buildings. We are focused on creating healthy workspaces and high performance properties while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste and greenhouse gas emissions. To that end, we have publicly adopted long-term energy, emissions, water and waste goals that establish aggressive reduction targets. As a company with a core strategy of long-term ownership, we are committed to charitable giving, volunteerism and public realm investments that make a positive impact on the communities in which we conduct business. Through these efforts, we demonstrate that operating and developing commercial real estate can be conducted with a conscious regard for the environment while mutually benefiting our tenants, investors, employees and the communities in which we operate.

2018 HIGHLIGHTS

In the 2018 Global Real Estate Sustainability Benchmark (GRESB®) assessment, Boston Properties ranked in the top quadrant, earning a seventh consecutive “Green Star” recognition and the highest GRESB5-Star Rating. Overall, Boston Properties ranked among the top 8% of 874 worldwide participants.

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As of December 31, 2018, we own and actively manage over 20 million square feet of green buildings certified at the highest LEED Gold and Platinum levels. Our recently-completed Salesforce Tower development earned more points under the LEED Version 3 rating system than any other project in the San Francisco Bay Area and became the highest rated new skyscraper in the State of California.1› In November 2018, we issued our first Green bonds, having an aggregate principal amount of $1 billion. The offering was 2.5 times oversubscribed and attracted a pool of green investors that represented 23% of the total allocation. The proceeds can be allocated to the funding of eligible green projects, such as Salesforce Tower.During 2018, we executed our first large-scale renewable energy purchase. We expect the procurement of 650,000 megawatt-hours (MWH) over three years will reduce our carbon footprint more than 55,000 metric tons of CO2 equivalent annually and will reduce the carbon intensity of our Massachusetts operations by approximately 78% compared to a 2008 base year. PROPOSAL 1: ELECTION OF DIRECTORS

 

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PROXY SUMMARY

PUBLIC SUSTAINABILITY GOALS AND PROGRESS

Our sustainability goals establish reduction targets for energy, greenhouse gas emissions, water consumption and waste. In 2016, we achieved our first round of energy, emissions and water targets three years early. By resetting company-wide goals, we raise stakeholder awareness and make best efforts to drive continuous year-over-year,like-for-like key performance indicator improvement. We have adopted goals with the following specific time frames, metrics and targets below a 2008 baseline:(1)

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(1)

Full 2018 calendar year energy and water data verified by a third party is not yet available. 2017 is the most recent year for which complete energy and water data is available and verified by a third party.

We are committed to transparent reporting of environmental, social and governance (“ESG”) sustainability indicators. Boston Properties publishes an annual sustainability report that is aligned with the Global Reporting Initiative (“GRI”) reporting framework. More detailed sustainability information, including our strategy, key performance indicators, annuallike-for-like comparisons, achievements and historical sustainability reports are available on our website athttp://www.bostonproperties.com under the heading “Sustainability.” Except for the documents specifically incorporated by reference into our Annual Report on Form10-K, information contained on our website or that can be accessed through our website is not incorporated by reference into our Annual Report on Form10-K.

8    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

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PROXY STATEMENT

This proxy statement is being made available to stockholders of Boston Properties, Inc. (“we,” “us,” “our,” “Boston Properties” or the “Company”) on or about April 5, 20192021 via the Internet or by delivering printed copies by mail, and is furnished in connection with the solicitation of proxies by the Board of Directors of Boston Properties, Inc. (our “Board” or our “Board of Directors”) for use at our 20192021 annual meeting of stockholders to be held virtually by live audio webcast on Tuesday,Thursday, May 21, 201920, 2021 at 9:00 a.m., Eastern Time, at 599 Lexington Avenue, New York, New York,www.virtualshareholdermeeting.com/BXP2021, and at any adjournments or postponements thereof.

Since becoming a public company in 1997 until 2020, we always held our annual meeting in person. Due to the health and safety concerns related to the COVID-19 pandemic, we held a virtual meeting in 2020 and will do so again this year. We intend to hold future annual meetings in person, provided that it is safe to do so.

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERSPROPOSAL 1:

THE BOARDELECTION OF DIRECTORS

Composition of the Board of Directors

Boston Properties is currently governed by an eleven-member Board of Directors. The current members of our Board of Directors are Kelly A. Ayotte, Bruce W. Duncan, Karen E. Dykstra, Carol B. Einiger, Dr. Jacob A. Frenkel, Joel I. Klein, Douglas T. Linde, Matthew J. Lustig, Owen D. Thomas, Martin Turchin and David A. Twardock. are:

› Kelly A. Ayotte

› Diane J. Hoskins

› Owen D. Thomas

› Bruce W. Duncan

› Joel I. Klein

› David A. Twardock

› Karen E. Dykstra

› Douglas T. Linde

› William H. Walton, III

› Carol B. Einiger

› Matthew J. Lustig

At the 20192021 annual meeting of stockholders, directors will be elected to hold office for aone-year term expiring at the 20202022 annual meeting of stockholders orstockholders. Directors hold office until his or her successor istheir successors are duly elected and qualified, or until his or hertheir earlier resignation or removal. Any director appointed to our Board of Directors to fill a vacancy will hold office for a term expiring at the next annual meeting of stockholders following such appointment.

Following the recommendation of the NCG Committee, our Board of Directors nominated all incumbent directors for Meetingsre-election. In making its recommendations, the NCG Committee considered a number of factors, including its criteria for Board membership, which include the minimum qualifications that must be possessed by a director candidate in order to be nominated for a position on our Board. Our Board of Directors anticipates that, if elected, the nominees will serve as directors. However, if any person nominated by our Board of Directors is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person as our Board of Directors may recommend.

VOTE REQUIRED AND MAJORITY VOTING STANDARD

Our By-laws provide for a majority voting standard. This means that, in an uncontested election, nominees for director are elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. The majority voting standard would not apply in contested elections, which, generally, will include any situation in which Boston Properties receives a notice that a stockholder has nominated a person for election to our Board of Directors at a meeting of stockholders that is not withdrawn on or before the tenth day before Boston Properties first mails its notice for such meeting to the stockholders.

The majority voting standard will apply to the election of directors at the 2021 annual meeting of stockholders. Accordingly, nominees for director will be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Broker non-votes, if any, and abstentions will not be treated as votes cast.

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1› PROPOSAL 1: ELECTION OF DIRECTORS

Our Board of Directors met eight times during 2018. Each incumbentalso adopted a related resignation policy, included in our Corporate Governance Guidelines, under which a director attended at least 75%who fails to receive the required number of votes for re-election will tender his or her resignation to our Board of Directors for its consideration. The NCG Committee will then act on an expedited basis to determine whether it is advisable to accept the director’s resignation and will submit its recommendation for prompt consideration by our Board of Directors. Our Board of Directors will act on the tendered resignation within 90 days following certification of the aggregatestockholder vote and will promptly and publicly disclose its decision. Any director whose resignation is under consideration will abstain from participating in any decision regarding his or her resignation. If the resignation is not accepted, the director will continue to serve until the next annual meeting of (1)stockholders and until the total numberdirector’s successor is duly elected and qualified or until the director’s earlier resignation or removal. The NCG Committee and our Board of meetingsDirectors may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

✔

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF ITS NOMINEES: KELLY A.
AYOTTE, BRUCE W. DUNCAN, KAREN E. DYKSTRA, CAROL B. EINIGER, DIANE J. HOSKINS, JOEL I. KLEIN,
DOUGLAS T. LINDE, MATTHEW J. LUSTIG, OWEN D. THOMAS, DAVID A. TWARDOCK AND WILLIAM H.
WALTON, III. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED
FOR EACH OF THE NOMINEES UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.

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1› PROPOSAL 1: ELECTION OF DIRECTORS

NOMINEES FOR ELECTION

The following biographical descriptions set forth certain information with respect to the nominees for election as directors at the 2021 annual meeting, based on information furnished to Boston Properties by each nominee, as well as the specific experience, qualifications, attributes and skills that led to the conclusion by our Board of Directors that such person should serve as a director of Boston Properties.

JOEL I. KLEIN

Chief Policy and Strategy Officer of Oscar Health Corporation

Qualifications:

Mr. Klein has worked for more than 40 years in private industry and government during which time he has gained significant experience in senior policy making and executive roles, as well as a broad range of legal and financial matters.

Professional Background:

•  Chief Policy and Strategy Officer of Oscar Health Corporation, a health insurance company

•  Director of News Corporation from January 2011 to November 2020

•  Executive Vice President, Office of the Chairman of News Corporation from June 2003 to December 2015 and Chief Executive Officer of Amplify, the education division of News Corporation, from January 2011 to December 2015

•  Chancellor of the New York City Department of Education from 2002 through 2010, where Mr. Klein oversaw a system of over 1,600 schools with 1.1 million students, 136,000 employees and a $22 billion budget

•  U.S. Chairman and Chief Executive Officer of Bertelsmann, Inc. and Chief U.S. Liaison Officer to Bertelsmann AG, a media company, from 2001 to 2002

•  Various roles with the Clinton administration, including Assistant U.S. Attorney General in charge of the Antitrust Division of the U.S. Department of Justice from 1997 to 2000 and Deputy White House Counsel to President Clinton from 1993 to 1995. Mr. Klein entered the Clinton administration after 20 years of public and private legal work in Washington, DC

Other Leadership Experience, Community

Involvement and Education:

•  Member of the Boards of The Foundation for Excellence in Education (ExcelinEd) and StudentsFirstNY

•  Member of the Advisory Boards of the Zuckerman Mind Brain Behavior Institute and Columbia College

•  Received a BA magna cum laude from Columbia University and a JD magna cum laude from Harvard Law School

•  Received honorary degrees from ten colleges and universities

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Director since:

January 2013

Age: 74

Independent

Chairman of the Board

Current Board Committees:

•ex officio member of all committees

Other Public Company Boards:

•  Current: None

•  Former (past 5 years): News Corporation

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1› PROPOSAL 1: ELECTION OF DIRECTORS

SENATOR

KELLY A. AYOTTE

Former United States Senator for the State of New Hampshire

Qualifications:

Senator Ayotte has significant leadership and strategic planning skills, as well as legal experience and experience in government and public affairs.

Professional Business Experience:

•  Represented New Hampshire in the United States Senate from 2011 to 2016; chaired the Armed Services Subcommittee on Readiness and the Commerce Subcommittee on Aviation Operations; and served on the Budget, Homeland Security and Governmental Affairs, Small Business and Entrepreneurship, and Aging Committees

•  New Hampshire’s first female Attorney General from 2004 to 2009 appointed by Republican Governor Craig Benson and reappointed twice by Democratic Governor John Lynch

•  Previously Deputy Attorney General, Chief of the Homicide Prosecution Unit and Legal Counsel to Governor Craig Benson

•  Former associate at the McLane Middleton law firm and law clerk to the New Hampshire Supreme Court

•  Director of The Blackstone Group, Inc., Caterpillar Inc. and News Corporation

•  Director of Blink Health LLC and BAE Systems, Inc., each a private company board

•  Former director of Bloom Energy Corporation from 2017 to 2019

•  Member of advisory boards of Microsoft Corporation, Chubb Insurance and Cirtronics Corporation

Other Leadership Experience, Community

Involvement and Education:

•  Senior Advisor for Citizens for Responsible Energy Solutions

•  Member of the non-profit boards of the One Campaign, the International Republican Institute, the McCain Institute, Swim with a Mission, Winning for Women and Veterans Count of New Hampshire

•  Member of the Aspen Institute’s Economic Strategy

•  Member of the Board of Advisors for the Center on Military and Political Power at the Foundation for Defense of Democracies

•  Co-chair of the Center for Strategic and International Study’s Commission on Health Security

•  Co-chair of the Center for a New American Security’s Digital Freedom Forum

•  Graduated with honors from the Pennsylvania State University and received a JD from the Villanova University School of Law

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Director since: May 2018

Age: 52

Independent

Current Board Committees:

•  Compensation (Chair)

•  NCG

Other Public Company Boards:

•  Current: The Blackstone Group, Inc., Caterpillar Inc. and News Corporation

•  Former (past 5 years): Bloom Energy Corporation

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1› PROPOSAL 1: ELECTION OF DIRECTORS

BRUCE W.

DUNCAN

President and Chief Executive Officer and a Director of CyrusOne Inc.

Qualifications:

Mr. Duncan has more than 30 years of diverse real estate management and investment experience, including as a chief executive officer and a director of other publicly traded companies.

Professional Business Experience:

•  President, Chief Executive Officer and director of CyrusOne Inc., a real estate investment trust (“REIT”) that develops, owns, operates and invests in data centers, since July 2020

•  Various positions at First Industrial Realty Trust, Inc., an industrial REIT, including Chairman of the Board from January 2016 and director from January 2009 until retiring from both positions in July 2020; President and Chief Executive Officer from January 2009 until he stepped down as President in September 2016 and retired as Chief Executive Officer in November 2016

•  Former Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), a leading worldwide hotel and leisure company, from May 2005 until its acquisition by Marriott International, Inc. in September 2016; director of Starwood from 1999 to September 2016; interim Chief Executive Officer of Starwood from April 2007 to September 2007

•  Trustee of Starwood Hotels & Resorts, a REIT and former subsidiary of Starwood, from 1995 to 2006

•  Director of the mutual funds sponsored and managed by T. Rowe Price Associates, Inc. since September 2013

•  Senior Advisor to Kohlberg Kravis Roberts & Co. (“KKR”), a global investment firm, since 2018; previously senior advisor to KKR from July 2008 to January 2009

•  Director of Marriott International, Inc., the world’s largest hotel company, from September 2016 to July 2020

•  Various positions at Equity Residential, one of the largest publicly traded apartment REITs in the United States, from March 2002 to December 2005, including Chief Executive Officer and Trustee from May 2005 to December 2005, President, Chief Executive Officer and Trustee from January 2003 to May 2005, and President and Trustee from March 2002 to December 2002

•  Chairman, President and Chief Executive Officer of Cadillac Fairview Corporation, one of North America’s largest owners and developers of retail and office properties, from December 1995 to March 2000

Other Leadership Experience, Community

Involvement and Education:

•  Life Trustee of Rush University Medical Center in Chicago

•  Member of the Executive Committee of the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”) since November 2020

•  Former member of the Executive Committees of the Board of the Canadian Institute for Public Real Estate Companies (CIPREC) and the National Multi-Housing Council (NMHC)

•  Former trustee of the International Council of Shopping Centers (ICSC)

•  Received a BA in Economics from Kenyon College and an MBA in Finance from the University of Chicago

LOGO

Director since: May 2016

Age: 69

Independent

Current Board Committees:

•  Audit

•  NCG

Other Public Company Boards:

•  Current: CyrusOne Inc.

•  Former (past 5 years): First Industrial Realty Trust, Inc., Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc.

LOGO

 |  2021 Proxy Statement

11

1› PROPOSAL 1: ELECTION OF DIRECTORS

KAREN E.

DYKSTRA

Former Chief Financial and Administrative Officer of AOL, Inc.

Qualifications:

Ms. Dykstra has extensive strategic, management, financial, accounting and oversight experience, particularly with companies in the technology sector.

Professional Business Experience:

•  Chief Financial and Administrative Officer of AOL, Inc., a global media technology company, from November 2013 to July 2015; Chief Financial Officer of AOL, Inc. from September 2012 to November 2013; director of AOL, Inc. from 2009 to 2012

•  Partner of Plainfield Asset Management LLC (“Plainfield”) from January 2007 to December 2010

•  Chief Operating Officer and Chief Financial Officer of Plainfield Direct Inc., Plainfield’s business development company, from May 2006 to 2010 and a director from 2007 to 2010

•  Various positions with Automatic Data Processing, Inc. for more than 25 years, including serving most recently as Chief Financial Officer from January 2003 to May 2006, and previously as Vice President – Finance, Corporate Controller

•  Director of Sirius Computer Solutions, a private company

•  Director of Gartner, Inc. since 2007 and VMware, Inc. since March 2016

•  Former director of Crane Co. from 2004 to 2012

Education:

•  Received a BA in Accounting from Rider University and an MBA from Fairleigh Dickinson University

LOGO

Director since: May 2016

Age: 62

Independent

Current Board Committees:

•  Audit

Other Public Company Boards:

•  Current: Gartner, Inc. and VMware, Inc.

•  Former (past 5 years): None

12

LOGO

 |  2021 Proxy Statement

1› PROPOSAL 1: ELECTION OF DIRECTORS

CAROL B.

EINIGER

President of Post Rock Advisors, LLC

Qualifications:

Ms. Einiger has more than 40 years of experience as an investment banker and investment advisor, during which time she has gained significant expertise in the operation of public and private debt and equity capital markets and the evaluation of investment opportunities.

Professional Background:

•  President of Post Rock Advisors, LLC, a private family investment office, since July 2018; founder and President of Post Rock Advisors, LLC, a registered investment advisory firm, from 2005 to 2016

•  Senior Advisor of Roundtable Investment Partners LLC, a registered investment advisory firm, from January 2017 to June 2018

•  Chief Investment Officer of The Rockefeller University, where she was responsible for the management of the University’s endowment, from 1996 to 2005

•  Chief Financial Officer and then Acting President of the Edna McConnell Clark Foundation from 1992 to 1996

•  Managing Director at Wasserstein Perella & Co. from 1989 to 1992

•  Visiting Professor and Executive-in-Residence at Columbia Business School from 1988 to 1989

•  Various positions at The First Boston Corporation from 1973 to 1988, becoming Managing Director and Head of the Capital Markets Department

•  Various positions at Goldman, Sachs & Co. from 1971 to 1972

Other Leadership Experience, Community

Involvement and Education:

•  Director, member and former Chair of the Investment Committee of UJA-Federation of New York

•  Member of the Investment Committee of the JPB Foundation and the Board of Overseers of Columbia Business School

•  Former member of the Boards of Trustees and Investment Committees of the University of Pennsylvania, the Lasker Foundation, the Horace Mann School

•  Former member of the Advisory Board of Blackstone Alternative Asset Management

•  Former Vice Chair of the Investment Committee of The Museum of Modern Art

•  Former Director of Credit Suisse First Boston (USA) and The New York Stem Cell Foundation

•  Recipient of numerous awards, including the Alumni Award of Merit of the University of Pennsylvania, the Columbia Business School Distinguished Alumna Award, the AJC National Human Relations Award, the Anti-Defamation League Woman of Achievement Award and the Catalyst Award for Corporate Leadership

•  Received a BA from the University of Pennsylvania and an MBA with honors from Columbia Business School

LOGO

Director since: May 2004

Age: 71

Independent

Current Board Committees:

•  Compensation

•  NCG

Other Public Company Boards:

•  Current: None

•  Former (past 5 years): None

LOGO

 |  2021 Proxy Statement

13

1› PROPOSAL 1: ELECTION OF DIRECTORS

DIANE J. HOSKINS

Chair and Co-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc.

Qualifications:

Ms. Hoskins has more than 30 years of architecture, design, real estate and business experience, including as a chief executive officer of a global brand. During this time, she has gained extensive leadership, strategic planning, financial stewardship and organizational development experience, as well as a deep understanding of markets and clients, including their current and future space needs and insight into how companies envision their workspaces of the future.

Professional Background:

•  Co-CEO of M. Arthur Gensler Jr. & Associates, Inc. (“Gensler”), the world’s largest architecture, design, and planning firm since 2005, and Chair of the Gensler Board of Directors since 2018, where Ms. Hoskins has broad responsibility for overseeing the company’s global platform and managing its day-to-day operations, including more than 5,000 employees networked across 48 offices in the Americas, Europe, Asia, and the Middle East

•  Various positions at Gensler since 1995, including Southeast Regional Managing Principal and Managing Director of the Washington, DC office

•  Founded the Gensler Research Institute to generate new knowledge and develop a deeper understanding of the connection between design, business, and the human experience

•  Senior Vice President of Epstein Architecture and Engineering from 1990 to 1994

•  Development Analyst at Olympia & York from 1987 to 1990

•  Architect Designer at Gensler from 1983 to 1985

•  Architect at Skidmore Owings & Merrill from 1980 to 1983

Other Leadership Experience, Community

Involvement and Education:

•  Member of the World Economic Forum’s Global Future Council on Cities & Urbanization and the CEO Initiative by Fortune and Time

•  Fellow of the American Institute of Architects, Global Board Member of the Urban Land Institute, Board Member of the Washington Board of Trade and member of several organizations, including the Economic Club of Washington, DC

•  Serves on the Visiting Committee of the School of Architecture at the Massachusetts Institute of Technology (MIT) and the Board of Advisors of the University of California, Los Angeles (UCLA) Anderson School of Management

•  Ms. Hoskins has been honored by several organizations for her work, including the Spirit of Life Award from City of Hope and the Outstanding Impact Award from the Council of Real Estate Women

•  Inducted into the Washington Business Hall of Fame in 2016, and co-ranked on the Business Insider’s 100 “Creators” list, a who’s who of the world’s 100 top creative visionaries

•  Ms. Hoskins is sought after by the media to share her expertise in many top tier media outlets, including The Wall Street Journal, The New York Times, Harvard Business Review, Fortune, Business Insider, Financial Times, Bloomberg TV, and global architecture and design trade publications

•  Frequent speaker at premier conferences, including the Bloomberg Business/CEO Summit, the Economist Human Potential Conference, and the Wall Street Journal Future of Cities Conference; was a featured panelist at the UN Climate Summit in the fall of 2019

•  Graduated from MIT and holds an MBA from the Anderson Graduate School of Management at UCLA

LOGO

Director since:

May 2019

Age: 63

Independent

Current Board Committees:

•  Sustainability (Chair)

•  NCG

Other Public Company Boards:

•  Current: None

•  Former (past 5 years): None

14

LOGO

 |  2021 Proxy Statement

1› PROPOSAL 1: ELECTION OF DIRECTORS

DOUGLAS T.

LINDE

President of Boston Properties, Inc.

Qualifications:

Mr. Linde has more than 30 years of experience in the real estate industry, including as our President and former Chief Financial Officer, during which time he gained extensive knowledge of the real estate industry, capital markets and real estate finance, as well as substantial experience in transactional, operational and accounting matters.

Professional Background:

•  President of Boston Properties, Inc. since May 2007

•  Mr. Linde joined Boston Properties in January 1997 as Vice President of Acquisitions and New Business to help identify and execute acquisitions and to develop new business opportunities; served as Senior Vice President for Financial and Capital Markets from October 1998 to January 2005, Chief Financial Officer and Treasurer from September 2000 to November 2007, and Executive Vice President from January 2005 to May 2007

•  President of Capstone Investments, a Boston real estate investment company, from 1993 to 1997

•  Project Manager and Assistant to the Chief Financial Officer of Wright Runstad and Company, a private real estate developer in Seattle, WA, from 1989 to 1993

•  Began his career in the real estate industry with Salomon Brothers’ Real Estate Finance Group

Other Leadership Experience, Community

Involvement and Education:

•  Trustee of the Beth Israel Lahey Health Board of Trustees

•  Director Emeritus of the Board of Directors of Beth Israel Deaconess Medical Center (“BIDMC”) and co-chair of the BIDMC capital campaign

•  Member of the Real Estate Roundtable

•  Director of the Boston Municipal Research Bureau and Jobs for Massachusetts

•  Member of the Urban Studies and Planning Visiting Committee at MIT

•  Trustee Emeritus of the Wesleyan University Board of Trustees

•  Received a BA from Wesleyan University and an MBA from Harvard Business School

LOGO

Director since: January 2010

Age: 57

Current Board Committees:

•  Sustainability

Other Public Company Boards:

•  Current: None

•  Former (past 5 years): None

LOGO

 |  2021 Proxy Statement

15

1› PROPOSAL 1: ELECTION OF DIRECTORS

MATTHEW J.

LUSTIG

Chairman of North America Investment Banking and Head of Real Estate & Lodging at Lazard Frères & Co.

Qualifications:

Mr. Lustig has worked for more than 35 years in the real estate industry, during which time he has gained extensive experience providing strategic and financial advice and transaction execution to clients including leading real estate companies, and investing in real estate companies and assets as a principal.

Professional Background:

•  Chairman of North America Investment Banking at Lazard Frères & Co. (“Lazard”), the investment bank, since 2019 (previously Head of North America Investment Banking, from 2012 to 2019), with responsibility for the management of a range of Financial Advisory/Investment Banking businesses

•  Head of Real Estate & Lodging at Lazard, a position he has held for more than 20 years, serving clients and running its Real Estate and Lodging industry group. In recent years, Mr. Lustig has played an active role in more than $300 billion of advisory assignments and transactions involving leading real estate and lodging companies in the public and private markets

•  Former Chief Executive Officer of the real estate investment business of Lazard and its successors, where he oversaw multiple funds with over $2.5 billion of equity capital invested in REITs and real estate operating companies

•  Director of Ventas, Inc., a REIT with a portfolio of senior housing, research and innovation, and healthcare properties, since May 2011

•  Former Chairman of Atria Senior Living Group, Inc., which was acquired by Ventas in May 2011

•  Former director of several other public and private fund portfolio REITs and companies

Other Leadership Experience, Community

Involvement and Education:

•  Member of the Real Estate Roundtable, the Urban Land Institute, the Pension Real Estate Association (former Board and Executive Committee member) and the Council on Foreign Relations

•  Member of the Real Estate centers at the business schools of Wharton/UPenn (Chairman of the Advisory Board) and Columbia University

•  Member of the Board of Advisors at the School of Foreign Service at Georgetown University

•  Received a BSFS from Georgetown University

LOGO

Director since: January 2011

Age: 60

Independent

Current Board Committees:

•  NCG (Chair)

•  Sustainability

Other Public Company Boards:

•  Current: Ventas, Inc.

•  Former (past 5 years): None

16

LOGO

 |  2021 Proxy Statement

1› PROPOSAL 1: ELECTION OF DIRECTORS

OWEN D. THOMAS

Chief Executive Officer of Boston Properties, Inc.

Qualifications:

Mr. Thomas is a recognized leader in the real estate industry with more than 33 years of executive leadership, strategic planning and management experience, as well as substantial experience in financial and capital markets.

Our Board agreed to nominate Mr. Thomas for re-election to the Board of Directors for so long as he remains CEO, and he has agreed to resign from the Board upon termination of employment.

Professional Background:

•  Chief Executive Officer of Boston Properties, Inc. since April 2013

•  Chairman of the Board of Directors of Lehman Brothers Holdings Inc. (“LBHI”) from March 2012 until March 2013 and continues to serve as a member of the Board of Directors of LBHI

•  Various positions at Morgan Stanley from 1987 to 2011, including Chief Executive Officer of Morgan Stanley Asia Ltd., President of Morgan Stanley Investment Management, Head of Morgan Stanley Real Estate and Managing Director

•  Member of Morgan Stanley’s Management Committee from 2005 to 2011

•  Director of Grosvenor Group Limited from 2011 to 2013

Other Leadership Experience, Community

Involvement and Education:

•  Global Chairman of the Urban Land Institute

•  Director of the Real Estate Roundtable

•  Member of the Executive Board of Nareit

•  Member and former Chairman of the Pension Real Estate Association

•  Former Director of the University of Virginia Investment Management Company

•  Received a BS in Mechanical Engineering from the University of Virginia and an MBA from Harvard Business School

LOGO

Director since: April 2013

Age: 59

Current Board Committees:

•  Sustainability

Other Public Company Boards:

•  Current: None

•  Former (past 5 years): None

LOGO

 |  2021 Proxy Statement

17

1› PROPOSAL 1: ELECTION OF DIRECTORS

DAVID A.

TWARDOCK

Former President of Prudential Mortgage Capital Company, LLC

Qualifications:

Mr. Twardock has more than 35 years of experience in the real estate finance industry, during which time he has overseen the lending and asset management of billions of dollars of commercial mortgages and other real estate debt financing and the management and disposition of billions of dollars of real estate equity.

Professional Background:

•  Former President of Prudential Mortgage Capital Company, LLC, the real estate finance affiliate of Prudential Financial, Inc., from December 1998 to March 2013, which had more than $70 billion in assets under management and administration as of December 31, 2012 and annually lent billions of dollars in real estate debt financing

•  Various positions with Prudential relating to real estate equity and debt from 1982 to December 1998, including as Senior Managing Director of Prudential Realty Group from 1996 to November 1998

•  Member of the advisory board of LBA Realty

•  Private investor in multiple real estate partnerships

•  Director of Morgan Stanley Bank, N.A. from 2015 through 2018

•  Member of the advisory board of Blue Vista Capital Management from 2015 to 2020

Other Leadership Experience, Community

Involvement and Education:

•  Member of the Urban Land Institute and the Economics Club of Chicago

•  Former director of the Real Estate Roundtable and former Chairman of the Real Estate Roundtable Capital Markets Committee

•  Received a BS in Civil Engineering from the University of Illinois and an MBA in Finance and Behavioral Science from the University of Chicago

LOGO

Director since: May 2003

Age: 64

Independent

Current Board Committees:

•  Audit (Chair)

•  Compensation

Other Public Company Boards:

•  Current: None

•  Former (past 5 years): None

18

LOGO

 |  2021 Proxy Statement

1› PROPOSAL 1: ELECTION OF DIRECTORS

WILLIAM H.

WALTON, III

Co-Founder and Managing Member of Rockpoint Group, LLC

Qualifications:

Mr. Walton has 40 years of real estate investment, development and management experience, as well as executive leadership experience having served in various roles and as a director of several public and private companies.

Professional Background:

•  Co-Founder and Managing Member of Rockpoint Group, LLC (“Rockpoint”), a global real estate investment management firm, where Mr. Walton is responsible for the overall operations and management of Rockpoint, as well as overseeing the origination, structuring and asset management of all of Rockpoint’s investment activities; since 1994, the Rockpoint founding managing members have invested in approximately $65 billion of real estate

•  Co-founder of Westbrook Real Estate Partners, LLC (“Westbrook”), a real estate investment management firm

•  Managing director in the real estate group of Morgan Stanley & Co., Inc. prior to co-founding Westbrook

•  Director of Dream Finders Homes, Inc., a publicly-traded residential building company, and FRP Holdings, Inc., a publicly-traded real estate investment and development company

•  Director of Crow Holdings, a privately owned real estate and investment firm

•  Former trustee of Corporate Office Properties Trust and former director of Florida Rock Industries and The St. Joe Company

Other Leadership Experience, Community

Involvement and Education:

•  Involved with several real estate industry organizations

•  Director or trustee of several non-profit organizations, with a particular interest in educational and policy entities, including the American Enterprise Institute, the Jacksonville University Public Policy Institute and the University of Florida Investment Corporation

•  Former member of the boards of Communities in Schools, the Episcopal School of Jacksonville, KIPP Jacksonville Schools, Mpala Wildlife Foundation, Princeton University and Princeton University Investment Company

•  Received an AB from Princeton University and an MBA from Harvard Business School

LOGO

Director since: May 2019

Age: 69

Independent

Current Board Committees:

•  Compensation

Other Public Company Boards:

•  Current: Dream Finders Homes, Inc., FRP Holdings, Inc.

•  Former (past 5 years): None

LOGO

 |  2021 Proxy Statement

19

1› PROPOSAL 1: ELECTION OF DIRECTORS

›  SUMMARY OF BOARD NOMINEE QUALIFICATIONS, EXPERIENCE AND DIVERSITY

In addition to the minimum qualifications that our Board of Directors believes are necessary for all directors, the following chart highlights some of the key qualifications, and experience that our Board believes are relevant to the effective oversight of Boston Properties and the execution of its long-term strategy . A mark for an attribute indicates that the nominee gained the attribute through a current or prior position other than his or her service on the Boston Properties Board of Directors. Our Board did not assign specific weights to any of these attributes or otherwise formally rate the level of a nominee’s attribute relative to the rating for any other potential nominee or any other person. The absence of a mark for an attribute does not necessarily mean that the nominee does not possess that attribute; it means only that when the Board considered that nominee in the overall context of the composition of our Board of Directors, in 2018 held during the period for which he or she has been a director and (2) the total number of meetings in 2018 of all committees of our Board of Directors on which the director served during the periods that he or she served. Directors are expected to attend annual meetings of our stockholders in person unless doing so is impracticable due to unavoidable conflicts. Nine of the eleven directors then serving attended the 2018 annual meeting of stockholders. One director did not attend the 2018 annual meeting of stockholders because heattribute was not standing for re-electiona key factor in the determination to nominate that individual. Further information on each nominee’s qualifications and one director was unable to attend due to an unavoidable personal matter.relevant experience is provided in the individual biographical descriptions above.

Directors who qualify as“non-management” within the meaning of

NOMINEE QUALIFICATIONS AND EXPERIENCE

  Qualification/ExperienceAyotteDuncanDykstraEinigerHoskinsKleinLindeLustigThomasTwardockWalton  

Strategic Planning and Leadership

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

CEO/Executive Management

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

Risk Oversight

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

REIT and/or Real Estate

🌑🌑🌑🌑🌑🌑🌑

Asset Management

🌑🌑🌑🌑🌑🌑🌑🌑

Capital Markets and Investment Banking

🌑🌑🌑🌑🌑🌑🌑🌑

Other Public Company Board Experience

🌑🌑🌑🌑🌑🌑🌑🌑

Government and Public Policy

🌑🌑🌑

International

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

Financial Literacy

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

Audit Committee Financial Expert

🌑🌑🌑

Technology Industry

🌑🌑🌑🌑🌑

Corporate Governance

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

Sustainability

🌑🌑🌑🌑

Talent Management

🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑🌑

DIVERSITY OF NOMINEES

9 of 11  8.2 years  64.2 years  4  1

Independent Directors

  

Average Tenure of all Nominees

  

Average Age of all Nominees

  

Women

  

Ethnic Minority

20

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 |  2021 Proxy Statement

1› PROPOSAL 1: ELECTION OF DIRECTORS

DIRECTOR INDEPENDENCE

Under the rules of the New York Stock Exchange (“NYSE”) meet on a regular basis in executive sessions without management participation. The executive sessions occur after each regularly scheduled meeting of our entire Board and at such other times that thenon-management directors deem appropriate, and they are chaired by our lead independent director. Each director has the right to call an executive session. Currently, all of ournon-management directors are independent.

Director Succession Planning

Led by our lead independent director and our Nominating and Corporate Governance Committee (the “NCG Committee”“NYSE”), our Board of Directors remains focused on ensuring a smooth transition if and when directors decide to retire or otherwise leave our Board and that the composition of our Board is systematically refreshed so that, taken as a whole, our Board has the desired mix of skills, experience, reputation and diversity relevant to our strategic direction and operating environment, as well as the

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    9

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

knowledge, ability and independence to continue to deliver a high standard of governance expected by investors. Among other aspects of the process, our Board of Directors:

identifies the collective mix of desired skills, experience, knowledge, diversity and independence for our Board of Directors, taken as a whole, and identifies potential opportunities for enhancement in one or more of those areas;

considers each current director’s experience, skills, principal occupation, reputation, independence, age, tenure, committee membership and diversity (including geographic, gender and ethnicity); and

considers the results of our Board and committee self-evaluations, which, in 2018, we conducted through written questionnaires.

Our Board of Directors recognizes the importance of continuity and that refreshment should not be effectuated all at once. Consistent with this approach, since 2016, our Board nominated and our stockholders elected three new directors (Senator Ayotte, Ms. Dykstra and Mr. Duncan). For the 2019 annual meeting of stockholders, the NCG Committee recommended to our Board of Directors for nomination, and our Board nominated, two new candidates for election – Ms. Diane J. Hoskins and Mr. William H. Walton, III. Ms. Hoskins was initially recommended for consideration by Raymond A. Ritchey, our Senior Executive Vice President, and Mr. Walton was initially recommended for consideration by Mr.  Thomas, our Chief Executive Officer.

BOARD LEADERSHIP

Leadership Structure

Our Corporate Governance Guidelines provide that our Board of Directors does not have a policy with respect to whether or not the role of Chairman of the Board and Chief Executive Officer should be separate or combined. However, our Board has determined that its leadership structure should include either an independent,non-executive Chairman of the Board or a lead independent director who satisfies our standards for independence. Accordingly, our Corporate Governance Guidelines provide that it is the Board’s policy that if (1) the positions of Chairman of the Board and Chief Executive Officer are held by the same person, (2) the position of Chairman of the Board is held by anon-independent director or (3) none of the directors has been elected to serve as Chairman of the Board, then the independent directors shall select an independent director to serve as lead independent director.

In 2013, our Board separated the roles of the Executive Chairman and Chief Executive Officer, and in 2014 our Board established a lead independent director role and our independent directors selected Ivan G. Seidenberg to assume the new position. Since the 2016 annual meeting of stockholders, at which time Mortimer B. Zuckerman ceased serving as a director and our Board conferred upon him the honorary title of Chairman Emeritus, our Board of Directors has operated without a Chairman of the Board. Currently, Mr. Thomas serves as Chief Executive Officer and Mr. Klein serves as our lead independent director, a role he has held since Mr. Seidenberg’s retirement from our Board of Directors in May 2016. See “– Lead Independent Director” below. Our Board of Directors determined that this structure was appropriate because it (1) allows for the efficient and effective handling of the responsibilities of our Board of Directors with a key leading role played by our Chief Executive Officer, who is most directly responsible for developing and executing our strategic direction, and (2) helps ensure strong independent oversight by our Board of Directors through the role played by the lead independent director.

10    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Lead Independent Director

Our lead independent director has been selected annually by the vote of a majority of our independent directors since 2014, and the position has well-defined, substantive responsibilities that include, among others that may be assigned from time to time:

presiding at all meetings of the Board if none of the directors has been elected to serve as the Chairman of the Board or at which the Chairman of the Board is not present, including executive sessions of independent directors;

serving as liaison between the Chairman of the Board, if one is elected, the Chief Executive Officer and the independent directors;

approving information sent to the Board;

approving Board meeting agendas;

approving Board meeting schedules to assure that there is sufficient time for discussion of all agenda items;

having the authority to call meetings of the independent directors of the Board; and

if requested by major stockholders, ensuring that he or she is available for consultation and direct communication.

Establishment of Chairman of the Board

When our Board of Directors amended our Corporate Governance Guidelines in 2014 to create the position of lead independent director, the Board contemplated that in the future it might determine that it is advisable to appoint an independent,non-executive Chairman of the Board. As a result, our Corporate Governance Guidelines provide that the independent director selected to serve as lead independent director will serve in that role until (1) he or she ceases to be an independent director or resigns from the position, (2) a successor is selected by a majority of the independent directors or (3) an independent director is serving as the Chairman of the Board. In addition, they provide that, if the Chairman of the Board is an independent director, then the Chairman of the Board shall assume the responsibilities of the lead independent director referenced above and there will not be a separate lead independent director.

Our Board of Directors determined that it is advisable to appoint Mr. Klein as independent,non-executive Chairman of the Board, effective immediately following the 2019 annual meeting of stockholders. In addition to the responsibilities of the lead independent director outlined above and others that may be assigned from time to time, the Board expects that, as Chairman, Mr. Klein will:

coordinate the work of each committee with the activities of the Board as a whole;

work with the CEO and the Chair of the NCG Committee to provide strategic direction on all Board and governance matters;

work with the Compensation Committee to establish and review annual and long-term goals for assessing performance and to evaluate the performance of the CEO;

independently review with the CEO the Company’s succession plan for executive officers;

conduct bi-annual interviews with individual directors regarding individual contributions and overall Board composition and planning; and

work with the CEO on matters of strategic importance to the Board and the Company.

Our Board of Directors encourages strong communication among all of our independent directors and the Chief Executive Officer and believes that it has been able to effectively provide independent oversight of our business and affairs, including risks facing the Company, through our lead independent director, the independent committees of our Board of Directors, the overall composition of our Board of Directors and contributions of all of our independent directors and other corporate

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    11

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

governance processes in place. Given Mr. Klein’s current role, our Board believes that his appointment as the independent, non-executive Chairman of the Board will only serve to enhance our independent directors’ oversight of our business and affairs.

BOARD COMMITTEES

Our Board of Directors has an (1) Audit, (2) Compensation and (3) NCG Committee. Each of the Audit Committee, Compensation Committee and NCG Committee operates pursuant to a charter that was approved by our Board of Directors and that is reviewed and reassessed at least annually. A copy of each of these charters is available on our website athttp://www.bostonproperties.com under the heading “Corporate Governance.” Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of Boston Properties or to discharge specific duties delegated by the full Board of Directors.

The membership and the function of each of the Audit Committee, Compensation Committee and NCG Committee, and the number of meetings each held during 2018, are described below.

Audit Committee

Members:

David A. Twardock (Chair)*

Karen E. Dykstra*

Martin Turchin

Number of Meetings in 2018: 8

*Our Board of Directors determined that each of Ms. Dykstra and Mr. Twardock qualifies as an “audit committee financial expert” as that term is defined in the rules of the SEC.

The Audit Committee’s responsibilities include:

•   sole authority to appoint, retain, terminate and determine the compensation of our independent registered public accounting firm;

•   reviewing with our independent registered public accounting firm the scope and results of the audit engagement;

•   approving professional services provided by our independent registered public accounting firm;

•   reviewing the independence of our independent registered public accounting firm;

•   overseeing the planning and conduct of our annual risk assessment;

•   evaluating the Company’s internal audit function and reviews the internal audit plan; and

•   performing such other oversight functions as may be requested by our Board of Directors from time to time.

Each member of the Audit Committee is “independent” as that term is defined in the rules of the Securities and Exchange Commission (“SEC”) and the NYSE.

For additional disclosures regarding the Audit Committee, including the Audit Committee Report, see“Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm” beginning on page 101.

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Compensation Committee

Members:

Carol B. Einiger (Chair)

Kelly A. Ayotte*

Bruce W. Duncan

David A. Twardock

Number of Meetings in 2018:10

*Sen. Ayotte was appointed to the Compensation Committee on May 23, 2018.

The Compensation Committee’s responsibilities include:

•   reviewing and approving the corporate goals and objectives relevant to the compensation of the Chief Executive Officer and certain designated senior executive officers;

•   evaluating the performance of the Chief Executive Officer and designated senior executive officers in light of such goals and objectives and determines and approves compensation of these officers based on such evaluation;

•   reviewing and approving the compensation of other executive officers;

•   reviewing and approving grants and awards under all incentive-based compensation plans and equity-based plans;

•   reviewing and making recommendations to the full Board of Directors regarding the compensation ofnon-employee directors; and

•   performing other functions and duties deemed appropriate by our Board of Directors.

None of the members of the Compensation Committee is an employee of Boston Properties and each of them is an independent director under the NYSE rules.

The Compensation Committee makes all compensation decisions for all executive officers. With respect to compensation decisions relating to executive officers other than the Chief Executive Officer, the Compensation Committee takes into consideration recommendations made by the Chief Executive Officer and/or the President. Decisions regarding thenon-equity compensation of other officers and employees are made by the Chief Executive Officer and the President and reviewed with the Compensation Committee. The Compensation Committee reviews and approves all equity awards for all employees although it has delegated limited authority to the Chief Executive Officer to make equity grants to employees who are not executive officers.

In 2018, the Compensation Committee engaged FPL Associates L.P. (“FPL”) to assist the committee in determining the amount and form of executive compensation. Information concerning the nature and scope of FPL’s assignments and related disclosures is included under “Compensation Discussion and Analysis” beginning on page 38. We have concluded that the work of FPL did not raise any conflict of interest.

The Compensation Committee Report is included in this proxy statement on page 69.

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Nominating and Corporate Governance Committee

Members:

Matthew J. Lustig (Chair)

Kelly A. Ayotte*

Bruce W. Duncan*

Jacob A. Frenkel

Number of Meetings in 2018: 4

*Sen. Ayotte and Mr. Duncan were appointed to the NCG Committee on May 23, 2018.

The NCG Committee’s responsibilities include:

•   identifying individuals qualified to become Board members, consistent with criteria established by the NCG Committee, and recommending to the Board director nominees for election at each annual meeting of stockholders;

•   establishing a policy with regard to the consideration by the NCG Committee of director candidates recommended by securityholders;

•   establishing procedures to be followed by securityholders submitting such recommendations and establishing a process for identifying and evaluating nominees for the Board of Directors, including nominees recommended by securityholders; and

•   performing such other functions as may be requested by our Board of Directors from time to time.

The NCG Committee is also responsible for annually reviewing our Corporate Governance Guidelines and recommending any changes to the Board of Directors. These Corporate Governance Guidelines provide that the NCG Committee, together with our Chief Executive Officer, is responsible for coordinating succession planning by the Board of Directors. A copy of the Corporate Governance Guidelines is available on our website athttp://www.bostonproperties.com under the heading “Corporate Governance” and subheading “Governance Guidelines.”

Each member of the NCG Committee is an independent director under the NYSE rules.

BOARD’S ROLE IN RISK OVERSIGHT

Our Board of Directors plays an important role in the risk oversight of Boston Properties. Our Board of Directors is involved in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by our Board of Directors and its committees. In particular, our Board of Directors administers its risk oversight function through:

the review and discussion of regular periodic reports to our Board of Directors and its committees on topics relating to the risks that Boston Properties faces, including, among others:

Ø

market conditions;

Ø

tenant concentrations and credit worthiness;

Ø

leasing activity and expirations;

Ø

the status of current and anticipated development projects;

Ø

compliance with debt covenants;

Ø

management of debt maturities;

Ø

access to debt and equity capital markets;

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Ø

existing and potential legal claims against Boston Properties;

Ø

potential cyber attacks and intrusions; and

Ø

various other matters relating to Boston Properties’ business;

the required approval by our Board of Directors (or a committee thereof) of significant transactions and other decisions, including, among others:

Ø

acquisitions and dispositions of properties;

Ø

development projects, new borrowings; and

Ø

the appointment and retention of Boston Properties’ senior management;

the direct oversight of specific areas of Boston Properties’ business by the Audit, Compensation and NCG Committees; and

regular periodic reports from Boston Properties’ independent registered public accounting firm and other outside consultants regarding various areas of potential risk, including, among others, those relating to the qualification of Boston Properties as a real estate investment trust (“REIT”) for tax purposes and Boston Properties’ internal control over financial reporting.

Our Board of Directors also relies on management to bring significant matters impacting Boston Properties to its attention.

Pursuant to the Audit Committee’s charter, the Audit Committee is specifically responsible for discussing the guidelines and policies that govern the process by which Boston Properties’ exposure to risk is assessed and managed by management. As part of this process, the Audit Committee oversees the planning and conduct of an annual risk assessment that is designed to identify and analyze risks to achieving Boston Properties’ business objectives. The results of the risk assessment are then discussedwith management and used to develop Boston Properties’ annual internal audit plan. In addition, as one component of Boston Properties’ anti-fraud program, Boston Properties, under the supervision of the Audit Committee, established a hotline that is available for the anonymous and confidential submission of complaints relating to any matter to encourage the reporting of questionable activities directly to our senior management and the Audit Committee (see “– Communications with the Board” below).

Because of the role of our Board of Directors in the risk oversight of Boston Properties, our Board of Directors believes that any leadership structure that it adopts must allow it to effectively oversee the management of the risks relating to Boston Properties’ operations. Our Board of Directors recognizes that there are different leadership structures that could allow it to effectively oversee the management of the risks relating to Boston Properties’ operations, and while our Board believes its current leadership structure enables it to effectively manage such risks, it was not the primary reason our Board of Directors selected its current leadership structure over other potential alternatives. See the discussion under the heading “– Board Leadership” above for a discussion of why our Board of Directors has determined that its current leadership structure is appropriate.

DIRECTOR INDEPENDENCE

Under the rules of the NYSE, a majority of the Board of Directors must qualify as “independent directors.” To qualify as an “independent director,” the Board of Directors must affirmatively determine that the director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). Our Board of Directors established categorical standards to assist it in making the required independence determinations.

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Under these categorical standards, any relationship with us shall be deemed not material if:

 

1.

The relationship does not preclude a finding of independence under Sections 303A.02(b) of the NYSE Listed Company Manual (the “NYSE Disqualifying Rules”); and

 

2.

The relationship does not involve any of the following, whether currently existing or occurring since the end of the last fiscal year or during the past three fiscal years:

 

 (a)

a director being an executive officer of, or owning, or having owned, of record or beneficially in excess of ten percent (10%) equity interest in, any business or professional entity that has made during any of such fiscal years, or proposes to make during the Company’s current fiscal year, payments to the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company for property or services in excess of five percent (5%) of: (i) the Company’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year), or (ii) the other entity’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year);

 

 (b)

a director being an executive officer of, or owning, or having owned, of record or beneficially in excess of ten percent (10%) equity interest in, any business or professional entity to which the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company has made during any of such fiscal years, or proposes to make during the Company’s current fiscal year, payments for property or services in excess of five percent (5%) of: (i) the Company’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year), or (ii) the other entity’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year);

 

 (c)

a director or an immediate family member of the director being an officer, director or trustee of a charitable organization where the annual discretionary charitable contributions of the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company in any single year to the charitable organization exceeded the greater of $1 million or two percent (2%) of that organization’s consolidated gross revenues for the fiscal year;

 

 (d)

a director or an immediate family member of a director being indebted to the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company in an amount in excess of $120,000;

 

 (e)

a director being an executive officer, partner or greater than 10% equity owner of an entity, or being a trustee or a substantial beneficiary of a trust or estate, indebted to the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company in an amount in excess of the greater of $120,000 or 5% of such entity’s total consolidated assets, or to whom the Company or an entity controlled by an executive officer of the Company is indebted (other than with respect to (i) any publicly traded debt securities of the Company or such entity or(ii) non-recourse loans secured by real estate where both the lender and the Company or such entity intend for the lender to transfer all right to, and control over, the loan within 12 months and the documentation includes customary provisions for loans targeted at the commercial mortgage backed securities (CMBS) or collateralized debt obligation (CDO) markets) in an amount in excess of 5% of the Company’s or such entity’s total consolidated assets;

 

 (f)

a transaction or currently proposed transaction (other than relating to the ownership of securities), which involved or involves the direct or indirect payment in a single year of in excess of $120,000 from the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company to a director or an immediate family member of a director;

 

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

1› PROPOSAL 1: ELECTION OF DIRECTORS

 

 (g)

a director or an immediate family member of a director being an executive officer, general or managing partner or owner of more than 10% of the outstanding equity securities of an entity that has aco-investment or is a joint venture partner with the Company where the amount of the entity’s equity investment in any single year exceeds the greater of $1 million or 2% of the total consolidated assets of the entity; or

 

 (h)

a director or an immediate family member of a director being an executive officer, general or managing partner or owner of more than 10% of the outstanding equity securities of an entity (other than the Company) in which an executive officer of the Company or an entity controlled by an executive officer of the Company is an executive officer, general or managing partner or owner of more than 10% of the outstanding equity securities of the entity.

For purposes of these standards, “immediate family” member has the same meaning as in the NYSE Disqualifying Rules.

Relationships not specifically deemed not material by the above categorical standards may, in the Board’s judgment, be deemed not to be material.

›  2021 INDEPENDENCE DETERMINATIONS

The Board of Directors concluded that Mses. Ayotte, Dykstra, Einiger and Hoskins and Messrs. Duncan, Frenkel, Klein, Lustig, Turchin, Twardock and Waltonthe following directors qualify as independent directors under NYSE rules because none of them (1) has any relationships that would disqualify him or her from being considered independent under the minimum objective standards contained in the NYSE rules or (2) has any relationships other than those deemed to be immaterial under the categorical standards adopted by the Board of Directors.

› Kelly A. Ayotte

› Carol B. Einiger

› Matthew J. Lustig

› Bruce W. Duncan

› Diane J. Hoskins

› David A. Twardock

› Karen E. Dykstra

› Joel I. Klein

› William H. Walton, III

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In determining that each of Ms. Ayotte and Messrs. Duncan andMr. Twardock qualified as an independent director for purposes of his or her service on the Compensation Committee, our Board considered that (1) each serves or previously served as a non-employee director (or advisory board member) for a company with which Boston Properties has a commercial relationship or engaged in commercial transactions in the ordinary course of business, (2) each transaction was on arms’-length terms and the director had no direct or indirect involvement in the transaction, and (3) the director had no pecuniary interest in the success of the transaction.

CONSIDERATION OF DIRECTOR NOMINEES

Securityholder Recommendations›  SECURITYHOLDER RECOMMENDATIONS

The NCG Committee’s current policy is to review and consider any director candidates who have been recommended by securityholders in compliance with the procedures established from time to time by the NCG Committee. All securityholder recommendations for director candidates must be submitted to our Secretary at Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts02199-8103, who will forward all recommendations to the NCG Committee. We did not receive any securityholder recommendations for director candidates for election at the 20192021 annual meeting in compliance with the procedures set forth below. All securityholder recommendations for director candidates for election at the 20202022 annual meeting of stockholders must be submitted to our Secretary on or before December 7, 20196, 2021 and must include the following information:

 

the name and address of record of the securityholder;

 

a representation that the securityholder is a record holder of our securities, or if the securityholder is not a record holder, evidence of ownership in accordance with Rule14a-8(b)(2) under the Securities Exchange Act of 1934;

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1› PROPOSAL 1: ELECTION OF DIRECTORS

 

the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five (5) full fiscal years of the proposed director candidate;

 

a description of the qualifications and background of the proposed director candidate which addresses the minimum qualifications and other criteria for Board membership as approved by the Board from time to time;

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

 

a description of all arrangements or understandings between the securityholder and the proposed director candidate;

 

the consent of the proposed director candidate (1) to be named in the proxy statement relating to our annual meeting of stockholders and (2) to serve as a director if elected at such annual meeting; and

 

any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to the rules of the SEC.Securities and Exchange Commission (“SEC”).

Board Membership Criteria›  BOARD MEMBERSHIP CRITERIA

The NCG Committee has established criteria for NCG Committee-recommended director nominees. These criteria include the following specific, minimum qualifications that the NCG Committee believes must be met by an NCG Committee-recommended nominee for a position on the Board:

 

the candidate must have experience at a strategic or policymaking level in a business, government,non-profit or academic organization of high standing;

 

the candidate must be highly accomplished in his or her respective field, with superior credentials and recognition;

 

the candidate must be well regarded in the community and must have a long-term reputation for high ethical and moral standards;

 

the candidate must have sufficient time and availability to devote to our affairs, particularly in light of the number of boards on which the nomineecandidate may serve;

 

the candidate’s principal business or occupation must not be such as to place the candidate in competition with us or conflict with the discharge of a director’s responsibilities to us and our stockholders; and

 

to the extent the candidate serves or has previously served on other boards, the candidate must have a history of actively contributing at board meetings.

In addition to the minimum qualifications for each nominee set forth above, the NCG Committee will recommend director candidates to the full Board for nomination, or present director candidates to the full Board for consideration, to help ensure that:

 

a majority of the Board of Directors will be “independent” as defined by the NYSE rules;

 

each of its Audit, Compensation and NCG Committees will be comprised entirely of independent directors; and

 

at least one member of the Audit Committee will have such experience, education and other qualifications necessary to qualify as an “audit committee financial expert” as defined by the rules of the SEC.

Finally, in addition to any other standards the NCG Committee may deem appropriate from time to time for the overall structure and composition of the Board, the NCG Committee may consider the following factors when recommending director candidates to the full Board for nomination, or presenting director candidates to the full Board for consideration:

 

whether the candidate has direct experience in the real estate industry or in the markets in which we operate; and

 

whether the candidate, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience.

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CORPORATE GOVERNANCE PRINCIPLESIDENTIFYING AND BOARD MATTERS

Identifying and Evaluating NomineesEVALUATING NOMINEES

The NCG Committee may solicit recommendations for director nominees from any or all of the following sources:non-management directors, the Chief Executive Officer, other executive officers, third-party search firms or any other source it deems appropriate.

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1› PROPOSAL 1: ELECTION OF DIRECTORS

The NCG Committee will review and evaluate the qualifications of any proposed director candidate that it is considering or has been recommended to it by a securityholder in compliance with the NCG Committee’s procedures for that purpose, and conduct inquiries it deems appropriate into the background of these proposed director candidates. In identifying and evaluating proposed director candidates, the NCG Committee may consider, in addition to the minimum qualifications for NCG Committee-recommended director nominees, all facts and circumstances that it deems appropriate or advisable, including, among other things, the skills of the proposed director candidate, his or her depth and breadth of business experience, his or her independence, and the needs of our Board. Neither the NCG Committee nor the Board, has a specific policy with regard to the consideration of diversity in identifying director nominees, although both may consider diversity when identifying and evaluating proposed director candidates. As noted above, the NCG Committee, when recommending director candidates to the full Board for nomination, may consider whether a director candidate, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience. Other than circumstances in which we may be legally required by contract or otherwise to provide third parties with the ability to nominate directors, the NCG Committee will evaluate all proposed director candidates that it considers or who have been properly recommended to it by a securityholder based on the same criteria and in substantially the same manner, with no regard to the source of the initial recommendation of the proposed director candidate.

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2› CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

Boston Properties is committed to strong corporate governance policies and practices designed to foster effective leadership and independent oversight of management. Our Board of Directors oversees management performance on behalf of our stockholders to ensure that our stockholders’ long-term interests are being served, to monitor adherence to Boston Properties’ standards and policies, and to promote the exercise of responsible corporate citizenship.

BOARD LEADERSHIP STRUCTURE

Our Corporate Governance Guidelines provide that our Board of Directors does not have a policy with respect to whether or not the role of Chairman of the Board and CEO should be separate or combined. However, our Board has determined that its leadership structure should include either an independent, non-executive Chairman of the Board or a lead independent director who satisfies our standards for independence. Accordingly, our Corporate Governance Guidelines provide that it is the Board’s policy that if (1) the positions of Chairman of the Board and CEO are held by the same person, (2) the position of Chairman of the Board is held by a non-independent director or (3) none of the directors has been elected to serve as Chairman of the Board, then the independent directors shall select an independent director to serve as lead independent director.

When our Board of Directors amended our Corporate Governance Guidelines in 2014 to create the position of lead independent director, the Board contemplated that in the future it might determine that it is advisable to appoint an independent, non-executive Chairman of the Board. As a result, our Corporate Governance Guidelines provide that an independent director selected to serve as lead independent director will serve in that role until (1) he or she ceases to be an independent director or resigns from the position, (2) a successor is selected by a majority of the independent directors or (3) an independent director is serving as the Chairman of the Board. In addition, if the Chairman of the Board is an independent director, then the Chairman of the Board shall assume the responsibilities of the lead independent director referenced above and there will not be a separate lead independent director.

The independent directors selected Mr. Klein to serve as lead independent director in May 2016, a position he held until May 2019. Our Board of Directors appointed Mr. Klein as independent, non-executive Chairman of the Board, effective immediately following the 2019 annual meeting of stockholders, and he continues to serve in that role. In addition to responsibilities that may be assigned from time to time by the full Board, Mr. Klein’s responsibilities as Chairman include:

•  Approving information sent to the Board

•  Approving Board meeting agendas and schedules to ensure sufficient time for all agenda items

•  Coordinating the work of each committee with the activities of the full Board

•  Calling meetings of the independent directors

•  Presiding at all meetings of the Board, including executive sessions of independent directors

•  Attending meetings of Board committees regularly

•  Working with the CEO and the Chair of the NCG Committee to provide strategic direction on all Board and governance matters

•  Serving as liaison between the CEO and the independent directors

•  Working with the CEO on matters of strategic importance to the Board and the Company

•  Ensuring that he is available, if requested by major stockholders, for direct consultation and communication

•  Working with the Compensation Committee to establish and review annual and long-term goals for assessing performance and to evaluate the performance of the CEO

•  Conducting bi-annual interviews with individual directors regarding individual contributions and overall Board composition and planning

•  Independently reviewing with the CEO the Company’s succession plan for executive officers

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2› CORPORATE GOVERNANCE

Our Board believes that Mr. Klein’s appointment as Chairman enhances our independent directors’ oversight of our business and affairs. Our Board of Directors encourages strong communication among all of its independent directors and the CEO, and the Board believes that it has been able to effectively provide independent oversight of our business and affairs, including risks facing the Company, through our Chairman of the Board, the independent committees of our Board of Directors, the overall composition of our Board of Directors and contributions from all of our independent directors and other corporate governance processes in place.

BOARD AND COMMITTEE MEETINGS

Number of Meetings and Attendance. Our Board of Directors met fourteen (14) times during 2020. Each incumbent director attended at least 75% of the aggregate of (x) the total number of meetings of our Board of Directors in 2020 held during the period for which he or she was a director and (y) the total number of meetings in 2020 of all committees of our Board of Directors on which the director served during the periods that he or she served. In the aggregate, during 2020, our directors attended more than 99% of the total number of Board meetings and meetings of committees on which they served.

Annual Meeting Attendance. Directors are expected to attend annual meetings of our stockholders in person unless doing so is impracticable due to unavoidable conflicts. All directors then serving attended the 2020 annual meeting of stockholders.

Meetings of Non-Management Directors. Directors who qualify as “non-management” within the meaning of the rules of the NYSE meet on a regular basis in executive sessions without management participation. The executive sessions occur after each regularly scheduled meeting of our entire Board and at such other times that the non-management directors deem appropriate, and they are chaired by our independent, non-executive Chairman of the Board. Each director has the right to call an executive session. Currently, all of our non-management directors are independent.

BOARD REFRESHMENT AND EVALUATIONS

›  DIRECTOR SUCCESSION PLANNING

Led by our Chairman of the Board and our NCG Committee, our Board of Directors remains focused on ensuring a smooth transition if and when directors decide to retire or otherwise leave our Board and that the composition of our Board is systematically refreshed so that, taken as a whole, our Board has the desired mix of skills, experience, reputation and diversity relevant to our strategic direction and operating environment, as well as the knowledge, ability and independence to continue to deliver a high standard of governance expected by investors. Among other aspects of the process, our Board of Directors:

identifies the collective mix of desired skills, experience, knowledge, diversity and independence for our Board of Directors, taken as a whole, and identifies potential opportunities for enhancement in one or more of those areas;

considers each current director’s experience, skills, principal occupation, reputation, independence, age, tenure, committee membership and diversity (including geography, gender and ethnicity); and

•

considers the results of our Board and committee self-evaluations, as well as feedback received from the bi-annual interviews of each director by our Chairman of the Board (see “– Board and Committee Evaluations” below).

Since 2016, our Board nominated, and our stockholders elected, five new directors, three of whom are women.

›  BOARD COMMITTEE ROTATION

The NCG Committee also considers the periodic rotation of committee members and committee chairs to introduce fresh perspectives and to broaden and diversify the views and experience represented on committees.

›  DIRECTOR TENURE AND MANDATORY RETIREMENT AGE

To ensure that our Board has an appropriate balance of experience, continuity and fresh perspective, our Board considers the length of tenure and age when nominating candidates for election. Our Board does not have formal limits on director tenure, but has a policy that provides no person shall be nominated by the Board for election as a non-employee director following his or her 75th birthday.

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›  BOARD AND COMMITTEE EVALUATIONS

The feedback received from each member of our Board during the Board and committee evaluation process plays a critical role in ensuring that our Board and its committees function effectively. To this end, the NCG Committee is responsible for establishing the process used and the criteria for the evaluations.

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Topics considered during the Board and committee evaluations include:

Board and Committee Operations

•  Board and committee membership, including independence, director skills, background, expertise and diversity

•  Board rotation and succession

•  Committee structure

•  Process for director nominations

•  Number and conduct of meetings, including time allocated for, and encouragement of, candid dialogue and executive sessions

•  Materials and information, including quality, quantity and timeliness of information received from management, and suggestions for educational sessions

•  Culture

Board Performance

•  Strategic oversight

•  Risk oversight

›  Financial

›  Cyber Attacks and Intrusions

›  ESG

•  Identification of topics that should receive more attention and discussion

•  Management succession

Committee Performance

•  Performance of committee duties under its charter

•  Effectiveness of outside advisors

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2› CORPORATE GOVERNANCE

BOARD COMMITTEES

Our Board of Directors has an (1) Audit, (2) Compensation and (3) NCG Committee. Each of these committees operates pursuant to a charter that was approved by our Board of Directors and that is reviewed and reassessed at least annually. As required by the rules of the NYSE, a copy of each of these charters is available on our website at http://www.bxp.com under the heading “Corporate Governance.” In addition, on March 18, 2021, our Board of Directors established a Sustainability Committee. Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of Boston Properties or to discharge specific duties delegated by the full Board of Directors.

The membership and the function of each of these committees, and the number of meetings each held during 2020, are described below.

›  AUDIT COMMITTEE

Members:

David A. Twardock (Chair)

Bruce W. Duncan*

Karen E. Dykstra

Number of Meetings in

2020: 9

Financial Expertise: Our Board of Directors determined that each of Ms. Dykstra and Messrs. Duncan and Twardock qualifies as an “audit committee financial expert” as that term is defined in the rules of the SEC.

* Mr. Duncan was appointed to the Audit Committee on July 9, 2020. Mr. Walton served on the Audit Committee until July 9, 2020.

The Audit Committee’s responsibilities include:

•  sole authority to appoint, retain, terminate and determine the compensation of our independent registered public accounting firm;

•  reviewing with our independent registered public accounting firm the scope and results of the audit engagement;

•  approving professional services provided by our independent registered public accounting firm;

•  reviewing the independence of our independent registered public accounting firm;

•  overseeing the planning and conduct of our annual risk assessment;

•  overseeing our cyber risk management;

•  evaluating the Company’s internal audit function and reviewing the internal audit plan; and

•  performing such other oversight functions as may be requested by our Board of Directors from time to time.

Each member of the Audit Committee is “independent” as that term is defined in the rules of the SEC and the NYSE.

For additional disclosures regarding the Audit Committee, including the Audit Committee Report, see “Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm” beginning on page 102.

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›  COMPENSATION COMMITTEE

Members:

Kelly A. Ayotte (Chair)

Carol B. Einiger

David A. Twardock

William H. Walton, III*

Number of Meetings in

2020: 11

*Mr. Walton was appointed to the Compensation Committee on July 9, 2020. Mr. Duncan served as the Chair of the Compensation Committee until July 9, 2020.

The Compensation Committee’s responsibilities include:

•  reviewing and approving the corporate goals and objectives relevant to the compensation of the CEO and certain designated senior executive officers;

•  evaluating the performance of the CEO and designated senior executive officers in light of such goals and objectives and determining and approving compensation of these officers based on such evaluation;

•  reviewing and approving the compensation of other executive officers;

•  reviewing and approving grants and awards under all incentive-based compensation plans and equity-based plans;

•  reviewing and making recommendations to the full Board of Directors regarding the compensation of non-employee directors; and

•  performing other functions and duties deemed appropriate by our Board of Directors.

None of the members of the Compensation Committee is an employee of Boston Properties and each of them is an independent director under the NYSE rules.

The Compensation Committee makes all compensation decisions for all executive officers. The Compensation Committee reviews and approves all equity awards for all employees and delegated limited authority to the CEO to make equity grants to employees who are not executive officers.

In 2020, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) to serve as its independent, third-party advisor with respect to our overall executive compensation program and to advise on the reasonableness of executive compensation levels in comparison with those of other similarly situated companies and consult on the structure of our executive compensation program to optimally support our business objectives. FW Cook also advised on executive compensation trends among REITs and the broader market. Information concerning the nature and scope of FW Cook’s assignments and related disclosures is included under “Compensation Discussion and Analysis” beginning on page 51.

The Compensation Committee Report is included in this proxy statement on page 91.

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2› CORPORATE GOVERNANCE

›  NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Members:

Matthew J. Lustig (Chair)

Kelly A. Ayotte

Bruce W. Duncan

Carol B. Einiger*

Diane J. Hoskins

Number of Meetings in

2020: 3

*Ms. Einiger was appointed to the NCG Committee on March 18, 2021.

The NCG Committee’s responsibilities include:

•  identifying individuals qualified to become Board members, consistent with criteria established by the NCG Committee, and recommending to the Board director nominees for election at each annual meeting of stockholders;

•  recommending to the Board the directors for appointment to is committees;

•  establishing a policy with regard to the consideration by the NCG Committee of director candidates recommended by securityholders;

•  establishing procedures to be followed by securityholders submitting such recommendations and establishing a process for identifying and evaluating nominees for our Board of Directors, including nominees recommended by securityholders; and

•  performing such other functions as may be requested by our Board of Directors from time to time.

The NCG Committee is also responsible for annually reviewing our Corporate Governance Guidelines and recommending any changes to our Board of Directors. These Corporate Governance Guidelines provide that the NCG Committee, together with our CEO, is responsible for coordinating succession planning by our Board of Directors. A copy of the Corporate Governance Guidelines is available on our website at http://investors.bxp.com/governance-guidelines.

Each member of the NCG Committee is an independent director under the NYSE rules.

›  SUSTAINABILITY COMMITTEE

Members:

Diane J. Hoskins (Chair)

Douglas T. Linde

Matthew J. Lustig

Owen D. Thomas

The Board of Directors established the Sustainability Committee on March 18, 2021. Under its charter, the Sustainability Committee’s responsibilities include:

•  reviewing and sharing real estate industry sustainability best practices;

•  working with our Board and management to establish environmental performance goals (energy, emissions, water and waste), and initiatives related to climate action and resilience;

•  monitoring and evaluating the Company’s progress in achieving its sustainability goals and commitments, as well as relevant independent environmental, sustainability and governance ratings and rankings;

•  reporting to and advising our Board as appropriate on the Company’s sustainability objectives and its strategy;

•  periodically reviewing legal, regulatory and compliance matters that may have a material impact on the implementation of the Company’s sustainability objectives, and making recommendations to our Board and management, as appropriate, with respect to the Company’s response to such matters;

•  assisting our Board in fulfilling its oversight responsibility by identifying, evaluating and monitoring the environmental and climate trends, issues, risks and concerns that affect or could affect the Company’s business activities and performance;

•  advising our Board on significant stakeholder concerns related to sustainability; and

•  performing such other functions as may be requested by our Board of Directors from time to time.

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2› CORPORATE GOVERNANCE

BOARD’S ROLE IN RISK OVERSIGHT

Our Board of Directors has overall responsibility for our risk oversight. The Board discharges this responsibility either directly with respect to significant matters or indirectly through its committees. While the full Board of Directors is primarily responsible for risk oversight, its committees monitor and address risks that are within the scope of a particular committee’s expertise, the committee’s charter or the resolution(s) appointing the committee. Our Board and its committees exercise their oversight responsibilities in a variety of ways, but in all cases our directors are informed by regular reports from management that are intended to identify key risks and our strategies to mitigate them.

BOARD OF DIRECTORS

  Our Board of Directors administers its risk oversight function through:

•  Regular periodic reports from management on material risks that Boston Properties faces, including, among others:

›  market conditions

›  tenant concentrations, credit worthiness and possible tenant bankruptcies

›  leasing activity and expected expirations

›  the status of development projects

›  compliance with debt covenants and credit ratings

›  management of debt maturities and interest-rate risk

›  access to debt and equity capital markets

›  existing and potential legal claims against Boston Properties

›  environmental, social and governance risks

›  potential cyber-attacks and intrusions

›  public health crises, pandemics and epidemics

›  succession planning

•  Required approval by our Board of Directors (or a committee thereof) of significant transactions and other decisions, including, among others:

›  acquisitions and dispositions of properties

›  development and redevelopment projects

›  new borrowings, refinancings and guarantees of debt, and the use of hedging instruments to manage interest-rate risk

›  the appointment of all officers of Boston Properties

›  the compensation of Boston Properties’ executive officers

›  transactions with related persons and conflicts of interest

•  Reports from the Audit, Compensation, NCG and Sustainability Committees, and other committees that may be established from time to time, on matters delegated to them

•  Reports from outside consultants, including legal, accounting and tax professionals, regarding various areas of potential risk

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2› CORPORATE GOVERNANCE

BOARD COMMITTEES

Our Board of Directors uses its committees to assist in risk oversight as follows:

Audit CommitteeCompensation
Committee		Nominating and
Corporate Governance
Committee		Sustainability Committee

The Audit Committee oversees risks related to:

•  the integrity of our financial statements and internal control over financial reporting;

•  compliance with GAAP and the use of estimates and judgments;

•  our use of non-GAAP financial measures;

•  pending and threatened litigation, and legal and regulatory requirements;

•  the performance of our internal audit function;

•  the independence and performance of our independent auditors;

•  REIT compliance;

•  cyber-security and insurance; and

•  our anti-fraud program.

The Compensation Committee oversees risks related to:

•  our ability to attract, retain and motivate our executive officers;

•  the use of compensation practices and plans to align the interests of our executives with our stockholders; and

•  the influence of incentive compensation on excessive risk-taking.

For more information, see “Compensation Discussion and Analysis — IV. Other Compensation Policies — Assessment of Compensation-Related Risks” on page 76.

The NCG Committee oversees risks related to:

•  the composition, leadership and independence of the Board and its committees;

•  the general operations of the Board;

•  the process of conducting the annual Board and committee evaluations;

•  our compliance with our Corporate Governance Guidelines and applicable laws and regulations, including applicable rules of the NYSE; and

•  policies with respect to the consideration of director candidates recommended by stockholders.

The Sustainability Committee oversees risks related to:

•  environmental and climate action and resilience trends and issues;

•  our progress in achieving our sustainability goals and initiatives; and

•  regulatory compliance matters that may impact our sustainability objectives.

Audit Committee Role in Risk Assessment. The Audit Committee oversees an annual risk assessment designed to identify and analyze risks to achieving Boston Properties’ business objectives. The results of the risk assessment are used to develop Boston Properties’ annual internal audit plan.

Because of the role of our Board of Directors in the risk oversight of Boston Properties, our Board believes that any leadership structure that it adopts must allow it to effectively oversee the management of the risks relating to our operations. Our Board of Directors recognizes that there are different leadership structures that could allow it to effectively oversee the management of these risks, and while our Board believes its current leadership structure enables it to effectively manage such risks, it was not the primary reason our Board of Directors selected its current leadership structure over other potential alternatives. See the discussion under the heading “– Board Leadership Structure” beginning on page 25 for a discussion of why our Board of Directors has determined that its current leadership structure is appropriate.

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2› CORPORATE GOVERNANCE

OTHER GOVERNANCE MATTERS

›  CODE OF BUSINESS CONDUCT AND ETHICS AND OTHER POLICIES

Our Board of Directors adopted the following policies, copies of which are available on our website:

Code of Business Conduct and Ethics (the “Code of Ethics”) available on our website at http://investors.bxp.com/code-conduct-and-ethics

The Code of Ethics governs business decisions made and actions taken by our directors, officers and employees. We intend to disclose on this website any amendment to, or waiver of, any provision of this Code of Ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE rules.

Corporate Governance Guidelines available on our website at http://investors.bxp.com/governance-guidelines

Policy on Company Political Spending available on our website at http://investors.bxp.com/policy-political-spend

›  COMMUNICATIONS WITH THE BOARD

Stockholders and other interested parties who wish to communicate with any of our directors or the Board of Directors as a group, may do so by writing to them at Name(s) of Director(s)/Board of Directors of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

Stockholders and other interested parties who wish to contact the Audit Committee to report complaints or concerns regarding accounting, internal accounting controls or auditing matters, may do so by:

•

following any of the “Procedures for Submission of Complaints under the Audit Committee Complaint Procedures” that are attached as Exhibit 1 to our Code of Ethics (see “– Code of Business Conduct and Ethics and Other Policies” above), or

writing to the Chair of the Audit Committee of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

You are welcome to make any such reports anonymously, but we prefer that you identify yourself so that we may contact you for additional information if necessary or appropriate.

Stockholders and other interested parties who wish to communicate with our non-management directors as a group, may do so by writing to Non-Management Directors of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

We recommend that all correspondence be sent via certified U.S. mail, return receipt requested. All correspondence received by the Compliance Officer will be forwarded by the Compliance Officer promptly to the addressee(s).

›  COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mses. Ayotte and Einiger and Messrs. Duncan, Twardock and Walton each served on the Compensation Committee during 2020. None of these persons has served as an officer or employee of Boston Properties. None of these persons had any relationships with Boston Properties requiring disclosure under Item 404 of Regulation S-K. None of Boston Properties’ executive officers served as a director or a member of a compensation committee (or other committee serving a similar function) of any other entity, an executive officer of which served as a director of Boston Properties or a member of the Compensation Committee during 2020.

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2› CORPORATE GOVERNANCE

›PROXY ACCESSBY-LAW PROVISIONS

OurBy-laws include a proxy access right for stockholders, pursuant to which a stockholder, or group of no more than five stockholders, meeting specified eligibility requirements, may include director nominees in our proxy materials for annual meetings of our stockholders. In order to be eligible to utilize these proxy access provisions, a stockholder, or group of stockholders, must, among other requirements:must:

 

have owned shares of common stock equal to at least 3% of the aggregate of the issued and outstanding shares of common stock continuously for at least the prior three years;

 

represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control and that such stockholder or group does not presently have such intent; and

 

provide a notice requesting the inclusion of director nominees in our proxy materials and provide other required information to us not less than 120 days prior to the anniversary of the date of the proxy statement for the prior year’s annual meeting of stockholders (with adjustments if the date for the upcoming annual meeting of stockholders is more than 30 days before or more than 60 days after the anniversary date of the prior year’s annual meeting).

For purposes of the foregoing requirements, issued and outstanding common units, other than those owned by us, our OperatingBoston Properties Limited Partnership (our “Operating Partnership”) or any of their directly or indirectly wholly owned subsidiaries and excluding issued and outstanding long term incentive units, will be treated as issued and outstanding shares of common stock.

Additionally, all director nominees submitted through these provisions must be independent and meet specified additional criteria, and stockholders will not be entitled to utilize this proxy access right at an

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    19

CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

annual meeting if we receive notice through our traditional advanced noticeby-law provisions that a stockholder intends to nominate a director at such meeting. The maximum number of director nominees that may be submitted pursuant to these provisions may not exceed 25% of the number of directors then in office.

The foregoing proxy access right is subject to additional eligibility, procedural and disclosure requirements set forth in ourBy-laws.

CODE OF BUSINESS CONDUCT AND ETHICS AND OTHER POLICIES

Code of Business Conduct and Ethics

Our Board of Directors adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), which governs business decisions made and actions taken by our directors, officers and employees. A copy of this Code of Ethics is available on our website athttp://www.bostonproperties.com under the heading “Corporate Governance” and subheading “Code of Conduct and Ethics.” We intend to disclose on this website any amendment to, or waiver of, any provision of this Code of Ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE rules.

Corporate Governance Guidelines

Our Board of Directors adopted Corporate Governance Guidelines, a copy of which is available on our website athttp://www.bostonproperties.com under the heading “Corporate Governance” and subheading “Governance Guidelines.”

Policy on Company Political Spending

Our Board of Directors adopted a Policy on Company Political Spending, a copy of which is available on our website athttp://www.bostonproperties.com under the heading “Corporate Governance” and subheading “Policy on Political Spending.”

COMMUNICATIONS WITH THE BOARD

Stockholders and other interested parties who wish to communicate with any of our directors or the Board of Directors as a group, may do so by writing to them at Name(s) of Director(s)/Board of Directors of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

Stockholders and other interested parties who wish to contact the Audit Committee to report complaints or concerns regarding accounting, internal accounting controls or auditing matters, may do so by:

•

following any of the “Procedures for Submission of Complaints under the Audit Committee Complaint Procedures” that are attached as Exhibit 1 to our Code of Ethics (see “– Code of Business Conduct and Ethics and Other Policies – Code of Business Conduct and Ethics” above), or

writing to the Chair of the Audit Committee of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

You are welcome to make any such reports anonymously, but we prefer that you identify yourself so that we may contact you for additional information if necessary or appropriate.

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

Stockholders and other interested parties who wish to communicate with ournon-management directors as a group, may do so by writing toNon-Management Directors of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

We recommend that all correspondence be sent via certified U.S. mail, return receipt requested. All correspondence received by the Compliance Officer will be forwarded by the Compliance Officer promptly to the addressee(s).

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PROPOSAL 1: ELECTION OF DIRECTORS

At the annual meeting, directors shall be elected to hold office for aone-year term expiring at the 2020 annual meeting of stockholders or until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal. Following the recommendation of the NCG Committee, our Board of Directors has nominated Kelly A. Ayotte, Bruce W. Duncan, Karen E. Dykstra, Carol B. Einiger, Diane J. Hoskins, Joel I. Klein, Douglas T. Linde, Matthew J. Lustig, Owen D. Thomas, David A. Twardock and William H. Walton, III for election. Each nominee other than Ms. Hoskins and Mr. Walton is currently serving as a director of Boston Properties. In making its recommendations, the NCG Committee considered a number of factors, including its criteria for Board membership, which include the minimum qualifications that must be possessed by a director candidate in order to be nominated for a position on our Board. Our Board of Directors anticipates that, if elected, the nominees will serve as directors. However, if any person nominated by our Board of Directors is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person as our Board of Directors may recommend.

VOTE REQUIRED

OurBy-laws provide for a majority voting standard. This means that, in an uncontested election, nominees for director are elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. The majority voting standard would not apply in contested elections, which, generally, will include any situation in which Boston Properties receives a notice that a stockholder has nominated a person for election to our Board of Directors at a meeting of stockholders that is not withdrawn on or before the tenth day before Boston Properties first mails its notice for such meeting to the stockholders.

The majority voting standard will apply to the election of directors at the 2019 annual meeting of stockholders. Accordingly, nominees for director will be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Brokernon-votes, if any, and abstentions will not be treated as votes cast.

Our Board of Directors has also adopted a resignation policy, included in our Corporate Governance Guidelines, under which a director who fails to receive the required number of votes forre-election will tender his or her resignation to our Board of Directors for its consideration. The NCG Committee will act on an expedited basis to determine whether it is advisable to accept the director’s resignation and will submit the recommendation for prompt consideration by our Board of Directors. Our Board of Directors will act on the tendered resignation within 90 days following certification of the stockholder vote and will promptly and publicly disclose its decision. The director whose resignation is under consideration will abstain from participating in any decision regarding his or her resignation. If the resignation is not accepted, the director will continue to serve until the next annual meeting of stockholders and until the director’s successor is duly elected and qualified or until the director’s earlier resignation or removal. The NCG Committee and our Board of Directors may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

The Board of Directors unanimously recommends a voteFOReach of its nominees, Kelly A. Ayotte, Bruce W. Duncan, Karen E. Dykstra, Carol B. Einiger, Diane J. Hoskins, Joel I. Klein, Douglas T. Linde, Matthew J. Lustig, Owen D. Thomas, David A. Twardock, and William H. Walton, III. Properly authorized proxies solicited by the Board of Directors will be votedFOReach of the nominees unless instructions to the contrary are given.

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PROPOSAL 1: ELECTION OF DIRECTORS

INFORMATION REGARDING THE NOMINEES AND EXECUTIVE OFFICERS

Summary of Board Nominee Experience and Skills

In addition to the minimum qualifications that our Board of Directors believes are necessary for all directors, the following chart highlights certain skills and experience that are relevant to our long-term strategy and therefore relevant when considering candidates for election to our Board. A mark for an attribute indicates that the nominee gained the attribute through a current or prior position other than his or her service on the Boston Properties Board of Directors. Our Board did not assign specific weights to any of these attributes or otherwise formally rate the level of a nominee’s attribute relative to the rating for any other potential nominee. The absence of a mark for an attribute does not necessarily mean that the nominee does not possess that attribute; it means only that when the Board considered that nominee in the overall context of the composition of our Board of Directors, that attribute was not a key factor in the determination to nominate that individual. Further information on each nominee’s qualifications and relevant experience is provided in the individual biographies that follow the chart.

 

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3› HUMAN CAPITAL AND SUSTAINABILITY

HUMAN CAPITAL AND SUSTAINABILITY

HUMAN CAPITAL

Boston Properties’ success depends on human capital. We are focused on social performance and positive externalities, including diversity and inclusion in our workforce, the well-being of our employees, their training and professional development, and making positive contributions to the communities we serve.

›  DIVERSITY & INCLUSION

Our policy is to recruit, hire, assign, promote and train in all job titles without regard to race, national origin, religion, age, color, sex, sexual orientation, gender identity, disability, or protected veteran status, or any other characteristic protected by applicable law.

In 2020, we formalized and elevated our focus on diversity and equity within our company.

We launched the BXP Diversity & Inclusion (“D&I”) Committee with the mission of promoting diversity, inclusion, equality and transparency as part of our culture, business activities and decision-making practices. Priorities for the D&I Committee include recruiting, retention and professional development, review and assessment of our policies with a focus on business partner diversity and other relationships, and community outreach.

•

Our Chief Executive Officer is a signatory to the CEO Action for Diversity & Inclusion campaign, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace.

The following is a snapshot of the diversity of our workforce as of December 31, 2020:

TOTAL WORKFORCE(1)MANAGER & ABOVE(1)

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(1)   We determine race and gender based on our employees’ self-identification. Ethnic minorities are defined as those included in the EEO Ethnicity and Race Categories: Asian, Black/African American, Hispanic/Latino, Native American or Pacific Islander, or multiracial background. Total workforce includes all of our employees except union employees for which the union controls the hiring process.

›  CULTURE & EMPLOYEE ENGAGEMENT

The success of our business is tied to the quality of our workforce, and we strive to maintain a corporate environment without losing the entrepreneurial spirit with which we were founded more than 50 years ago.

We conduct employee engagement surveys to monitor satisfaction in all aspects of their employment; employee responsiveness to the surveys has been consistently high (93% responsiveness in 2020 reflected an overall rating of “very favorable”)

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Ayotte3› HUMAN CAPITAL AND SUSTAINABILITY

The success of our efforts in the workplace is demonstrated by the satisfaction and long tenure of our employees:

32% worked at BXP for ten or more years

average tenure is 9.8 years for employees and 18.2 years for our executive leadership.

›  HEALTH, SAFETY & WELLNESS

We are keenly aware of the influence of buildings on human health and its importance to our tenants and employees. In light of the COVID-19 pandemic, our focus on healthy buildings has become even more important.

In early 2020, we established a Health Security Task Force of internal and external subject matter experts

Task force developed the BXP Health Security Plan, a comprehensive set of building operational measures, including cleaning and disinfection, air and water quality, physical distancing, screening and personal protective equipment, and health security communication

We also believe the success of our employees depends upon their physical health, mental health, work-life balance and financial well-being. To support this, our employee benefits program includes:

an Employee Wellness Program to encourage employees to improve their health and well-being, and

an Employee Assistance Program that includes services for childcare, eldercare, personal relationship information, financial planning assistance, stress management, mental illness and general wellness and self-help.

›  CAREER DEVELOPMENT & TRAINING

We invest significant resources in our employees’ personal and professional growth and development and provide a range of development opportunities that build and strengthen employees’ leadership and professional skills.

In 2020, we offered Unconscious/Implicit Bias training as part of our commitment to recognize that we all have a role to play to mitigate unconscious bias in the work environment and support an inclusive workforce.

SUSTAINABILITY

We actively work to promote our growth and operations in a sustainable and responsible manner across our five regions. The BXP sustainability strategy is to conduct our business, the development and operation of new and existing buildings, in a manner that contributes to positive economic, social and environmental outcomes for our investors, customers, employees and the communities we serve. Our investment philosophy is shaped by our core strategy of long-term ownership and our commitment to our communities and the centers of commerce and civic life that make them thrive. We are focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas emissions and climate change. To that end, we have publicly adopted long-term energy, emissions, water and waste goals that establish aggressive reduction targets and have been aligned with the United Nations Sustainable Development Goals. BXP is a corporate member of the U.S. Green Building Council® (“USGBC”) and has a long history of owning, developing and operating properties that are certified under USGBC’s Leadership in Energy and Environmental Design™ (LEED®) rating system. In 2018, we announced a partnership with a leading healthy building certification system, Fitwel, to support healthy building design and operational practices across our portfolio, becoming a Fitwel Champion.

In addition, since 2018 we have been an active participant in the green bond market, which provides access to sustainability-focused investors interested in the positive environmental externalities of our business activities. BXP and its employees also make a social impact through charitable giving, volunteerism, public realm investments and diversity and inclusion. Through these efforts, we demonstrate that operating and developing commercial real estate can be conducted with a conscious regard for the environment and wider society while mutually benefiting our stakeholders.

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›   INDUSTRY LEADERSHIP

We continue to be recognized as an industry leader in sustainability. In 2020, BXP ranked among the top real estate companies in the Global Real Estate Sustainability Benchmark (“GRESB”) assessment, earning a fifth consecutive 5 Star rating, the highest rating and recognition for being an industry leader. It was the ninth consecutive year that BXP earned the GRESB “Green Star” designation, achieving the highest scores in several categories, including: Data Monitoring & Review, Targets, Policies, Reporting and Leadership. BXP was also named one of America’s Most Responsible Companies by Newsweek magazine in 2020. BXP ranked 56th overall out of 400 companies included. It was the second highest ranking of all property companies and the highest ranking of any office REIT. In 2014, 2015, 2017, 2018 and 2019, BXP was selected by Nareit as a Leader in the Light Award winner. Nareit’s annual Leader in the Light Awards honor Nareit member companies that have demonstrated superior and sustained sustainability practices.

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BXP has adopted sustainable development and operational practices across its portfolio. In 2017, shortly after the U.S. withdrawal from the Paris Agreement, BXP became a proud signatory of the We Are Still In declaration, and aligned emissions reduction targets with climate science. The SBTi Target Validation Team has classified BXP’s emissions reduction target ambition and has determined that it is in line with a 1.5°C trajectory, currently the most ambitious designation available. As of the end of 2020, BXP is one of six North American Real Estate companies with this distinction and the only North American office company in that group. We have LEED certified 27.7 million square feet of our portfolio, of which 96% is certified at the highest Gold and Platinum levels. BXP’s master lease form includes green lease clauses that support a more sustainable tenant-landlord relationship. In 2020, BXP was named a Green Lease Leader at the highest Gold level by the Institute for Market Transformation and the U.S. Department of Energy for exhibiting a strong commitment to high performance and sustainability in buildings and best practices in leasing. Through active asset management and tenant engagement, BXP has been a leader in energy efficiency and healthy building practices. In 2020 BXP was recognized by the Environmental Performance Agency a 2020 ENERGY STAR Partner of the Year. BXP was named a 2020 Best in Building Health award winner. We completed the first Fitwel Design Certified project in the world in 2019 and executed more Fitwel certifications by count and building area than any other company in 2019. BXP has 11 Fitwel Ambassadors among our Sustainability, Development and Property Management teams.

›  GREEN FINANCE

From 2018 to 2021, BPLP issued an aggregate of $2.7 billion of green bonds in three separate offerings. The terms of the green bonds have restrictions that limit our allocation of the net proceeds to “eligible green projects.” We published our first Green Bond Allocation Report in June 2019, disclosing the full allocation of approximately $988 million in net proceeds from BPLP’s inaugural green bond offering to the eligible green project at our Salesforce Tower property in San Francisco, California. We recently published our September 30, 2020 Green Bond Allocation Report disclosing the full allocation of approximately $841 million in net proceeds from BPLP’s green bond offering in June 2019. The Green Bond Allocation Reports are available on our website at http://www.bxp.com under the heading “Sustainability,” but they are not incorporated by reference into this proxy statement, our Annual Report on Form 10-K, or any other document we file with the SEC.

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● HUMAN CAPITAL AND SUSTAINABILITY

›   CLIMATE RESILIENCE

As a long-term owner and active manager of real estate assets in operation and under development, we take a long-term view of potential risks, including climate change. We are in the process of evaluating physical and transition risks associated with climate change and we view this as an opportunity to protect asset value by proactively assessing climate risk, implementing measures, planning and decision-making processes to protect our investments by improving resilience. We are preparing for long-term climate risk by considering climate change scenarios and will continue to assess climate change vulnerabilities resulting from potential future climate scenarios and sea level rise. In 2020, we began using Four Twenty Seven climate risk scoring to evaluate the forward-looking physical climate risk exposure of our entire portfolio. Event-driven (acute) and longer-term (chronic) physical risks that may result from climate change could have a material adverse effect on our properties, operations and business. Management’s role in assessing and managing these climate-related risks and initiatives is spread across multiple teams across our organization, including our executive leadership and our Sustainability, Risk Management, Development, Construction and Property Management departments. Climate resilience measures include training and implementation of emergency response plans and the engagement of our executives and BXP’s Board of Directors on climate change and other ESG aspects.

›  PUBLIC SUSTAINABILITY GOALS AND PROGRESS

Our sustainability goals establish reduction targets for energy, greenhouse gas emissions, water consumption and waste. In 2016, we achieved our first round of energy, emissions and water targets three years early. By resetting company-wide goals, we raise stakeholder awareness and make best efforts to drive continuous year-over-year, like-for-like key performance indicator improvement. We have adopted goals with the following specific time frames, metrics and targets below a 2008 baseline:(1)

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●Full 2020 calendar year energy and water data assured by a third party is not yet available. 2019 is the most recent year for which complete energy and water data is available and assured by a third party.

 

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3› HUMAN CAPITAL AND SUSTAINABILITY

PROPOSAL 1: ELECTION OF DIRECTORS›  ESG REPORTING

A notable part of our commitment to sustainable development and operations is our commitment to transparent reporting of ESG performance indicators, as we recognize the importance of this information to investors, lenders and others in understanding how BXP assesses sustainability information and evaluates risks and opportunities. We publish an annual sustainability report that is aligned with the Global Reporting Initiative reporting framework, United Nations Sustainable Development Goals and the SASB framework that includes our strategy, key performance indicators, annual like-for-like comparisons, achievements and historical sustainability reports. This report is available on our website at http://www.bxp.com under the heading “Sustainability,” but it is not incorporated by reference in this proxy statement. In addition, we continue to work to further align our reporting with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures to disclose climate-related financial risks and opportunities.

 

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4› EXECUTIVE OFFICERS

Nominees for ElectionEXECUTIVE OFFICERS

The following biographical descriptions set forth certain information with respect to the nominees for election as directors at the annual meeting and theBiographies of our executive officers, whoother than Messrs. Thomas and Linde, are not directors,presented below, based on information furnished to Boston Properties by each nominee and executive officer. Each executive officer holds office until the regular meeting of the Board of Directors following the next annual meeting of stockholders and until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal.

The biographical description below Information for each nominee includes the specific experience, qualifications, attributesMessrs. Thomas and skills that led to the conclusion by our BoardLinde is included above under “Proposal I: Election of Directors that such person should serve as a director of Boston Properties.– Nominees for Election” beginning on page 9.

  Name

  Age  Position  Joined BXP

Raymond A. Ritchey

  70  Senior Executive Vice President  1980

Michael E. LaBelle

  57  Executive Vice President, Chief Financial Officer and Treasurer  2000

Peter D. Johnston

  62  Executive Vice President, Washington, DC Region  1987

Bryan J. Koop

  62  Executive Vice President, Boston Region  1999

Robert E. Pester

  64  Executive Vice President, San Francisco, Region  1998

John F. Powers

  74  Executive Vice President, New York Region  2014

Frank D. Burt

  62  Senior Vice President, Chief Legal Officer and Secretary  1986

Michael R. Walsh

  54  Senior Vice President, Chief Accounting Officer  1986

 

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Senator KellyRaymond A. Ayotte

Independent

Director since May 2018

Age 50

Board Committees

Compensation

Nominating and Corporate Governance

Senator Ayotte has significant legal experience and experience in government and public affairs, as well as leadership and strategic planning skills.

Senator Ayotte represented New Hampshire in the United States Senate from 2011-2016, where she chaired the Armed Services Subcommittee on Readiness and the Commerce Subcommittee on Aviation Operations. She also served on the Budget, Homeland Security and Governmental Affairs, Small Business and Entrepreneurship, and Aging Committees. From 2004-2009, Senator Ayotte served as New Hampshire’s first female Attorney General having been appointed to that position by Republican Governor Craig Benson and reappointed twice by Democratic Governor John Lynch. Prior to that, she served as the Deputy Attorney General, Chief of the Homicide Prosecution Unit and as Legal Counsel to Governor Craig Benson. She began her career as a law clerk to the New Hampshire Supreme Court and as an associate at the McLane Middleton law firm.

Senator Ayotte serves on the boards of Caterpillar Inc., News Corporation, BAE Systems, Bloom Energy Corporation and Blink Health LLC, and the advisory boards of Microsoft Corporation, Chubb Insurance and Cirtronics Corporation. Senator Ayotte is a Senior Advisor for Citizens for Responsible Energy Solutions. She also serves on thenon-profit boards of the One Campaign, the International Republican Institute, the McCain Institute, Swim with a Mission and Veterans Count of New Hampshire. In 2017, Senator Ayotte was a joint visiting fellow at the Harvard Institute of Politics and the Belfer Center for Science and International Affairs. In 2018, she was a visiting fellow at the University of Chicago’s Institute of Politics and the Perkins Bass Distinguished Visitor at Dartmouth College. She also is a member of the Aspen Institute’s Economic Strategy and Homeland Security groups and serves on the Board of Advisors for the Center on Military and Political Power at the Foundation for Defense of Democracies.

Senator Ayotte graduated with honors from the Pennsylvania State University and received a JD from the Villanova University School of Law.

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Bruce W. Duncan

Independent

Director sinceMay 2016

Age 67

Board Committees

Compensation

Nominating and Corporate Governance

Mr. Duncan has more than 30 years of diverse real estate management and investment experience, including as a chief executive officer and a director of other publicly traded companies.

Mr. Duncan serves as Chairman of the Board of Directors of First Industrial Realty Trust, Inc. (“First Industrial”), a REIT that engages in the ownership, management, acquisition, sale, development and redevelopment of industrial real estate properties. Mr. Duncan has served as a director of First Industrial since January 2009 and as its Chairman of the Board since January 2016. He previously served as President and Chief Executive Officer of First Industrial from January 2009 until he stepped down as President in September 2016 and retired as Chief Executive Officer in November 2016. Mr. Duncan has been a senior advisor to Kohlberg Kravis Roberts & Co. (“KKR”), a global investment firm, since November 2018.

Previously, Mr. Duncan served as Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), a leading worldwide hotel and leisure company, from May 2005 until its acquisition by Marriott International, Inc. in September 2016. Mr. Duncan currently serves as a director of Marriott International, Inc., the world’s largest hotel company. Since September 2013, Mr. Duncan has also served as a director of the T. Rowe Price Mutual Funds. From April 2007 to September 2007, Mr. Duncan served as Chief Executive Officer of Starwood on an interim basis. Mr. Duncan served as a director of Starwood since 1999 and served on its Corporate Governance and Nominating Committee. Mr. Duncan also served as a Trustee of Starwood Hotels & Resorts, a real estate investment trust and former subsidiary of Starwood, from 1995 to 2006. He also was a senior advisor to KKR, from July 2008 until January 2009. He was a private investor from January 2006 to January 2009. From March 2002 to December 2005, Mr. Duncan held various positions at Equity Residential (“EQR”), one of the largest publicly traded apartment REITs in the United States. In particular, from May 2005 to December 2005, Mr. Duncan was Chief Executive Officer and a Trustee of EQR, from January 2003 to May 2005, he was President, Chief Executive Officer and a Trustee of EQR and from March 2002 to December 2002 he was President and a Trustee of EQR. From December 1995 until March 2000, Mr. Duncan served as Chairman, President and Chief Executive Officer of Cadillac Fairview Corporation, one of North America’s largest owners and developers of retail and office properties.

Mr. Duncan is a Life Trustee of Rush University Medical Center in Chicago, and is on the Board of Governors of the Investment Company Institute (ICI) and is on the Governing Board of the Independent Directors Council (IDC). He previously served on the Advisory Board of Governors of Nareit, the Executive Committees of the Board of the Canadian Institute for Public Real Estate Companies (CIPREC) and the National Multi-Housing Council (NMHC). He also previously served on the Board of Directors of The Rouse Company, a diversified commercial real estate firm, and as a Trustee of the International Council of Shopping Centers (ICSC).

Mr. Duncan received a BA in Economics from Kenyon College and an MBA in Finance from the University of Chicago.

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PROPOSAL 1: ELECTION OF DIRECTORS

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Karen E. Dykstra

Independent

Director since May 2016

Age 60

Board Committees

Audit

Ms. Dykstra has extensive strategic, management, financial, accounting and oversight experience, particularly with companies in the technology sector.

Ms. Dykstra served as Chief Financial and Administrative Officer of AOL, Inc., a global media technology company, from November 2013 until July 2015 and as Chief Financial Officer of AOL, Inc. from September 2012 until November 2013. From January 2007 until December 2010, Ms. Dykstra was a Partner of Plainfield Asset Management LLC (“Plainfield”), and she served as Chief Operating Officer and Chief Financial Officer of Plainfield Direct Inc., Plainfield’s business development company, from May 2006 to 2010, and as a director from 2007 to 2010. Prior to joining Plainfield, she spent over 25 years with Automatic Data Processing, Inc., serving most recently as Chief Financial Officer from January 2003 to May 2006, and as Vice President – Finance, Corporate Controller and in other capacities.

Ms. Dykstra currently serves on the Board of Directors of Gartner, Inc. and VMware, Inc. Ms. Dykstra is a former director of Crane Co. and AOL, Inc.

Ms. Dykstra received a BA in Accounting from Rider University and an MBA from Fairleigh Dickinson University.

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Carol B. Einiger

Independent

Director since May 2004

Age 69

Board Committees

Compensation (Chair)

Ms. Einiger has more than 40 years of experience as an investment banker and investment advisor, during which time she has gained significant expertise in the operation of public and private debt and equity capital markets and the evaluation of investment opportunities.

Ms. Einiger has been President of Post Rock Advisors, LLC, a private investment firm, since July 2018. From January 2017 to June 2018, she served as Senior Advisor of Roundtable Investment Partners LLC, a registered investment advisory firm. From 2005 to 2016, she was founder and President of Post Rock Advisors, LLC. From 1996 to 2005, she served as Chief Investment Officer of The Rockefeller University, where she was responsible for the management of the University’s endowment. Ms. Einiger began her investment career in 1971 at Goldman, Sachs & Co. and worked at The First Boston Corporation from 1973 to 1988, becoming Managing Director and Head of the Capital Markets Department; from 1988 to 1989 as Visiting Professor andExecutive-in-Residence at Columbia Business School; and from 1989 to 1992 as Managing Director at Wasserstein Perella & Co. From 1992 to 1996, Ms. Einiger served as Chief Financial Officer and then Acting President of the Edna McConnell Clark Foundation, before joining The Rockefeller University.

Ms. Einiger is a Director and member (and former Chair) of the Investment Committee ofUJA-Federation of New York, a member of the Investment Committee of the JPB Foundation, and a member of the Board of Overseers of Columbia Business School. She previously served on the Boards of Trustees and Investment Committees of the University of Pennsylvania, the Lasker Foundation and the Horace Mann School; as Vice Chair of the Investment Committee of The Museum of Modern Art; as

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a Director of Credit Suisse First Boston (USA) and The New York Stem Cell Foundation; and on the Advisory Board of Blackstone Alternative Asset Management. Ms. Einiger is the recipient of numerous awards, including the Alumni Award of Merit of the University of Pennsylvania, the Columbia Business School Distinguished Alumna Award, the AJC National Human Relations Award, the Anti-Defamation League Woman of Achievement Award and the Catalyst Award for Corporate Leadership.

Ms. Einiger received her BA from the University of Pennsylvania and her MBA with honors from Columbia Business School.

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Diane J. Hoskins

Independent

Director Nominee

Age 61

Ms. Hoskins has more than 30 years of architecture, design, real estate, and business experience, including as a chief executive officer of a global brand. During this time, she has gained extensive leadership, strategic planning, and organizational development experience, as well as a deep understanding of markets and clients.

Ms. Hoskins has been theCo-CEO of M. Arthur Gensler Jr. & Associates, Inc. (“Gensler”), the world’s largest architecture, design, and planning firm since 2005, and Chair of the Gensler Board of Directors since 2018. She has broad responsibility for managing Gensler, overseeing the company’s global platform and itsday-to-day operations, which spans over 6,000 employees networked across 48 offices in the Americas, Europe, Asia, and the Middle East. She founded the Gensler Research Institute to generate new knowledge and develop a deeper understanding of the connection between design, business, and the human experience. Ms. Hoskins has held various positions at Gensler since 1995, including Southeast Regional Managing Principal and Managing Director of the Washington, DC office.

Previously, Ms. Hoskins was Senior Vice President of Epstein Architecture and Engineering from 1990 to 1994, Development Analyst at Olympia & York from 1987 to 1990, Architect Designer at Gensler from 1983 to 1985 and Architect at Skidmore Owings & Merrill from 1980 to 1983.

Ms. Hoskins is a member of the World Economic Forum’s Global Future Council on Cities & Urbanization, and the CEO Initiative by Fortune and Time. She is a Fellow of the American Institute of Architects and member of several organizations, including the D.C. Board of Trade and the Economic Club of Washington, DC. She is on the Visiting Committee of the School of Architecture at the Massachusetts Institute of Technology (MIT) and serves on the University of California, Los Angeles (UCLA) Anderson School of Management Board of Advisors. Ms. Hoskins has been honored by several organizations for her work, including the Spirit of Life Award from City of Hope and the Outstanding Impact Award from the Council of Real Estate Women. In 2016, she was inducted into the Washington Business Hall of Fame and, along with herCo-CEO, were ranked on the Business Insider’s 100 “Creators” list, a who’s who of the world’s 100 top creative visionaries. Ms. Hoskins is sought after by the media to share her expertise in many top tier media outlets, including The New York Times, Harvard Business Review, Fortune, Financial Times, Bloomberg TV, and global architecture and design trade publications. She is a frequent speaker at premier conferences, including the Bloomberg Business/CEO Summit, the Economist Human Potential Conference, and the Wall Street Journal Future of Cities Conference.Ritchey

 

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PROPOSAL 1: ELECTION OF DIRECTORS

Ms. Hoskins graduated from MIT and holds an MBA from the Anderson Graduate School of Management at UCLA.

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Joel I. Klein

Independent

Director since January 2013

Age 72

Lead Independent Director

Mr. Klein has worked for more than 40 years in private industry and government during which time he has gained significant experience in senior policy making and executive roles, as well as a broad range of legal matters.

Mr. Klein is the Chief Policy and Strategy Officer of Oscar Health Corporation, a health insurance company. In addition, he has been a Director of News Corporation since January 2011 where he was also Executive Vice President, Office of the Chairman of News Corporation and Chief Executive Officer of Amplify, the education division of News Corporation, from January 2011 through December 2015.

From 2002 through 2010, Mr. Klein was Chancellor of the New York City Department of Education where he oversaw a system of over 1,600 schools with 1.1 million students, 136,000 employees and a $22 billion budget. He was the U.S. Chairman and Chief Executive Officer of Bertelsmann, Inc. and Chief U.S. Liaison Officer to Bertelsmann AG, a media company, from 2001 to 2002. Mr. Klein also served with the Clinton administration in a number of roles, including Assistant U.S. Attorney General in charge of the Antitrust Division of the U.S. Department of Justice from 1997 until 2000 and Deputy White House Counsel to President Clinton from 1993 to 1995. Mr. Klein entered the Clinton administration after 20 years of public and private legal work in Washington, DC.

Mr. Klein serves on the Boards of Teach for America, The Foundation for Excellence in Education (ExcelinEd), and StudentsFirstNY. He is alsoCo-Chair of the Zuckerman Mind Brain Behavior Institute and is on the Advisory Board of Columbia College.

Mr. Klein received a BA with honors from Columbia University and a JD with honors from Harvard Law School. He has also received honorary degrees from ten colleges and universities.

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Douglas T. Linde

Director sinceJanuary 2010

Age 55

Mr. Linde serves as President of Boston Properties, Inc. Prior to his appointment to this position in May 2007, he served as Executive Vice President since January 2005 and he also served as Chief Financial Officer and Treasurer from 2000 until November 2007. He joined Boston Properties in January 1997 as Vice President of Acquisitions and New Business to help identify and execute acquisitions and to develop new business opportunities and was promoted to Senior Vice President for Financial and Capital Markets in October 1998.

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Prior to joining Boston Properties, Mr. Linde served from 1993 to 1997 as President of Capstone Investments, a Boston real estate investment company. From 1989 to 1993, he served as Project Manager and Assistant to the Chief Financial Officer of Wright Runstad and Company, a private real estate developer in Seattle, WA. He began his career in the real estate industry with Salomon Brothers’ Real Estate Finance Group.

Mr. Linde is a Trustee of the Beth Israel Lahey Health Board of Trustees. Mr. Linde is a Director Emeritus of the Board of Directors of Beth Israel Deaconess Medical Center (“BIDMC”) andco-chairs the BIDMC capital campaign. He is a member of the Real Estate Roundtable and serves as a director of the Boston Municipal Research Bureau and Jobs for Massachusetts. Mr. Linde also serves on the Urban Studies and Planning Visiting Committee at MIT and is a member of the Wesleyan University Board of Trustees.

Mr. Linde received a BA from Wesleyan University and an MBA from Harvard Business School.

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Matthew J. Lustig

Independent

Director sinceJanuary 2011

Age 58

Board Committees

Nominating and Corporate Governance (Chair)

Mr. Lustig has worked for more than 35 years in the real estate industry, during which time he has gained extensive experience providing strategic and financial advice and transaction execution to clients, and investing in real estate companies and assets as a principal.

Mr. Lustig has been Head of North America Investment Banking at Lazard Frères & Co. (“Lazard”), the investment bank, since 2012, and he is also Head of Real Estate & Lodging at Lazard, a position he has held for more than 20 years. He is responsible for managing Lazard’s broad investment banking businesses in North America, as well as serving clients and running its Real Estate and Lodging industry group. In recent years, he has played an active role in more than $300 billion of advisory assignments and transactions involving leading real estate and lodging companies in the public and private markets. Mr. Lustig separately served previously as Chief Executive Officer of the real estate investment business of Lazard and its successors, and oversaw multiple funds with over $2.5 billion of equity capital invested in REITS and real estate operating companies.

Mr. Lustig is a member of the Board of Directors at Ventas, Inc. and had served as the Chairman of Atria Senior Living Group, Inc., which was acquired by Ventas in May 2011. He has also served as a director of several other public and private fund portfolio REITs and companies.

Mr. Lustig is a member of the Real Estate Roundtable, the Urban Land Institute, and the Pension Real Estate Association (former Board and Executive Committee member) as well as the Real Estate centers at the business schools of Wharton/UPenn (Chairman of the Advisory Board) and Columbia University. He is also a member of the Council on Foreign Relations and serves on the Board of Advisors at the School of Foreign Service at Georgetown University from which he graduated with a BSFS.

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PROPOSAL 1: ELECTION OF DIRECTORS

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Owen D. Thomas

Director sinceApril 2013

Age 57

Mr. Thomas has served as our Chief Executive Officer since April 2, 2013. Mr. Thomas served as Chairman of the Board of Directors of Lehman Brothers Holdings Inc. (“LBHI”) from March 2012 until March 2013 and continues to serve as a member of the Board of Directors of LBHI.

From 1987 until 2011, Mr. Thomas held various positions at Morgan Stanley, including Chief Executive Officer of Morgan Stanley Asia Ltd., President of Morgan Stanley Investment Management, Head of Morgan Stanley Real Estate and Managing Director. Mr. Thomas was also a member of Morgan Stanley’s Management Committee from 2005 to 2011. He is a Director of the University of Virginia Investment Management Company, a director of the Urban Land Institute, an officer and a member of the Executive Board of Nareit, a director of the Real Estate Roundtable and the former Chairman of the Pension Real Estate Association.

Mr. Thomas received a BS in Mechanical Engineering from the University of Virginia and an MBA from Harvard Business School.

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David A. Twardock

Independent

Director sinceMay 2003

Age 61

Board Committees

Audit (Chair)

Compensation

Mr. Twardock has more than 30 years of experience in the real estate finance industry, during which time he has overseen the lending and asset management of billions of dollars of commercial mortgages and other real estate debt financing and the management and disposition of billions of dollars of real estate equity.

From December 1998 to March 2013, Mr. Twardock was the President of Prudential Mortgage Capital Company, LLC, the real estate finance affiliate of Prudential Financial, Inc., which had more than $70 billion in assets under management and administration as of December 31, 2012 and annually lent billions of dollars in real estate debt financing. From 1982 to December 1998, Mr. Twardock held numerous positions relating to real estate equity and debt with Prudential, including his position from 1996 to November 1998 as Senior Managing Director of Prudential Realty Group.

Mr. Twardock serves on the advisory boards of Blue Vista Capital Management and LBA Realty and served on the Board of Directors of Morgan Stanley Bank, N.A. from 2015 through 2018. Mr. Twardock is a member of the Urban Land Institute and the Economics Club of Chicago. Mr. Twardock previously served as a director of the Real Estate Roundtable and Chairman of the Real Estate Roundtable Capital Markets Committee.

Mr. Twardock received a BS in Civil Engineering from the University of Illinois and an MBA in Finance and Behavioral Science from the University of Chicago.

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William H. Walton, III

Independent

Director Nominee

Age 67

Mr. Walton has 40 years of real estate investment, development and management experience, as well as executive leadership experience having served in various roles and as a director of several public and private companies.

Mr. Walton isco-founder and managing member of Rockpoint Group, LLC (“Rockpoint”), a global real estate investment management firm. Mr. Walton is responsible for the overall operations and management of Rockpoint, as well as overseeing the origination, structuring and asset management of all of Rockpoint’s investment activities. In 1994, Mr. Walton alsoco-founded Westbrook Real Estate Partners, LLC (“Westbrook”), a similar real estate investment management firm. Since 1994, the Rockpoint founding managing members have invested in approximately $60 billion of real estate.

Prior toco-founding Westbrook, Mr. Walton was a managing director in the real estate group of Morgan Stanley & Co., Inc., which he joined in 1979.

Mr. Walton is involved with several real estate industry organizations and serves on the boards of Crow Holdings, a privately owned real estate and investment firm, and FRP Holdings, Inc., a company engaged in the real estate business. He is a former trustee of Corporate Office Properties Trust and a former director of Florida Rock Industries and The St. Joe Company. Mr. Walton also serves as a director or trustee of severalnon-profit organizations, with a particular interest in educational entities, including the American Enterprise Institute, the Jacksonville University Public Policy Institute, KIPP Jacksonville Schools, Mpala Wildlife Foundation and the University of Florida Investment Corporation, and previously served on the boards of Communities in Schools, the Episcopal School of Jacksonville, Princeton University and Princeton University Investment Company.

Mr. Walton received an AB from Princeton University and an MBA from Harvard Business School.

Executive Officers who are not Directors

Raymond A. Ritcheyserves as Senior Executive Vice President. Prior to his appointment to this position inPresident of Boston Properties since January 2016, Mr. Ritchey served as Executive Vice President, Head of our Washington, DC Office and National Director of Acquisitions and Development since April 1998 and Senior Vice President andCo-Manager of our Washington, DC office. Mr. Ritchey is responsiblewith responsibility for all business development, leasing and marketing, as well as new opportunity origination in the Washington, DC area. He alsoarea and directly oversees similar activities on a national basis. Mr. Ritchey joined usbasis

Various positions at Boston Properties since 1980, including Executive Vice President, Head of our Washington, DC Office and National Director of Acquisitions and Development and Senior Vice President and Co-Manager of our Washington, DC office

Joined Boston Properties in 1980, leading our expansion to become one of the dominant real estate firms in the Washington, DC metropolitan area. For four years prior to joining us, Mr. Ritchey was one of thearea

A leading commercial real estate brokersbroker in the Washington, DC area with Coldwell Banker. Mr. Ritchey is the Banker from 1976 to 1980
President of the Board of Spanish Education Development (SED) Center; a memberCenter

Member of the Federal City Council; a member ofCouncil and The Economic Club of Washington; Washington

Founding member of the National Association of Industrial and Office Properties (NAIOP), Northern Virginia; Virginia

Chair of the JDRFThe Juvenile Diabetes Research Foundation (JDRF) Real Estate Games; and an active volunteer with numerous civic, charitable, and real estate industry organizations. A sampling of Mr. Ritchey’s professionalGames

Professional honors include: ULI Lifetime Achievement Award; Man of the Year, CREW; Brendan McCarthy Award, GWCAR; Good Scout of the Year, Boy Scouts; Trendsetter of the Year, Transwestern; Developer of the Year (numerous organizations); and Junior Achievement Man of the Year. He is a graduateYear

Graduate of the U.S. Naval Academy and a graduate of the U.S. Naval Post Graduate School in Monterey, California. He is 68 years old.California

 

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PROPOSAL 1: ELECTION OF DIRECTORS

Michael E. LaBelle

 

Michael E. LaBelleserves as

Executive Vice President, Chief Financial Officer and Treasurer. Prior to his appointment to this position inTreasurer of Boston Properties since January 2016, Mr. LaBelle servedwith responsibility for overseeing the finance, accounting, tax, internal audit and investor relations departments, as well as capital raising, treasury management, credit underwriting, financial strategy and planning

Various positions at Boston Properties since March 2000, including Senior Vice President, Chief Financial Officer and Treasurer sincefrom November 2007 to January 2016 and he also served as Senior Vice President, Finance from February 2005 to November 2007. In his current role, Mr. LaBelle oversees the finance, accounting, tax, information systems, internal audit and investor relations departments and is also responsible for capital raising, treasury management, credit underwriting, financial strategy and planning. Prior to joining us in March 2000, Mr. LaBelle held the position of2007

Former Vice President & Relationship Manager with Fleet National Bank for nine yearsfrom 1991 to 2000, with the responsibility offor financing large-scale commercial real estate developments. He started his career as andevelopments
Former Associate National Bank Examiner with the Office of the Comptroller of the Currency in New York City specializing in commercial real estate debt portfolio analysis and valuation in commercial banks located throughout theMid-Atlantic and Northeastern United States. Mr. LaBelle is onStates

Member of the National Advisory Board for the University of Colorado Real Estate Center. Mr. LaBelle holdsCenter

Received a BS degree in Economics from the University of Colorado. He is 54 years old.Colorado

Peter D. Johnston

Peter D. Johnstonserves as

Executive Vice President, Washington, DC Region. Prior to his appointment to this position inRegion of Boston Properties since January 2016, Mr. Johnston served as Senior Vice President and Regional Manager of our Washington, DC office. He is in charge ofwith responsibility for all operations, including project development, leasing, construction, property management and administrative activities for our Washington, DC office, with a staff of approximately 181 people. Mr. Johnston joined the Company in 1987. In 1989 he was promoted to Project Manager, with subsequent promotions in 1991 to Vice President and in 1997 to Senior Vice President. In 2003 he was appointed head of the development team in the Washington, DC Region and held this position until his promotion in September 2005 to the position of Regional Manager. Mr. Johnstonpeople; has been responsible for more than eight11 million square feet of new development and renovation projects. He is a past memberprojects

Various positions at Boston Properties since 1987, including Senior Vice President and Regional Manager and Head of the boardDevelopment of directorsour Washington, DC office

Former director of the Northern Virginia Chapter of NAIOP. Mr. Johnston receivedNAIOP

Received a BA in Business Administration from Roanoke College, an MA from Hollins College and an MBA from the University of Virginia. He is 60 years old.Virginia

Bryan J. Koop

Bryan J. Koopserves as

Executive Vice President, Boston Region. Prior to his appointment to this position inRegion of Boston Properties since January 2016, Mr. Koop served as Senior Vice President and Regional Manager of our Boston office since 1999. Mr. Koop is responsiblewith responsibility for overseeing the operation of our existing regional portfolio in the Boston area, which includes the Prudential CenterBoston CBD, Cambridge and Kendall Center. He is also responsible forWaltham/Lexington submarkets and developing new business opportunities in the area. Priorarea

Senior Vice President and Regional Manager of our Boston office from 1999 to joining us in 1999, Mr. Koop served2016

Various positions at Trammell Crow Company from 1982 to 1999, where his career covered high-rise office building leasing and the development of commercial office buildings and shopping centers. From 1993 to 1999, his position was

and shopping centers, including Managing Director and Regional Leader for Trammell Crow Company’s New England region, with responsibility for all commercial office and shopping center operations.

Director and Regional Leader for Trammell Crow Company’s New England region, which included all commercial office and shopping center operations. Mr. Koop is a member of the Board of Directors for the Massachusetts Chapter of NAIOP, the Boston Green Ribbon Commission and the Kendall Square Association and previously served as

Former chairman of the Back Bay Association. Mr. Koop receivedAssociation

Received a BBA and an MBA from Texas Christian University. He is 60 years old.University

Robert E. Pesterserves as

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4› EXECUTIVE OFFICERS

Robert E. Pester

Executive Vice President, San Francisco Region. Prior to his appointment to this position inRegion of Boston Properties since January 2016, Mr. Pester served as Senior Vice President and Regional Manager of our San Francisco office since 1998. Mr. Pester is responsiblewith responsibility for overseeing existing operations in San Francisco and our other Bay Area properties on the Peninsula and in Silicon Valley, and developing new business opportunities in the area. Priorarea

Senior Vice President and Regional Manager of our San Francisco office from 1998 to joining us in 1998, he served as 2016

Executive Vice President and Chief Investment Officer of Bedford Property Investors, a real estate investment trustREIT in Lafayette, CA, whereCalifornia, for which he led the acquisitions and development program. Priorprogram from 1994 to 1994, he was 1998
President of Bedford Property Development, a private West Coast development concern that held more than $2 billion in real estate assets. From 1980assets from 1989 to 1989, he was a1998

A leading commercial real estate broker with Cushman & Wakefield in northern California, from 1980 to 1989, where he last served as Vice President. He isPresident

Licensed California officer and real estate broker

Received a graduate ofBA in Economics and Political Science from the University of California at Santa Barbara with a BA in Economics and Political Science. He is 62 years old.

 

32    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PROPOSAL 1: ELECTION OF DIRECTORS

John F. Powers

 

John F. Powers serves as

Executive Vice President, New York Region. He overseesRegion of Boston Properties since January 2016, with responsibility for overseeing all aspects of our New York and Princeton, New Jersey activities, including development, acquisitions, leasing and building operations. Prior to joining us on January 2, 2014 as operations

Senior Vice President and Regional Manager of our New York office he served from 2004 as January 2014 to January 2016

Chairman of CBRE, Inc. for the New YorkTri-State Region, overseeingfrom 2004 to 2016, where he oversaw the strategic direction of CBRE’sTri-State operations. He joinedoperations

Joined the Edward S. Gordon Company, which was subsequently merged into CBRE, in 1986, after working eight years at Swiss Bank Corp (now UBS). At ESG,where he developed and managed the Consulting Division into a strong and integral part of the firm’s service delivery platform, which facilitated its sustained leadership in the Manhattan office leasing market. He also brokered millions of square feet of transactions, representing both tenants and landlords, led numerous strategic consulting assignments for large corporate occupiers and advised on manyground-up developments. He is a frequent speaker on commercial real estate in New York valued for his insight linking economic trends and conditions to their eventual impact on the office market. Mr. Powers is chairman

platform, which facilitated its sustained leadership in the Manhattan office leasing market; also brokered millions of square feet of transactions, representing both tenants and landlords, led numerous strategic consulting assignments for large corporate occupiers and advised on many ground-up developments

Spent eight years at Swiss Bank Corporation (now UBS)

Chairman of Right to Dream, Inc. He received

Received a BA in Mathematics from St. Anselm College, an MA in Economics from the University of Massachusetts and an MBA from the University of Massachusetts. He also studiedMassachusetts

Studied international economics at the Graduate Institute of International Studies, Geneva. He is 72 years old.Geneva

Frank D. Burt

Frank D. Burtserves as

Senior Vice President, Chief Legal Officer and Secretary positions he has held since 2003. He is responsible2019 and Senior Vice President, General Counsel and Secretary of Boston Properties from 2003 until 2019, with responsibility for overseeing the legal and risk management departments. Mr. Burt has served in various capacitiesdepartments

Various positions at Boston Properties since he joined us in 1986, and he1986; represented usBoston Properties in the acquisition of the Prudential Center in Boston and the Embarcadero Center in San Francisco, as well as in the development activities at the Prudential Center. He previously workedCenter
Former attorney in the real estate department at Nutter, McClennen & Fish in Boston. Mr. Burt is a memberBoston

Member of the American College of Real Estate Lawyers and the Boston Bar Association and a speaker

Speaker for the American College of Real Estate Lawyers, the Association of Corporate Counsel, Massachusetts Continuing Legal Education, NAIOP and Nareit. Mr. Burt receivedNareit

Received a BA, magna cum laude, from Brown University and a JD, cum laude, from the University of Pennsylvania Law School. He is 60 years old.School

Michael R. Walshserves as

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4› EXECUTIVE OFFICERS

Michael R. Walsh

Senior Vice President, Chief Accounting Officer. He is responsibleOfficer of Boston Properties since May 2016, with responsibility for overseeing financial reporting, property accounting and tax compliance and is also responsible for providing transactional support on capital markets activity. Prior to his appointment to this position in May 2016, Mr. Walsh served as activity

Executive Vice President, Chief Financial Officer and Treasurer of Paramount Group, Inc. (“Paramount”), a real estate investment trustREIT focused on Class A office properties in New York City, Washington, DC and San Francisco, from March 2015 to March 2016. Before joining Paramount, Mr. Walsh was a2016
Various positions at Boston Properties from 1986 to 2015, including Senior Vice President, Finance and Capital Markets at Boston Properties where he served in various capacities since 1986, and was most recently responsiblewith responsibility for overseeing its accounting, financial reporting, financial analysis and tax functions and participated extensively in investor relations matters. Mr. Walsh receivedmatters

Member of Nareit’s Best Financial Practices Council

Received a BS, magna cum laude, from Eastern Nazarene College. He is 52 years old.College

 

BOSTON PROPERTIES, INC.  |2019
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43

5› PRINCIPAL AND MANAGEMENT STOCKHOLDERS

PRINCIPAL AND MANAGEMENT STOCKHOLDERS

The table below shows the amount of common stock of Boston Properties, Inc. and units of partnership interest in our Operating Partnership beneficially owned as of February 1, 20195, 2021 by:

 

each director;

each nominee for director;

 

each of our named executive officers (“NEOs”);

 

all directors nominees for director and executive officers of Boston Properties Inc. as a group; and

 

each person known by Boston Properties to be the beneficial owner of more than 5% of our outstanding common stock.

On February 1, 2019,5, 2021, there were:

 

(1)

154,500,220 shares of our common stock outstanding;

155,805,445 shares of our common stock outstanding;

 

(2)

16,791,376 common units of partnership interest in our Operating Partnership (“common units”) outstanding (other than the common units held by Boston Properties), each of which is redeemable for one share of Boston Properties’ common stock (if Boston Properties elects to issue common stock rather than pay cash upon such redemption);

16,097,110 common units of partnership interest in our Operating Partnership (“common units”) outstanding (other than the common units held by Boston Properties, Inc.), each of which is redeemable for one share of Boston Properties, Inc.’s common stock (if Boston Properties elects to issue common stock rather than pay cash upon such redemption);

 

(3)

1,145,303, long term incentive units of partnership interest in our Operating Partnership (“LTIP units”) outstanding that were issued as part of our long-term incentive (“LTI”) program, excluding LTIP units issued pursuant to 2016 Multi-Year Long-Term Incentive Program (“MYLTIP”) awards, 2017 MYLTIP awards and 2018 MYLTIP awards, each of which, upon the satisfaction of certain conditions, is convertible into one common unit; and

1,587,923 long term incentive units of partnership interest in our Operating Partnership (“LTIP units”) outstanding that were issued as part of our long-term incentive (“LTI”) program, excluding LTIP units issued pursuant to 2019 Multi-Year Long-Term Incentive Program (“MYLTIP”) awards, 2020 MYLTIP awards and 2021 MYLTIP awards, each of which, upon the satisfaction of certain performance and service conditions, is convertible into one common unit; and

 

(4)

75,512 deferred stock units outstanding.

73,744 deferred stock units outstanding.

All references in this proxy statement to LTIP units exclude LTIP units issued pursuant to 20162019 MYLTIP awards, 20172020 MYLTIP awards and 20182021 MYLTIP awards because the three-year performance periods of these awards had not ended by February 1, 2019.5, 2021. LTIP units issued pursuant to 20162019 MYLTIP awards, 20172020 MYLTIP awards and 20182021 MYLTIP awards are collectively referred to herein as “Performance“Unearned Performance Awards.” None of our directors or NEOs beneficially ownsowned any preferred units or shares of our preferred stock.

 

34    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

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PRINCIPAL AND MANAGEMENT STOCKHOLDERS

5› PRINCIPAL AND MANAGEMENT STOCKHOLDERS

 

 Common Stock   Common
Stock and Units		   Common Stock   Common
Stock and Units		 
Name and Address of Beneficial Owner* 

Number of

Shares

Beneficially

Owned(1)

 

Percent of

Common

Stock(2)

   

Number of

Shares

and Units

Beneficially

Owned(1)

 

Percent of

Common

Stock and

Units(3)

   Number of
Shares
Beneficially
Owned(1)		   

Percent of

Common

Stock (2)

   

Number of

Shares

and Units

Beneficially

Owned (1)

   

Percent of

Common

Stock and

Units (3)

 

Directors, Nominees for Director and Named Executive Officers

     

Directors and Named Executive Officers

Directors and Named Executive Officers

 

Kelly A. Ayotte(4)

 

 

—

 

 

 

**

 

  

 

1,047

 

 

 

**

 

   213    **    4,109    ** 

Bruce W. Duncan(5)

 

 

—

 

 

 

**

 

  

 

3,110

 

 

 

**

 

   21,000    **    26,959    ** 

Karen E. Dykstra(6)

 

 

4,537

 

 

 

**

 

  

 

5,062

 

 

 

**

 

   7,420    **    7,945    ** 

Carol B. Einiger(7)

 

 

17,930

 

 

 

**

 

  

 

24,050

 

 

 

**

 

   29,185    **    38,154    ** 

Jacob A. Frenkel(8)

 

 

1,013

 

 

 

**

 

  

 

8,492

 

 

 

**

 

Diane J. Hoskins

 

 

—

 

 

 

**

 

  

 

—

 

 

 

**

 

Diane J. Hoskins(8)

   4,149    **    4,149    ** 

Joel I. Klein(9)

 

 

5,080

 

 

 

**

 

  

 

10,290

 

 

 

**

 

   9,081    **    17,140    ** 

Douglas T. Linde(10)

 

 

288,013

 

 

 

**

 

  

 

474,826

 

 

 

**

 

   259,131    **    554,901    ** 

Matthew J. Lustig(11)

 

 

6,058

 

 

 

**

 

  

 

14,126

 

 

 

**

 

   8,799    **    19,716    ** 

Owen D. Thomas(12)

 

 

63,399

 

 

 

**

 

  

 

244,682

 

 

 

**

 

   63,624    **    402,264    ** 

Martin Turchin(13)

 

 

26,241

 

 

 

**

 

  

 

29,299

 

 

 

**

 

David A. Twardock(14)

 

 

33,442

 

 

 

**

 

  

 

33,442

 

 

 

**

 

William H. Walton, III

 

 

—

 

 

 

**

 

  

 

—

 

 

 

**

 

David A. Twardock(13)

   8,060    **    8,060    ** 

William H. Walton, III(14)

   1,610    **    4,459    ** 

Raymond A. Ritchey(15)

 

 

96,802

 

 

 

**

 

  

 

456,462

 

 

 

**

 

   —    **    371,015    ** 

Michael E. LaBelle(16)

 

 

29,258

 

 

 

**

 

  

 

114,509

 

 

 

**

 

   11,333    **    135,195    ** 

Bryan J. Koop(17)

 

 

25,509

 

 

 

**

 

  

 

82,769

 

 

 

**

 

   17,919    **    87,145    ** 

All directors and executive officers as a group (19 persons)(18)

 

 

671,972

 

 

 

**

 

  

 

1,702,415

 

 

 

**

 

   499,708    **    1,912,747   1.10% 

5% Holders

                 

The Vanguard Group(19)

 

 

19,920,963

 

 

 

12.89%

 

  

 

19,920,963

 

 

 

11.55%

 

   22,350,551   14.35%    22,350,551   12.88% 

BlackRock, Inc.(20)

 

 

16,120,682

 

 

 

10.43%

 

  

 

16,120,682

 

 

 

9.34%

 

   16,207,690   10.40%    16,207,690   9.34% 

Norges Bank (The Central Bank of Norway)(21)

 

 

10,634,382

 

 

 

6.88%

 

  

 

10,634,382

 

 

 

6.16%

 

   13,037,554   8.37%    13,037,554   7.51% 

State Street Corporation(22)

 

 

8,711,108

 

 

 

5.64%

 

  

 

8,711,108

 

 

 

5.05%

 

   8,745,065   5.61%    8,745,065   5.04% 

TCI Fund Management Limited
and Christopher Hohn(23)

   8,362,038   5.37%    8,362,038   4.82% 

 

*

Unless otherwise indicated, the address is c/o Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

 

**

Less than 1%.

 

(1)

The number of shares of common stock “beneficially owned” by each beneficial owner is determined under rules issued by the SEC regarding the beneficial ownership of securities. This information is not necessarily indicative of beneficial ownership for any other purpose. “Number of Shares Beneficially Owned” includes (a) shares of common stock that may be acquired upon the exercise of options that are exercisable on or within 60 days after February 1, 20195, 2021 and (b) the number of shares of common stock issuable to directors upon settlement of deferred stock units.units on or within 60 days after February 5, 2021. The “Number of Shares and Units Beneficially Owned” includes all shares included in the “Number of Shares Beneficially Owned” column plus the number of shares of common stock for which common units and LTIP units may be redeemed (assuming, in the case of LTIP units, that they have first been converted into common units). Under the limited partnership agreement of the Operating Partnership, the holders of the common units and LTIP units (assuming conversion in full into common units, as applicable) have the right to redeem the units for cash or, at our option, shares of common stock, subject to certain conditions. Except as otherwise noted, each beneficial owner has sole voting and investment power over the shares and units. Holders of common units, LTIP units and deferred stock units are not entitled to vote such units on any of the matters presented at the 20192021 annual meeting.

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    35

PRINCIPAL AND MANAGEMENT STOCKHOLDERS

 

(2)

The total number of shares outstanding used in calculating this percentage assumes (a) the exercise of all options to acquire shares of common stock that are exercisable on or within 60 days after February 1, 20195, 2021 held by the beneficial owner and that no options held by other beneficial owners are exercised and (b) the conversion into shares of common stock of all deferred stock units held by the beneficial owner and that no deferred stock units held by other beneficial owners are converted.

 

(3)

The total number of shares outstanding used in calculating this percentage assumes (a) that all common units and LTIP units are presented (assuming conversion in full into common units, if applicable) to the Operating Partnership for redemption and are acquired by Boston Properties for shares of common stock, (b) does not separately include outstanding common units held by Boston Properties, as these common units are already reflected in the

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5› PRINCIPAL AND MANAGEMENT STOCKHOLDERS

denominator by the inclusion of all outstanding shares of common stock, (c) the exercise of all options to acquire shares of common stock that are exercisable on or within 60 days after February 1, 20195, 2021 held by the beneficial owner and that no options held by other beneficial owners are exercised and (d) the conversion into shares of common stock of all deferred stock units.units the receipt of which has not been deferred to a date later than 60 days after February 5, 2021.

 

(4)

Represents 1,047213 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 3,896 LTIP units (all of(of which 1,709 LTIP units are subject to vesting). Excludes 1,921 deferred stock units, the receipt of which has been deferred to a date later than 60 days after February 5, 2021 pursuant to a specific deferral election (see “Compensation of Directors – Deferred Compensation Program” on page 49).

 

(5)

Represents 3,11021,000 shares of common stock held indirectly through a trust. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 5,959 LTIP units (of which 1,0471,709 LTIP units are subject to vesting). Excludes 2,514 deferred stock units, the receipt of which has been deferred to a date later than 60 days after February 5, 2021 pursuant to a specific deferral election (see “Compensation of Directors – Deferred Compensation Program” on page 49).

 

(6)

Includes 4,0856,934 shares of common stock held directly (of which 1,0471,709 shares are subject to vesting) and 452486 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 525 LTIP units.

 

(7)

Represents 17,930Includes 8,000 shares of common stock held indirectly through a trust and 21,185 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 6,1208,969 LTIP units (of which 1,0471,709 LTIP units are subject to vesting).

 

(8)

Represents 1,0134,149 shares of common stock. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 7,479 LTIP unitsstock (of which 1,047 LTIP units1,709 shares are subject to vesting).

 

(9)

Represents 5,0809,081 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 5,2108,059 LTIP units (of which 1,0471,709 LTIP units are subject to vesting).

 

(10)

Includes 182,190180,763 shares of common stock held directly, (of which 4,568 shares are subject to vesting), 700 shares of common stock held by Mr. Linde’s spouse, 2,100 shares of common stock held by Mr. Linde’s children, and 103,02375,568 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 186,813295,770 LTIP units (of which 41,83279,487 LTIP units are subject to vesting). Excludes Unearned Performance Awards. Mr. Linde has shared voting and dispositive power with respect to 700 shares of common stock.

 

(11)

Represents 6,0588,799 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 8,06810,917 LTIP units (of which 1,0471,709 LTIP units are subject to vesting).

 

(12)

Includes 9,1179,342 shares of common stock held directly and 54,282 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficiary Owned” column, 181,283338,640 LTIP units (of which 71,756117,350 LTIP units are subject to vesting). Excludes Unearned Performance Awards.

 

(13)

Includes 3,0077,610 shares of common stock held directly 200(of which 1,709 shares are subject to vesting) and 450 deferred stock units. Excludes 27,486 deferred stock units, the receipt of common stock held by Mr. Turchin’s spouse, 650 shareswhich has been deferred to a date later than 60 days after February 5, 2021 pursuant to a specific deferral election (see “Compensation of common stock held through trusts and 22,384Directors – Deferred Compensation Program” on page 49).

(14)

Includes 1,610 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 3,0582,849 LTIP units (of which 1,0471,709 LTIP units are subject to vesting). Mr. Turchin has shared voting and dispositive power with respect to 650 shares of common stock.

(14)

Includes 9,834 shares of common stock held directly (of which 1,047 shares are subject to vesting) and 23,608 deferred stock units.

 

(15)

Represents 96,802 shares of common stock underlying exercisable stock options. Also includes,Includes, only under the “Number of Shares and Units Beneficially Owned” column, 99,30588,805 common units held directly, 35,600 common units held by a limited liability company of which Mr. Ritchey is the sole manager and a member, 31,265 common units held by a trust of which Mr. Ritchey is a beneficiary and Mr. Ritchey’s spouse is the sole trustee, 10,500 common units held by a grantor retained annuity trust of which Mr. Ritchey is the beneficiary and 193,490trustee and 240,445 LTIP units (of which 3,80113,814 LTIP units are subject to vesting). Excludes Unearned Performance Awards.

 

36    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PRINCIPAL AND MANAGEMENT STOCKHOLDERS

(16)

Includes 12,921Represents 11,333 shares of common stock held directly (of which 6,9291,858 shares are subject to vesting). Also includes, only under the “Number of Shares and 16,337Units Beneficially Owned” column, 123,862 LTIP units (of which 27,576 LTIP units are subject to vesting). Excludes Unearned Performance Awards.

(17)

Includes 2,585 shares of common stock held directly and 15,334 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 85,25169,226 LTIP units (of which 13,41919,364 LTIP units are subject to vesting). Excludes Performance Awards.

(17)

Includes 4,559 shares of common stock held directly and 20,950 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 57,260 LTIP units (of which 14,420 LTIP units are subject to vesting). ExcludesUnearned Performance Awards.

 

(18)

Includes an aggregate of 286,484312,700 shares of common stock, 309,976145,184 shares of common stock underlying exercisable stock options and 75,51241,824 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 184,944149,344 common units and 845,4991,263,695 LTIP units. See also Notes (4) – (17) above. Excludes an aggregate of 31,920 deferred stock units, the receipt of which has been deferred by directors to dates later than 60 days after February 5, 2021 pursuant to specific deferral elections (see “Compensation of Directors – Deferred Compensation Program” on page 49). Excludes Unearned Performance Awards.

 

(19)

Information regarding The Vanguard Group (“Vanguard”) is based solely on a Schedule 13G/A filed by Vanguard with the SEC on February 11, 2019.10, 2021. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. The Schedule 13G/A indicates that Vanguard hasdoes not have sole voting power with respect to 316,389any shares of common stock and has shared voting power with respect to 203,394579,360 shares of common stock, sole dispositive power with respect to 19,541,27021,371,777 shares of common stock and shared dispositive power with respect to 379,693978,774 shares of common stock.

 

(20)

Information regarding BlackRock, Inc. (“BlackRock”) is based solely on a Schedule 13G/A filed by BlackRock with the SEC on January 30, 2019.27, 2021. BlackRock’s address is 55 East 52nd Street, New York, NY 10055. The Schedule 13G/A indicates that BlackRock has sole voting power with respect to 14,777,06314,520,631 shares of common stock and sole dispositive power with respect to all of the shares of common stock.

 

(21)

Information regarding Norges Bank (The Central Bank of Norway) (“Norges Bank”) is based solely on a Schedule 13G/A filed by Norges Bank with the SEC on January 24, 2019.February 1, 2021. Norges Bank’s address is Bankplassen 2, PO Box 1179 Sentrum, NO 0107 Oslo, Norway. The Schedule 13G/A indicates that Norges Bank has sole voting and dispositive power with respect to all of the shares of common stock.

 

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(22)

Information regarding State Street Corporation (“State Street”) is based solely on a Schedule 13G filed by State Street with the SEC on February 13, 2019.5, 2021. State Street’s address is State Street Financial Center, One Lincoln Street, Boston, MA 02111. The Schedule 13G indicates that State Street has shared voting with respect to 7,866,8927,517,844 shares of common stock and shared dispositive power with respect to 8,709,6698,736,685 shares of common stock.

(23)

Information regarding TCI Fund Management Limited and Christopher Hohn is based solely on a Schedule 13G filed jointly by TCI Fund Management Limited and Christopher Hohn with the SEC on February 16, 2021. The address for each of TCI Fund Management Limited and Christopher Hohn is 7 Clifford Street, London, W1S 2FT, United Kingdom. The Schedule 13G indicates that each of TCI Fund Management Limited and Christopher Hohn have shared voting and dispositive power with respect to all of the shares of common stock.

DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the executive officers and directors of Boston Properties, and persons who own more than ten percent of a registered class of Boston Properties’ equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish Boston Properties with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations from our officers and directors that no other reports were required during the fiscal year ended December 31, 2018,2020, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners were timely satisfied.satisfied, except Ms. Hoskins, who failed to timely file two Form 4 reports, each reflecting a purchase of common stock, which purchases were subsequently reflected on a Form 5.

 

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47

6› COMPENSATION OF DIRECTORS

COMPENSATION OF DIRECTORS    

At our 2019 annual meeting of stockholders, our stockholders approved the Boston Properties, Inc. Non-Employee Director Compensation Plan (the “Director Compensation Plan”), effective January 1, 2019. The Director Compensation Plan sets forth the cash and equity compensation that is to be paid to our non-employee directors in a specific, formulaic manner. The compensation levels established under the Director Compensation Plan have not changed since 2019.

Directors who are also employees of Boston Properties or any of its subsidiaries receive no additional compensation for their services as directors.

COMPONENTS OF DIRECTOR COMPENSATION

Non-employee directors do not receive meeting attendance fees for any meeting of our Board of Directors or a committee thereof that he or she attends.

›  CASH COMPENSATION

During 2020, we paid our non-employee directors the following cash compensation pursuant to the Director Compensation Plan:

  RoleAnnual Cash
Retainer(1)

All Non-Employee Directors for Board Services

$85,000

Chairman of the Board(2)

$100,000

Chair of the Audit Committee(2)

$20,000

Members of the Audit Committee

$15,000

Chairs of other standing committees(2)(3)

$15,000

Members of other standing committees(3)

$10,000

(1)

The sum of all cash retainers are payable in quarterly installments in arrears, subject to proration for periods of service less than a full quarter in length.

(2)

The retainer payable to the Chairman is in addition to all other retainers to which the Chairman may be entitled and the retainer to each committee chair is in addition to the retainer payable to all members of the committee.

(3)

The term “other standing committees” includes the Compensation and NCG Committees.

Non-employee directors also are reimbursed for reasonable expenses incurred to attend Board of Directors and committee meetings.

›  EQUITY COMPENSATION

The Director Compensation Plan provides for grants of equity to non-employee directors as follows:

Annual Grant. Each continuing non-employee director is entitled to receive, on the fifth business day after the annual meeting of stockholders, an annual equity award with an aggregate value of $150,000.

Initial Grant. Any new non-employee director that is appointed to our Board of Directors other than at an annual meeting of stockholders would be entitled to receive, on the fifth business day after the appointment, an initial equity award with an aggregate value of $150,000 (prorated based on the number of months from the date the director is first appointed to our Board of Directors to the first anniversary of the Company’s most recently held annual meeting of stockholders).

Annual and initial equity awards are made in the form of shares of restricted common stock, or, if offered by the Board of Directors and elected by such director, LTIP units (or a combination of both).

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6› COMPENSATION OF DIRECTORS

The actual number of shares of restricted common stock or LTIP units that we grant is determined by dividing the fixed value of the grant by the closing market price of our common stock on the NYSE on the grant date.

Annual and initial grants of LTIP units and restricted common stock will vest 100% on the earlier of (1) the first anniversary of the grant date and (2) the date of the next annual meeting of stockholders.

Accordingly, on May 28, 2020, the last reported sale price of a share of our common stock on the NYSE was $87.76, and we granted each of Mses. Ayotte, Einiger, Dykstra and Hoskins and Messrs. Duncan, Klein, Lustig, Twardock and Walton 1,709 LTIP units or shares of restricted common stock.

DEFERRED COMPENSATION PROGRAM

In accordance with our Amended and Restated Rules and Conditions for Directors’ Deferred Compensation Program (the “Directors’ Deferred Compensation Program”), non-employee directors may elect to defer all cash retainers otherwise payable to them and to receive the deferred cash compensation in the form of our common stock or in cash following their retirement from our Board of Directors. Each electing director is credited with the number of deferred stock units determined by dividing the amount of the cash compensation deferred during each calendar quarter by the closing market price of our common stock on the NYSE on the last trading day of the quarter. Hypothetical dividends on the deferred stock units are “reinvested” in additional deferred stock units based on the closing market price of the common stock on the cash dividend payment date.

Directors may elect to receive payment of amounts in their accounts either in (x) a lump sum of shares of our common stock equal to the number of deferred stock units in a director’s account or (y) ten annual installments following the director’s retirement from our Board of Directors. In addition, non-employee directors who elect a deferred payout following their retirement from the Board may elect to change their notional investment from our common stock to a deemed investment in one or more measurement funds. This election to convert may only be made after the director’s service on the Board ends, the conversion date must be at least 180 days after the latest issuance date of deferred stock units credited to the director’s account, the election is irrevocable and the director must convert 100% of his or her deferred stock account if any is converted. Payment of a director’s account that has been converted to measurement funds will be in cash instead of shares of our common stock. The measurement funds available to directors are the same as those available to our executives under our Nonqualified Deferred Compensation Plan. See “Compensation of Executive Officers – Nonqualified Deferred Compensation in 2020” on page 81.

DIRECTOR STOCK OWNERSHIP GUIDELINES

 5x

  Annual Cash Retainer for Board Service  

Our Board believes it is important to align the interests of the directors with those of the stockholders and for directors to hold equity ownership positions in Boston Properties. Accordingly, each non-employee director is expected to retain an aggregate number of shares of our common stock, deferred stock units (and related dividend equivalent rights) in the Company, and LTIP units and common units in the Operating Partnership, whether vested or not, equal to at least five (5) times the value of the then current annual cash retainer paid to non-employee directors for their service on the Board, without respect to service on committees of the Board or as lead independent director or Chairman. Each non-employee director, until such director complies with the ownership guidelines set forth above, is expected to retain all equity awards granted by the Company or the Operating Partnership (less amounts sufficient to fund any taxes owed relating to such equity awards). The deferred stock units (and related dividend equivalent rights) in the Company and LTIP units and common units in the Operating Partnership shall be valued by reference to the market price of the number of shares of our common stock issuable upon the settlement or exchange of such units assuming that all conditions necessary for such settlement or exchange have been met. For shares of our common stock or equity valued by reference to our common stock for purposes of these ownership guidelines, the market price of our common stock used to value such equity shall be the greater of (1) the market price on the date of purchase or grant of such equity or (2) the market price as of the date compliance with these ownership guidelines is measured.

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6› COMPENSATION OF DIRECTORS

DIRECTOR COMPENSATION TABLE    

The following table summarizes the compensation earned by our non-employee directors during the year ended December 31, 2020.

  Name  

Fees Earned

or Paid in

Cash(1)

   

Stock

Awards(2)

   Total 

Kelly A. Ayotte

  $112,174   $135,000   $247,174 

Bruce W. Duncan

  $121,535   $135,000   $256,535 

Karen E. Dykstra

  $102,500   $150,000   $252,500 

Carol B. Einiger

  $95,000   $135,000   $230,000 

Diane J. Hoskins

  $95,000   $150,000   $245,000 

Joel I. Klein

  $185,000   $135,000   $320,000 

Matthew J. Lustig

  $112,500   $135,000   $247,500 

David A. Twardock

  $130,000   $150,000   $280,000 

William H. Walton, III

  $97,649   $135,000   $232,649 

(1)

Mses. Ayotte and Einiger and Messrs. Duncan, Klein, Lustig, Twardock and Walton deferred the cash fees they earned during 2020 and received in lieu thereof deferred stock units. The following table summarizes the deferred stock units credited to the director accounts during 2020.

  NameDeferred Stock
Units Earned
During 2020(#)

Kelly A. Ayotte

1,257.22

Bruce W. Duncan

1,357.17

Carol B. Einiger

1,062.57

Joel I. Klein

2,073.69

Matthew J. Lustig

1,258.19

David A. Twardock

1,460.32

William H. Walton, III

1,091.81

(2)

Represents the total fair value of common stock and LTIP unit awards granted to non-employee directors in 2020, determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718 “Compensation—Stock Compensation” (“ASC 718”), disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. A discussion of the assumptions used in calculating these values can be found in Note 16 to our 2020 audited financial statements beginning on page 178 of our Annual Report on Form 10-K for the year ended December 31, 2020 included in the annual report that accompanied this proxy statement. Our non-employee directors had the following unvested equity awards outstanding as of December 31, 2020: Ms. Ayotte—1,709 LTIP units; Mr. Duncan—1,709 LTIP units; Ms. Dykstra—1,709 shares of restricted common stock; Ms. Einiger—1,709 LTIP units; Ms. Hoskins—1,709 shares of restricted common stock; Mr. Klein—1,709 LTIP units; Mr. Lustig—1,709 LTIP units; Mr. Twardock—1,709 shares of restricted common stock; and Mr. Walton—1,709 LTIP units.

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7› COMPENSATION DISCUSSION AND ANALYSIS
 I.  EXECUTIVE OVERVIEW

COMPENSATION DISCUSSION AND ANALYSIS

This “Compensation Discussion and Analysis,” or “CD&A,” sets forth our philosophy and objectives regarding the compensation of our named executive officers (“NEOs”), including how we determine the elements and amounts of executive compensation. When we use the term “Committee” in this CD&A, we mean the Compensation Committee of the Board of Directors of Boston Properties, Inc. Our NEOs for 20182020 were:

 

Owen D. Thomas, Chief Executive Officer

Douglas T. Linde, President

Raymond A. Ritchey, Senior Executive Vice President

Michael E. LaBelle, Executive Vice President, Chief Financial Officer and Treasurer

Bryan J. Koop, Executive Vice President, Boston Region

 

 Name

I.

EXECUTIVE SUMMARY

Title

 Owen D. Thomas

Chief Executive Officer

 Douglas T. Linde

President

 Raymond A. Ritchey

Senior Executive Vice President

 Michael E. LaBelle

Executive Vice President, Chief Financial Officer & Treasurer

 Bryan J. Koop

Executive Vice President, Boston Region

IntroductionI. EXECUTIVE OVERVIEW

We are the largest publicly-traded developer and owner of Class A office properties in the United States, concentrated in Boston, Los Angeles, New York, San Francisco and Washington, DC. We have a demonstrated history of creating long-term stockholder value in large part because we take on complex, technically challenging development and redevelopment projects, leveraging the skills of our management team to successfully develop and reposition properties that other organizations may not have the expertise, capacity or resources to pursue. Some of our most successful development projects have taken longer than a decade to acquire, obtain permits, construct andlease-up to stabilization. In addition, we seek to sign long-term leases with creditworthy tenants, and we generally seek long-term, fixed-rate financing in order to fix our interest expense and proactively manage our debt maturities. We recognize that our business is thus long-term in nature, and our success requires that we make business decisions with a focus on our long-term objectives, even if they have short-term negative implications.

As a result, our Committee strives to make compensation decisions that reward management for executing our strategy and promoting the best interests of the Company and its stockholders over the long term. Our market focus and strategy for creating long-term value for investors differ from many of our competitors in the office REIT segment, which makes direct comparisons in performance and compensation difficult. We therefore do not rely on a strict formulaic framework for measuring performance against short-term goals to determine compensation awards for a particular year, but instead aim for a balanced quantitative and qualitative approach, as outlined below, that our Committee believes is appropriate to ensure our continued success.

Process for Determining Executive Compensation

For the third year in a row, we received more than 90% stockholder supportfor our“Say-on-Pay” advisory vote at our annual meeting of stockholders. As a result of this continued support, and based on the overall positive feedback we received in our communications with investors throughout the year, our Committee followed the same general process when setting executive compensation program covering our NEOs is designed to attract and retain critical executive talent, motivate behaviors that align with stockholders’ interests and pay for 2018 as in recent years, which includes:

using the median (50th percentile) ofperformance. To ensure that pay is competitive with market ranges, we review a peer group of 16 REITs that are constituents of the S&P 500 Index (the “Benchmarking Peer Group”) as the beginning reference point and as an indicator of competitive market trends;

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COMPENSATION DISCUSSION AND ANALYSIS

I.    EXECUTIVE SUMMARY

considering anbenchmarking analysis prepared by FPL Associates L.P. (“FPL”), the Committee’s independent compensation consultant, that benchmarks each executive officer, and the NEOs as a group, against the Benchmarking Peer Group to determine their relative placement with respect to compensation for the prior year;

assessing performance not only against our ownpre-established corporate goals, but also against the same performance metrics for six publicly-traded office REITs that we consider our most directly comparable peers (the “Office Peers”);

considering total NEO compensation over time, both on an awarded basis and on a realized basis after forfeitures;

considering projections for compensation increases and decreases among our peers and the market generally, and other input received from FPL; and

based on the foregoing,year when establishing a dollar amount for total compensation for each NEO and then allocating it among base salary, cash bonusannual incentive target opportunities and long-term incentive (“LTI”) target opportunities. More than 90% of our NEOs’ pay is variable and contingent on performance with approximately two-thirds paid in the form of LTI equity awards (including time- basedcompensation. Although target incentive opportunities are set by reference to market, the terms of our incentive plans provide for actual payouts to be above or below target levels depending upon actual performance against pre-determined goals.

When we established the target compensation levels for each component of our NEOs’ compensation in early 2020, our Committee did not foresee the widespread, negative impact that the COVID-19 pandemic would have on our business and our stockholders. The unprecedented issues Boston Properties faced due to the global health crisis created a remarkably challenging year for our NEOs. In addition to the global pandemic, in 2020, major social-justice movements and demonstrations highlighted the racial injustices and economic inequities plaguing our society and called for companies to act. There was also a heightened focus on the importance of environmental and sustainability issues.

Despite the sudden and significant impacts of the pandemic on our business, the Committee did not modify the components or the target compensation levels of our executive compensation program. The Committee also did not modify the 2020 Annual Incentive Plan, including any of its three categories (FFO, leasing, and business and individual goals) or the specific targets within each category established in early 2020. In deciding not to change the program, the Committee prioritized strong alignment with Boston Properties’ investors and their experiences during the pandemic. As the year progressed and the severity of the pandemic became clearer, the Committee supplemented the business and individual goals with additional goals that guided the NEOs in responding thoughtfully and responsibly to the global health crisis and important social and environmental issues.

Our NEOs showed exceptional leadership in addressing all of the significant challenges and issues presented to them in 2020, but with business conditions dominated by the pandemic, they were unable to achieve their FFO and leasing targets under the 2020 Annual Incentive Plan. Our NEOs did not earn any payout under the FFO per share category and only one NEO earned a portion of the target payout for the leasing category; for the third category of the 2020 Annual Incentive Plan, the business and individual goals, each NEO exceeded his goals. As a result, the Committee awarded final bonus payments to our NEOs that ranged from 50% to 75% of target. While these same challenging business conditions had a severe, negative impact on office REITs generally, leading to negative absolute total stockholder returns (“TSR”) across the sector in 2020, the Committee noted that Boston Properties’ TSR for the one-year and three-year periods ending December 31, 2020 placed it at the 80th percentile, or third, among its most directly comparable office peers for both periods. (For a list of these peers, see “– II. Executive Compensation Program – LTI awards and performance-based LTI awards that useEquity Compensation – 2021 MYLTIP” below.) Although the Committee did not base its decisions on BXP’s relative TSR over overlapping three-year measurement periodsrankings, the Committee believes they validated the appropriateness of the final bonus payments to our NEOs.

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7› COMPENSATION DISCUSSION AND ANALYSIS
 I.  EXECUTIVE OVERVIEW

The Committee remains proud of the extraordinary leadership demonstrated by our NEOs and their efforts in protecting our tenants’ and employees’ health and safety and preserving our properties, financial condition, culture of excellence and ultimately the Boston Properties’ brand in 2020.

›2020 COMPENSATION DECISIONS

As described in detail later in this CD&A, below are the key actions that our Compensation Committee took with respect to our NEOs’ 2020 compensation and the impact of those decisions on 2020 compensation.

2020 COMPENSATION DECISION HIGHLIGHTS

Ø No change in base salary for any of the NEOs

Ø  No change to Annual Incentive Plan categories, weightings or goal targets set in January 2020 resulting in bonus payments ranging from 50% to 75% of target

›   Supplemented Business and Individual goals to add pandemic-related goals

Ø No change to any outstanding equity plans or awards, including MYLTIP awards granted in 2020

Ø  LTI equity compensation as a percentage of total compensation increased to 81% for our CEO and 74% for all of the NEOs as a group (from 72% and 64%, respectively, in 2019)

Ø Granted LTI equity compensation for 2020 performance below target for CEO

Ø  Below - target payout of 29% for CEO under 2018 MYLTIP (covering Feb. 2018 – Feb. 2020); CEO realized 36% of aggregate amount reported and expensed for that award

    
LOGO 

 

% Variable Pay(1)

 

 

 

% Paid in Equity(1)

 

 

 

Cash Bonus
as % of Target

 

 

 

2018 MYLTIP Payout
as % of Target(2)

 

 

93%

 

74%

 

 

50%

 

 

29%

 

LOGO 

% Variable Pay(1)

 

 

% Paid in Equity(1)

 

 

 

Cash Bonus

as % of Target

 

 

 

2018 MYLTIP Payout
as % of Target(2)

 

 

91%

 

66%

 

 

57%

 

 

29%

 

(1)

Percentages based on 2020 target total direct compensation.

(2)

On February 5, 2021, the three-year performance period for the Company’s 2018 MYLTIP awards ended and the final payout was 29% of target, representing only 36% of the reported pay for each of the CEO and the NEOs as a group.

›2020 SAY-ON-PAY VOTE & STOCKHOLDER OUTREACH

Say-on-Pay Vote

At our 2020 annual meeting of stockholders, approximately 89% of the votes cast supported our “Say-on-Pay” advisory vote. These results reflect continued investor support for our executive compensation program, including the changes our Committee made in 2019 to our executive compensation program based on investor feedback. The 2020 compensation year is the first year in which the changes made in 2019 were effective, and although COVID-19 unpredictably and unprecedentedly impacted our business and financial results, the Committee determined not to modify any of the key changes from 2019 to our executive compensation. In doing so, our Committee opted to remain within the original framework of the 2020 Annual Incentive Plan when determining 2020 compensation. We believe this demonstrates the Committee’s commitment to the changes it made in response to investor feedback.

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7› COMPENSATION DISCUSSION AND ANALYSIS
 I.  EXECUTIVE OVERVIEW

Investor Outreach & Feedback

We are firmly committed to learning investors’ perspectives and believe that proactive engagement is an effective means to solicit and receive valuable feedback. This feedback has helped shape our policies and practices. We conduct outreach throughout the year to ensure that management and the Board understand the issues of importance to our investors and address them appropriately. The Board regularly reviews shareholder feedback, which informs Board discussions on a wide range of topics, including our approaches to corporate governance, ESG, human capital management, diversity, equity and inclusion and executive compensation.

In 2020, we engaged directly with our investors in various forums and through different media (including in-person meetings prior to the pandemic and virtual meetings during the pandemic) as the performance metric, to further align management’s objectives with the interestspart of our investors).outreach program. In addition to discussions in the ordinary course of business, we:

hosted three investor outreach series to meet with existing investors, potential investors in Europe and one dedicated to ESG matters;

Rather than relying on a strict formulaic framework, the Committee combines a quantitative and a qualitative assessment againstpre-established goals because this approach allows it to:

 

 • 

evaluate management’s performance annually while taking into account our focus on value creation over the long-termheld more than 400 one-on-one meetings with investors at various REIT conferences, including Nareit REITWeek and REITWorld conferences, Citi 2020 Global, Evercore ISI and Bank of America Merrill Lynch 2020 Global Real Estate conferences and the difficulty of making precise comparisons to peers with different investment objectives and different strategies (see “–III. Assessing Performance – Focus on Long-Term Value Creation”);NYSE Real Estate Investor Day;

 

strikeheld one-on-one meetings at four non-REIT conferences: the appropriate balance between short-term objectivesMorgan Stanley Sustainable Futures conference, the Stifel Cross-Sector conference, BofA Financial Futures conference and long-term strategies;the Goldman Sachs Financials conference; and

 

properly emphasize quantitative results whileheld meetings at other ESG-focused engagements, including numerous one-on-one meetings with ESG-dedicated funds and an investor webinar focused on our efforts related to ESG matters.

In total, we engaged directly with representatives of more than 200 firms, including approximately 50 U.S. and international institutional investors who own, in the aggregate, approximately 45% of the total number of outstanding shares of BXP common stock and approximately 80% of the total number of outstanding shares of BXP common stock held by actively managed funds.

The topics discussed at these meetings varied, but generally focused on the impacts of the pandemic and our responses thereto. Among other things, we heard questions about the long-term impact of the hybrid or partial “work-from-home” trend on demand for office space, the impact of new sublease space on overall supply and rental rates and the financial strength of various industries and sectors (including co-working, retail stores, restaurants, theaters and fitness clubs). We also considering qualitative factors when assessing management’s performance.

Investor Outreach and Engagement

We value our relationships with our stockholders and believe it is important to maintain an ongoing dialoguediscussed with them throughout the year on a wide rangedetails of topics, including our financial and operating performance, compensation practices and ESG. EngagingHealth Security Plan for repopulating our buildings. The questions expressed in dialogue with our investors helpswere echoed by REIT analysts and even the media, and they helped guide us to understand how they view usin establishing the pandemic-related goals.

In 2020, our Investor Relations team was ranked by Institutional Investor Magazine as #1 among Office REITs and #3 among all REITs in three categories: Best IR program, Best IR Team and Best IR Professional. We believe our Investor Relations team excelled in leading and coordinating these atypical outreach efforts, and the topics they deem important.

In 2018, we undertook a review of our entire approach to our investor relations efforts. This included a review of the department’s needs, asrecognition it received is well as those of our investors and analysts. We retained Rivel Research Group to conduct and present to our Board the results of a stockholder perception study.

We hired a new Vice President, Investor Relations to lead our efforts. This is the first time that our head of Investor Relations has held an officer title, which demonstrates the importance management and our Board place on this function. Led by our new Vice President, Investor Relations, we refreshed our overall investor relations approach and substantially increased our efforts to connect with a more diverse range of investors (includingnon-dedicated real estate investment fund managers and foreign investors).

We understand the importance of direct and regular access to our executive team. In total, in 2018, our senior management team met with more than 180 actively managed institutional investment firms, including approximately 92 existing stockholders representing almost 50%

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    39

COMPENSATION DISCUSSION AND ANALYSIS

I.    EXECUTIVE SUMMARYdeserved.

 

of our total shares outstanding (excluding holdings of passive investors such as index funds), and more than 70 new or prospective investors. These meetings occur at various locations and events, which, in 2018, included:

Ø

fournon-deal roadshows;

Ø

five industry conferences;

Ø

37 property tours with investors across our five regions; and

Ø

an investor-analyst event at our new Salesforce Tower building in San Francisco during Nareit’s REITWorld conference.

2018 Performance Highlights

In addition to management meeting or exceeding the set of corporate goals established at the beginning of the year, as detailed in “– III. Assessing Performance–2018 Corporate Goals” below, highlights of our 2018 performance include the following:

 

LOGOØleased approximately 7.2 million square feet, the second largest annual total in our history, including 2.0 million square feet for development properties;
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LOGO7› Øcommenced development of three projects in 2018 totaling approximately 2.0 million square feet that are 80%pre-leased; COMPENSATION DISCUSSION AND ANALYSIS
 
LOGOØdelivered 2.3 million square feet of new developments representing $1.5 billion (our share) of investment, including Salesforce Tower in San Francisco, which is 100% leased (including leases with future commencement dates);
LOGOØincreased diluted FFO per share from $6.22 to $6.30, which includes the unbudgeted loss from early extinguishment of debt of approximately $16.5 million, or $0.10 per share, resulting from the early redemption of our 5.875% unsecured senior notes due 2019; excluding this loss and the impact of unbudgeted acquisitions and dispositions, our FFO per share would have increased by 3.5%;
LOGOØincreased our regular quarterly dividend by 18.75% to $0.95 per share of common stock in the third quarter;
LOGOØreduced our future borrowing costs and extended our debt maturities by refinancing $700 million of 5.875% unsecured senior notes that were scheduled to mature in October 2019 with the proceeds from the green bond offering of $1.0 billion of 4.500% unsecured senior notes maturing in December 2028;
 I.  EXECUTIVE OVERVIEW

 

40    BOSTON PROPERTIES, INC.  |›  2019 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSISGOVERNANCE

I.    EXECUTIVE SUMMARY

LOGOØcompleted the sale of a total of sixnon-core assets and assets with lower growth profiles for an aggregate sale price of approximately $492.0 million, including the sale of the ongoing TSA development project in Springfield, Virginia that reduced our future capital needs by an additional $215.6 million, resulting in approximately $708 million of total consideration from dispositions in 2018;
LOGOØranked in the top 8% of 874 worldwide participants earning a “Green Star” recognition from the Global Real Estate Sustainability Benchmark for the seventh consecutive year; and
LOGOØranked #5 out of 83 U.S. REITs in Green Street Advisors’ 2018 Corporate Governance rankings.

Highlights of 2018 Compensation Decisions

The Committee concluded that the Company had a very strong year in 2018, noting, in particular, our achievements in leasing, growth in FFO per share, new investments, development activity and dispositions. (See “–III. Assessing Performance–2018 Corporate Goals.”) In light of the quantitative and qualitative assessments of performance relative to the corporate goals, performance against our Office Peers and individual performance, and reported and realized NEO compensation, the Committee determined to award 2018 total compensation for the NEOs, as a group, at a level that, based on advice from FPL, the Committee expects will result in the total compensation awarded to our NEOs ranking at approximately the 60th percentile of our Benchmarking Peer Group.

As part of its benchmarking review, FPL analyzed the allocation between performance-based and time- based LTI equity awards and, for 2018, the Committee determined that it would be advisable to maintain the 50% – 50% mix of performance-based and time-based LTI equity awards that is widely accepted in the market and prevalent among our peers. The precise allocation may vary among different NEOs and from year to year based on circumstances. (See “–V. Alignment of Pay with Performance” beginning on page 58.)

The following are highlights of 2018 compensation:

2018 Pay Highlights
CEO:
0% 93% 70% 50%
Change in base salary
between 2016 - 2018		 Amount of pay that is
variable and not
guaranteed		 Amount paid in equity
with remaining 30%
paid in cash		 Amount of total equity
awarded asTSR-based
performance equity
All NEOs (as a group):
0% 91% 62% 50%
Change in base salary
between 2016 - 2018		 Amount of pay that is
variable and not
guaranteed		 Amount paid in equity
with remaining 38%
paid in cash		 Amount of total equity
awarded as TSR-based
performance equity

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    41

COMPENSATION DISCUSSION AND ANALYSIS

II.

COMPENSATION GOVERNANCE

The objectives of our executive compensation program are to attract, retain and rewardmotivate executives who have the motivation, experience and skills to lead the Company and continue our long-term track record of profitability, growth and TSR. The following are thetable highlights key features of our executive compensation program:program that demonstrate the Company’s ongoing commitment to promoting stockholder interests through sound compensation governance practices.

 

WHAT WE DO
✓ We use the median (50th percentile) of the Benchmarking Peer Group as the beginning reference point and the Committee then adjusts compensation based on a quantitative and qualitative review of corporate and individual performance.WHAT WE DON’T DO
✓

LOGO

 Variable pay is 93% of our CEO’s total target compensation. The vast majority of total compensation (for 2018, more than 91%) is variable pay (i.e., not guaranteed) and; salaries comprise a small portion of each NEO’s total compensation opportunity.
✓

LOGO

 Variable pay is based on an assessment of annual performance compared toNo tax pre-establishedgross-ups. goals, as well as a comparison of performance against other office-focused REITs in key metrics.
✓We align our NEOs with our long-term investors by awarding a significant percentage (approximately 50% in 2018) of equity compensation in the form of multi-year, performance-based equity awards that use relative TSR as the metric.
✓We enhance executive officer retention with time-based, multi-year vesting schedules for equity incentive awards granted for prior-year performance.
✓We have “double-trigger” vesting for time-based equity incentive awards following a change of control.
✓We have a clawback policy that allows for the recovery of previously paid incentive compensation in the event of a financial restatement.
✓We have stock ownership guidelines for our executives and directors.
✓We engage an independent compensation consultant to advise the Committee.
WHAT WE DON’T DO
ÐWe do not directly target compensation above the market median (50th percentile) of the Benchmarking Peer Group.
ÐWe do not provide any new executive with taxgross-ups with respect to payments made in connection with a change of control.
Ð

LOGO

 Bonus pay linked to pre-established goals. Annual cash bonuses for our NEOs are linked to performance against goals in three categories, and each NEO has target and maximum bonus opportunities.

LOGO

No hedging, pledging or short-sales. We do not allow hedging, pledging or pledgingshort-sales of Company securities.
Ð

LOGO

 Two-thirds of target compensation paid in equity. We align our NEOs with our long-term investors by awarding in 2/3rds of our NEOs’ total target compensation in the form of equity, more than 1/2 of which is in the form of multi-year, performance-based equity awards.

LOGO

Risk mitigation factors in compensation policies and procedures. We do not encourage unnecessary or excessive risk taking as a result of our compensation policies; incentive compensation is not based on a single performance metric and we do not have guaranteed minimum payouts.
Ð

LOGO

 Capped bonus and LTI awards. We have caps on annual and long-term incentives.

LOGO

No stock option repricing. We do not allow for repricing of stock options.
Ð

LOGO

 Clawback policy. We do not relyhave a clawback policy that allows for the recovery of previously paid incentive compensation in the event of a financial restatement.

LOGO

No full dividends on a strict formulaic frameworkunearned performance-based LTI awards. Recipients of performance-based LTI equity awards receive only 10% of full dividend unless and until earned.

LOGO

Stock ownership guidelines for measuring annual performance against goalsall executives. We have robust stock ownership guidelines for our executives (for our CEO, 6.0x base salary).

LOGO

Independent compensation consultant. We engage an independent compensation consultant to determine compensation.advise the Committee.

 

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COMPENSATION DISCUSSION AND ANALYSIS

III.

ASSESSING PERFORMANCE

7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

Business Strategy

The core elements of our business strategy are:

to maintain a keen focus on select markets that exhibit the strongest economic growth and investment characteristics over time – currently Boston, Los Angeles, New York, San Francisco and Washington, DC;

to invest in the highest quality buildings (primarily office) with unique amenities and locations that are able to maintain high occupancy, achieve premium rental rates through economic cycles and that advance our commitment to sustainable development and operations;

in our core markets, to maintain scale and a full-service real estate capability (development, construction, leasing and property management) to ensure we (1) see all relevant investment deal flow, (2) maintain an ability to execute on all types of real estate opportunities, such as development, repositioning, acquisitions and dispositions, throughout the real estate investment cycle and (3) provide superior service to our tenants;

to be astute in market timing for investment decisions by developing into economic growth, acquiring properties in times of opportunity and selling assets at attractive prices, resulting in continuous portfolio refreshment;

to ensure a strong balance sheet to maintain consistent access to capital and the resultant ability to make opportunistic investments; and

to foster a culture and reputation of integrity, excellence and purposefulness, making us the employer of choice for talented real estate professionals and the counterparty of choice for tenants and real estate industry participants.

Focus on Long-Term Value Creation

Execution of our strategy spans multiple markets with different economic drivers over long periods. Development projects, which are particularly important to our strategy, take time to identify, acquire, permit, construct, lease and stabilize. This strategy of creating value for investors is multifaceted and differs from that of many of our competitors in the office REIT segment, which makes direct comparisons difficult and underlies our less formulaic approach to assessing performance, as contrasted with a purely quantitative “actual versus target” framework.

We manage every aspect of our business with a focus on the long-term, including, among others, developments, redevelopments, leasing, balance sheet management and our employees. To cite one recent example among many, we fully placedin-service our Salesforce Tower development project in San Francisco in the fourth quarter of 2018. Salesforce Tower is an approximately 1,400,000 square foot Class A office skyscraper in the South of Market district of downtown San Francisco, and as of December 31, 2018, was 100% leased (including leases with future commencement dates). Our involvement in the project began with the formation of a joint venture with Hines in 2012, and as of April 1, 2019, we now own 100% of Salesforce Tower. We expect the income from Salesforce Tower to have a significant impact on our results of operations in 2019, which is seven years after our initial involvement; Hines had been involved in the project since 2007. Other successful development projects have taken even longer. For example, it took more than 20 years to acquire, design, permit, construct andlease-up to stabilization 888 Boylston Street in Boston.

Redevelopment and repositioning of existing properties are also important components of maintaining and enhancing the overall quality and long-term value of our portfolio. However, redevelopment and repositioning activities often have a short-term dilutive impact. When we remove from service all or a portion of a property for redevelopment or repositioning, we typically recognize less rental revenue

II. EXECUTIVE COMPENSATION PROGRAM

BOSTON PROPERTIES, INC.  |›  2019 Proxy Statement    43

COMPONENTS OF EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

while the space is vacant. For example, our repositioning activity at One Five Nine East 53rd Street in New York City required that we pay some tenants to terminate their leases. Among other things, this can have a material negative impact on a comparison of our results of operations and funds from operations. However, we absorb the short-term negative impact because we believe investing in our assets to maintain and enhance the quality of our portfolio is in the best interest of stockholders. In addition to maintaining a full-service real estate platform and providing superior service to our tenants, our focus on long-term performance involves management of capital and liquidity, leverage ratios, interest-rate risk, capital commitments and debt maturities to reduce the impact of capital market volatility and provide us with the flexibility to take advantage of opportunities as they arise.

For all these reasons, we look at performance not only for the latest year and on a year-over-year basis, but also with a view to managing compensation to appropriately compensate, incentivize and retain our executives.

Performance Metrics

We focus on key drivers of value creation such as leasing, development activity, new investments, dispositions, growth in FFO per share, same property net operating income (NOI) growth and balance sheet management. While the Committee is aware that different companies may calculate relevant performance metrics differently, particularlynon-GAAP financial measures, the Committee finds it useful to compare our performance to what the Office Peers disclose for similar measures, even though information is not always directly comparable among companies.

The Committee believes that internal and external data are important tools in the design and implementation of optimal compensation programs and that benchmarking against peers provides the Committee with a market check of its compensation awards. Different sections of this CD&A discuss in detail the data on which the Committee relied to make sure that different elements of compensation align with our performance. In addition, the Committee utilizes its collective experiences and judgment when establishing the appropriate types and amounts of compensation.

The Committee’s evaluation of our NEOs places strong emphasis on their contributions to overall Company performance because the Committee believes that the NEOs share responsibility for achieving the goals of the Company as a whole, and the goals are set with a view towards how they help achieve the overall long-term strategy by the Board. We also value and seek to reward performance that develops talent at all levels of our organization, promotes our culture of excellence, enhances our reputation and extends our track record of profitability and growth.

Direct Peer Competitors

In addition to assessing our performance against ourpre-established internal goals, the Committee also reviews our performance against metrics from other companies to assess our performance relative to our peers’ performance and to ensure the goals are sufficiently challenging. Given our scale, national focus and development skills, we do not have a directly comparable peer in the public market. We often compete with larger, privately-owned and, in some cases, global office development companies for which performance data is not publicly available. In the public market where operating data is available, we assess our specific performance relative to the following six Office Peers (with their total capitalizations as of December 31, 2018 shown in parentheses), some of which we compete with in a single market and some of which do not have development capabilities or pursue significant development strategies.

Douglas Emmett, Inc. ($10.9 billion)

JBG Smith Properties ($6.9 billion)

44    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

Kilroy Realty Corporation ($9.6 billion)

Paramount Group, Inc. ($7.3 billion)

SL Green Realty Corp. ($13.1 billion)

Vornado Realty Trust ($24.0 billion)

Boston Properties’ total capitalization as of the same date was $32.3 billion (see “– VII. Benchmarking Peer Group and Compensation Advisor’s Role”).

2018 Corporate Goals

In early 2018, the Committee established for management a rigorous set of operational, capital and management goals that the Committee believed challenged management to perform for our investors. We do not have a strictly formulaic framework for measuring annual performance against goals to determine compensation. (See “–III. Assessing Performance” above.) The Committee believes that:

the focus should be on performance over a time span that is consistent with the different core elements of our long-term strategy for creating value;

excessive reliance on short-term goals could have negative implications for the execution of our strategy;

business conditions and unforeseen developments during the year that lead our Board and management to make decisions that impact actual performance against the goals as originally established must be taken into account; and

calculations that formulaically determine the amount of compensation paid based on performance versus goals may have unintended results.

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

The table below lists the principal operational and capital goals for 2018 and the Committee’s overall assessment of management’s performance with respect to each denoting whether a goal was “exceeded,” “met” or “not met.” The Committee attributes greater relative importance to certain goals based on what the Committee deems most important in the execution of our strategy in that year. For 2018, the Committee categorized the goals as follows:

 

2018 Goals  COMPONENT  Overall AssessmentWHY WE PAY IT
Primary Goals:

Base Salary

Provide a fixed, competitive level of cash compensation that reflects the NEO’s leadership role and the relative market rate for the executive’s experience and responsibilities

Annual Cash Incentive

Reward NEOs for achievement of annual financial and strategic goals that drive stockholder value, thereby aligning our NEOs’ interests with those of our stockholders

•  Annual cash bonuses for each NEO are linked to performance against goals in three weighted categories and each NEO has target and maximum bonus opportunities

Performance-Based Equity (MYLTIP)

Align the interests of our NEOs with those of our stockholders

Motivate, retain and reward NEOs to achieve multi-year strategic business objectives that drive both relative and absolute TSR out-performance

•  Create a direct link between executive pay and relative and absolute TSR performance

•  Enhance executive officer retention with 100% vesting after completion of three-year performance period (i.e., “cliff vesting”), with one additional year of post-vesting transfer restrictions

Time-Based Equity

Align the interests of our NEOs with those of our stockholders

Motivate, retain and reward NEOs to achieve multi-year strategic business objectives that drive absolute TSR out-performance

•  Create a direct link between executive pay and absolute TSR performance

•  Enhance executive officer retention with time-based, multi-year vesting schedules for equity incentive awards

›2020 ANNUAL TARGET COMPENSATION

In the first quarter of each year, the Committee establishes annual target total compensation for each NEO by considering competitive benchmarking data, executive position and level of responsibility and, for executives other than our CEO, our CEO’s recommendation. Targets are reviewed annually and adjusted if determined to be appropriate by the Committee. The Committee may also adjust target compensation to reflect changes in or new responsibilities.

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7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

Variable pay, consisting of annual cash bonuses and LTI equity awards, constitutes the vast majority of our executive compensation. We believe that having a significant portion of our executives’ compensation at risk more closely aligns their interests with our long-term interests and those of our stockholders. For our CEO and NEOs as a group, variable pay for 2020 was 92.8% and 90.5%, respectively, of target total compensation. This emphasis on variable pay allows the Committee to reward good performance and penalize poor performance. For 2020, the targeted mix of total direct compensation was as follows:

CEO TARGET PAY MIXALL NEOs TARGET PAY MIX
LOGOLOGO

The total target direct compensation for each NEO was as follows:

  Name  Salary   Target Bonus   

Target

LTI Equity

   Total Target
Compensation		 

Owen D. Thomas

   $  900,000    $  2,350,000    $  9,250,000    $  12,500,000 

Douglas T. Linde

   $  750,000    $  1,900,000    $  5,850,000    $    8,500,000 

Raymond A. Ritchey

   $  740,000    $  1,650,000    $  4,410,000    $    6,800,000 

Michael E. LaBelle

   $  510,000    $  1,250,000    $  1,990,000    $    3,750,000 

Bryan J. Koop

   $  410,000    $  1,250,000    $  1,490,000    $    3,150,000 

›CASH COMPENSATION

Base Salary

The base salary for each NEO is determined by the Committee and is intended to provide a fixed level of compensation that reflects the NEO’s leadership role and the relative market rate for similarly situated executives in the NEO’s position. The Committee determines whether to adjust base salaries based on a range of factors, including benchmark versus peers and changes in individual duties and responsibilities. Any increases to base salaries are generally determined in January of the compensation year and become effective in February of the compensation year.

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The Committee did not increase the base salary of any NEO for 2021 and has not changed the base salary for any NEO since 2019.

 

  Name

 

  

 

2020 Salary

 

    

 

2019 Salary

 

    

 

% Change  

 

 

Owen D. Thomas

  $900,000    $900,000     — 

Douglas T. Linde

  $750,000    $750,000     — 

Raymond A. Ritchey

  $740,000    $740,000     — 

Michael E. LaBelle

  $510,000    $510,000     — 

Bryan J. Koop

  $410,000    $410,000     — 

Total

  $3,310,000    $3,310,000     — 

2020 Annual Incentive Plan

Program Design and Structure

In January 2020, based largely on feedback received from our investors in 2019, the Committee established the 2020 Annual Incentive Plan under which annual cash bonuses payable to our executive officers are directly linked to the achievement of specific, pre-established goals. Under the plan, each NEO has a target bonus opportunity expressed in a fixed dollar amount. Actual earned amounts may range from zero (0) to 150% of target, depending on performance versus the annual goals in each category, with payout interpolated for performance between levels.

Performance Level for Each CategoryPayout (% of Target)
>= Maximum150%
Target100%
Threshold50%
<Threshold0

We use a “scorecard” approach for our bonus determinations. This approach is intended to reflect a comprehensive analysis by the Committee of corporate, regional and individual performance based on performance in three categories: (1) FFO per Share, (2) Leasing and (3) Business and Individual goals.

FFO per Share. FFO per share was selected as a key financial metric for the 2020 Annual Incentive Plan because it is the earnings metric most commonly used by investors and analysts to evaluate our performance on an absolute basis and relative to other REITs. As such, the Committee considers this to be the corporate component of the scorecard as it is an objective, company-wide performance metric that drives near-term business strategies. The FFO per share goal is subject to adjustment for acquisitions, dispositions, financings, lease terminations and similar transactions and circumstances.

Leasing. The Committee established specific leasing goals, starting at the property level, rolling up by region and then aggregating to corporate leasing goals, as the second component. The leasing goals were then categorized as short-term leasing and total leasing goals to encourage the executives to focus on current addressable vacancies and near-term roll-over, and to avoid scenarios in which leasing goals are met solely due to unexpected early renewals. The Committee selected this category because it links objective measures of corporate, regional and individual performance by formula to the amounts paid.

Business & Individual Goals. Business goals include milestone-oriented objectives related to management of capital expenditures and G&A expense, acquisitions, dispositions, delivering development and construction projects on time and budget and achieving the desired returns on cost, joint ventures, securing entitlements, and/or launching new developments. Business goals are based on regional priorities for the regional EVPs. For the CEO and President, business goals include a relevant subset of those regional goals, as well as goals related to executive management of the Company. For the CFO, business goals relate to balance sheet management, capital raising, and other finance department priorities.

Individual goals include leadership and professional development goals, diversity initiatives, succession planning and other ESG priorities for each executive. The Compensation Committee considers absolute and/or relative performance outcomes against Company and Business and Individual goals and objectives, as well as the context in which they were achieved (including, e.g., degree of difficulty, importance to BXP, headwinds and tailwinds during the year and other similar factors).

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7› COMPENSATION DISCUSSION AND ANALYSIS
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For the 2020 compensation year, the Committee set the weighting of each category equally for all NEOs except for Mr. LaBelle. The following table summarizes the performance measurement categories and weightings under the Annual Incentive Plan for 2020.

   Weightings 
  Annual Incentive Performance Measures  Thomas   Linde  LaBelle(1)  Ritchey  Koop 
  FFO per Share   33.3%    33.3%   33.3%   33.3%   33.3% 
  Leasing (Short-Term and Total)       

Overall BXP

   33.3%    33.3%   16.7%   

DC Region(2)

       24.8%  

LA Region(2)

       8.5%  

Boston Region

                    33.3% 
  Business & Individual Goals       

Overall BXP

   33.3%    33.3%    

Finance

      50.0%   

DC Region + LA Region

       33.3%  

Boston Region

                    33.3% 
Total   100.0%    100.0%   100.0%   100.0%   100.0% 

(1)

For all NEOs except Mr. LaBelle, the weighting of each category is equal (33.3% for each of FFO per Share, Leasing and Business and Individual goals). For Mr. LaBelle, the weightings are 33.3% for FFO per share, 16.7% for leasing and 50% for business & individual goals. In determining Mr. LaBelle’s weightings for each category, the Committee considered, among other things, his reduced role in leasing relative to Messrs. Thomas and Linde and his direct role in and responsibility for the Finance Department of the Company.

(2)

Mr. Ritchey’s leasing goal (weighted 33.3% in total) is evenly split between short-term and total leasing (16.7% each) and further bifurcated between the Washington, DC and Los Angeles regions based on the square footage of each region’s portfolio as follows: short-term: 70% Washington, DC / 30% Los Angeles; total: 79% Washington, DC / 21% Los Angeles.

NEOs’ Response to the World Health Crisis and Important Social and Environmental Issues

At the time we filed our 2020 proxy statement, the COVID-19 pandemic was in its infancy and, in light of the rapidly changing business environment and fluid nature of the potential implications on the Company’s business, the Committee reserved its right to re-evaluate the categories and targets, as appropriate, in light of the pandemic’s actual impact on Boston Properties. Soon thereafter, Americans witnessed the social movements that spotlighted racial and social injustices that plague society that called for action, and we experienced a much-heightened awareness of the importance of environmental and sustainability issues.

Despite the sudden and significant impact of the global pandemic on our business, the Committee prioritized maintaining a strong alignment with our shareholders’ interests and decided not to modify any aspects of the executive compensation program despite the unexpected and unprecedented economic and social conditions. In deciding not to change the 2020 Annual Incentive Plan, the Committee considered (1) the importance of demonstrating its commitment to the more formulaic bonus plan in its first year, (2) whether doing so would disrupt the alignment of interests between our NEOs and investors and (3) whether choosing not to do so would negatively impact retention and incentives. As a result, our NEOs earned no payout under the FFO per share category and only one NEO earned a portion of the potential payout for the leasing category and it was below target.

For the third performance category under the 2020 Annual Incentive Plan, the Committee established Business and Individual goals for each NEO in January 2020. This category represented 33.3% of the potential payout opportunity for each NEO other than Mr. LaBelle (for whom it represented 50%). As it became clear that the pandemic was causing severe strain on the economy, our tenants and our business, the Board shifted its priorities for management and the Committee appended to each NEO’s Business and Individual goals a set of pandemic-related goals intended to assess and reward the NEOs for their success in meeting those priorities.

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In determining that our NEOs exceeded their pandemic-related goals, the Committee noted the following achievements:

although physical occupancy was low, all office properties throughout the Boston Properties portfolio remained open for tenants,

in early April 2020, we formed a Health Security Task Force comprised of Boston Properties’ employees, as well as outside experts in health care, industrial hygiene, cleaning and security,

in May 2020, the Heath Security Task Force issued a Heath Security Plan for repopulating the workplace, which provided a framework for health security at BXP’s office properties, including enhanced cleaning and disinfection, air and water quality protocols, physical distancing, screening and personal protective equipment (PPE) requirements,

following the release of the Health Security Plan in early May, our NEOs and management teams conducted town halls and one-on-one sessions with tenants across BXP’s regions to support their office repopulation processes, which slowly began in June in Boston,

our NEOs demonstrated remarkable discipline and flexibility in maximizing rent collections while concurrently addressing tenants’ needs:

›

for the month of April 2020, the first full month of COVID-19 restrictions, we collected approximately 97% of the total rent due April 1 from office tenants, and collections among all tenants were approximately 93%

›

by the fourth quarter of 2020, collections from office tenants had improved to a strong 99.7%, and collections from all tenants were 99.1%,

when appropriate, our NEOs worked with our tenants (primarily in retail businesses) that were in financial distress to modify lease agreements and otherwise provide relief in light of the economic downturn. During 2020, these lease modification agreements covered approximately 4.7 million square feet

›

although some of the lease modifications were deferrals under which we expect the tenant will pay us in full primarily in 2021, the majority of the lease modifications involved extending the lease term (in some cases for a year or more) or providing for a period of time where the tenant will only pay percentage rent

›

as a result of the lease modification agreements that extended the lease terms, we expect to see an increase in the cash rent we will receive in the future,

in elevating our focus on diversity and equity, we constituted our Diversity and Inclusion Committee in early 2020. Our NEOs demonstrated strong commitment to fostering its success and supported the D&I Committee in promoting diversity both within BXP and in the communities in which we operate

›

the D&I Committee set its focus on (1) recruitment and development, (2) Company policies and (3) community outreach

›

the D&I Committee has met and expects to meet regularly with our full Board of Directors, and

›

in early May 2020, we issued $1.25 billion of 3.250% senior unsecured notes that mature in 2031, and we used the net proceeds to repay amounts borrowed under our revolving line of credit and to bolster our liquidity.

Although it was not a factor in assessing our NEOs’ performance against their pandemic-related goals, the Committee noted that Boston Properties and its NEOs were ranked #1 among all office REITs by Institutional Investors Magazine in 2020 in the category “Crisis Management amid COVID-19.” They also ranked #1 in the following categories:

Overall All-American Executive Team,

Best CEO and

Best CFO.

Despite the severe, negative impacts of the pandemic on office REITs generally, which led to negative absolute total stockholder returns across the sector in 2020, the Committee also noted that Boston Properties’ TSR for the one-year and three-year periods ending December 31, 2020 placed it at the 80th percentile, or third, among its most directly comparable office peers for both periods. (For a list of these peers, see “– LTI Equity Compensation – 2021 MYLTIP” below.) Although the Committee did not base its decisions on BXP’s relative TSR rankings, the Committee believes they validated the appropriateness of the final bonus payments to our NEOs.

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7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

Set forth in the following tables is a summary of each NEO’s performance measures and weightings, with specific threshold, targets and maximum goals for each of the FFO per share and leasing performance measures, and the principal business, individual and pandemic-related goals, along with each NEO’s performance results for 2020.

 

Owen D. Thomas

  Performance

  Category

  Weighting Payout (% of target)   

Threshold

50%

  

Target

100%

  

Maximum

150%

  2020
Results		 Category
Payout %

FFO per Share

  LOGO   $7.35  $7.55  $7.75  $6.29(1) 0%

Leasing

(in million square feet)

  

 

 

 

LOGO

 

  Short-term   3.2  3.6  4.4  1.7 0%
  

 

Total

 

 

 

  5.0

 

  5.6

 

  6.9

 

  3.7

 

Business &

Individual Goals

  

LOGO

 

  


The Committee assessed Mr. Thomas’ performance against his
business, individual and pandemic-related goals and
determined that he exceeded his goals and earned the
maximum award for this category.

 150.0%

Business goals included:

•  Execute capital raising strategy to fund future investments

•  Manage G&A, capital expenditures and credit ratings

•  Complete identified transactions

•  Deliver identified development projects in-service

Individual goals included:

•  Make contributions to increase workforce diversity

•  Increase employee engagement

•  Oversee and manage employees, including the execution of succession plans

Pandemic-related goals included:

•  Demonstrate strong leadership during pandemic and demands of remote work

•  Ensure health security of BXP employees and customers

•  Maximize rent collections

•  Optimize leasing outcomes

•  Ensure active development projects remain on schedule and on budget

    TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET =        50.0%    

(1)

For all NEOs, represents Diluted FFO per share. For disclosures required by Regulation G, refer to pages 101 through 104 of our 2020 Annual Report on Form 10-K.

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Douglas T. Linde

  Performance

  Category

 Weighting Payout (% of target)   

Threshold

50%

  

Target

100%

  

Maximum

150%

  2020
Results		  Category
Payout %

FFO per Share

 LOGO   $7.35  $7.55  $7.75  $6.29  0%

Leasing

(in million square feet)

 

 

LOGO

 

  Short-term   3.2  3.6  4.4  1.7  0%
  

 

Total

 

 

 

  5.0

 

  5.6

 

  6.9

 

  3.7

 

Business &

Individual Goals

 

LOGO

 

  


The Committee assessed Mr. Linde’s performance against his
business, individual and pandemic-related goals and
determined that he exceeded his goals and earned the
maximum award for this category.

  150.0%

Business goals included:

•  Execute capital raising strategy to fund future investments

•  Manage G&A, capital expenditures and credit ratings

•  Complete identified transactions

•  Deliver identified development projects in-service

Individual goals included:

•  Make contributions to increase workforce diversity

•  Manage Information Technology department’s execution of target objectives

•  Increase employee engagement

Pandemic-related goals included:

•  Demonstrate strong leadership during the pandemic and demands of remote work

•  Ensure health security of BXP employees and customers

•  Maximize rent collections

•  Optimize leasing outcomes

•  Ensure active development projects remain on schedule and on budget

TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET =         50.0%    

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Raymond A. Ritchey

  Performance

  Category

 Weighting Payout (% of target)   

Threshold

50%

  

Target

100%

  

Maximum

150%

  2020
Results		  Category
Payout %

FFO per Share

 

LOGO

 

      $7.35  $7.55  $7.75  $6.29  0%

Leasing

(in million square feet)

 

LOGO

 

  Short-term*           
  DC:   1.1  1.3  1.6  1.2  DC: 65.6%
  LA:   0.5  0.6  0.7  0.1  LA:      0%
  Total*           
  DC:   1.8  2.0  2.5  1.9  DC: 70.1%
  LA:   0.5  0.6  0.7  0.1  LA:      0%
 

*  For more detail on the weightings for Mr. Ritchey’s leasing goal, see page 58.

 

      

Business &

Individual Goals

 

LOGO

 

  


The Committee assessed Mr. Ritchey’s performance against
his business, individual and pandemic-related goals and
determined that he exceeded his goals and earned the
maximum award for this category.

  150.0%

Business goals included:

•  Assess new development and business opportunities in the DC and LA regions

•  Complete identified transactions

Individual goals included:

•  Make contributions to increase workforce diversity

•  Expand focus on strategy and building and maintaining relationships

•  Maintain mentoring and leadership roles

Pandemic-related goals included:

•  Demonstrate strong leadership during the pandemic and demands of remote work

•  Ensure health security of BXP employees and customers

•  Maximize rent collections

•  Optimize leasing outcomes

•  Ensure active development projects remain on schedule and on budget

TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET =         66.9%    

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Michael E. LaBelle

  Performance

  Category

 Weighting Payout (% of target)   

Threshold

50%

  

Target

100%

  

Maximum

150%

  2020
Results		  Category
Payout %

FFO per Share

 

LOGO

 

      $7.35  $7.55  $7.75  $6.29  0%

Leasing*

(in million square feet)

 

LOGO

 

  Short-term   3.2  3.6  4.4  1.7  0%
  

 

Total

 

 

 

  5.0

 

  5.6

 

  6.9

 

  3.7

 

  

*  Mr. LaBelle’s leasing goal (weighted 16.7% in total) is evenly split between short-term and total leasing (8.35% each).

   

Business &

Individual Goals

 

LOGO

 

  


The Committee assessed Mr. LaBelle’s performance against
his business, individual and pandemic-related goals and
determined that he exceeded his goals and earned the
maximum award for this category.

  150.0%

Business goals included:

•  Execute capital raising strategy to fund future investments

•  Manage credit ratings

•  Develop strategy for 2021 debt maturities

•  Complete identified transactions

•  Enhance ESG disclosures in SEC
filings and Sustainability Report

Individual goals included:

•  Make contributions to increase workforce diversity

•  Manage and maintain effectiveness and productivity of Finance Department

•  Advance employee succession plans through mentoring

Pandemic-related goals included:

•  Demonstrate strong leadership during the pandemic and demands of remote work

•  Ensure health security of BXP employees and customers

•  Manage operating expenses tightly

•  Support tenant collection and pandemic-related restructuring activities from financial perspective

TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET =        75.0%    

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63

7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

Bryan J. Koop

  Performance

  Category

WeightingPayout (% of target)

Threshold

50%

Target

100%

Maximum

150%

2020
Results		Category
Payout %

FFO per Share

LOGO$7.35$7.55$7.75$6.290%

Leasing

(in million square feet)

LOGO

Short-term0.50.60.80.080%

Total

1.1

1.3

1.5

0.8

Business &

Individual Goals

LOGO




The Committee assessed Mr. Koop’s performance against his
business, individual and pandemic-related goals and
determined that he exceeded his goals and earned the
maximum award for this category.

150.0%
 
LeasingExceeded
Growth

Business goals included:

•  Deliver identified projects in Diluted FFO per Share

Exceeded
New InvestmentsExceeded
Key Leasing NOI DriversMet
Development StartsExceeded
Development EconomicsMet
Secondary Goals:
DispositionsExceeded
Balance Sheet Management/FinancingsExceeded
Development DeliveriesExceeded
Growththe Boston region

•  Maintain schedule and budget for development projects in Same Property NOI

�� Met
Growth in Same Property NOI – CashMet
General & Administrative ExpenseMet
Capital Expenditures & RepositioningMet
RedevelopmentMet
EntitlementsMet
Additional Management Goals:
Strategic ReviewMet
Board InitiativesMet
Investor RelationsExceeded
New MarketsMet

ResidentialBoston region

  Met

Individual goals included:

•  Make contributions to increase workforce diversity

•  Exhibit strong management skills and refine new business initiatives within region

•  Provide consultation support to other regions related to retail activities

Pandemic-related goals included:

•  Demonstrate strong leadership during the COVID-19 pandemic and demands of remote work

•  Ensure health security of BXP employees and customers

•  Maximize rent collections

•  Optimize leasing outcomes

•  Ensure active development projects remain on schedule and on budget

TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET =         50.0%    

Primary GoalsBased on the foregoing, the Committee awarded annual cash bonuses to the NEOs for 2020 as follows:

  Name  2020 Actual
Annual
Incentive		  2020 Target
Annual
Incentive		  2020 Actual as
% of Target

Owen D. Thomas

  $1,175,000  $2,350,000  50.0%

Douglas T. Linde

     $950,000  $1,900,000  50.0%

Raymond A. Ritchey

  $1,103,850  $1,650,000  66.9%

Michael E. LaBelle

     $937,500  $1,250,000  75.0%

Bryan J. Koop

     $625,000  $1,250,000  50.0%

 

Ø
 

Leasing64

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 |  2021 Proxy Statement

Why it is important:We generate revenue and cash primarily by leasing our operating and development properties. When making leasing decisions, we consider, among other things, the creditworthiness of the tenant, the term of the lease, the rental rate to be paid at inception and throughout the lease term, the costs of tenant improvements and other landlord concessions, current and anticipated operating expenses, real estate taxes, overall vacancy, anticipated rollover and expected future demand for the space, the impact of any expansion rights and general economic factors.

Goal:Following our successful leasing activity in 2016 and 2017, we set an even more aggressive leasing goal for 2018 of 6.3 million square feet (of which 4.8 million square feet were in ourin-service portfolio and 1.5 million square feet were in our development properties). In addition, we set a goal of achieving 90% - 92% occupancy for ourin-service portfolio and proactively managing future lease rollover.

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

Quantitative Assessment:We exceeded the goal by leasing a total of 7.2 million square feet, or 14.6% of the total square footage in our total portfolio (excluding our residential and hotel properties). Of the total 7.2 million square feet, 5.2 million square feet were leased in ourin-service portfolio and 2.0 million square feet were leased in our development portfolio. Also, of the total 7.2 million square feet, 1.8 million square feet of leasing was completed in our New York region, including approximately 529,000 square feet at 399 Park Avenue. The total number of square feet leased at ourin-service and development properties was greater than all six of our Office Peers and the total as a percentage of our total portfolio was greater than three of the six Office Peers.

We also met our goal of achieving 90% - 92% occupancy for ourin-service portfolio and proactively managed future lease rollover. We accomplished this goal by increasing ourin-service occupancy by 70 basis points since December 31, 2017 to 91.4%, which was a greater percentage than three of the six Office Peers. Excluding Salesforce Tower in San Francisco, which was added to ourin-service portfolio in the fourth quarter of 2018 at 69.9% occupancy, the occupancy for ourin-service portfolio would have been 92.1%, which would have exceeded our occupancy goal. Salesforce Tower is 100% leased (including leases with future commencement dates), and we expect all office tenants to occupy the building by the second half of 2019.

Overall Assessment:Goal exceeded.

7Ø› 

Growth in Diluted FFO per Share

 COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

Why it is important:FFO is anon-GAAP financial measure that, when combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO and FFO per share to be useful measures for understanding and comparing our operating results because, by excluding real estate-related depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), impairment losses on depreciable real estate and gains or losses associated with disposition activities, FFO and FFO per share can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current Nareit definition or that interpret the current Nareit definition differently.

Goal: Our goal was to exceed the midpoint of our guidance range for 2018 for diluted FFO per share of $6.20 to $6.36 (assuming no acquisitions and dispositions). This target range equated to projected growth of 0%-2.3% over 2017.

Quantitative Assessment:Our actual 2018 diluted FFO per share was $6.30, representing 1.3% year-over-year growth in diluted FFO per share, which was greater than one of the five Office Peers that reported year-over-year results. The sixth Office Peer, JBG Smith Properties, did not exist as a public company untilmid-2017 and, therefore, year-over-year results are not available. (Refer to pages 100 through 105 of our Annual Report on Form10-K for information relating to the calculation of FFO and diluted FFO.)

Qualitative Assessment:Our 2018 diluted FFO per share of $6.30 included the unbudgeted loss on extinguishment of debt of $0.10 per share resulting from the early redemption in December 2018 of $700 million of 5.875% unsecured senior notes that were scheduled to mature in October 2019. Excluding this loss and the impact of unbudgeted acquisitions and dispositions, our diluted FFO per share would have been $6.44, or $0.08 greater than the high end of the guidance range set at the beginning of the year, and would have equated to growth of 3.5% over 2017.

 

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COMPENSATION DISCUSSION AND ANALYSISChanges for 2021 Annual Incentive Plan

III.    ASSESSING PERFORMANCE

Overall Assessment:Goal exceeded.

Ø

New Investments

Why it is important:Active participation in new investments sustains our market-leading position and growth prospects, and new partnerships provide additional sources of capital and validate our strong reputation as a preeminent owner and developer.

Goal:Our goal was to:

complete the procurement of anchor tenants for office developments in Reston, Virginia;

secure at least one anchor tenant at certain office developments or buildings in Boston, Cambridge and Washington, DC;

make select acquisitions depending on market conditions, with a focus on opportunities in the Los Angeles and San Francisco markets; and

form a joint venture strategy for certain New York City investments.

Quantitative Assessment:In 2018, management completed each componentAs part of the goal, successfully securing anchor tenants for four of the Company’s office developments aggregating more than 2.1 million square feet ofpre-leasing (subject to certain escrow conditions), consisting of:

850,000 square feet leased to Fannie Mae in Reston, Virginia;

440,000 square feet leased to Verizon Communications, Inc. at 100 Causeway Street in Boston, Massachusetts;

276,000 square feet leased to Leidos Holdings, Inc. in Reston, Virginia; and

an aggregate of 638,000 square feet leased to Google, LLC in Kendall Center in Cambridge, Massachusetts (which lease is currently in escrow pending satisfaction of certain conditions).

In addition, we significantly grew our footprint in Los Angeles with the acquisition of a 55% interest in Santa Monica Business Park and in the Bay Area with the execution of a65-year ground lease for land totaling approximately 5.6 acres (with an option to purchase commencing in February 2020) branded as Platform 16 in San Jose, California. In New York City, we established a new partnership through the acquisition of a 25% interest in a development project that could accommodate up to 2.0 million square feet located at 3 Hudson Boulevard, and we entered into a cost-sharing arrangement with an existing joint venture partner for the Metropolitan Transportation Authority (MTA) development project. Overall, for 2018, we invested a greater percentage of our gross asset value than five of the six Office Peers.

Overall Assessment:Goal exceeded.

Ø

Key Leasing NOI Drivers

Why it is important:Our current strategy to drive future growth is to invest primarily in higher yielding new development properties with significantpre-leasing commitments and in redevelopment opportunities, rather than lower yielding acquisitions of stabilized assets for which demand and pricing remain aggressive. Consistent with this strategy, beginning in 2015 we removed all or portions of some of our properties from service for redevelopment or repositioning, despite the near-term dilutive impact. In light of the significant amount of development and redevelopment projects, and the loss of occupancy and the dilutive impact of removing properties from service, management outlined for investors our plan to achieve incremental growth of approximately $366 million (including $256 million from development

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

properties and $110 million from other key assets) in our share of annualized NOI by 2020. The Key NOI Drivers goal is the primary manner by whichCommittee’s annual executive compensation process, the Committee assesses progress againstreviewed and reassessed the “bridge” in the years leading up to 2020.

Goal:In addition to the overall leasing goal discussed above, we set specific goals to lease an aggregate of approximately 1.4 million square feet at sevenin-service properties and an aggregate of approximately 270,000 square feet at two existing development projects in 2018.

Quantitative Assessment:As of December 31, 2018, we had signed leases for an aggregate of approximately 2.3 million square feet at the sevenin-service properties,annual cash incentive program, including more than 740,000 square feet at our Reston Town Center property in Reston, Virginia and approximately 529,000 square feet at 399 Park Avenue in New York City. The 529,000 square feet of leasing at 399 Park Avenue was twice the amount of the goal. Of the sevenin-service properties, management only failed to achieve the specific goal for one property and only by approximately 23,000 square feet, but overall, management exceeded the totalin-service leasing goal of 1.4 million square feet by 0.9 million square feet.

As of December 31, 2018, we had signed a lease for an aggregate of approximately 195,000 square feet at our One Five Nine East 53rd Street (the low rise portion of 601 Lexington Avenue) in New York City, meeting one of the two existing development projects targeted in the goal. We did not complete any new leasing at the Brooklyn Navy Yard development project in 2018.

Qualitative Assessment:Despite failing to achieve the leasing goals at two of the nine assets targeted by management, the Committee concludedits structure. Based on that taken as a whole, management successfully met this goal by leasing an aggregate of 2.3 million square feet at the nine assets, exceeding the goal by 0.9 million square feet, or 64%.

Overall Assessment:Goal met.

Ø

Development Starts

Why it is important:Development starts are a useful indicator of future external growth, and they help us assess our ability to identify, underwrite and acquire new land parcels and air rights or redevelop existing properties, secure anchor tenants with significantpre-leasing commitments, obtain financing and/or joint venture partners, and commence construction of the building. Our investments in new developments and redevelopments are a product of the execution of our strategy to drive future growth, and the commencement of these projects substantiates our reputation and expertise in this area.

Goal:Our goal was to commence development of 17Fifty Presidents Street, a 276,000 square foot office development, and Reston Gateway, a 1.1 million square foot development, both located in Reston, Virginia.

Quantitative Assessment:We met the goal by commencing the developments of 17Fifty Presidents Street in the first quarter of 2018 and Reston Gateway in the third quarter of 2018. The aggregate budget for both projects is approximately $858.2 million. In addition, management successfully secured Verizon Communications, Inc. as the anchor tenant at 100 Causeway Street in Boston, Massachusetts, the office component of The Hub on Causeway development project that we own in a joint venture with Delaware North Companies, Inc., and commenced development in the third quarter of 2018.

When delivered, we expect these properties will total approximately 2.0 million square feet, which is approximately 0.7 million square feet more than the goal set for 2018. As of December 31, 2018, these three office development projects were 80%pre-leased. Our three development starts have

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

an aggregate development budget (our share) of approximately $1.1 billion and represent approximately 4.5% of our gross asset value, which percentage is greater than five of the Office Peers.

Overall Assessment:Goal exceeded.

Ø

Development Economics

Why it is important:The success of our development projects and realization of our plans for growth depend on the stabilized unleveraged cash yields we generate.

Goal: Our goal was to deliver three development/redevelopment projects – 191 Spring Street in Lexington, Massachusetts, Proto Kendall Square in Cambridge, Massachusetts and Signature at Reston in Reston, Virginia – on or below budget, which was an aggregate of approximately $429 million.

Quantitative Assessment:The actual cost for all three projects totaled approximately $429 million. Thecash-on-cash return for 191 Spring Street was approximately 6.4%, performing in line with management’s expectations. The other two projects – Proto Kendall Square and Signature at Reston – are residential development projects that were 56% and 50% leased, respectively, as of December 31, 2018. Upon stabilization, we expect these residential properties to deliver unleveragedcash-on-cash returns of approximately 5.4% and 6.7%, respectively, both of which are slightly greater than management’s projected returns prior to project commencement. In addition to the three development/redevelopment projects targeted by management, we also fully placedin-service Salesforce Tower in the fourth quarter of 2018, which was 100% leased at December 31, 2018 (including leases with future commencement dates) and also exceeded management’s projectedcash-on-cash return for the project.

Overall Assessment:Goal met.

Secondary Goals

Ø

Dispositions

Why it is important:The disposition ofnon-core assets and assets with lower growth profiles helps to enhance the performance of our remaining portfolio through higher portfolio occupancy and revenue growth. In addition, older buildings require relatively greater operating costs and capital expenditures than new buildings, so we believe a consistent review, of the properties in our portfolio and their future growth opportunities is an important component of our overall strategy.

Goal: Our goal was to sell an aggregate of at least $200 million in assets, depending on market conditions, and to specifically sell three of sixnon-core assets identified by management at the beginning of the year and at least one other asset not identified. The sale of additional assets or development projects to raise capital as needed was also included in the goal.

Quantitative Assessment:During 2018, we completed approximately $492.0 million in sales of sixnon-core assets or assets with lower growth profiles, including our development project for the TSA in Springfield, Virginia. We sold the TSA development project for approximately $98.1 million, and the buyer assumed the future funding needs to complete the construction. The estimated total project costs, including the land, are approximately $313.7 million. Therefore, the sale of the TSA development project resulted in a significant reduction in our near-term capital needs of approximately $215.6 million. Including this reduction, dispositions in 2018 totaled approximately $708 million of consideration, which represents approximately 2.8% of our gross asset value, and this percentage was greater than two of the six Office Peers.

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

Overall Assessment: Goal exceeded.

Ø

Balance Sheet Management/Financings

Why it is important:A strong balance sheet and superior access to capital help us minimize debt financing costs, enable us to act quickly on opportunistic investments and better manage our debt maturities to reduce the impact of capital market volatility.

Goal:Our goal was to manage near-term debt maturities and maintain a conservative balance sheet by:

financing the Hub on Causeway – Residential development project;

developing a strategy and begin marketing for construction financing for our Marriott Headquarters development project;

refinancing the loan collateralized by 540 Madison Avenue;

developing a strategy for refinancing our revolving facility to fund projected development costs;

evaluating the use and replacement for our delayed draw term loan;

completing awork-out arrangement with our partner in the Annapolis Junction Building One property; and

developing a strategy for refinancing the $700 million of our 5.875% unsecured senior notes maturing in October 2019.

Quantitative Assessment:In 2018, management executed our strategy to manage near-term debt maturities and maintain a conservative balance sheet by accomplishing all of the components in this goal. For example, in December 2018, we completed a public “green bond” offering of $1.0 billion in aggregate principal amount of 4.500% unsecured senior notes due 2028. The proceeds of the green bond issuance were initially used to redeem $700 million in aggregate principal amount of our 5.875% unsecured senior notes scheduled to mature in October 2019 and to repay amounts outstanding under our revolving credit facility. This had the effect of reducing our borrowing costs and extending our debt maturities. Also, in 2018, our50%-50% joint venture that owned Annapolis Junction Building One modified a mortgage loan that was in default and distributed 100% of the interest in the property to our partner, including the assumption by our partner of the mortgage loan. We no longer have an ownership interest in this property.

In addition, we completed significant financings for two of our joint venture properties. In April 2018, a joint venture in which we have a 50% interest obtained construction financing with a total commitment of $180.0 million collateralized by its Hub on Causeway – Residential development project in Boston, bearing interest at a variable rate equal to LIBOR plus 2.00% per annum and maturing in April 2022. Also in April 2018, a joint venture in which we own a 60% interest refinanced a loan secured by interests in 540 Madison Avenue in New York City totaling $120.0 million, bearing interest at a variable rate equal to LIBOR plus 1.10% per annum and maturing in June 2023.

Overall Assessment:Goal exceeded.

Ø

Development Deliveries

Why it is important:Development deliveries measure our ability to execute our development pipeline on time and within budget.

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

Goal:Our goal was to deliver three development/redevelopment projects – 191 Spring Street, Proto Kendall Square and Signature at Reston – totaling approximately 839,000 square feet with an aggregate development budget of $429 million, which represents 1.8% of our gross asset value.

Quantitative Assessment:We met the goal by fully placingin-service all three development projects on budget and for an aggregate of approximately 855,000 square feet. In addition, we fully placedin-service our Salesforce Tower development project consisting of approximately 1.4 million square feet in San Francisco in the fourth quarter of 2018. In total, the four development projects delivered in 2018 represent an aggregate of 2.3 million square feet, which is greater than all six Office Peers, and 6.0% of our gross asset value, a greater percentage than four of the six Office Peers.

Overall Assessment:Goal exceeded.

Ø

Growth in Same Property NOI

Why it is important:Same Property NOI (excluding termination income) reflects the combined impact of trends in occupancy rates, rental rates and operating costs on an unleveraged basis, providing perspective on the performance of our Same Property portfolio across fiscal periods which are not immediately apparent from net income.

Goal:Our goal for year-over-year growth in our share of Same Property NOI (excluding termination income) was a 0.5% - 2.5% increase.

Quantitative Assessment: We met the goal with a 1.5% increase. The growth in our share of Same Property NOI (excluding termination income) was greater than two of the Office Peers. (Refer toAppendix A to this proxy statement for reconciliations and other information regarding our share of Same Property NOI (excluding termination income) for the fiscal years ended December 31, 2018 and 2017.)

Overall Assessment:Goal met.

Ø

Growth in Same Property NOI – Cash

Why it is important:Same Property NOI – Cash (excluding termination income) allows investors to compare the performance of our Same Property portfolio across periods without taking into account the effects of straight-lining rent, fair value lease revenue, straight-lined ground rent expense and certain lease transaction costs that qualify as rent inducements.

Goal:Our goal for year-over-year growth in our share of Same Property NOI (excluding termination income) – Cash was a 0.5% - 2.5% increase.

Quantitative Assessment:Management achieved the goal with year-over-year growth of 1.3% compared to 2017, which was less than five of the Office Peers that reported year-over-year results for this metric. The sixth Office Peer, JBG Smith Properties did not exist as a public company untilmid-2017 and, therefore, year-over-year results for this metric are not available. (Refer toAppendix A to this proxy statement for reconciliations and other information regarding our share of Same Property NOI – Cash (excluding termination income) for the fiscal years ended December 31, 2018 and 2017.)

Overall Assessment:Goal met.

Ø

General and Administrative Expense

Why it is important:To understand our expense base, of which executive compensation is a meaningful line item, our Committee assesses our management of G&A expense by targeting an absolute dollar amount for G&A expense as a percentage of total revenue.

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III.    ASSESSING PERFORMANCE

Goal:Our goal was to manage G&A expense (excluding transaction expenses) to an aggregate spend of approximately $117 million, including compensation, benefits and other expenses.

Quantitative Assessment:Our actual 2018 G&A expense was approximately $121.7 million, which represents approximately 4.5% of our total revenue for 2018. This is a smaller percentage of total revenue than five of the six Office Peers.

Overall Assessment:Goal met.

Ø

Capital Expenditures and Repositioning

Why it is important:Consistent with our strategy to create long-term value, we reinvest in our existing properties through capital expenditures to maintain and enhance the overall high quality and value of our assets. This strategy includes thoughtful deliberations by management in selecting certain properties within our portfolio for repositioning to improve the assets’ value and better position them for competition.

Goal:Our goal was to make capital expenditures of up to $166 million, which includes approximately $51 million for repositioning projects.

Quantitative Assessment:Our actual capital expenditures in 2018 were approximately $142 million, representing approximately 0.6% of our gross asset value for 2018, which is a greater percentage of gross asset value than four of the six Office Peers, and $3.16 per square foot, which is greater than three of the six Office Peers.

Overall Assessment:Goal met.

Ø

Redevelopment

Why it is important:Redevelopment of existing properties is important in maintaining the overall high quality of our portfolio of assets, and repositioning properties –e.g., to add amenities, incorporate technology,re-imagine interior spaces or upgrade infrastructure., etc., can better position specific properties to attract certain types of tenants and their workers.

Goal:Our goal was to:

finalize redevelopment plans for two of our assets;

commence lobby renovations at Embarcadero Center in San Francisco, California; and

complete the renovations and redevelopments of three assets.

Quantitative Assessment:In 2018, we finalized redevelopment plans for the two properties identified, which resulted in the commencement of renovations at Embarcadero Center and the sale of 1333 New Hampshire Avenue in Washington, DC. We also completed renovations at two of the three identified assets: 399 Park Avenue in New York City and 100 Federal Street Plaza in Boston, Massachusetts. The other property identified for completion of renovations remains ongoing as the tenant continues to perform tenant work and anticipates opening in early 2019.

Overall Assessment:Goal met.

Ø

Entitlements

Why it is important:Obtaining the necessary entitlements and permits is an essential component to the execution of our development and redevelopment pipeline.

Goal: Our goals were to (1) obtain the remaining entitlements and/or complete the development plans for five projects and (2) advance the development plans for three projects.

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COMPENSATION DISCUSSION AND ANALYSIS

III.    ASSESSING PERFORMANCE

Quantitative Assessment:We obtained the necessary entitlements for four of the five projects, including Back Bay Station in Boston, Massachusetts, 2100 Pennsylvania Avenue in Washington, DC, Reston Gateway in Reston, Virginia and 7750 Wisconsin Avenue (Marriott Headquarters) in Bethesda, Maryland, which has commenced development. We did not receive the entitlements for the fifth property – Weston Corporate Center – because the town proposed a new development scheme. In addition, we advanced our development plans at each of the three properties that comprised the goal: Fourth and Harrison in San Francisco, MTA in New York City and 3625-3635 Peterson Way in Santa Clara.

Qualitative Assessment:Management made significant progress in 2018 by securing entitlements for four development projects totaling an aggregate of approximately 3.6 million square feet, and the Committee concluded that the failurecategories were appropriate, but that market practice among peers was that more weight should be given to obtain entitlements was the resultBusiness and Individual Goals. For 2021, the Committee changed the weighting of the process not being withincategories under the control of management. We remain focused on obtaining the remaining entitlementsAnnual Incentive Plan for Mr. LaBelle so that we have more control overit is the timing of when to commence construction of these projects. In lightsame for all five NEOs, and changed the weightings of the entitlements obtained in 2018, the Committee concluded that management met this goal.

Overall Assessment:Goal met.categories so they will be FFO per Share – 30%, Leasing – 30% and Business and Individual goals – 40%.

Additional Management Goals›LTI EQUITY COMPENSATION

Our executive officers were also given an additional setThe equity component of management goals in 2018, as shown on page 46. These additional management goals, by their nature, did not lend themselves to quantitative assessments. The Committee concluded that management satisfied these goals and they were considered as part of the overall qualitative assessment of performance for the year.

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COMPENSATION DISCUSSION AND ANALYSIS

IV.

PERFORMANCE-BASED EQUITY AWARDS; THREE-YEAR TSR DRIVES ACTUAL EARNED PAY

Multi-Year Long-Term Incentive Program (MYLTIP)

Management’s performance against operational, capital and management goals drives the Committee’s annualour NEOs’ compensation awards. What our NEOs actually earn is driven to a significant extent by our TSR through LTI equity awards consisting of a mix of time-based and performance-based LTIP unit awards.

Time-Based Equity Awards

The time-based LTI equity awards granted to the NEOs for 2020 performance consisted of LTIP units or restricted shares of our common stock that generally vest ratably over a four-year period (25% per year), subject to acceleration in certain circumstances (e.g., retirement, death or disability, and certain qualifying terminations following a change in control). See “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards.”

Performance-Based Equity Awards – Multi-Year Long-Term Incentive Program (MYLTIP)

The performance-based portion of LTI equity awards are granted under a rigorous performance-based program (ourour Multi-Year Long-Term Incentive Program, or “MYLTIP”). MYLTIP awards incorporate“MYLTIP.” MYLTIPs are awarded to provide incentives for long-term performance and focus over a formulaic link to our relative TSR over three-year overlapping measurement periods.

In 2018, the Committee, with the assistance of FPL, undertook a comprehensive reviewmulti-year period. The design of the MYLTIP plan design withawards links the objective of simplifyingultimate payouts directly by formula to our TSR over a three-year measurement period.

2020 MYLTIP

Under the program while maintaining its integrity. Based on this review, the 2019 MYLTIP reflects three key changes as compared to the 20182020 MYLTIP:

 

the Company’s relative TSR performance will beis measured against a single index – the FTSE Russell Nareit Office Index (the “Nareit Office Index”) (which is adjusted to include Vornado Realty Trust because it is a publicly-traded office REIT that we consider one of the six Office Peersour most directly comparable peers despite being categorized as a diversified REIT by FTSE Nareit). After receiving advice from FPL, including the lack of correlation between the Company and the multi-sector Cohen & Steers’ Realty Majors Index (“C&S Index”), the Committee felt that as apay-for-performance tool the Nareit Office Index is the benchmark that is most relevant to the Company as a measure of performance relative to peers and concluded it should remove the C&S Index as a benchmark index;;

 

•

awards are denominated in LTIP units (see “IX. Other Compensation Policies – LTIP Units” on page 65) as the Committee felt that denominating awards in LTIP units allows the value of the awards to fluctuate with the price of the Company’s common stock, which builds further alignment with stockholders; and

the awards are denominated in LTIP units; and

 

relative TSR will beis the sole determinant of how many LTIP units are earned and eligible to vest. The Committee opted to simplifyvest; there are no absolute TSR modifiers that can increase or decrease the program by removing both upside and downside modifiers, keeping the focus on relative performance to motivate the Company’s management team. We will continue to analyze market trends in LTI plan design and may consider including modifiers in future years, if appropriate.final payout.

For 20192020 MYLTIP awards, the number of LTIP units that can be earned, whether in whole, in part or not at all, is based on levels of payout opportunity ranging from zero to 100%200% of the target number of LTIP units initially issued, (with target at 50%) on a straight-line basis depending on relative TSR performance compared to the Nareit Office Index (as adjusted) as follows:

 

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COMPENSATION DISCUSSION AND ANALYSIS

IV.    PERFORMANCE-BASED EQUITY AWARDS; THREE-YEAR TSR DRIVES ACTUAL EARNED PAY

7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

 

The Committee believes that the new 2019 MYLTIP design provides management with quantifiable incentives that (i) span an appropriate, symmetrical range of relative TSR performance aligned with historical volatility in the REIT sector compared to our actual performance, (ii) will keep our management motivated over the entire three-year measurement period and (iii) reward management within a rigorouspay-for-performance philosophy. Based on advice from FPL, the Committee believes that the 2019 MYLTIP design is competitive as compared with current market practice in the REIT industry for similar plans and provides an appropriate risk-rewardtrade-off.

Status of MYLTIP Awards

The following summarizes the performance periods and outcomes of our 2013-2016 MYLTIP plans, all of which have ended, and the interim valuations as of December 31, 2018 for our 2017-2018 MYLTIP plans, in each case, based on calculations prepared by Appraisal Economics, Inc., our valuation expert. As shown below, only one plan – the 2013 MYLTIP – ultimately paid out at or above target.

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(1)

All percentages are rounded. The percentages shown for 2017 and 2018 are estimates as of December 31, 2018 based on interim valuations performed by a valuation expert (which could change up or down over the balance of the respective measurement periods).

CEO Reported vs. Realized Pay

The Committee is cognizant that a direct correlation does not exist between the successful execution of our long-term strategy, as demonstrated year after year through the achievement of goals set for management, and our TSR, particularly on a relative basis. This is particularly true when TSR is compared over a limited period of time. For example, for the most recently completed 2016 MYLTIP program, our NEOs, including our CEO, earned 69.5% of the target value for those awards. This result occurred despite management meeting or surpassing its goals.

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IV.    PERFORMANCE-BASED EQUITY AWARDS; THREE-YEAR TSR DRIVES ACTUAL EARNED PAY

The following graph shows for our CEO (1) the reported valuevalues of the MYLTIP awards granted between 2015—2020 as of thetheir respective grant dates, (2) the maximum payout opportunity that could have been earned under each plan based primarily on relative TSR performance, and (3) the actual realized pay for each of the 2013-2016 MYLTIP awards granted between 2015—2018 for which the measurement periods have ended as well asand (3) the interim valuations as of December 31, 20182020 for the 20172019 and 20182020 MYLTIP awards:

 

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(1)

Interim Valuation amounts and Payout as % of Reported Pay percentages shown for the 2019 and 2020 MYLTIP are estimates as of December 31, 2020 based on interim valuations performed by our independent valuation consultant. Actual results could differ materially from the interim valuations.

2021 MYLTIP

In 2020, the Committee, with the assistance of FW Cook, undertook a comprehensive review of all facets of the MYLTIP plan design to help ensure that it successfully links executive pay and long-term performance and is therefore effective in motivating, retaining and rewarding our NEOs. In its review, the Committee considered whether the peer group(s) against which the Company’s performance is assessed is comprised of the appropriate peers, particularly in light of the impact of COVID-19 on the office REIT sector, as well as the appropriate metric(s) on which to assess performance.

After consideration, the Committee modified the design of the 2021 MYLTIP so that it now consists of two, equally weighted components, each of which provides a payout opportunity ranging from zero to 200% of a target number of LTIP units based on

 

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7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

COMPENSATION DISCUSSION AND ANALYSISBXP’s relative and absolute TSR performance over a three-year performance period. The objectives of the 2021 MYLTIP program are (1) retention (similar to time-based equity awards), (2) alignment with stockholders and (3) pay-for-performance. The Committee believes that, particularly in light of COVID-19, the performance targets are rigorous, but achievable, and challenge our executive team to achieve strong performance over time, on both an absolute and relative basis. The Committee added the second component, in part, to limit the scenarios in which our investors may suffer losses due to a decline in absolute TSR while our NEOs realize outsized payouts for relative TSR. As a result, BXP performance above the maximum goal under the Relative TSR component does not automatically result in a payout equal to the maximum 200% of target because the total payout would be offset, e.g., if performance is below target under the Absolute TSR component. The Committee concluded that this “offsetting” feature helps align our NEOs’ interests with our stockholders, while also providing incentives to outperform our peers.

 

V.Ø

ALIGNMENT OF PAY WITH PERFORMANCERelative TSR Component

Based on the goal assessments, FPL’s benchmarking analysis and projections for compensation increases and decreases among our peers and the market generally, and other input received from FPL, the Committee decided that 2018 total compensation for the NEOs, as a group, should be set at a level that will result in the total compensation awarded to our NEOs ranking at approximately the 60th percentile of our Benchmarking Peer Group, with a view towards retention and providing incentives aligned with the best long-term interestsThe first component of the Company and its stockholders.

2021 MYLTIP, which represents Variable Pay Mixone-half

For each NEO, (50%) of the Committee approvestarget grant-date value, retains the appropriate level and mixbasic structure of paythe 2020 MYLTIP awards. The number of LTIP units that can be earned under this component ranges from zero to 200% of the target number of LTIP units, based on his role, responsibilities and performance. The Committee believes that our executive compensation is well- aligned with our stockholders’ interests and in line with the Benchmarking Peer Group. Variable pay, consisting of LTI equity awards and annual cash bonus, constitutes the vast majority of our executive compensation (for our CEO and NEOs as a group, variable pay increased modestly from 92.4% and 90.4%, respectively, in 2017 to 93.0% and 90.8%, respectively, in 2018). This allows the Committee to reward goodBXP’s annualized relative TSR (“rTSR”) performance and penalize poor performance. The following charts present the allocation of total pay among different components for our CEO and the weighted-average of each component for all NEOs as a group:

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2018 Compensation

The following table presents the total direct compensation of our NEOs, inclusive of salary, bonus and LTI equity awards, but not other items required by SEC rules to be reported in the Summary Compensation Table presented under “Compensation of Executive Officers.” We believe that this table most accurately reflects the awards made by the Committee with respect to executive compensation for 2018 compared to 2017, including MYLTIP awards whose ultimate valuean index. Under this component, 100% of the target LTIP units will be earned if the Company’s TSR equals the index TSR; the maximum 200% of the target number of LTIP units will be earned if the Company’s rTSR is at least 1,000 basis points greater than the index; and no LTIP units will be earned if the Company’s rTSR is more than 1,000 basis points less than the index. For rTSR performance between -1,000 basis points and +1,000 basis points, the number of LTIP units earned will be determined over a forward three-year period based on ourusing linear interpolation.

For purposes of measuring relative TSR. To link annual awards of long-term equity incentive compensation to annual performance, the Committee, consistent with many other companies whose fiscal year ends on December 31, typically makes equity2021 MYLTIP awards forprovide that BXP’s TSR shall be compared to the TSR of a particular year in late January or early Februarycustom peer group index (the “Custom Index”) consisting of the following year. SEC rulesnine (9) office REITs:

Columbia Property Trust

Douglas Emmett, Inc.

Empire State Realty Trust

Hudson Pacific Properties, Inc.

JBG Smith Properties

Kilroy Realty Corporation

Paramount Group, Inc.

SL Green Realty Corp.

Vornado Realty Trust

The purpose of using a peer group is to provide a mechanism for equity awards (unlikecomparing our relative performance against competitors, however, the Company does not have a directly comparable peer in the public market and often competes with larger, privately-capitalized companies for cash bonuses)which performance data is not readily available, if at all. The FTSE Nareit Office Index, which has been the comparative index used in recent years, includes more than 20 REITs, more than half of which are not direct competitors due to geographic regions, type of product (Central Business District vs. Suburban), asset quality or size. The Custom Index was selected to include only office REITs that are most similar to the Company in terms of asset type, asset quality, and having full-scale operations in one or more of the U.S. gateway markets in which the Company operates.

For purposes of determining the TSR of the Custom Index, the weighting ascribed to each company in the Custom Index is fixed as of the grant date based on its relative market capitalization at that time; in contrast, the 2020 MYLTIP and prior programs determined the relative weight of each constituent annually and used the average of each constituent’s annual weightings over the performance period. In deciding to change the weighting methodology, the Committee considered that market practice is to fix the weightings at the plan inception.

The Committee back-tested our performance versus the Custom Index. From February 6, 2018 through February 5, 2021, which was the performance period for the 2018 MYLTIP, our annualized TSR was 235 bps above the Custom Index, which would have resulted in payout of 123.5% of the target LTIP units. However, our absolute TSR was negative over that period. To align management with our stockholders and hold them more accountable for our absolute TSR, the 2021 MYLTIP includes an absolute TSR component, as described below. If the absolute TSR component had also been in effect, the resulting payout would have been reduced to approximately 87.7% of target.

 

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V.    ALIGNMENT OF PAY WITH PERFORMANCE

require that they be presented as compensation for the year in which they were actually granted, and therefore equity awards shown in the Summary Compensation Table presented under “Compensation of Executive Officers” on page 70 lag a year (i.e., awards made in February 2019 to reward performance in 2018 are not reflected in this year’s Summary Compensation Table).

   Salary(1)   Cash Bonus 
Executive  2018   2017   % Change   2018   2017   % Change 

Owen D. Thomas

  $875,000   $875,000    0%   $2,875,000   $2,425,000    18.6% 

Douglas T. Linde

  $725,000   $725,000    0%   $2,180,000   $1,935,000    12.7% 

Raymond A. Ritchey

  $720,000   $720,000    0%   $2,080,000   $2,080,000    0% 

Michael E. LaBelle

  $500,000   $500,000    0%   $1,450,000   $1,325,000    9.4% 

Bryan J. Koop

  $400,000   $400,000    0%   $1,550,000   $1,280,000    21.1% 
  

 

 

   

 

 

     

 

 

   

 

 

   

Total

  $3,220,000   $3,220,000    0%   $10,135,000   $9,045,000    12.1% 
   LTI Equity Awards   Total Compensation 
Executive  2018   2017   % Change   2018   2017   % Change 

Owen D. Thomas

  $8,750,000   $8,189,000    6.9%   $12,500,000   $11,489,000    8.8% 

Douglas T. Linde

  $5,395,000   $5,331,000    1.2%   $8,300,000   $7,991,000    3.9% 

Raymond A. Ritchey

  $4,200,000   $4,509,000    (6.9)%   $7,000,000   $7,309,000    (4.2)% 

Michael E. LaBelle

  $1,950,000   $2,050,000    (4.9)%   $3,900,000   $3,875,000    0.6% 

Bryan J. Koop

  $1,300,000   $1,308,000    (0.6)%   $3,250,000   $2,988,000    8.8% 
  

 

 

   

 

 

     

 

 

   

 

 

   

Total

  $21,595,000   $21,387,000    1.0%   $34,950,000   $33,652,000    3.9% 
7› COMPENSATION DISCUSSION AND ANALYSIS
 II.  EXECUTIVE COMPENSATION PROGRAM

 

(1)Ø

From 2016 to 2018, the Committee did not increase the base salaries of the NEOs. For 2019, the Committee approved base salaries for the NEOs as follows: Mr. Thomas – $900,000; Mr. Linde – $750,000; Mr. Ritchey – $740,000; Mr. LaBelle – $510,000; and Mr. Koop – $410,000.Absolute TSR Component

The second component represents the remaining BOSTON PROPERTIES, INC.  |one-half 2019 Proxy Statement    59(50%) of the target grant-date value of the 2021 MYLTIP. The number of LTIP units that can be earned under this component ranges from zero to 200% of the target number of LTIP units, based on BXP’s cumulative absolute TSR (“aTSR”) during the performance period. Under this component, 100% of the target LTIP units will be earned if the Company achieves an aTSR equal to +1,000 basis points; the maximum 200% of target LTIP units will be earned if the Company achieves an aTSR of +6,000 basis points or greater; and the threshold percentage to earn any LTIP units is an aTSR of greater than -4,000

basis points. If the Company’s aTSR is greater than COMPENSATION DISCUSSION AND ANALYSIS-4,000 basis points but less than +6,000 basis points, then the number of LTIP units earned will be determined using linear interpolation.

 

VI.Ø

ALLOCATION OF LTI EQUITY AWARDSOther Changes to MYLTIP Design

Dividends. Consistent with previous MYLTIP programs, during the three-year performance period holders of 2021 MYLTIP Units are not entitled to receive full dividends on the 2021 MYLTIP Units. Instead, to support the units’ characterization as profits interests for tax purposes, the holders of the units are entitled to receive only a partial dividend on each unit equal to 10% of the dividend payable on a share of BXP common stock. Unlike prior MYLTIP programs, however, following the completion of the three-year performance period, BXP will also make a “catch-up” cash payment on the 2021 MYLTIP Units that are ultimately earned in an amount equal to the regular and special distributions, if any, declared during the performance period on BXP common stock, less the distributions actually paid to holders of 2021 MYLTIP Units during the performance period on all of the awarded 2021 MYLTIP Units.

Post-vesting Transfer Restrictions. Subject to the provisions on “Qualified Retirement” and the other terms of the award agreement, after the completion of the three-year performance period all earned MYLTIP Units shall be deemed “vested“, but may not be converted, redeemed, sold or otherwise transferred for one additional year after the end of the performance measurement period. Therefore, 100% of earned awards, if any, shall vest as of February 1, 2024, but may not be monetized until February 1, 2025.

Allocation of LTI Awards

2020 Performance Grants

The Committee approved LTI equity awards to NEOs for 20182020 performance as a mix of performance-based MYLTIP awards and time-based, full-value equity awards. The MYLTIP awards were denominated in a fixed number of LTIP units as of February 2, 2021, the date of initial grant. AtThe Committee maintained the directionsame allocation of performance-based equity as a percentage of total LTI equity for our CEO as in 2019 for 2020, so his allocation remained 55% performance-based and 45% time-based. For the other NEOs, the Committee maintained the allocation at 50% performance-based and 50% time-based.

In light of the Committee, FPL conducted a multi-year, backward-economic circumstances and forwarding-looking analysis of peer equity award pay mix withchallenges the objective of findingNEOs faced in 2020, including the appropriate allocation to maintain the focus and dedication of a talented management team, which,sudden shift in our case, has met or exceeded its goals as a whole. Based on the information received from FPL,priorities, the Committee determinedawarded the dollar values set forth below for performance-based and time-based equity awards to the NEOs in 2021 for performance in 2020. The Committee awarded Messrs. Thomas and Linde the same dollar value in LTI equity awards for 2020 as was awarded last year for 2019 performance, the result of which was an award of less than target for each, and awarded Mr. Ritchey his target LTI equity awards in acknowledgment of his continued leadership in the Washington, DC and Los Angeles regions. The Committee assessed Messrs. LaBelle and Koop’s performance in 2020 as strong and awarded each LTI equity that it would be advisable to maintain the allocationwas above target.

  Executive Total LTI Equity
Awards		  Total LTI
Equity Awards
as % of Target		 

Performance-
Based LTI

Equity

Awards

  % of Total
Equity
Awards		  Time-Based LTI
Equity Awards		  % of
Total
Equity
Awards		 

Owen D. Thomas

  $  9,050,000  98%        $  4,977,500   55%       $  4,072,500   45%     

Douglas T. Linde

  $  5,655,000  97%        $  2,827,500   50%       $  2,827,500   50%     

Raymond A. Ritchey

  $  4,410,000  100%        $  2,205,000   50%       $  2,205,000   50%     

Michael E. LaBelle

  $  2,189,000  110%        $  1,094,500   50%       $  1,094,500   50%     

Bryan J. Koop

  $  1,788,000  120%        $     894,000   50%       $     894,000   50%     

Total

  $23,092,000  100%        $11,998,500   52%       $11,093,500   48%     

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 II.  EXECUTIVE COMPENSATION PROGRAM

The performance-based portion of LTI equity awards for the NEOs of 50% performance-based and 50% time-based that is widely accepted2020 performance was granted in the marketform of 2021 MYLTIP awards, which have a three-year performance period (February 2, 2021 to February 1, 2024), and prevalent amongan additional year of post-vesting restrictions on transfer. The dollar values of the awards were converted into a fixed number of MYLTIP units on the initial grant date, and the number of units initially granted equals 200% of the target number of units, and it is the maximum number of units that may be earned. Following completion of the three-year performance period, the Committee will determine the final payout based on computations from our peers. independent valuation consultant for this plan, and if the number of units initially awarded exceeds the number of units ultimately earned, then the excess will be forfeited. The units determined to be earned shall vest 100% as of the final day of the performance period, but shall be subject to an additional one-year, no-sale holding period. Therefore, while the award of 2021 MYLTIP units is partially in recognition for performance in 2020, award recipients must continue to perform over the three-year term of the 2021 MYLTIP program in order to earn and vest in any of the MYLTIP units and must generally remain employed for the three years to earn the full amount. The aggregate target number of units for NEOs is approximately 137,688 LTIP units and an aggregate payout opportunity ranging from zero to a maximum of 275,376 LTIP units. The baseline share price for 2020 MYLTIP awards was $90.73 (the average closing price per share of our common stock on the NYSE for the five trading days prior to and including February 2, 2021).

The 2021 MYLTIP awards are generally amortized into earnings over the three-year plan period under the graded vesting method, unless accelerated in certain circumstances such as a “Qualified Retirement” as defined under “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards.” Under the Financial Accounting Standards Board’s Accounting Standards Codification 718 “Compensation – Stock Compensation” (“ASC Topic 718”), we expect that 2021 MYLTIP awards to NEOs will have an aggregate value of approximately $12.0 million.

2019 Performance Grants

The following table sets forth the dollar values of the performance-based and time-based equity awards granted to NEOs in February 2020 for 2018:performance in 2019:

 

Executive    

Performance-
Based LTI

Equity

Awards

     Time-Based LTI
Equity Awards		     

Total LTI Equity

Awards

   Total LTI
Equity Awards
as % of Total
Compensation		  

Total LTI Equity

Awards

 Performance-Based
LTI Equity  Awards		 % of Total
Equity Awards		 Time-Based LTI
Equity Awards		 % of Total
Equity Awards		 

Owen D. Thomas

    $4,375,000     $4,375,000     $8,750,000    70%   $  9,050,000   $  4,977,500   55%   $  4,072,500   45% 

Douglas T. Linde

    $2,697,500     $2,697,500     $5,395,000    65%   $  5,655,000   $  2,827,500   50%   $  2,827,500   50% 

Raymond A. Ritchey

    $2,100,000     $2,100,000     $4,200,000    60%   $  4,240,000   $  2,120,000   50%   $  2,120,000   50% 

Michael E. LaBelle

    $975,000     $975,000     $1,950,000    50%   $  1,945,000   $     972,500   50%   $     972,500   50% 

Bryan J. Koop

    $650,000     $650,000     $1,300,000    40%   $  1,370,000   $     685,000   50%   $     685,000   50% 
    

 

     

 

     

 

   

Total

    $10,797,500     $10,797,500     $21,595,000    62%   $22,260,000   $11,582,500   52%   $10,677,500   48% 

The performance-based portion of LTI equity awards for 20182019 performance was made by granting 2019granted in the form of 2020 MYLTIP awards, which have a three-year performance period (February 5, 20194, 2020 to February 4, 2022)3, 2023), and an additional year of time-based vesting. The dollar values of the awards were converted into a fixed number of MYLTIP units on the initial grant date, and the number of units initially granted equals 200% of the target number of units, and it is the maximum number of units that may be earned and equals 200% of the target number of units.earned. Following completion of the three-year performance period, the Committee will determine the final payout based on computations from our appraisal expertindependent valuation consultant for this plan, AON plc, and if athe number of units initially awarded exceeds the number of units ultimately earned, then the excess will be forfeited. Therefore, while the award of 20192020 MYLTIP units iswas partially in recognition for performance in 2018,2019, award recipients must continue to perform over the three-year term of the 20192020 MYLTIP program in order to earn and vest in any of the MYLTIP units. The total target for NEOs was approximately 88,316 LTIP units and an aggregate payout opportunity ranging from zeromust generally remain employed for the four years to a maximum of 176,632 LTIP units. The baseline share priceearn the full amount.

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7› COMPENSATION DISCUSSION AND ANALYSIS
 III.  DETERMINING EXECUTIVE COMPENSATION

III. DETERMINING EXECUTIVE COMPENSATION

›  PROCESS FOR DETERMINING EXECUTIVE COMPENSATION

Starting in 2020, and in response to shareholder feedback, our Committee established target total direct compensation opportunities for 2019 MYLTIP awards was $131.60 (the average closing price per shareeach of our common stockNEOs consisting of base salary, target annual cash incentive, and target long-term incentive grant value. When establishing target total direct compensation levels, the Committee considered a variety of factors, including:

industry and market conditions;

the Company’s financial and strategic performance, on both an absolute basis and versus competitors;

market compensation data among comparable companies;

individual executive past performance, future potential, roles and responsibilities, experience, retention risk, and succession planning;

total NEO compensation over time, both on an awarded basis and on a realized basis after forfeitures; and

current and evolving practices and trends among our peers and the NYSEmarket generally, especially in light of the impact of the COVID-19 pandemic on global and national economies, and other input received from FW Cook.

The Committee evaluated the pre-established performance goals under the Annual Incentive Plan to determine earned annual incentives for 2020 (refer to page 64). The Committee determined LTI equity grant values earned for 2020 (granted in 2021) with reference to the five trading days priortargets established at the beginning of the year (refer to and including February 5, 2019)page 68).

Under the Financial Accounting Standards Board’s Accounting Standards Codification 718 “Compensation – Stock Compensation” (“ASC Topic 718”), we expect that 2019 MYLTIP awards to NEOs will have an aggregate The ultimate earned value of approximately $10.8 million, which amount will generally be amortized into earnings over the four-year plan period under the graded vesting method. 2019 MYLTIP awards were made in the form of LTIP units that are subject to forfeiture to the extent they are not earned or do not become vested.

The time-based portion of LTI equity awards granted for 2018 performance to the NEOs other than Mr. Ritchey consisted of LTIP units or restricted shares of our common stock that vest ratably over a four-year period (25% per year). In the case of Mr. Ritchey, the time-based portion of his 2018 LTI equity award was fully vested upon issuance because he had attained the retirement age of 65. In addition,these LTI equity awards will become vested upon a Qualified Retirement, which generally means the

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VI.    ALLOCATION OF LTI EQUITY AWARDS

termination of the grantee’s employment on or after the date on which the sum of years of service plus age equals or exceeds 70 (subject to certain conditions, including that the grantee is at least 58 years old on the date of termination of employment). Pursuant to our Equity Award Grant Policy discussed below, time-based full-value equity awards were issued as of the close of business on February 1, 2019be based on the closing price per shareperformance of our common stock, onas well as performance versus the NYSE on that date of $131.18.relative and absolute TSR components under the 2021 MYLTIP.

›  COMPENSATION ADVISOR’S ROLE & BENCHMARKING PEER GROUP

VII.

BENCHMARKING PEER GROUP AND COMPENSATION ADVISOR’S ROLE

Compensation Advisor’s Role

The Committee monitors the effectiveness of our executive compensation program on an ongoing basis. For it to be effective, among other things, we believe it is necessary for compensation to be competitive with other large public real estate companies with which we compete for executive talent. The Committee uses industry peer group data as one tool in assessing and determining pay for our executive officers. Other REITs, however, both in the office sector and in other sectors, are not always comparable to us because of differences in underlying business fundamentals. Peer group data is intended to provide the Committee with insight across the peer group into overall market pay levels for each element of compensation and total target compensation of executive officers having similar titles and responsibilities to our NEOs, market trends, “best” governance practices, and overall industry performance. The median (50th percentile) serves as a reference point and indicator of competitive market trends and the Committee uses it as the starting point when setting our executive compensation. We believe this use of peer companyHowever, market data is consistent with how stockholders and proxy advisory firms use such data.one of many factors the Committee considers when setting target pay opportunities.

TheIn 2020, the Committee hasagain retained FPLFW Cook to serve as its advisor since 2012independent, third-party compensation consultant. FW Cook reports directly to the Committee and every yearre-assesses andre-affirmsdoes not provide services to management that are not under the independenceCommittee’s purview. A representative of FPL in connection with renewalFW Cook attends meetings of the engagement. The Committee, directed FPLas requested, and communicates with the Committee Chair and management between meetings. Consistent with its charter and as required by SEC rules and NYSE listing standards, prior to amongretaining FW Cook as its consultant, the Committee considered all factors relevant to FW Cook’s independence from management. FW Cook advises the Committee on the reasonableness of executive compensation levels in comparison with those of other things: (1) benchmarksimilarly situated companies, consults on the structure of our executive compensation againstprogram to optimally support our peersbusiness objectives and assist in developingadvises the Committee on executive compensation objectives,trends among REITs and the broader market.

Benchmarking Peer Group

FW Cook (1) advised the Committee that size, as measured by total capitalization, best depicts the scale, complexity and breadth of the Company’s operations, as well as the amount of capital and assets managed, and therefore is the most appropriate scope measure for peer company selection and (2) analyze trends in compensation inreviewed the marketplace generallypeer group for 2019 and among our peers specifically and (3) recommendrecommended that the components and amounts of compensation

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 III.  DETERMINING EXECUTIVE COMPENSATION

Committee maintain the same peer group for our top executive officers.

Following recommendations from FPL,2020. Based on that advice, the Committee selected the companies to be included in thesame peer group we use for benchmarking 2020 executive compensation. FPL’s recommendations were based on an annual review of the methodologies employed by sixteen of the REITs included in the S&P 500 Index. Based on these criteria, FPL recommended to the Committeecompensation that it update theused for 2019. That peer group used last year to remove three REITs – GGP, Inc., HCP, Inc. and The Macerich Company – and replace them with Essex Property Trust, Inc., Regency Centers Corporation, and UDR, Inc. FPL recommended the changes, and the Committee agreed, because FPL advisedconsists of sixteen publicly traded real estate companies that the three replacements are moreof comparable size to the Company in terms of total capitalization and assets, irrespective of property focus. In general, FPL felt that size, as measured by total capitalization rather than equity market capitalization, is the most relevant criterion because top executives are ultimately responsible for managing the entire organization and total capitalization best depicts scale, complexity and breadth of operations, as well as the amount of capital and assets managed. Notably, fourteen out of the sixteen members of this Benchmarking Peer Group also list uslisted Boston Properties as a peer company.

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VII.    BENCHMARKING PEER GROUP AND COMPENSATION ADVISOR’S ROLE

company in their 2020 proxy statements.

The following table provides the names and key information for each peer company:

 

       Number of
Employees(1)		 UPREIT
Market
Capitalization
(in millions)(2)		 Total
Capitalization
(in millions)(3)		 
Company  Sector  Location   

Total

Capitalization

(in millions)(1)

 

Alexandria Real Estate Equities, Inc.

 Office Pasadena, CA 386  $12,793  $18,888   Office   Pasadena, CA   $33,988 

American Tower Corporation (REIT)

 Specialty Boston, MA 5,026  $69,771  $92,499   Specialty   Boston, MA   $137,133 

AvalonBay Communities, Inc.

 Multifamily Arlington, VA 3,087  $24,109  $31,169   Multifamily   Arlington, VA   $30,132 

Digital Realty Trust, Inc.

 Specialty San Francisco, CA 1,530  $23,122  $35,797   Specialty   Austin, TX   $56,308 

Equity Residential

 Multifamily Chicago, IL 2,700  $25,302  $34,155   Multifamily   Chicago, IL   $31,307 

Essex Property Trust, Inc.

 Multifamily San Mateo, CA 1,826  $16,722  $22,490   Multifamily   San Mateo, CA   $22,547 

Host Hotels & Resorts, Inc.

 Hotel Bethesda, MD 184  $12,470  $16,379   Hotel   Bethesda, MD   $16,583 

Prologis, Inc.

 Industrial San Francisco, CA 1,617  $38,149  $52,145   Industrial   San Francisco, CA   $96,667 

Public Storage

 Self-Storage Glendale, CA 5,600  $35,293  $40,755   Self-Storage   Glendale, CA   $47,025 

Regency Centers Corporation

 Shopping Center Jacksonville, FL 446  $9,873  $13,630   Shopping Center   Jacksonville, FL   $11,952 

Simon Property Group, Inc.

 Regional Mall Indianapolis, IN 4,150  $59,775  $83,358   Regional Mall   Indianapolis, IN   $59,516 

SL Green Realty Corp.

 Office New York, NY 1,058  $6,944  $13,106   Office   New York, NY   $10,451 

UDR, Inc.

 Multifamily Highlands Ranch, CO 1,418  $11,890  $15,570   Multifamily   Highlands Ranch, CO   $17,564 

Ventas, Inc.

 Health Care Chicago, IL 500  $21,067  $31,870   Health Care   Chicago, IL   $30,811 

Vornado Realty Trust

 Office New York, NY 3,928  $12,557  $23,962   Office   New York, NY   $17,144 

Welltower Inc.

 Health Care Toledo, OH 384  $26,631  $42,025   Health Care   Toledo, OH   $42,188 

Median

    1,574   $22,095   $31,520         $31,059 

Average

    2,115   $25,404   $35,488         $41,332 

Boston Properties, Inc.

    760   $19,385   $32,304         $31,782 

Relative Percentile Rank

      30%-ile   44%-ile   55%-ile          55%-ile 

Source: S&P Dow Jones Indices,Market Intelligence, a Division of S&P Global. Data as of December 31, 2018.2020.

(1)

Represents the number of employees on a full-time equivalent basis.

(2)

Represents market value of outstanding common stock. May include the value of OP units, where available.

(3)

Total capitalization includes debt and the book value of any preferred stock.

FPL’sThe benchmarking review was based, in part, on information disclosed in the peer companies’ proxy statements filed in 20182020 (the latest year for which comprehensive data iswere publicly available). FPL also reviewed the 2018 Nareit Compensation Survey (which FPL conducts) and additional proprietary real estate compensation surveys conducted throughout the year by FPL for additional context. FPL’s review compared our executive pay practices to cash and

non-cash›  compensation awarded to executives in comparable positions at peer companies. FPL advised the Committee that the peer companies generally have compensation programs comparable to ours, with annual bonuses generally in the form of cash and annual long-term compensation generally in the form of equity with time-based vesting over three to five years with a combination of time-based and performance-based compensation.

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ROLE OF MANAGEMENT IN COMPENSATION DISCUSSION AND ANALYSISDECISIONS

VIII.

ROLE OF MANAGEMENT IN COMPENSATION DECISIONS

Our CEO and President make recommendations to the Committee on the compensation of the other executive officers, and our CEO makes recommendations to the Committee on the compensation of our President, in each case, based on their assessment of achievement of the Company’s strategicperformance versus corporate and tactical plans, executives’ individual performancegoals and a variety of other factors (e.g., compensation history, tenure, responsibilities, market data for competitive positions and retention concerns). The Committee considers these recommendations together with input from FPL. All final executive compensation decisions are made by the Committee.

 

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 IV.  OTHER COMPENSATION POLICIES

Double-Trigger Acceleration of Vesting of Equity Awards Upon a Change of Control

Time-basedIV. OTHER COMPENSATION POLICIES

›  DOUBLE-TRIGGER ACCELERATION OF VESTING OF EQUITY AWARDS UPON A CHANGE OF CONTROL

All time-based equity awards made in 2015 or laterafter 2014 include “double-trigger” vesting, meaning that, if there is a “change of control” and the awards are not otherwise cancelled in connection with the change of control transaction, then they only become fully vested if, within 24 months after the change of control, the executive’s employment is terminated by the Company or its successor without “cause” or the executive resigns for “good reason.” We believe that this policy regarding acceleration of vesting upon a change of control is in line with current best practice while also continuing to remove potential disincentives for executives to pursue a change of control transaction that would benefit stockholders. Although not required, the Committee decided to make the policy applicable tocertain senior officers, including our Chief Executive Officer, whoCEO, were entitled to single-trigger vesting under their employment agreements, the Committee requested, and those executives voluntarily agreed, to the change. The Committee believes that this demonstrates its and management’s responsiveness to stockholders and that the policy addresses two key objectives:

 

 • 

Aligning executives’ interests with stockholders’ interests:whenWhen a change of control may be imminent, it is important to ensure that executives have the same incentive asexecutives’ interests are aligned with stockholders to maximize stockholder value.

 

 • 

Minimizing conflicts of interest:double-triggerDouble-trigger vesting in the context of a potential change of control (1) reduces distraction and the risk that executives would leave the Company before a transaction is completed while also preventingand (2) prevents executives from receiving a windfall by compensating thembecause executives’ time-based equity vests only if their employment is terminated.

Clawback Policy›CLAWBACK POLICY

We have a formal “clawback” policy, which allows us to recoup from all executive officers and certain other specified officers’ incentive compensation paid on the basis of financial results that are subsequently restated. Under the policy, if we are required to prepare an accounting restatement due to materialnon-compliance with any financial reporting requirement, the Committee may require those officers to repay or forfeit “excess compensation,” which includes annual cash bonus and long-term incentive compensation in any form (including stock options, restricted stock and LTIP units, whether time-based or performance-based) received by them during the three-year period preceding the publication of the restated financial statements, that the Committee determines was in excess of the amount that they would have received had such compensation been determined based on the financial results reported in the restated financial statements.

The Committee may take into account any factors it deems reasonable in determining (1) whether to seek recoupment of previously paid excess compensation, (2) the amount of excess compensation to recoup from each individual officer, which may reflect whether the Committee concluded that he or she engaged in wrongdoing or committed grossly negligent acts or omissions, and (3) the form of the compensation to be recouped. The Committee intends to periodically review this policy and, as

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appropriate, conform it to any applicable final rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

›Gross-UpGROSS-UP for Excess Parachute PaymentsFOR EXCESS PARACHUTE PAYMENTS

In January 2014, we adopted a formal “no taxgross-up” policy with respect to our senior executives. Pursuant to this policy, we will not make or promise to make any taxgross-up payment to any senior executive in the future, other than payments in accordance with obligations existing at the time of the policy’s adoption or pursuant to arrangements applicable to our management employees generally, such as a relocation policy. All of the employment agreements that we have entered into with new senior executives since 2013, including our original and newcurrent employment agreements with our CEO, Mr. Thomas, do not provide for taxgross-up payments and, accordingly,payments. Accordingly, this policy representsformalized the formalization of the Committee’spre-existing then-existing practice with respect to taxgross-ups. In addition, our Senior Executive Severance Plan and Executive Severance Plan provide that executives who become eligible to participate in these plans in the future will not be entitled to any taxgross-up payments under the plans.

Policy Concerning Hedging and Pledging Transactions›POLICY CONCERNING HEDGING AND PLEDGING TRANSACTIONS

We have a policy prohibitingprohibit all employees, including our executive officers, and directors from engaging in short sales and derivative transactions, purchasing our securities on margin and pledging our securities as collateral for a loan. Transactions such as

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 COMPENSATION DISCUSSION AND ANALYSIS
 IV.  OTHER COMPENSATION POLICIES

purchases and sales of publicly traded put and call options, short sales, hedging transactions such as prepaid variable forwards, equity swaps and collars create a heightened compliance risk or could create the appearance of misalignment between management and stockholders. In addition, securities held in a margin account or pledged as collateral may be sold without consent if the owner fails to meet a margin call or defaults on the loan, thus creating the risk that a sale may occur at a time when an officeremployee or director is aware of material,non-public information or otherwise is not permitted to trade in Company securities. Our Board may grant a waiver from the policy on acase-by-case basis where an executive officer or director who wishes to pledge Company securities as collateral for a loan (not including margin debt) clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. No such exceptions have ever been granted.

Mandatory Minimum Equity Ownership Policy for Senior Executives›MANDATORY MINIMUM EQUITY OWNERSHIP POLICY FOR SENIOR EXECUTIVES

To align senior management with our stockholders and demonstrate to the investment community that our senior management is personally committed to our continued financial success, we have a policy that requires the following officer positions to maintain equity ownership equal to a multiple of their base salaries as follows:

 

Title  Multiple of
Base Salary

Chief Executive Officer

  

6.0x

President

  

5.0x

Senior Executive Vice President

  

5.0x

Executive Vice President, Chief Financial Officer

  

3.0x

Executive Vice President, Regional Manager

  

2.0x

Senior Vice President

1.5x

 CEO Mandatory Minimum      1.5x 

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CEO Actual Stock Ownership  
6x Base Salary

35x Base Salary

If an executive’s ownership falls below the applicable guideline due solely to a decline in the value of our common stock, the executive will not be required to acquire additional shares to meet the

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guideline, but he or she will be required to retain all shares then held (except for shares withheld to pay withholding taxes or the exercise price of options) until such time as the executive again attains the target multiple.

Employees who are hired or promoted to senior management positions will have a five-year period beginning on January 1 of the year following their appointment to achieve this ownership requirement. Exceptions may be made for significant extenuating personal circumstances. The types of securities that will be counted toward the equity ownership requirement include shares of our common stock, common units and LTIP units (excluding performance-based LTIP units until and unless they have been earned), in each case both vested and unvested, as well as shares acquired and held through our stock purchase and dividend reinvestment plans. Stock options will not be counted.

›LTIP UnitsUNITS

Since 2003, we have used a class of partnership interests in our Operating Partnership, called long termlong-term incentive units, or LTIP units, as a form of equity-based award for annual long-term incentive equity compensation. LTIP units are designed to qualify as “profits interests” in the Operating Partnership for federal income tax purposes, meaning that initially they are not economically equivalent in value to a share of our common stock, but over time can increase in value toone-for-one parity with common stock by operation of special tax rules applicable to profits interests. LTIP units are designed to offer executives a long-term incentive comparable to restricted stock, while allowing them to enjoy a more favorable income tax treatment. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under our incentive equity plan. The key difference between LTIP units and restricted stock is that at the time of award, LTIP units do not have full economic parity with common units, but can achieve such parity over time upon the occurrence of specified events in accordance with partnership tax rules. Until and unless such parity is reached, the value that an executive will realize for a given number of vested LTIP units is less than the value of an equal number of shares of our common stock.

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 IV.  OTHER COMPENSATION POLICIES

Under the 2017, 2018 and 2019 MYLTIP awards, during the performance period holders of LTIP units will receive distributions equal toone-tenth (1 / (1/10th) of the amount of regular quarterly distributions paid on a common unit, but will not receive any special distributions. After the end of the performance period, holders of earned LTIP units, both vested and unvested, will be entitled to receive distributions in an amount per LTIP unit equal to the distributions, both regular and special, payable on a common unit (which equal per share dividends (both regular and special) on our common stock). Beginning with the 2021 MYLTIP, following the completion of the three-year performance period, BXP will also make a “catch-up” cash payment on the 2021 MYLTIP Units that are ultimately earned in an amount equal to the regular and special distributions, if any, declared during the performance period on BXP common stock, less the distributions actually paid to holders of 2021 MYLTIP Units during the performance period on all of the awarded 2021 MYLTIP Units. LTIP units awarded with time-based vesting conditions only, both vested and unvested, are entitled to receive distributions in an amount per LTIP unit equal to the distributions, both regular and special, payable on a common unit.

Employment Agreements›  EMPLOYMENT AGREEMENTS

We have employment agreements with each of our NEOs. (See “Compensation of Executive Officers – Potential Payments Upon Termination or Change in ControlEmployment Agreements” beginning on page 80)) For NEOs other than Mr. Thomas, these agreements provide for a certain level of severance, generally the sum of base salary plus the prior year’s cash bonus, 12 additional months of vesting in equity-based awards and participation in our health plan for up to 12 months, in the event of a termination of employment by us without cause or by the executives for good reason. The employment agreement with Mr. Thomas provides for stipulated severance benefits in lieu of participation in severance plans for which other NEOs are eligible. In return, each executiveNEO agrees, during the term of employment and for one year thereafter, not to compete with us, solicit our tenants or employees or interfere with our relationship with our tenants, suppliers, contractors, lenders, employees or with any governmental agency. We

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believe that these agreements are fair to the executivesNEOs and to our stockholders and, because the severance benefits are negotiated at the time of the agreement, avoid the need for protracted negotiations in the event of termination.

Change in Control Arrangements›  CHANGE IN CONTROL ARRANGEMENTS

We have an employment agreement with Mr. Thomas that provides him with cash severance and certain benefits in the event of his termination under certain circumstances within 24 months following a change in control. Although Mr. Thomas was entitled to “single-trigger” vesting upon a change in control under his original employment agreement, he has agreed to be subject to the “double-trigger” vesting policy adopted for all time-based LTI equity awards made in 2015 or later.after 2014. We also have two change in control severance plans, one for our President, Senior Executive Vice President and Executive Vice Presidents, and the other for our Senior Vice Presidents and those Vice Presidents with ten (10) or more years of tenure with us. These plans also provide cash severance and certain benefits in the event of termination of employment under certain circumstances within 24 months following a change in control. The two change in control severance plans are “double trigger” arrangements, providing severance benefits only upon involuntary termination or constructive termination of the executive officer following a change in control. (See “Compensation of Executive Officers – Potential Payments Upon Termination or Change in Control” beginning on page 80)) Officers who became eligible under the two severance plans described above prior to their amendment in January 2014 upon adoption by the Committee of a formal “no taxgross-up” policy are entitled to agross-up payment in the event they become subject to the 20% golden parachute excise tax. This was market practice when these plans were adopted in 1998. Mr. Thomas is not entitled to a taxgross-up payment under his employment agreement.

In our experience, change in control cash severance protection for executive officers is common in the REIT industry. Our Committee believes it is fair to provide severance protection in the event of an involuntary termination or constructive termination of employment following a change in control because very often senior manager positions are eliminated following a change in control. ByThe Committee believes that agreeing up frontin advance to provide severance benefits in the event of an involuntary termination or constructive termination of employment following a change in control the Committee believes we canhelps reinforce and encourage the continued attention and dedication of senior management to their assigned duties without distraction in the face of an actual or threatened change in control and helps ensure that management is motivated to negotiate the best consideration for our stockholders. For treatment of equity awards in the event of a change in control, please see“– Double-Trigger Acceleration of Vesting of Equity Awards upon a Change of Control”above.

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 IV.  OTHER COMPENSATION POLICIES

Perquisites›  PERQUISITES

We provide Messrs. Linde, Ritchey and Koop a monthly car allowance of $750 and we provide all of our executive officers a designated parking space. Mr. Thomas’ employment agreement provides that he is entitled to the use of a Company-owned or leased vehicle, but Mr. Thomas has declined this benefit at all times since 2013. Apart from these arrangements, we do not provide any other perquisites to our executive officers.

Deferred Compensation Plan›DEFERRED COMPENSATION PLAN

We offer a deferred compensation plan that enablespermits our executives to defer up to 20% of their base salaries and bonuses. The amounts deferred are not included in the executive’s current taxable income and, therefore, are not currently deductible by us. The executives select from a limited number of mutual funds, which serve as measurement funds, and the deferred amounts are increased or

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decreased to correspond to the market value of the mutual fund investments. Because the measurement funds are publicly traded securities, we do not consider any of the earnings credited under the deferred compensation plan to be “above market.” We do not provide any matching contribution to any executive officer who participates in this plan, other than a limited amount to make up for any loss of matching contributions under our Section 401(k) plan. We have made this plan available to our executives in order to ensure that our benefits are competitive. See “Compensation of Executive Officers – Nonqualified Deferred Compensation in 2020.” beginning on page 77.

Retirement and Health and Welfare Benefits›RETIREMENT AND HEALTH AND WELFARE BENEFITS

We have never had a traditional or defined benefit pension plan. We maintain a Section 401(k) retirement plan in which all salaried employees can participate, which provides a Company matching contribution of 200% of the first 3% of compensation contributed to the plan (utilizing earnings not in excess of an amount established by the Internal Revenue Service ($275,000285,000 in 2018)2020)). Other benefits, such as health and dental plans, group term life insurance, short- and long-term disability insurance and travel accident insurance, are also available generally to all of our salaried employees. Our executives participate in Company-sponsored benefit programs available broadly to generally all of our salaried employees, including our employee stock purchase plan and our Section 401(k) plan.

Deductibility of Executive Compensation›DEDUCTIBILITY OF EXECUTIVE COMPENSATION

The Committee’s policy is to consider the tax treatment of compensation paid to our executive officers while simultaneously seeking to provide our executives with appropriate rewards for their performance. Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), a publicly-held corporation may not deduct compensation of more than $1 million paid to any “covered employee” unless certain exceptions are met primarily related to performance-based compensation. Substantially all of the services rendered by our executive officers were performed on behalf of our operating partnership or its subsidiaries. The Internal Revenue Service has issued a series of private letter rulings which indicate that compensation paid by an operating partnership to executive officers of a REIT that serves as its general partner is not subject to limitation under Section 162(m) to the extent such compensation is attributable to services rendered to the operating partnership. We have not obtained a ruling on this issue, but have no reason to believe that the same conclusion would not apply to us.employee.” To the extent that compensation paid to our executive officers is subject to and does not qualify for deduction under Section 162(m), our Committee is prepared to exceed the limit on deductibility under Section 162(m) to the extent necessary to establish compensation programs that we believe provide appropriate incentives and reward our executives relative to their performance. Because we qualify as a REIT under the Code, we generally distribute at least 100% of our net taxable income each year and therefore do not pay federal income tax. As a result, and based on the level of cash compensation paid to our executive officers, the possible loss of a federal tax deduction would not be expected to have a material impact on us.

Accounting for Stock-Based Compensation›ACCOUNTING FOR STOCK-BASED COMPENSATION

We account for stock-based awards in accordance with the requirements of ASC Topic 718.

 

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7› COMPENSATION DISCUSSION AND ANALYSIS
 IV.  OTHER COMPENSATION POLICIES

 

Assessment of Compensation-Related Risks›ASSESSMENT OF COMPENSATION-RELATED RISKS

The Committee is responsible for overseeing the risks relating to compensation policies and practices affecting senior management on an ongoing basis. The Committee believes that, because of the following factors, there is a low likelihood that our compensation policies and practices would encourage excessive risk-taking:

 

Risk Mitigation Factors

•

Risk Mitigation Factors

•our policies and programs are generally intended to encourage executives to focus on long- term objectives;

 

•

overall compensation is maintained at levels that are competitive with the market;

 

•

the mix of compensation rewards long-term performance with a significantat-risk component;

 

•

variable pay is based on the achievement of a variety of operational, capital  annual cash bonuses for executives are linked to performance against goals in three categories with specific weightings and management goals with the Committee having discretion to determine how much each measure should impact pay, thereby mitigating the risk that any one measure can dominate the payouts based on a formula;executive has target and maximum bonus opportunities;

 

•

except for those employees who satisfy the conditions for Qualified Retirement, all equity awards are subject to multi-year vesting (see “– Potential Payments Upon Termination or Change in Control – Time-BasedRetirement Eligibility Provisions for LTI Equity Awards Agreements – Qualified Retirement” on page 83));

 

•

executive officers are subject to minimum stock ownership guidelines and limitations on trading in our securities, including prohibitions on hedging and pledging; and

 

•

a clawback policy permits the Company to recoup compensation paid on the basis of financial results that are subsequently restated.

Equity Award Grant Policy›EQUITY AWARD GRANT POLICY

We have a policy that annual grants to employees are approved by the Committee in late January or around the third or fourth weekearly February of January each year, with an effective grant date immediately following the closing of the NYSE on the second trading day after we publicly release financial results for the prior year. We believe this policy provides the necessary certainty and transparency for both employees and stockholders, while allowing the Committee desired flexibility.

Our Committee approves equity awards in dollar values. To the extent these awards are paid in the form of full-value awards (either shares of restricted stock and/or LTIP units), the number of shares/units granted is calculated by dividing the dollar value of the approved awards by the closing market price on the NYSE of a share of our common stock on the effective date of grant. To the extent these awards are made in the form of stock options, the number of shares underlying option grants is determined by dividing the dollar value of the approved awards by the grant-date fair value of aten-yearthe option, with the exercise price equal to the closing market price on the NYSE of a share of our common stock on the effective date of grant, as calculated by an independent valuation expert in accordance with ASC Topic 718 using assumptions approved by the Committee.. The Equity Award Grant Policy does not apply to performance-based equity awards such as the MYLTIP awards because they are not “full-value” awards upon issuance and their value depends on our future TSR performance; accordingly,of the different considerations that apply to the granting of such awards. For example, consistent with our past practice for performance- basedwhen granting performance-based equity awards, the Committee determined that the 2021 MYLTIP baseline share price, from which TSR performance is measured, should be based on the average closing stock price for the five trading days prior to and including the effective date of grant.

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee of Boston Properties has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Submitted by the Compensation Committee:

Carol B. Einiger, Chair

Kelly A. Ayotte

Bruce W. Duncan

David A. Twardock

8› COMPENSATION OF EXECUTIVE OFFICERS

 

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SUMMARY COMPENSATION TABLE

The following table shows the compensation for each of our NEOs in accordance with Item 402(c) of RegulationS-K.

 

Name and

Principal Position

 Year 

Salary

($)

 

Bonus

($)(1)

 

Stock

Awards

($)(2)

 

All Other

Compensation

($)(6)

 

Total

($)

  Year 

Salary

($)

 

Bonus

($)(1)

 

Stock

Awards

($)(2)

 Non-Equity
Incentive Plan
Compensation
($)(6)		 

All Other

Compensation

($)(7)

 

Total

($)(8)

 

Owen D. Thomas

Chief Executive Officer

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

875,000

 

 

 

 

 

 

 

 

 

2,875,000

 

 

 

 

 

 

 

 

 

7,927,786

 

 

(3) 

 

 

 

 

 

 

17,160

 

 

 

 

 

 

 

 

 

11,694,946

 

 

 

 

 2020  900,000  —  8,644,379(3)  1,175,000 17,910 10,737,289 
 

 

2017

 

 

 

  

 

875,000

 

 

 

  

 

2,425,000

 

 

 

  

 

6,745,617

 

(4) 

 

  

 

16,680

 

 

 

  

 

10,062,297

 

 

 

  2019  898,077 2,550,000 8,452,063(4)   —  17,460 11,917,600 
 

 

2016

 

 

 

  

 

867,308

 

 

 

  

 

2,558,333

 

 

 

  

 

6,560,000

 

(5) 

 

  

 

16,380

 

 

 

  

 

10,002,021

 

 

 

  2018  875,000 2,875,000 7,927,786(5)   —  17,160 11,694,946 

Douglas T. Linde

President

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

725,000

 

 

 

 

 

 

 

 

 

2,180,000

 

 

 

 

 

 

 

 

 

5,163,416

 

 

(3) 

 

 

 

 

 

 

34,380

 

 

 

 

 

 

 

 

 

8,102,796

 

 

 

 

 2020  750,000  —  5,373,381(3)  950,000  35,310 7,108,691 
 

 

2017

 

 

 

  

 

725,000

 

 

 

  

 

1,935,000

 

 

 

  

 

4,777,500

 

(4) 

 

  

 

33,600

 

 

 

  

 

7,471,100

 

 

 

  2019  748,077 2,095,000 5,211,300(4)   —  34,680 8,089,057 
 

 

2016

 

 

 

  

 

724,231

 

 

 

  

 

1,847,500

 

 

 

  

 

4,605,120

 

(5) 

 

  

 

33,300

 

 

 

  

 

7,210,151

 

 

 

  2018  725,000 2,180,000 5,163,416(5)   —  34,380 8,102,796 

Raymond A. Ritchey

Senior Executive Vice

President

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

720,000

 

 

 

 

 

 

 

 

 

2,080,000

 

 

 

 

 

 

 

 

 

4,278,466

 

 

(3) 

 

 

 

 

 

 

33,576

 

 

 

 

 

 

 

 

 

7,112,042

 

 

 

 

 2020  740,000  —  4,028,000(3)  1,103,850  34,326 5,906,176 
 

 

2017

 

 

 

  

 

720,000

 

 

 

  

 

2,080,000

 

 

 

  

 

4,077,125

 

(4) 

 

  

 

33,096

 

 

 

  

 

6,910,221

 

 

 

  2019  738,462 1,820,000 3,990,000(4)   —  33,876 6,582,338 
 

 

2016

 

 

 

  

 

719,231

 

 

 

  

 

1,555,000

 

 

 

  

 

3,915,844

 

(5) 

 

  

 

32,796

 

 

 

  

 

6,222,871

 

 

 

  2018  720,000 2,080,000 4,278,466(5)   —  33,576 7,112,042 

Michael E. LaBelle

Executive Vice President,

Chief Financial Officer and Treasurer

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

500,000

 

 

 

 

 

 

 

 

 

1,450,000

 

 

 

 

 

 

 

 

 

1,973,150

 

 

(3) 

 

 

 

 

 

 

25,380

 

 

 

 

 

 

 

 

 

3,948,530

 

 

 

 

 2020  510,000  —  1,848,139(3)  937,500  26,310 3,321,949 
 

 

2017

 

 

 

  

 

500,000

 

 

 

  

 

1,325,000

 

 

 

  

 

2,100,000

 

(4) 

 

  

 

24,600

 

 

 

  

 

3,949,600

 

 

 

  2019  509,231 1,295,000 1,916,801(4)   —  25,680 3,746,712 
 

 

2016

 

 

 

  

 

499,231

 

 

 

  

 

900,000

 

 

 

  

 

1,929,312

 

(5) 

 

  

 

24,300

 

 

 

  

 

3,352,843

 

 

 

  2018  500,000 1,450,000 1,973,150(5)   —  25,380 3,948,530 

Bryan J. Koop

Executive Vice President,

Boston Region

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

400,000

 

 

 

 

 

 

 

 

 

1,550,000

 

 

 

 

 

 

 

 

 

1,257,523

 

 

(3) 

 

 

 

 

 

 

34,380

 

 

 

 

 

 

 

 

 

3,241,903

 

 

 

 

 2020  410,000  —  1,301,500(3)  625,000  35,310 2,371,810 
 

 

2017

 

 

 

  

 

400,000

 

 

 

  

 

1,280,000

 

 

 

  

 

1,316,874

 

(4) 

 

  

 

33,600

 

 

 

  

 

3,030,474

 

 

 

  2019  409,231 1,370,000 1,235,000(4)   —  34,680 3,048,911 
 

 

2016

 

 

 

  

 

399,231

 

 

 

  

 

835,000

 

 

 

  

 

1,295,910

 

(5) 

 

  

 

33,300

 

 

 

  

 

2,563,441

 

 

 

  2018  400,000 1,550,000 1,257,523(5)   —  34,380 3,241,903 

 

(1)

Represent cash bonuses paid to the NEOs in recognition of performance in the year reported. Such bonuses arewere paid in the subsequent year (e.g., the bonuses paid in recognition of performance in 20182019 were paid in 2019)2020).

 

(2)

A discussion of the assumptions used in calculating these values can be found in Note 16 to our 20182020 audited financial statements beginning on page 175178 of our annual reportAnnual Report on Form10-K for the year ended December 31, 20182020 included in the annual report that accompanied this proxy statement.

 

(3)

Represents the aggregate grant date fair value of time-based restricted common stock and LTIP unit awards and 20182020 MYLTIP awards granted in 2018,2020, determined in accordance with ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. The following table sets forth (a) the grant date fair values for the time-based restricted common stock and LTIP unit awards, are as follows: Mr. Thomas – $3,588,786; Mr. Linde – $2,302,416; Mr. Ritchey – $2,178,466; Mr. LaBelle – $1,060,650; and Mr. Koop – $697,523. The(b) the grant date fair values for the 20182020 MYLTIP awards based upon the probable outcome of the performance conditions as of the grant date for the awards are as follows: Mr. Thomas – $4,339,000; Mr. Linde – $2,861,000; Mr. Ritchey – $2,100,000; Mr. LaBelle – $912,500; and Mr. Koop – $560,000. The(c) the maximum values of the 20182020 MYLTIP awards as of the date of grant, assuming that the highest levellevels of performance conditions is achieved, are as follows: Mr. Thomas – $10,582,927; Mr. Linde – $6,978,049; Mr. Ritchey – $5,121,951; Mr. LaBelle – $2,225,610; and Mr. Koop – $1,365,854.achieved. To have value, the 20182020 MYLTIP awards require the Company to achieve relative total stockholder return thresholds (subject to limited absolute performance modifiers).thresholds. See“Compensation Discussion and Analysis – IV. Performance-BasedII. Executive Compensation Program – LTI Equity Awards; Three-Year TSR Drives Actual Earned Pay”Compensation” beginning on page 55.65.

NEO  Time-Based Awards Grant
Date Value		   2020 MYLTIP Awards
Grant Date Value		   2020 MYLTIP Awards
Maximum Value		 
Mr. Thomas  $3,666,879  $4,977,500  $10,643,375
Mr. Linde  $2,545,881  $2,827,500  $6,046,077
Mr. Ritchey  $1,908,000  $2,120,000  $4,533,257
Mr. LaBelle  $875,639  $972,500  $2,079,496
Mr. Koop  $616,500  $685,000  $1,464,682

 

(4)

Represents the grant date fair value of time-based restricted common stock and LTIP unit awards and 20172019 MYLTIP awards granted in 2017,2019, determined in accordance with ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions.

 

(5)

Represents the grant date fair value of time-based restricted common stock and LTIP unit awards and 20162018 MYLTIP awards granted in 2016,2018, determined in accordance with ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions.

 

 

70    BOSTON PROPERTIES, INC.  |2019
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77

COMPENSATION OF EXECUTIVE OFFICERS

8› COMPENSATION OF EXECUTIVE OFFICERS

 

(6)

Represents amounts earned under the 2020 Annual Incentive Plan paid in 2021 for performance in 2020. See “Compensation Discussion and Analysis – II. Executive Compensation Program – Cash Compensation” beginning on page 56.

(7)

The table below shows the components of “All Other Compensation” for 2018,2020, which include the life insurance premiums paid by usthe Company for group term life insurance, our match for each individual who made 401(k) contributions, the car allowances provided to Messrs. Linde, Ritchey and Koop and the costs to the Company of providing parking spaces to Messrs. Linde, Ritchey, LaBelle and Koop. The amounts shown for car allowances in the table below reflect the aggregate cost to the Company without deducting costs attributable to business use. The components of “All Other Compensation” for 20162018 and 20172019 for each of the NEOs were reported in our 20172019 and 20182020 proxy statements, respectively.

 

Name  

Life

Insurance

($)

   

401(k)

Company

Match ($)

   

Car

Allowance

($)

   

Parking

($)

   

Total

($)

 
NEO  

Life

Insurance

   

401(k)

Company

Match

   

Car

Allowance

   

Parking

   

Total

 

Mr. Thomas

  

 

660

 

  

 

16,500

 

  

 

—

 

  

 

—

 

  

 

17,160

 

  $810   $17,100  $—   $—   $17,910 

Mr. Linde

  

 

660

 

  

 

16,500

 

  

 

9,000

 

  

 

8,220

 

  

 

34,380

 

  $810   $17,100  $9,000   $8,400   $35,310 

Mr. Ritchey

  

 

660

 

  

 

16,500

 

  

 

9,000

 

  

 

7,416

 

  

 

33,576

 

  $810   $17,100  $9,000   $7,416   $34,326 

Mr. LaBelle

  

 

660

 

  

 

16,500

 

  

 

—

 

  

 

8,220

 

  

 

25,380

 

  $810   $17,100  $—   $8,400   $26,310 

Mr. Koop

  

 

660

 

  

 

16,500

 

  

 

9,000

 

  

 

8,220

 

  

 

34,380

 

  $810   $17,100  $9,000   $8,400   $35,310 

 

(8)

The amount shown in the “Total” column for each NEO equals the sum of all columns of the Summary Compensation Table.

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    71

COMPENSATION OF EXECUTIVE OFFICERS

2018 GRANTS OF PLAN-BASED AWARDS IN 2020

The following table provides information about the awards granted to our NEOs during the year ended December 31, 2018.2020.

 

    

Date of

Compensation

Committee

Approval (1)

  Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards		 Estimated Future Payouts
Under Equity
Incentive Plan Awards		  All Other
Stock Awards:
Number of
Shares of
Stock or
Units
(#)(4)		 

Grant Date
Fair Value

of Stock
and Option
Awards
($)(5)

 
Name Grant Date 

Date of

Compensation

Committee

Approval(1)

  

Estimated Future Payouts

Under Equity

Incentive Plan Awards

  All Other
Stock Awards:
Number of
Shares of
Stock or
Units
(#)(3)		 Grant Date
Fair Value of
Stock and
Option
Awards
($)(4)		  Grant Date 

Threshold

($)(2)

 

Target

($)(2)

 Maximum
($)(2)		 

Threshold

(#)(3)

 

Target

(#)(3)

 

Maximum

(#)(3)

 

Threshold

($)(2)

 

Target

($)(2)

 

Maximum

($)(2)

 

Owen D. Thomas

 

 

2/2/2018

 

 

 

1/22/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

32,260

 

 

 

3,588,786

 

  —  1/22/2020  1,175,000 2,350,000 3,525,000  —   —   —   —   — 

 

2/6/2018

 

 

 

1/22/2018

 

 

 

0

 

 

 

5,291,463

 

 

 

10,582,927

 

 

 

—

 

 

 

4,339,000

 

 1/31/2020  1/22/2020   —   —   —   —   —   —  28,409 3,666,879
 2/4/2020  1/22/2020   —   —   —   —  36,813 73,626  —  4,977,500

Douglas T. Linde

 

 

2/2/2018

 

 

 

1/22/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20,697

 

 

 

2,302,416

 

  —  1/22/2020  950,000 1,900,000 2,850,000  —   —   —   —   — 

 

2/6/2018

 

 

 

1/22/2018

 

 

 

0

 

 

 

3,489,024

 

 

 

6,978,049

 

 

 

—

 

 

 

2,861,000

 

 1/31/2020  1/22/2020   —   —   —   —   —   —  19,724 2,545,881
 2/4/2020  1/22/2020   —   —   —   —  20,912 41,824  —  2,827,500

Raymond A. Ritchey

 

 

2/2/2018

 

 

 

1/22/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,596

 

 

 

1,889,982

 

  —  1/22/2020  825,000 1,650,000 2,475,000  —   —   —   —   — 

 

2/6/2018

 

 

 

1/22/2018

 

 

 

0

 

 

 

2,560,976

 

 

 

5,121,951

 

 

 

—

 

 

 

2,100,000

 

 

2/6/2018

 

 

 

2/6/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,679

 

 

 

288,484

 

 1/31/2020  1/22/2020   —   —   —   —   —   —  14,788 1,908,000
 2/4/2020  1/22/2020   —   —   —   —  15,679 31,359  —  2,120,000

Michael E. LaBelle

 

 

2/2/2018

 

 

 

1/22/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,646

 

 

 

850,589

 

  —  1/22/2020  625,000 1,250,000 1,875,000  —   —   —   —   — 

 

2/6/2018

 

 

 

1/22/2018

 

 

 

0

 

 

 

1,112,805

 

 

 

2,225,610

 

 

 

—

 

 

 

912,500

 

 

2/6/2018

 

 

 

2/6/2018

 

       

 

1,951

 

 

 

210,061

 

 1/31/2020  1/22/2020   —   —   —   —   —   —  6,784 875,639
 2/4/2020  1/22/2020   —   —   —   —  7,192 14,385  —  972,500

Bryan J. Koop

 

 

2/2/2018

 

 

 

1/22/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,692

 

 

 

522,005

 

  —  1/22/2020  625,000 1,250,000 1,875,000  —   —   —   —   — 

 

2/6/2018

 

 

 

1/22/2018

 

 

 

0

 

 

 

682,927

 

 

 

1,365,854

 

 

 

—

 

 

 

560,000

 

 

2/6/2018

 

 

 

2/6/2018

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,630

 

 

 

175,518

 

 1/31/2020  1/22/2020   —   —   —   —   —   —  4,778 616,500
 2/4/2020  1/22/2020   —   —   —   —  5,066 10,132  —  685,000

 

(1)

For a discussion of the Company’s policy with respect to the effective grant dates for annual equity-based awards, see “Compensation Discussion and Analysis – IX.IV. Other Compensation Policies – Equity Award Grant Policy” beginning on page 68.76.

 

(2)

Represents 2018the potential payout at threshold, target and maximum for 2020 performance under the 2020 Annual Incentive Plan, as described under “Compensation Discussion and Analysis – II. Executive Compensation Program – Cash Compensation.” The actual bonuses received under the 2020 Annual Incentive Plan by each NEO are reported in the Summary Compensation Table on page 77 in the column “Non-Equity Incentive Compensation.”

(3)

Represents 2020 MYLTIP awards for each NEO. Performance-based vesting of 20182020 MYLTIP awards will be measured on the basis of ourBXP’s annualized, compounded TSR over a three-year measurement period ending February 5, 20213, 2023 relative to the annualized, compounded total return of (i) the C&S Index (50% weight) and (ii) theFTSE Nareit Office Index adjusted(adjusted to include Vornado Realty Trust (50% weight)Trust). Amounts ultimately earned under the 2018See “Compensation Discussion and Analysis – II. Executive Compensation Program – LTI Equity Compensation – 2020 MYLTIP awards may range from zero to the maximum amount set forth in the table depending on our TSR relative to the two indices. Levels of payout opportunity range from zero (for relative TSR performance that is 1,000 basis points or more below the index) to a maximum of 200% of target value (for relative TSR performance that is 1,000 basis points or more greater than the index), with linear interpolation between-1,000 and +1,000 basis points. Earned awards measured on the basis of relative TSR performance are subject to absolute TSR modifiers that (a) reduce the level of earned awards by 20% if our annualized TSR is less than 0%, and (b) cause awards to be earned at “threshold” (50% of target value) if our annualized TSR is greater than 12%, even if based on relative TSR alone no awards would be earned. Any 2018 MYLTIP awards ultimately earned based on performance will vest 50% on February 5, 2021 and 50% on February 5, 2022, subject to exceptions discussed under “– Potential Payments Upon Termination or Change in Control” beginning on page 80. Distributions payable on 2018 MYLTIP awards equalone-tenth (1/10th) of the regular quarterly distributions on common units of our Operating Partnership (and no amounts are payable on special distributions) prior to being earned..”

 

(3)

78

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8› COMPENSATION OF EXECUTIVE OFFICERS

(4)

Stock awards were made in the form of shares of restricted common stock and/or LTIP units at the election of each NEO. Each NEO elected to receive all LTIP units. LTIP units were awarded under the Boston Properties, Inc. 2012 Stock Option and Incentive Plan (the “2012 Plan”) by the Compensation Committee. Dividends are payable on restricted common stock and distributions are payable on the LTIP units to the same extent and on the same date that dividends and distributions are paid on Boston Properties common stock and common units of our Operating Partnership, respectively. Grantees of restricted common stock pay $0.01 per share and grantees of LTIP units pay $0.25 per unit. The awards generally are scheduled to vest over a four-year period with 25% vesting on January 15 of each year beginning January 15, 2019,2021, based on continued employment through such date, subject to acceleration under certain circumstances. When anAn employee attainswho had attained age 65 or attainsattained age 62 with 20 years of service with

72    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

COMPENSATION OF EXECUTIVE OFFICERS

us the employee becomesprior to February 1, 2019 became fully vested in all time-based LTI equity awards granted on February 2, 2018. Awards granted on February 6, 2018 toJanuary 31, 2020. All other employees at age 65 or age 62 with 20 years of service as of February 6, 2018 vest over a two-year period with 50% vesting on January 15 of each year beginning January 15, 2019. Accordingly, in the case of Mr. Ritchey, because he previously attained the age of 65, all of his awards granted on February 2, 2018 werewill become fully vested upon grant and his awards granted on February 6, 2018 vest over a two-year period.“Qualified Retirement” as defined under “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards” below.

 

(4)(5)

The amounts included in this column represent the full grant date fair value of the, restricted common stock, LTIP unit awards and 20182020 MYLTIP awards computeddetermined in accordance with ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. A discussion of the assumptions used in calculating these values can be found in Note 16 to our 20182020 audited financial statements beginning on page 175178 of our annual reportAnnual Report on Form10-K for the year ended December 31, 20182020 included in the annual report that accompanied this proxy statement.

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    73

COMPENSATION OF EXECUTIVE OFFICERS

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 20182020 FISCAL YEAR-END

The following table sets forth information regarding outstanding equity awards held by our NEOs as of December 31, 20182020 pursuant to Item 402(f) of RegulationS-K.

 

  Option Awards(1)  Stock Awards(1)    
Name 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

  

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

  

Option

Exercise

Price ($)

  

Option

Expiration

Date

  

Number of

Shares

or Units

of Stock

That Have

Not

Vested (#)

  

Market

Value of

Shares or

Units of

Stock

That Have

Not

Vested

($)(2)

  

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

(#)

  

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

($)(2)

  

  

 
Owen D. Thomas  54,282   —   95.69   4/2/2023      
      2,436(3)    274,172    
      3,895(4)    438,382    
      7,498(5)    843,900    
      9,849(6)    1,108,505    
      32,260(7)    3,630,863    
        47,985(9)    5,400,712(9)   
        52,402(10)    5,897,845(10)   
                           89,377(11)    10,059,381(11)      
Douglas T. Linde  27,455   —   86.86   1/28/2021      
  34,476   —   100.77   2/3/2022      
  41,092   —   98.46   2/1/2023      
      1,948(3)    219,247    
      3,114(4)    350,481    
      5,264(5)    592,463    
      6,852(6)    771,193    
      20,697(7)    2,329,447    
        33,686(9)    3,791,359(9)   
        36,459(10)    4,103,460(10)   
                           58,933(11)    6,632,909(11)      
Raymond A. Ritchey(12)  24,739   —   86.86   1/28/2021      
  32,120   —   100.77   2/3/2022      
  39,943   —   98.46   2/1/2023      
      2,461(4)    276,986    
      2,679(8)    301,521    
        25,545(9)    2,875,090(9)   
        27,944(10)    3,145,097(10)   
                           43,257(11)    4,868,575(11)      
Michael E. LaBelle  7,749   —   100.77   2/3/2022      
  8,588   —   98.46   2/1/2023      
      1,358(3)    152,843    
      723(4)    81,374    
      3,563(5)    401,016    
      4,819(6)    542,378    
      7,646(7)    860,557    
      1,951(8)    219,585    
        11,401(9)    1,283,183(9)   
        12,821(10)    1,443,004(10)   
                           18,796(11)    2,115,490(11)      

74    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

COMPENSATION OF EXECUTIVE OFFICERS

 Option Awards(1) Stock Awards(1)    Option Awards(1) Stock Awards(1) 
Name 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

 

Option

Exercise

Price ($)

 

Option

Expiration

Date

 

Number of

Shares

or Units

of Stock

That Have

Not

Vested (#)

 

Market

Value of

Shares or

Units of

Stock

That Have

Not

Vested

($)(2)

 

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

(#)

 

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

($)(2)

 

  

  

Number of

Securities

Underlying

Unexercised

Options

(#)
Exercisable

 

Option

Exercise

Price
($)

 

Option

Expiration

Date

 

Number of

Shares

or Units

of Stock

That Have

Not

Vested
(#)(2)

 

Market

Value of

Shares or

Units of

Stock

That Have

Not

Vested

($)(3)

 

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

(#)(4)

 

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

($)(3)

 

Owen D. Thomas

 54,282  95.69  4/2/2023  91,118 8,613,385 99,987 9,451,771

Douglas T. Linde

 34,476  100.77  2/3/2022  60,500 5,719,065 61,036 5,769,733
 41,092  98.46  2/1/2023   —   —   —   — 

Raymond A. Ritchey

  —   —   —  9,749 921,573 46,111 4,358,873

Michael E. LaBelle

  —   —   —  23,236 2,196,499 20,928 1,978,324
Bryan J. Koop 5,616   —  86.86  1/28/2021       7,067  100.77  2/3/2022  10,918 1,032,079 13,918 1,315,669
 7,067   —  100.77  2/3/2022       8,267  98.46  2/1/2023   —   —   —   — 
 8,267   —  98.46  2/1/2023      
     1,140(3)  128,307    
     607(4)  68,318    
     3,011(5)  338,888    
     3,916(6)  440,746    
     4,692(7)  528,085    
     1,630(8)  183,457    
       6,424(9)  723,021(9)  
       6,945(10)  781,660(10)  
             11,535(11)  1,298,264(11)   

 

(1)

This table does not include LTIP unit and restricted common stock awards granted in January 2021 and 20192021 MYLTIP awards granted in February 2019 in recognition of performance in 2018 because they were not outstanding at the end of 2018.2021. Those grants are described above under “Compensation Discussion and Analysis.” Stock options have not been granted since 2013. All stock options were fully vested as of January 15, 2017.

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8› COMPENSATION OF EXECUTIVE OFFICERS

 

(2)

The market valuefollowing table sets forth the number of such holdings is based on the closing price of our common stock as reported on the NYSE on December 31, 2018 of $112.55 per share.

(3)

On February 3, 2015, these NEOs received awards ofunvested time-based LTIP units and/or shares of restricted common stock, and unvested LTIP units earned under the 2012 Plan2017 MYLTIP plan, held by each NEO as follows: Mr. Thomas – 9,744 LTIP units; Mr. Linde – 7,789 shares of restricted common stock; Mr. LaBelle – 5,429 sharesDecember 31, 2020.

Award/Grant Date(a)  Mr. Thomas   Mr. Linde   Mr. Ritchey(d)   Mr. LaBelle   Mr. Koop(d) 
Time-Based Awards(b)                         

2/3/2017

   3,283   2,284   —    1,607   — 

2/2/2018

   16,130   10,349   —    3,823   — 

2/6/2018

   —    —    —    975   — 

2/1/2019

   25,014   15,423   —    5,574   3,717

1/31/2020

   28,409   19,724   —    6,784   4,778
2017 MYLTIP Award(c)   18,282   12,720   9,749   4,473   2,423

(a)

The vesting of restricted common stock;time-based LTI equity awards and Mr. Koop – 4,557 LTIP units. These LTIP units and restricted common shares wereperformance-based LTI equity awards is subject to vestingacceleration under certain circumstances and other exceptions discussed below under “– Potential Payments Upon Termination or Change in Control”.

(b)

Time-based LTI equity awards are scheduled to vest ratably over four years, with 25% of the total award vesting on January 15 of each year beginning January 15 2016, subject to acceleration under certain circumstances.in the year following the grant, based on continued employment through such date.

 

(4)(c)

On February 5, 2015, these NEOs received 2015 MYLTIP awards. On February 4, 2018,6, 2020, the measurement period for the 20152017 MYLTIP awards ended and the Company’s TSR was sufficient for employees to earn and therefore become eligible to vest in a portion of the 20152017 MYLTIP awards. TheseFifty percent (50%) of these earned 20152017 MYLTIP awards vested 50% on February 4, 20186, 2020 and 50% vested on February 4,6, 2021.

(d)

All of Mr. Ritchey’s time-based LTI equity awards were fully vested as of December 31, 2020 and all of Mr. Koop’s time-based LTI equity awards granted prior to January 1, 2019 were fully vested as of December 31, 2020 because each satisfied the conditions for retirement eligibility for these awards. These policies are described below under “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards”.

(3)

The market value of these holdings is based on the closing price of our common stock as reported on the NYSE on December 31, 2020 of $94.53 per share.

(4)

The following table sets forth the number of unearned performance-based LTI equity awards held by each NEO as of December 31, 2020.

Award(a)  Mr. Thomas   Mr. Linde   Mr. Ritchey   Mr. LaBelle   Mr. Koop 
2018 MYLTIP Award(b)   27,390    18,060    13,256    5,760    3,535 
2019 MYLTIP Award(c)   35,784    22,064    17,176    7,975    5,317 
2020 MYLTIP Award(d)   36,813    20,912    15,679    7,193    5,066 

(a)

The vesting of performance-based LTI equity awards is subject to exceptionsacceleration under certain circumstances discussed under “– Potential Payments Upon Termination or Change in Control” below.

 

(5)

On February 8, 2016, these NEOs received awards of LTIP units under the 2012 Plan as follows: Mr. Thomas – 14,996 LTIP units; Mr. Linde – 10,527 LTIP units; Mr. LaBelle – 7,126 LTIP units; and Mr. Koop – 6,022 LTIP units. These LTIP units were subject to vesting ratably over four years, with 25% of the total award vesting on January 15 of each year beginning January 15, 2017, subject to acceleration under certain circumstances.

(6)

On February 3, 2017, these NEOs received awards of LTIP units and/or restricted common stock under the 2012 Plan as follows: Mr. Thomas – 13,132 LTIP units; Mr. Linde – 9,136 shares of restricted common stock; Mr. LaBelle – 6,425 shares of restricted common stock; and Mr. Koop – 5,221 LTIP units. These LTIP units and restricted common shares were subject to vesting ratably over four years, with 25% of the total award vesting on January 15 of each year beginning January 15, 2018, subject to acceleration under certain circumstances.

(7)

On February 2, 2018, these NEOs received awards of LTIP units under the 2012 Plan as follows: Mr. Thomas – 32,260 LTIP units; Mr. Linde – 20,697 LTIP units; Mr. LaBelle – 7,646 LTIP units; and Mr. Koop – 4,692 LTIP units. These LTIP units were subject to vesting ratably over four years, with 25% of the total award vesting on January 15 of each year beginning January 15, 2019, subject to acceleration under certain circumstances.

(8)(b)

On February 6, 2018, these NEOs received 2018 MYLTIP awards. In accordance with SEC rules, the number of equity incentive plan awards of LTIP units underis based on achieving “threshold” performance goals. If our performance continued through the 2012 Plan as follows: Mr. Ritchey – 2,679 LTIP units; Mr. LaBelle – 1,951 LTIP units; and Mr. Koop – 1,630 LTIP units. Mr. Ritchey’s LTIP units were subject to vesting ratably over two years, with 50%end of the total award vesting on January 15 of each year

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    75

COMPENSATION OF EXECUTIVE OFFICERS

performance period at the same rate as had occurred from the beginning January 15, 2019, subject to acceleration under certain circumstances. Messrs. LaBelle’s and Koop’s LTIP units were subject to vesting ratably over four years, with 25% of the total award vestingperformance period through December 31, 2020, our NEOs would have earned an amount below threshold. 2018 MYLTIP awards earned based on January 15performance are scheduled to vest 50% on February 5, 2021 and 50% on February 5, 2022, based on continued employment through such date. The measurement period for assessing performance ended on February 5, 2021. The annualized TSR for the same period for the FTSE Nareit Office Index (adjusted to include Vornado Realty) was -2.21%, for the Cohen & Steers Realty Majors Index was 8.31% and for the Company was -4.92%. As a result, the final valuation for the awards was determined to be 29.1773% of each year beginning January 15, 2019, subject to acceleration under certain circumstances.target, or an aggregate of approximately $3.8 million for the NEOs as a group.

 

(9)(c)

On February 10, 2016,5, 2019, these NEOs received 20162019 MYLTIP awards. The measurement period for assessing performance ends on February 4, 2022. In accordance with SEC rules, the number of equity incentive plan awards is based on achieving “target” performance goals. If our performance continued through the end of the performance period at the same rate as had occurred from the beginning of the performance period through December 31, 2020, our NEOs would earn an amount between threshold and target. 2019 MYLTIP awards earned based on performance are scheduled to vest 50% on February 4, 2022 and 50% on February 4, 2023, based on continued employment through such date.

(d)

On February 4, 2020, these NEOs received 2020 MYLTIP awards. The measurement period for assessing performance ends on February 3, 2023. In accordance with SEC rules, the number of equity incentive plan awards is based on achieving “target” performance goals. If our performance had continued through the end of the performance period at the same rate as had occurred from the beginning of the performance period through December 31, 2018, our NEOs would have earned an amount between threshold and target. Any earned 2016 MYLTIP awards vest 50% on February 9, 2019 and 50% on February 9, 2020, subject to exceptions discussed under “– Potential Payments Upon Termination or Change in Control ” below. The measurement period for assessing performance ended on February 9, 2019. The TSR for the same period for the Nareit Office Index, adjusted to include Vornado Realty and exclude Boston Properties, Inc. was 9.73%, for the C&S Index was 8.44% and for the Company was 6.84%. As a result, the final awards were determined to be 69.5% of target or an aggregate of approximately $10.3 million for the NEOs as a group.

(10)

On February 7, 2017, these NEOs received 2017 MYLTIP awards. The measurement period for assessing performance ends on February 6, 2020. In accordance with SEC rules, the number of equity incentive plan awards is based on achieving “target” performance goals. If our performance had continued through the end of the performance period at the same rate as had occurred from the beginning of the performance period through December 31, 2018, our NEOs would earn an amount between threshold and target. 20172020 MYLTIP awards earned based on performance are scheduled to vest 50% on February 6, 20203, 2023 and 50% on February 6, 2021, subject to exceptions discussed under “– Potential Payments Upon Termination or Change in Control ” below.3, 2024, based on continued employment through such date.

 

(11)

On February 6, 2018, these NEOs received 2018 MYLTIP awards. The measurement period for assessing performance ends on February 5, 2021. In accordance with SEC rules, the number of equity incentive plan awards is based on achieving “maximum” performance goals. If our performance had continued through the end of the performance period at the same rate as had occurred from the beginning of the performance period through December 31, 2018, our NEOs would earn an amount between target and maximum. 2018 MYLTIP awards earned based on performance vest 50% on February 5,80

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8› COMPENSATION OF EXECUTIVE OFFICERS

 

(12)

All of Mr. Ritchey’s shares of restricted common stock and LTIP units (other than LTIP units earned pursuant to the 2015 MYLTIP awards and LTIP units granted on February 6, 2018) were fully vested as of December 31, 2018 because he previously attained the age of 65.

20182020 OPTION EXERCISES AND STOCK VESTED

The following table sets forth the aggregate number of options to purchase shares of our common stock exercised by our NEOs in 20182020 and the aggregate number of shares of common stock and LTIP units that vested in 2018.2020. The Value Realized on Exercise is the product of (1) the fair market value of a share of our common stock on the date of exercise minus the exercise price, multiplied by (2) the number of shares of common stock underlying the exercised options. The Value Realized on Vesting is the product of (1) the closing price on the NYSE of a share of our common stock on the vesting date (or, if the vesting date was not a trading day, the immediately preceding trading date), multiplied by (2) the number of shares/shares and LTIP units vesting. In each case, the value realized is before payment of any applicable taxes and brokerage commissions.

 

Name  

Number of

Shares

Acquired on

Exercise (#)

   

Value

Realized on

Exercise ($)

   

Number of

Shares

Acquired

on Vesting

(#)

   

Value

Realized on

Vesting ($)

   

Number of

Shares

Acquired on

Exercise (#)

   

Value

Realized on

Exercise

   

Number of

Shares

Acquired

on Vesting

(#)

   

Value

Realized on

Vesting

 

Owen D. Thomas

  

 

—

 

  

 

—

 

  

 

28,149

 

  

 

3,394,126

 

   —    —    57,198   $8,067,183 

Douglas T. Linde

  

 

—

 

  

 

—

 

  

 

22,823

 

  

 

2,751,154

 

   27,455   $1,587,136    38,819   $5,479,164 

Raymond A. Ritchey

  

 

—

 

  

 

—

 

  

 

29,526

 

  

 

3,523,633

 

   —    —    34,119   $4,887,658 

Michael E. LaBelle

  

 

—

 

  

 

—

 

  

 

11,347

 

  

 

1,373,093

 

   16,337   $617,061    15,798   $2,220,867 

Bryan J. Koop(1)

  

 

—

 

  

 

—

 

  

 

9,216

 

  

 

1,115,451

 

   —    —    14,592   $1,801,210 

 

(1)

Mr. Koop attained age 62 with 20 years of service on August 18, 2020. As a result, all of his unvested time-based LTI awards granted prior to January 1, 2019 automatically vested.

76    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

COMPENSATION OF EXECUTIVE OFFICERS

NONQUALIFIED DEFERRED COMPENSATION IN 2020

We provide our executives with the opportunity to defer up to 20% of their base salarysalaries and cash bonuses. Deferrals are credited with earnings or losses based upon the executive’s selection of one or more of 28 measurement funds, which are all publicly traded mutual funds. Executives may change their selection of measurement funds on a daily basis.

The table below summarizes the annual rates of return for the year ended December 31, 20182020 for the 28 measurement funds:

 

Name of Fund  2018 Rate of
Return (%)		     Name of Fund  2018 Rate of
Return (%)		 

American Beacon Small Cap Value

  

 

-16.39

 

    

T. Rowe Price Retirement 2025

  

 

-6.21

 

Artisan Mid Cap

  

 

-4.35

 

    

T. Rowe Price Retirement 2030

  

 

-6.97

 

Dodge & Cox Income

  

 

-0.16

 

    

T. Rowe Price Retirement 2035

  

 

-7.60

 

Dodge & Cox International

  

 

-18.84

 

    

T. Rowe Price Retirement 2040

  

 

-8.10

 

Domini Impact Equity

  

 

-10.01

 

    

T. Rowe Price Retirement 2045

  

 

-8.36

 

Oakmark Equity & Income

  

 

-8.73

 

    

T. Rowe Price Retirement 2050

  

 

-8.35

 

PIMCO Low Duration Bond

  

 

0.50

 

    

T. Rowe Price Retirement 2055

  

 

-8.44

 

T. Rowe Price Dividend Growth

  

 

-1.34

 

    

T. Rowe Price Retirement 2060

  

 

-8.41

 

T. Rowe Price Growth Stock

  

 

-2.32

 

    

T. Rowe Price Retirement Balanced Fund

  

 

-3.61

 

T. Rowe PriceMid-Cap Value

  

 

-11.65

 

    

VanguardSmall-Cap Index

  

 

-10.06

 

T. Rowe Price Retirement 2005

  

 

-3.54

 

    

Vanguard Total Bond Market Index

  

 

0.24

 

T. Rowe Price Retirement 2010

  

 

-3.93

 

    

Vanguard Total International Stock Index

  

 

-15.35

 

T. Rowe Price Retirement 2015

  

 

-4.62

 

    

Vanguard Total Stock Market Index

  

 

-5.94

 

T. Rowe Price Retirement 2020

  

 

-5.49

 

    

Virtus Real Estate Securities A

  

 

-5.89

 

  Name of Fund2020 Rate of
Return (%)

American Beacon Small Cap Value Fund Class Institutional

3.96

Artisan Mid Cap Fund Institutional Class

57.05

Dodge & Cox Income Fund

9.30

Dodge & Cox International Stock Fund

0.92

Oakmark Equity And Income Fund Investor Class

8.09

PIMCO Low Duration Fund Institutional Class

3.29

T. Rowe Price Dividend Growth Fund

13.30

T. Rowe Price Growth Stock Fund

34.60

T. Rowe Price Mid-Cap Value Fund

9.96

T. Rowe Price Retirement 2005 Fund

10.83

T. Rowe Price Retirement 2010 Fund

11.41

T. Rowe Price Retirement 2015 Fund

12.03

T. Rowe Price Retirement 2020 Fund

12.57

T. Rowe Price Retirement 2025 Fund

13.92

T. Rowe Price Retirement 2030 Fund

15.02

T. Rowe Price Retirement 2035 Fund

16.13

T. Rowe Price Retirement 2040 Fund

17.08

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8› COMPENSATION OF EXECUTIVE OFFICERS

  Name of Fund2020 Rate of
Return (%)

T. Rowe Price Retirement 2045 Fund

17.64

T. Rowe Price Retirement 2050 Fund

17.63

T. Rowe Price Retirement 2055 Fund

17.51

T. Rowe Price Retirement 2060 Fund

17.45

T. Rowe Price Retirement Balanced Fund

11.00

Vanguard FTSE Social Index Fund Admiral

21.59

Vanguard Small-Cap Index Fund Admiral Shares

18.96

Vanguard Total Bond Market Index Fund Admiral Shares

7.41

Vanguard Total International Stock Index Fund Admiral Shares

10.21

Vanguard Total Stock Market Index Fund Institutional Shares

20.08

Virtus Duff & Phelps Real Estate Securities Fund Class I

-0.13

Benefits under the deferred compensation plan are generally paid in a lump sum upon the executive’s termination of employment prior to attainment of retirement age (age(as defined in the plan to be age 55 with five years of service) or the executive’s death, or in a lump sum or annual installments for a period of up to 15 years (as previously selected by the executive)executive at the time of deferral) upon the executive’s retirement. Payment will generally start or be made by January 15 following the year of termination or retirement, or six months after the executive’s termination or retirement, whichever is later. Executives may also at the time of deferral elect a fixed distribution date, which must be at least five years after the end of the calendar year in which amounts are deferred. The deferred compensation plan also permits anin-service withdrawal of the executive’s account balance attributable topre-2005 deferrals, subject to a withdrawal penalty equal to 10% of the amount withdrawn.

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COMPENSATION OF EXECUTIVE OFFICERS

The following table shows deferrals made by our NEOs to the deferred compensation plan during the year ended December 31, 2018,2020, the earnings and withdrawals/distributions during the year, and the aggregate account balance of each NEO under the deferred compensation plan as of December 31, 2018.2020.

 

Name  

Executive

Contributions

in 2018

($)(1)(2)

   

Registrant

Contributions

in 2018

($)

   

Aggregate

Earnings

in 2018

($)

   

Aggregate

Withdrawals/

Distributions

($)

   

Aggregate

Balance at

12/31/2018($)(3)

   

Executive

Contributions

in 2020(1)(2)

   

Registrant

Contributions

in 2020

   

Aggregate

Earnings

in 2020

   

Aggregate
Withdrawals/
Distributions

   

Aggregate

Balance at

12/31/2020(3)

 

Owen D. Thomas

  

 

175,000

 

  

 

—

 

  

 

-63,884

 

  

 

—

 

  

 

909,491

 

  $186,923    —   $247,622    —   $1,746,748 

Douglas T. Linde

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

   —    —    —    —    — 

Raymond A. Ritchey

  

 

280,000

 

  

 

—

 

  

 

-227,507

 

  

 

—

 

  

 

2,906,516

 

   —    —   $629,566    —   $4,674,386 

Michael E. LaBelle

  

 

—

 

  

 

—

 

  

 

-75,029

 

  

 

—

 

  

 

1,048,990

 

   —    —   $253,923   $199,519   $1,220,377 

Bryan J. Koop

  

 

176,000

 

  

 

—

 

  

 

-95,013

 

  

 

—

 

  

 

1,286,369

 

  $228,266    —   $294,960    —   $2,314,995 

 

(1)

These amounts do not include any contributions out of bonus payments that were made in February 20192021 in recognition of performance in 2018.2020.

 

(2)

Of the amounts reported in the contributions column, (a) all of Mr. Thomas’ contributions $72,000 of Mr. Ritchey’s contributions and $48,000$63,866 of Mr. Koop’s contributions are also included in the Summary Compensation Table as salary for 20182020 and (b) $208,000 of Mr. Ritchey’s contributions and $128,000$164,400 of Mr. Koop’s contributions are also included in the Summary Compensation Table as bonus for 20172019 that was paid in 2018.2020.

 

(3)

Of the amounts reported in the aggregate balance column, (a) $186,923 of Mr. Thomas’ aggregate balance and $63,866 of Mr. Koop’s aggregate balance are also included in the Summary Compensation Table as salary for 2020; (b) $179,615 of Mr. Thomas’ aggregate balance and $49,108 of Mr. Koop’s aggregate balance are also included in the Summary Compensation Table as salary for 2019, (c) $175,000 of Mr. Thomas’ aggregate balance, $72,000 of Mr. Ritchey’s aggregate balance and $48,000 of Mr. Koop’s aggregate balance are also included in the Summary Compensation Table as salary for 2017, (b) $208,000 of Mr. Ritchey’s contributions and $128,0002018, (d) $164,400 of Mr. Koop’s contributions are also included in the Summary Compensation Table as bonus for 20172019 that was paid in 2018, (c) $173,462 of Mr. Thomas’ aggregate balance, $71,9232020, and (e) $416,000 of Mr. Ritchey’s aggregate balance $24,962 of Mr. LaBelle’s aggregate balance and $47,908$186,000 of Mr. Koop’s aggregate balance are also included in the Summary Compensation Table as salary for 2016 and (d) $83,500 of Mr. Koop’s aggregate balance is also included in the Summary Compensation Table as bonus for 20162018 that was paid in 2017.2019. In each case, the amounts disclosed in this footnote are the amounts originally contributed and do not reflect subsequent gains/losses on investment after the date of contribution.

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8› COMPENSATION OF EXECUTIVE OFFICERS

EMPLOYMENT AGREEMENTS

We have employment agreements with each of our NEOs. The material terms of these agreements are summarized below.

Summary of Owen›  SUMMARY OF OWEN D. Thomas’ Employment AgreementTHOMAS’ EMPLOYMENT AGREEMENT

We originally hired Mr. Thomas to be our CEO effective April 2, 2013. The initial term of Mr. Thomas’ employment agreement was three years, with automaticone-year renewals commencing on the third and fourth anniversaries of the effective date unless prior written notice of termination was given. The term of Mr. Thomas’ original employment agreement expired on April 2, 2018 on which date we entered into a new employment agreement with him. The following is a summary of Mr. Thomas’ newcurrent employment agreement:

Term.Term and Duties

April 2, 2018 through June 30, 2023.2023

Duties.

As CEO, Mr. Thomas reports directly to the Board of Directors, and must devote substantially all of his working time and efforts to the performance of his duties.

Board Membership.

Our Board willagreed to continue to nominate Mr. Thomas forre-election as a member ofto the Board of Directors whilefor so long as he remains CEO, and he has agreed to resign from the Board upon termination of employment.

Outside Activities.

•

Mr. Thomas may participate as an officer or director of, or advisor to, any organization that is not engaged in commercial real estate activities (e.g., Nareit) and also engage in religious, charitable or other community activities, provided that they do not materially restrict his ability to fulfill his obligations to us as an officer. Mr. Thomas may also continue serving on the Board of Lehman Brothers Holdings Inc. and may engage in “Minority Interest Passive Investments,” which are defined as acquiring, holding and exercising the voting rights associated with an investment made through (1) a non-controlling, minority interest in an entity or (2) the lending of money, in either case with the purpose or intent of obtaining a return on such investment but without management of the property or business to which the investment directly or indirectly relates and without any business or strategic consultation by Mr. Thomas.

Compensation and Benefits

 

•

Annual base salary of $875,000, subject to annual review and may be increased but not decreased. Mr. Thomas’ current base annual salary is $900,000 (see “Compensation Discussion and Analysis – II. Executive Compensation Program – Cash Compensation” beginning on page 56).

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in religious, charitable or other community activities provided that they do not materially restrict his abilityTarget annual bonus equal to fulfill his obligations to us as an officer. Mr. Thomas may also continue serving on the Board of Lehman Brothers Holdings Inc. and may engage in “Minority Interest Passive Investments,” which are defined as acquiring, holding and exercising the voting rights associated with an investment made through (1) anon-controlling, minority interest in an entity or (2) the lending of money, in either case with the purpose or intent of obtaining a return on such investment but without management of the property or business to which the investment directly or indirectly relates and without any business or strategic consultation by Mr. Thomas.

Base Salary. $875,000, subject to annual review and may be increased but not decreased. The Compensation Committee increased Mr. Thomas’ base salary to $900,000 for 2019 (see“V. Alignment of Pay with Performance - 2018 Compensation” on page 59 of this proxy statement).

Target Bonus.250% of his annual base salary, with the actual amount to be determined at the discretion of the Compensation Committee.

Incentive Equity. Theequity in an amount shall be determined at the discretion of the Compensation Committee based on Company and individual performance and competitive peer group information. LTI equity awards may be provided in the form of stock options, restricted stock, restricted stock units and/or LTIP units and may be subject to either time-based and/or performance-based vesting, or both, as determined by the Compensation Committee.

Benefits.Mr. Thomas is entitled to participate

Participation in all of our employee benefit plans or programs as in effect from time to time for our senior executive employees, including medical/dental insurance, life insurance, disability insurance and deferred compensation plans, plus the use of a Company-owned or leased automobile.

Severance Benefits and Retirement Eligibility    

No TaxGross-Ups.

•

Mr. Thomas’ employment with us is at-will, but his employment agreement provides for certain payments and benefits to him upon his separation from the Company in certain circumstances (see “– Potential Payments upon Termination or Change in Control” below).

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•

Mr. Thomas’ employment agreement provides for the acceleration of vesting of equity awards granted after April 2, 2018 upon attainment of age 62 with 10 years of service (see “– Potential Payments upon Termination or Change in Control” below).

Mr. Thomas is not entitled to participate in any of the Company’s change in control severance plans or programs. As such, Mr. Thomas is not entitled to receive any taxgross-up payments, but, inpayments. In the event that any payment or benefit to be paid or provided to Mr. Thomas would be subject to the golden parachute excise tax, the payments and benefits will be reduced to the extent necessary to avoid the imposition of the excise tax if doing so would result in a greaterafter-tax benefit to Mr. Thomas.

Expiration of the Term.

The expiration of Mr. Thomas’ agreement on June 30, 2023 will not constitute or result in a termination of employment by the Company without cause, and the severance provisions (other than retirement eligibility)eligibility and related benefits) shall not apply.

Restrictive Covenants    

Restrictive Covenants.

While he is an officer and foruntil the later of (1) one year thereafter (or longer as provided above with respect toafter the termination of his employment for any reason or (2) the latest date of full vesting of any performance-based LTI equity awards with performance-based vesting),award, Mr. Thomas is prohibited from:

engaging, participating or assisting, directly or indirectly, in the acquisition, development, construction, operation, management, or leasing of any commercial real estate property of a type which is the subject of a significant portion of the Company’s business (measured as at least 10% of the Company’s revenues on a trailing12-month basis) at the time of termination of his employment;

 

›

engaging, participating or assisting, directly or indirectly, in the acquisition, development, construction, operation, management, or leasing of any commercial real estate property of a type which is the subject of a significant portion of the Company’s business (measured as at least 10% of the Company’s revenues on a trailing 12-month basis) at the time of termination of his employment;

intentionally interfering with the Company’s relationships with its tenants, suppliers, contractors, lenders or employees or with any governmental agency; or

›

intentionally interfering with the Company’s relationships with its tenants, suppliers, contractors, lenders or employees or with any governmental agency; or

›

competing for, soliciting or diverting the Company’s tenants or employees, either for himself or any other business, person or entity.

 

competing for, soliciting or diverting the Company’s tenants or employees, either for himself or any other business, person or entity.

Mr. Thomas is also subject to confidentiality requirements and post-termination litigation and regulatory cooperation obligations.

 

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In addition, thenon-competition provisioncovenant shall not apply if Mr. Thomas’ employment is terminated following a change in control (as defined in the Boston Properties, Inc. 2012 Stock Option and Incentive Plan, as amended from time to time)time (the ”2012 Plan”)).

Attorneys’ Fees.› We have agreed to pay Mr. Thomas’ actual advisor fees (legal and tax) incurred in connection with the contemplation, preparation, negotiation and execution of his employment agreement up to a maximum of $25,000.

Retirement Eligibility.Mr. Thomas’ employment agreement provides for the acceleration of vesting of equity awards granted after April 2, 2018 upon attainment of age 62 with 10 or more years of service (see“– Potential Payments upon Termination or Change in Control”below).

As described below in“– Potential Payments upon Termination or Change in Control,” Mr. Thomas’ employment agreement also provides for and certain payments and benefits to him upon his separation from the Company in certain circumstances.

Summary of Employment Agreements with Messrs. Linde, Ritchey, LaBelle and Koop  SUMMARY OF EMPLOYMENT AGREEMENTS WITH MESSRS. LINDE, RITCHEY, LABELLE AND KOOP

We also have employment agreements with ourthe other NEOs—NEOs – i.e.,Messrs. Linde, Ritchey, LaBelle and Koop – under which each has agreed to devote substantially all of his business time to our business and affairs. The initial term of each of these employment agreements was two years beginning November 29, 2002 (January 24, 2008 in the case of Mr. LaBelle), with automaticone-year renewals commencing on each anniversary date unless written notice of termination is given at least 90 days prior to such date by either party. The base salary for each of these NEOs is to be reviewed annually by the Compensation Committee and may be increased but not decreased in its discretion. Each NEO is also eligible to receive a cash bonus and equity-based compensation to be determined at the discretion of the Compensation Committee.

Similar to Mr. Thomas’ employment agreement, the other NEOs’ employment agreements containnon-competition,non-interference andnon-solicitation restrictions (which shall not apply if the NEO’s employment is terminated following a change in control (as defined in the senior executive severance plan)) and permit them to participate as an officer or director of, or advisor to, any charitable or other tax exempt organization only and the scope of the noncompetition provision in each employment agreement is limited to our markets at the time of termination of their employment. The other NEO’sIn consideration for the benefits and protections afforded by the employment agreements, each of these NEOs agreed to confidentiality, non-competition, non-interference and non-solicitation covenants and to provide to the Company post-termination litigation and regulatory cooperation. These NEOs’ employment with us is at-will, but their employment agreements also provide for certain payments and benefits to the NEO’sthem upon separation from the Company in certain circumstances as described below in “–under “– Potential Payments upon Termination or Change in Control.Control” below.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Each NEO’s employment with us isat-will, but the employment agreements of each of Messrs. Thomas, Linde, Ritchey, LaBelle and Koop discussed under“– Employment Agreements” above provide themNEO has the right to receive severance and other benefits in the event of a termination of his employment under different circumstances pursuant to their employment agreements (discussed under “– Employment Agreements” above) and, except for Mr. Thomas, the Company’s Senior Executive Severance Plan. In addition, our LTI equity award agreements (including performance-based MYLTIP awards) provide for the vesting and forfeiture of LTI equity awards under different circumstances. The availability, nature and amount of severance and other benefits differ depending on whether the triggering event is:

a termination by the Company without “cause” (as defined in the applicable employment agreement),agreement or plan) or by the NEO with “good reason” (as defined in the applicable employment agreement),agreement or upon the occurrence ofplan) prior to a change in control,

a termination by the Company without “cause” or by the NEO with “good reason” within 24 months following a change in control,

a change in control without termination,

termination due to death or disability, or

a qualified retirement.

Upon a voluntary termination by the NEO, other than for “good reason” or a qualified retirement, or a termination by the Company with “cause,” the NEOs are not entitled to any additional or special payments under any plan, agreement or arrangement, and certain triggering events. All ofany unvested LTI equity awards will be immediately forfeited.

›  EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL SEVERANCE PLAN

The following chart summarizes payments and benefits (1) our CEO is eligible to receive under his employment agreement and (2) the NEOs other than our CEO are eligible to receive under their respective employment agreements and our Senior Executive Severance Plan. NEOs other than our CEO participate in the Company’s change in control severance plan,our Senior Executive Severance Plan, whereas the severance and benefits to which our CEO is entitled following a termination within twenty-four (24) months after a change in control are provided in his employment agreement. In addition, our 2012 Plan

  ScenarioComponent(1)

Termination by the Company without “Cause” or by the NEO for “Good Reason” without a Change in Control(2)

Bonus

•  All NEOs: Target bonus prorated for number of days employed in year of termination

Cash Severance

•  Mr. Thomas: 2x the sum of base salary plus amount of cash bonus, if any, received or payable with respect to the preceding year (but, not less than his target bonus)

•  Other NEOs: 1x the sum of base salary plus amount of cash bonus, if any, received or payable with respect to the preceding year

Time-Based LTI Equity Awards

•  Mr. Thomas: Additional 24 months of vesting

•  Other NEOs: Additional 12 months of vesting

Health Benefits

•  Participation by the NEO, his spouse and dependents, subject to payment of premiums at active employees’ rate

•  Mr. Thomas: Up to 24 months

•  Other NEOs: Up to 12 months

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ScenarioComponent(1)

Termination by the Company without “Cause” or by the NEO for “Good Reason” within 24 Months after a Change in Control

Bonus

•  Mr. Thomas: Target bonus prorated for number of days employed in year of termination

•  Other NEOs: Not applicable

Cash Severance

•  Mr. Thomas: Lump-sum equal to 3x the sum of (a) Mr. Thomas’ base salary plus (b) the amount of his average annual cash bonus (or his target bonus, if greater) with respect to the three calendar years preceding the change in control

•  Other NEOs: Lump-sum equal to 3x the sum of (a) the NEO’s base salary plus (b) the amount of his average annual cash bonus with respect to the three calendar years preceding the change in control

Time-Based LTI Equity Awards

•  Full vesting for all NEOs

Health Benefits

•  Participation by the NEO, his spouse and dependents for up to 36 months, subject to payment of premiums at active employees’ rate

Other Benefits

•  Financial counseling, tax preparation assistance and outplacement counseling for up to 36 months

Tax Gross-Up Payment

•  Mr. Thomas is not entitled to receive any tax gross-up payments from the Company. In the event that any payment or benefit would be subject to the golden parachute excise tax, the payments and benefits will be reduced to the extent necessary to avoid the imposition of such excise tax if the reduction would result in a greater after-tax benefit to Mr. Thomas.

•  Other NEOs are entitled to receive a tax gross-up payment in the event they become subject to the golden parachute excise tax (as discussed above under “Compensation Discussion and Analysis – IV. Other Compensation Policies – Gross-Up for Excess Parachute Payments” on page 72).

Termination due to Death or Disability

Bonus

•  Target bonus prorated for number of days employed in year of termination

Time-Based LTI Equity Awards

���  Full vesting for all NEOs

Health Benefits

•  Participation by the NEO, his spouse and dependents for up to 18 months, subject to payment of premiums at active employees’ rate

(1)

Performance-based LTI equity awards are governed by the relevant award agreements. The treatment of these awards under certain termination scenarios, including a change in control, is described under “– Performance-Based LTI Equity Awards” and “– Retirement Eligibility Provisions for LTI Equity Awards” below.

(2)

Receipt of these payments and benefits (other than the prorated target bonus) is subject to the NEO’s execution of a general release of claims with us.

›  DOUBLE-TRIGGER ACCELERATION OF VESTING OF EQUITY AWARDS UPON A CHANGE IN CONTROL

Time-based LTI equity award agreements (including MYLTIP awards) provideinclude “double-trigger” vesting, meaning that, if there is a “change in control” (as defined in the 2012 Plan) and the awards are not otherwise cancelled in connection with the change in control transaction, then they only become fully vested if, within 24 months after the change in control, the NEO’s employment is terminated by the Company or its successor without “cause” or the NEO resigns for vesting or forfeiture“good reason.”

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›  PERFORMANCE-BASED LTI EQUITY AWARDS

The treatment of performance-based LTI equity awards (e.g., MYLTIP awards) upon terminationcertain terminations of employment of our NEOs under different circumstances, including termination without “cause” or for “good reason,” in each case both prior to and following a change in control upon death or disability, and upon qualified retirement.is governed by the NEOs’ relevant award agreements. The material termsfollowing chart summarizes the treatment of these various arrangements are summarized below.awards under each scenario assuming it occurs prior to the end of the applicable three-year performance period.

 

  ScenarioTreatment of Award

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Employment Agreement with Mr. Thomas

Termination by the Company without “Cause” or by the NEO for “Good Reason” without a Change in Control

•  The number of LTIP units the NEO will earn, if any, will be determined at the end of the applicable three-year performance period based on our performance and will then be prorated based on the portion of the three-year performance period during which the NEO was employed by us.

•  Any earned LTIP Units will not be subject to forfeiture but the NEO will not be permitted to transfer the LTIP units until they otherwise would have vested under the terms of the awards.

Termination due to Death or Disability

•  The number of LTIP units the NEO will earn, if any, will be determined at the end of the applicable three-year performance period based on our performance.

•  Any earned LTIP units will not be prorated due to service time and will be fully vested.

Change in Control Without Termination

•  The number of LTIP units the NEO will earn, if any, will be determined as of the date of the change in control based on our performance through such date.

•  Any earned LTIP units will not be prorated due to service time and will be fully vested.

In the Company Without “Cause” or by Mr. Thomas for “Good Reason” Prior to a Change in Control

Mr. Thomas will be entitledcase of each of the foregoing scenarios following the end of the applicable three-year performance period, any LTIP units that had been earned prior to the following payments and benefits upon adate of such termination by the Company without cause or by Mr. Thomas for good reason prior to a change in control:

target bonus prorated for the number of days employedcontrol will become fully vested, but, in the yearcase of termination;

cash severance equal to two times the sum of Mr. Thomas’ base salary plus the amount of his cash bonus, if any, received or payable in respect of the immediately preceding year (but, not less than his target bonus), payable over a24-month period;

additional 24 months of vesting of time-based LTI equity awards; and

participation by Mr. Thomas, his spouse and dependents in the Company’s health plan for up to 24 months, subject to payment of premiums at the active employees’ rate.

Receipt of these payments and benefits (other than the prorated target bonus) in connection with a termination without cause or for good reason is subject to Mr. Thomas’ execution of a general release of claims with us.

Termination Upon Death or Disability

Mr. Thomas or his beneficiary will be entitled to receive his target bonus prorated for the number of days employed in the year of termination, full vesting of time-based LTI equity awards and participation by Mr. Thomas, his spouse and dependents in the Company’s health plan for up to 18 months, subject to payment of premiums at the active employees’ rate.

Termination by the Company Without “Cause” or by Mr. Thomas for “Good Reason” within 24 Months after a Change in Control

Upon a termination by the Company without “cause” or by Mr. Thomasthe NEO for “good reason,” in either case within 24 months followingreason” without a change in control, Mr. Thomasthe NEO will not be entitledpermitted to transfer the following payments and benefits:LTIP units until they otherwise would have vested under the terms of the awards.

target bonus prorated for the number of days employed in the year of termination;

lump-sum›  cash severance amount equal to three times the sum of (a) Mr. Thomas’ base salary plus (b) the amount of his average annual cash bonus with respect to the three calendar years preceding the change in control (or, his target bonus if greater);

full vesting of time-basedRETIREMENT ELIGIBILITY PROVISIONS FOR LTI equity awards;

financial counseling, tax preparation assistance and outplacement counseling for up to 36 months; and

participation by Mr. Thomas, his spouse and dependents in the Company’s health plan for up to 36 months, subject to payment of premiums at the active employees’ rate.

Retirement EligibilityEQUITY AWARDS

Retirement Provisions

Mr. Thomas.Pursuant to Mr. Thomas’ employment agreement, his LTI equityall award agreements for LTI equity awards granted beginning in 2019after April 2, 2018 shall provide that if Mr. Thomas is employed by us when he attains age 62 and has completed at least ten (10) years of employment with us:

he shall be deemed to satisfy the age and service requirements necessary for retirement eligibility;

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us, then his time-based LTI equity awards with time-based vesting shalland performance-based LTI equity awards that are earned will vest in full (without any proration of the award due tobased on service time);.

The full number of LTIP units Mr. Thomas earns (if any) under any performance-based LTI equity awards for which the performance period has not ended will be determined in the same manner and

•

regardless of whether he remains employed, the full number of LTIP units (and/or shares of common stock or other equity-based awards, if applicable) he earns (if any) under any LTI equity awards with performance-based vesting (e.g., a MYLTIP award) shall be determined in the same manner and at the same time as otherwise would have been the case if he had remained employed through the full vesting at the same time as otherwise would have been the case if he had remained employed through the full performance period for the applicable award, including without limitation with respect to performance hurdles and lapse of restrictions on transfer, without any proration of the award due to service time, and with all service-based vesting requirements deemed satisfied, so long as he agrees to be bound by the post-employment non-competition, non-interference and non-solicitation covenants (which are otherwise applicable until the later of (1) one (1) year following termination and (2) the latest date of full vesting of any performance-based LTI equity award).

NEOs other than Mr. Thomas. The agreements governing time-based LTI equity awards and performance-based LTI equity awards granted to NEOs other than Mr. Thomas provide that the time-based equity awards and performance-based equity awards that are earned will fully vest when the employee retires after the date on which the sum of the employee’s years of service plus age (which must be at least 58) equals or exceeds 70 (the so-called “Rule of 70”) (“Qualified Retirement”); provided that the NEO satisfies the other conditions of a “Qualified Retirement,” which require the employee to: (1) give prior written notice to the Company of his retirement (for NEOs, six (6) months’ notice is required), (2) enter into a separation agreement with the Company and (3) remain employed by the Company until the retirement date specified in such notice, unless employment is terminated by the Company without “cause” or by the employee for “good reason.”

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If an NEO retires after satisfying the conditions for a Qualified Retirement, the number of LTIP units the NEO earns (if any) under performance-based LTI awards will be determined in the same manner and at the same time as otherwise would have been the case if he had remained employed through the entire performance period for the applicable award, including with respect to performance hurdles and lapse of restrictions on transfer, without any proration of the award due to service time, and with any service-based vesting requirements deemed satisfied over the relevant service- vesting schedule, so long as he agrees to be bound by the post-employmentnon-competition,non-interference andnon-solicitation covenants (which are otherwise applicable for one (1) year under the agreement) until the latest date of full vesting applicable to any performance-based award entitled to the foregoing benefits.

Employment Agreements with Messrs. Linde, Ritchey, LaBelle and Koop (the “Other NEOs”)

Termination by the Company Without “Cause” or by the NEO for “Good Reason” Prior to a Change in Control

Each Other NEO is entitled to the following payments and benefits upon a termination by the Company without “cause” or by the Other NEO for “good reason” prior to a change in control:

target bonus prorated for the number of days employed in the year of termination;

cash severance equal to the sum of the NEO’s base salary plus the amount of his cash bonus, if any, received or payable in respect of the immediately preceding year, payable over a12-month period;

additional 12 months of vesting of time-based LTI equity awards; and

participation by the NEO, his spouse and dependent(s) in the Company’s health plan for up to 12 months, subject to payment of premiums at the active employees’ rate.

Receipt of these payments and benefits (other than the prorated target bonus) in connection with a termination without cause or for good reason is subject to the NEO’s execution of a general release of claims with us.

Termination Upon Death or Disability

Each Other NEO or his beneficiary will be entitled to receive his accrued and unpaid target bonus prorated for the number of days employed in the year of termination, full vesting of time-based LTI equity awards, and participation by each Other NEO, his spouse and dependents in the Company’s health plan for up to 18 months, subject to payment of premiums at the active employees’ rate.

Senior Executive Severance Plan

Each Other NEO is covered by our Senior Executive Severance Plan. Mr. Thomas does not participate in any of our severance plans; his payments are governed by his employment agreement (see“– Employment Agreement with Mr. Thomas”above). Under the Senior Executive Severance Plan, upon a termination by the Company without “cause” or by the NEO for “good reason,” in either case within 24 months following a change in control, each Other NEO will be entitled to the following payments and benefits:

lump-sum cash severance amount equal to three times the sum of (a) the NEO’s base salary plus (b) the amount of his average annual cash bonus with respect to the three calendar years preceding the change in control;

full vesting of time-based LTI equity awards;

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financial counseling, tax preparation assistance and outplacement counseling for up to 36 months; and

participation by each NEO, his spouse and dependents in the Company’s health and life insurance plans for up to 36 months, subject to payment of premiums at the active employees’ rate.

In addition, each Other NEO will be entitled to receive a taxgross-up payment in the event he becomes subject to the golden parachute excise tax (as discussed above under “Compensation Discussion and Analysis – IX. Other Compensation Policies –Gross-Up for Excess Parachute Payments”).

Time-Based LTI Equity Award Agreements

Change in Control Without Termination

Time-based LTI equity awards include “double-trigger” vesting, meaning that, if there is a “change of control” (as defined in the 2012 Plan) and the awards are not otherwise cancelled in connection with the change of control transaction, then they only become fully vested if, within 24 months after the change of control, the NEO’s employment is terminated by the Company or its successor without “cause” or the NEO resigns for “good reason.”

Qualified Retirement

Time-based LTI equity awards granted prior to 2019 (other than awards granted on February 6, 2018, which do not provide for acceleration of vesting upon attaining retirement eligibility age) provide that when an employee attains age 65, or attains age 62 and completes 20 years of service with us, the employee becomes fully vested in all time-based LTI equity awards (the“Pre-2019 Policy”).

Mr. Thomas’ time-based LTI equity awards granted beginning in 2019 are governed by his employment agreement (see “– Employment Agreement with Mr. Thomas” above).

Time-based LTI equity awards granted to the Other NEOs beginning in 2019, provide that when an employee terminates his or her employment after satisfying the conditions for a “Qualified Retirement,” the employee becomes fully vested in all time-based and performance-based LTI equity awards. The conditions for a Qualified Retirement are as follows:

(1)

on the date of termination, the sum of the employee’s years of service plus age equals or exceeds 70 (theso-called “Rule of 70”);

(2)

the employee is at least 58 years old on the date of termination of employment;

(3)

the employee gives written notice to the Secretary of the Company of his or her retirement/termination of employment at least at least six (6) months prior to the effective date of termination;

(4)

the employee enters into a Separation Agreement (as defined in the applicable award agreement) with the Company; and

(5)

the employee remains employed by the Company until the retirement date specified in such notice, unless the employee’s employment is terminated by the employee for “good reason” or by the Company without “cause.”

Time-based LTI awards made to employees who, on or prior to January 31, 2019, satisfied thePre-2019 Policy are “grandfathered” under thePre-2019 Policy such that subsequent time-based LTI awards will continue to be fully vested on the date of grant. As of December 31, 2018, Mr. Ritchey satisfied thePre-2019 Policy.

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Performance-Based LTI Equity Award Agreements

Termination by the Company Without “Cause” or by the NEO for “Good Reason” Prior to a Change in Control

In the event of a termination by the Company without “cause” or by the NEO for “good reason” prior to the end of the three-year performance period, the number of LTIP units the NEO will earn, if any, will be determined in the same manner, with respect to the performance hurdles, and at the same time as it otherwise would have been (i.e., as of the end of the performance period or upon a change in control) and will then bepro-rated based on the portion of the three-year performance period during which the NEO was employed by us. Any LTIP units earned will be fully vested. In the event of such a termination following the end of the three-year performance period, any LTIP units that had been earned prior to the date of such termination will become fully vested. In each case, the NEO will not be permitted to transfer any LTIP units that vest until they otherwise would have vested under the terms of the awards.

Termination Upon Death or Disability

In the event of a termination upon death or disability prior to the end of the three-year performance period, the number of LTIP units the NEO will earn, if any, will be determined in the same manner, with respect to the performance hurdles, and at the same time as it otherwise would have been (i.e., as of the end of the performance period or upon a change in control), without any proration of the award due to service time. Any LTIP units earned, will be fully vested. In the event of such a termination following the end of the three-year performance period, any LTIP units that had been earned prior to the date of such termination will become fully vested.

Change in Control

In the event of a change in control prior to the end of the three-year performance period, the number of LTIP units earned, if any, will be calculated as of the date of the change in control (without proration) based on our performance through such date. Any LTIP units earned will be fully vested. In the event of a change in control following the end of the three-year performance period, any LTIP units that had been earned prior to the date of the change in control will become fully vested.

Qualified Retirement

Awards Granted Prior to 2019

In the case of outstanding performance-based LTI equity awards for which the three-year performance period has ended and that have been earned (i.e., as of December 31, 2018, 2015 MYLTIP awards), if an employee retires after attaining age 65 or attaining age 62 with 20 years of service with us, then the unvested LTIP units will no longer be subject to forfeiture but the NEO will not be permitted to transfer the LTIP units until they otherwise would have vested under the terms of the awards.

Performance-basedPre-2019 Policy

Time-based LTI equity awards for which the three-year performance period has not ended (i.e., as of December 31, 2018, 2016-2018 MYLTIP awards) generallygranted prior to 2019 provide that:

•

If an employee retires after (1) attaining age 62 withthat when an employee attains age 65, or attains age 62 and completes 20 years of service with us, or (2) attaining age 65 with less than 15 years of service with us, then the number of LTIP units the employee will earn will be determined in the same manner, with respect to the performance hurdles, and at the same time as it otherwise would have been (i.e., as of the end of the performance period or upon a change in control) and will then bepro-rated based on the number of days elapsed in the performance period plus 365 (i.e., one additional year).

If an employee retires after (1) attaining age 65 with 15 years of service with us, then the number of LTIP units the employee will earn will be determined in the same manner, with

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COMPENSATION OF EXECUTIVE OFFICERS

respect to the performance hurdles, and at the same time as it otherwise would have been (i.e., as of the end of the performance period or upon a change in control) and will then bepro-rated based on the number of days elapsed in the performance period plus 730 (i.e., two additional years).

In both cases, any LTIP Units that are earned will not be subject to forfeiture but the employee will not be permitted to transfer the LTIP units until they otherwise would have vested under the terms of the awards.

Awards Granted in 2019

Mr. Thomas’ performance-based LTI equity awards granted in 2019 are governed by his employment agreement (see“– Employment Agreement with Mr. Thomas” above).

Performance-based LTI equity awards granted to the Other NEOs beginning in 2019 provide that when an employee terminates their employment after satisfying the conditions for a “Qualified Retirement,” which are the same as those set forth above under “– Time-Based LTI Equity Award Agreements – Qualified Retirement,” the employee becomes fully vested in all performance-basedtime-based LTI equity awards.

awards (the “Pre-2019 Policy”). In the case of performance-basedaddition, time-based LTI awards made to employees who, on or prior to January 31, 2019, attained age 65 or attained age 62 with 20 years of service are “grandfathered” under the Pre-2019 Policy such that subsequent time-based LTI awards will continue to be fully vested on the date of grant.

NEOs Eligible for which the three-year performance period has not ended, the numberRetirement as of LTIP units the employee will earn will be determined in the same manner,December 31, 2020

Based on their respective ages and tenure as of December 31, 2020:

Each of Messrs. Ritchey and Koop is eligible for a Qualified Retirement with respect to awards granted in 2020 and subsequent thereto.

Mr. Ritchey satisfied the performance hurdles,Pre-2019 Policy and at the same time as it otherwise would have been (i.e.,is grandfathered under such policy with respect to his time-based LTI equity awards. Therefore, all of Mr. Ritchey’s time-based equity awards were fully vested as of December 31, 2020 and subsequent awards will continue to vest on the end of the performance period or upon a change in control), without any proration of the award due to service time. Any LTIP Units that are earned will not be subject to forfeiture but the employee will not be permitted to transfer the LTIP units until they otherwise would have vested under the terms of the awards.grant date.

 

Mr. Koop attained age 62 with 20 years of service on August 18, 2020, and as a result, all of Mr. Koop’s unvested time-based equity awards that were granted prior to January 1, 2019 fully vested on that date.

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COMPENSATION OF EXECUTIVE OFFICERS

Estimated Payments Upon Termination or Change in ControlESTIMATED PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The following tables that follow show the potential payments and benefits that would have been provided to our NEOs assuming such eventseach scenario occurred on December 31, 2018.2020.

 

Payments Upon Termination  

Qualified

Retirement

($)

   

Involuntary

Not for Cause

Termination/

Good Reason

Termination

($)

   

Involuntary or

Good Reason

Termination

Following

Change in

Control

($)(1)

   

Change in

Control

Without

Termination

($)(1)

   

Death or

Disability

($)

 

Owen D. Thomas(2)

          

Bonus

  

 

—

 

  

 

2,187,500

 

  

 

2,187,500

 

  

 

—

 

  

 

2,187,500

 

Severance

  

 

—

 

  

 

6,600,000

 

  

 

10,166,666

 

  

 

—

 

  

 

—

 

Unvested Equity Awards(3)(4)

  

 

—

 

  

 

4,110,889

 

  

 

6,295,822

 

  

 

—

 

  

 

6,295,822

 

2016 MYLTIP awards(5)

  

 

—

 

  

 

3,330,257

 

  

 

3,456,523

 

  

 

3,456,523

 

  

 

3,456,523

 

2017 MYLTIP awards(5)

  

 

—

 

  

 

2,462,264

 

  

 

3,892,654

 

  

 

3,892,654

 

  

 

3,892,654

 

2018 MYLTIP awards(5)

  

 

—

 

  

 

1,597,014

 

  

 

5,331,494

 

  

 

5,331,494

 

  

 

5,331,494

 

Benefits Continuation

  

 

—

 

  

 

44,000

 

  

 

66,000

 

  

 

—

 

  

 

33,000

 

Other Benefits(6)

  

 

—

 

  

 

—

 

  

 

150,000

 

  

 

—

 

  

 

—

 

Excise TaxGross-Up(7)

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

  

 

—

 

Total

  

 

—

 

  

 

20,331,924

 

  

 

31,546,659

 

  

 

12,680,671

 

  

 

21,196,993

 

Douglas T. Linde

          

Bonus

  

 

—

 

  

 

725,000

 

  

 

—

 

  

 

—

 

  

 

725,000

 

Severance

  

 

—

 

  

 

2,660,000

 

  

 

7,762,500

 

  

 

—

 

  

 

—

 

Unvested Equity Awards(3)(4)

  

 

—

 

  

 

1,705,358

 

  

 

4,262,831

 

  

 

—

 

  

 

4,262,831

 

2016 MYLTIP awards(5)

  

 

—

 

  

 

2,337,827

 

  

 

2,426,465

 

  

 

2,426,465

 

  

 

2,426,465

 

2017 MYLTIP awards(5)

  

 

—

 

  

 

1,713,105

 

  

 

2,708,291

 

  

 

2,708,291

 

  

 

2,708,291

 

2018 MYLTIP awards(5)

  

 

—

 

  

 

1,053,011

 

  

 

3,515,387

 

  

 

3,515,387

 

  

 

3,515,387

 

Benefits Continuation

  

 

—

 

  

 

22,000

 

  

 

68,000

 

  

 

—

 

  

 

33,000

 

Other Benefits(6)

  

 

—

 

  

 

—

 

  

 

150,000

 

  

 

—

 

  

 

—

 

Excise TaxGross-Up

  

 

—

 

  

 

—

 

  

 

8,037,380

 

  

 

—

 

  

 

—

 

Total

  

 

—

 

  

 

10,216,301

 

  

 

28,930,854

 

  

 

8,650,143

 

  

 

13,670,974

 

Raymond A. Ritchey

          

Bonus

  

 

—

 

  

 

720,000

 

  

 

—

 

  

 

—

 

  

 

720,000

 

Severance

  

 

—

 

  

 

2,800,000

 

  

 

7,290,000

 

  

 

—

 

  

 

—

 

Unvested Equity Awards(3)(4)(8)

  

 

276,986

 

  

 

427,692

 

  

 

578,507

 

  

 

—

 

  

 

578,507

 

2016 MYLTIP awards(5)

  

 

1,840,080

 

  

 

1,772,862

 

  

 

1,840,080

 

  

 

1,840,080

 

  

 

1,840,080

 

2017 MYLTIP awards(5)

  

 

2,075,760

 

  

 

1,313,003

 

  

 

2,075,760

 

  

 

2,075,760

 

  

 

2,075,760

 

2018 MYLTIP awards(5)

  

 

2,493,132

 

  

 

772,918

 

  

 

2,580,321

 

  

 

2,580,321

 

  

 

2,580,321

 

Benefits Continuation

  

 

—

 

  

 

20,000

 

  

 

62,000

 

  

 

—

 

  

 

30,000

 

Other Benefits(6)

  

 

—

 

  

 

—

 

  

 

150,000

 

  

 

—

 

  

 

—

 

Excise TaxGross-Up

  

 

—

 

  

 

—

 

  

 

6,784,809

 

  

 

—

 

  

 

—

 

Total

  

 

6,685,958

 

  

 

7,826,475

 

  

 

21,361,477

 

  

 

6,496,161

 

  

 

7,824,668

 

  Scenario 

Payments and Benefits

Upon

Termination

 Owen D. Thomas  Douglas T. Linde  Raymond A. Ritchey  Michael E. LaBelle  Bryan J. Koop 

Involuntary Not for Cause or Good Reason Termination

 Bonus $2,350,000  $1,900,000  $1,650,000  $1,250,000  $1,250,000 
 Severance $6,900,000  $2,845,000  $2,560,000  $1,805,000  $1,780,000 
 Unvested Equity Awards(1)(2) $6,482,395  $2,859,533  $921,573  $1,137,385  $459,038 
 2018 MYLTIP Awards(1)(3) $1,652,730  $1,089,752  $799,853  $347,587  $213,288 
 2019 MYLTIP Awards(1)(3) $708,522  $436,849  $340,071  $157,916  $105,237 
 2020 MYLTIP Awards(1)(3) $84,153  $47,806  $35,833  $16,431  $11,573 
 Benefits Continuation $48,523  $24,261  $22,056  $24,261  $22,056 
 Total $18,226,323  $9,203,201  $6,329,386  $4,738,580  $3,841,192 

 

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COMPENSATION OF EXECUTIVE OFFICERS

8› COMPENSATION OF EXECUTIVE OFFICERS

 

Payments Upon Termination  

Qualified

Retirement

($)

   

Involuntary

Not for Cause

Termination/

Good Reason

Termination

($)

   

Involuntary or

Good Reason

Termination

Following

Change in

Control

($)(1)

   

Change in

Control

Without

Termination

($)(1)

   

Death or

Disability

($)

 

Michael E. LaBelle

          

Bonus

  

 

—

 

  

 

500,000

 

  

 

—

 

  

 

—

 

  

 

500,000

 

Severance

  

 

—

 

  

 

1,825,000

 

  

 

4,555,000

 

  

 

—

 

  

 

—

 

Unvested Equity Awards(3)(4)

  

 

—

 

  

 

885,431

 

  

 

2,257,753

 

  

 

—

 

  

 

2,257,753

 

2016 MYLTIP awards(5)

  

 

—

 

  

 

791,276

 

  

 

821,277

 

  

 

821,277

 

  

 

821,277

 

2017 MYLTIP awards(5)

  

 

—

 

  

 

602,431

 

  

 

952,398

 

  

 

952,398

 

  

 

952,398

 

2018 MYLTIP awards(5)

  

 

—

 

  

 

335,855

 

  

 

1,121,223

 

  

 

1,121,223

 

  

 

1,121,223

 

Benefits Continuation

  

 

—

 

  

 

22,000

 

  

 

68,000

 

  

 

—

 

  

 

33,000

 

Other Benefits(6)

  

 

—

 

  

 

—

 

  

 

150,000

 

  

 

—

 

  

 

—

 

Excise TaxGross-Up

  

 

—

 

  

 

—

 

  

 

3,771,028

 

  

 

—

 

  

 

—

 

Total

  

 

—

 

  

 

4,961,993

 

  

 

13,696,679

 

  

 

2,894,898

 

  

 

5,685,651

 

Bryan J. Koop

          

Bonus

  

 

—

 

  

 

400,000

 

  

 

—

 

  

 

—

 

  

 

400,000

 

Severance

  

 

—

 

  

 

1,680,000

 

  

 

4,136,250

 

  

 

—

 

  

 

—

 

Unvested Equity Awards(3)(4)

  

 

—

 

  

 

690,832

 

  

 

1,687,800

 

  

 

—

 

  

 

1,687,800

 

2016 MYLTIP awards(5)

  

 

—

 

  

 

445,791

 

  

 

462,693

 

  

 

462,693

 

  

 

462,693

 

2017 MYLTIP awards(5)

  

 

—

 

  

 

326,275

 

  

 

515,817

 

  

 

515,817

 

  

 

515,817

 

2018 MYLTIP awards(5)

  

 

—

 

  

 

206,125

 

  

 

688,131

 

  

 

688,131

 

  

 

688,131

 

Benefits Continuation

  

 

—

 

  

 

21,000

 

  

 

62,200

 

  

 

—

 

  

 

30,150

 

Other Benefits(6)

  

 

—

 

  

 

—

 

  

 

150,000

 

  

 

—

 

  

 

—

 

Excise TaxGross-Up

  

 

—

 

  

 

—

 

  

 

2,986,428

 

  

 

—

 

  

 

—

 

Total

  

 

—

 

  

 

3,770,023

 

  

 

10,689,319

 

  

 

1,666,641

 

  

 

3,784,591

 

  Scenario 

Payments and Benefits

Upon

Termination

 Owen D. Thomas  Douglas T. Linde  Raymond A. Ritchey  Michael E. LaBelle  Bryan J. Koop 

Involuntary Not for Cause or Good Reason Termination Following Change in Control(4)

 Bonus $2,350,000   —   —   —   — 
 Severance $10,550,000  $8,460,000  $8,200,000  $5,600,000  $5,430,000 
 Unvested Equity Awards(1)(2) $8,613,385  $5,719,065  $921,573  $2,196,499  $1,032,079 
 2018 MYLTIP Awards(1)(3) $1,708,913  $1,126,798  $827,043  $359,403  $220,538 
 2019 MYLTIP Awards(1)(3) $1,116,305  $688,273  $535,796  $248,803  $165,806 
 2020 MYLTIP Awards(1)(3) $278,391  $158,149  $118,541  $54,355  $38,285 
 Benefits Continuation $72,784  $75,214  $68,598  $75,214  $68,598 
 Other Benefits(5) $150,000  $150,000  $150,000  $150,000  $150,000 
 Excise Tax Gross-Up(6)  —  $4,364,986  $3,865,898  $2,747,823  $2,647,611 
 Total $24,839,778  $20,742,485  $14,687,449  $11,432,097  $9,752,917 

Change in Control Without Termination

 2018 MYLTIP Awards(1)(3) $1,708,913  $1,126,798  $827,043  $359,403  $220,538 
 2019 MYLTIP Awards(1)(3) $1,116,305  $688,273  $535,796  $248,803  $165,806 
 2020 MYLTIP Awards(1)(3) $278,391  $158,149  $118,541  $54,355  $38,285 
 Total $3,103,609  $1,973,220  $1,481,380  $662,561  $424,629 

Death or Disability

 Bonus $2,350,000  $1,900,000  $1,650,000  $1,250,000  $1,250,000 
 Unvested Equity Awards(1)(2) $8,613,385  $5,719,065  $921,573  $2,196,499  $1,032,079 
 2018 MYLTIP Awards(1)(3) $1,708,913  $1,126,798  $827,043  $359,403  $220,538 
 2019 MYLTIP Awards(1)(3) $1,116,305  $688,273  $535,796  $248,803  $165,806 
 2020 MYLTIP Awards(1)(3) $278,391  $158,149  $118,541  $54,355  $38,285 
 Benefits Continuation $36,392  $36,392  $33,084  $36,392  $33,084 
 Total $14,103,386  $9,628,677  $4,086,037  $4,145,452  $2,739,792 

Qualified Retirement

 Unvested Equity Awards(1)(2)  —   —  $921,573   —  $1,032,079 
 2018 MYLTIP Awards(1)(3)  —   —  $827,043   —  $220,538 
 2019 MYLTIP Awards(1)(3)  —   —  $535,796   —  $165,806 
 2020 MYLTIP Awards(1)(3)  —   —  $118,541   —  $38,285 
 Total  —   —  $2,402,953   —  $1,456,708 

 

(1)

Assumes termination occurs simultaneously with a change in control.

(2)

We entered into a new employment agreement with Mr. Thomas on April 2, 2018.

(3)

Restricted common stock, LTIP units and LTIP units that would have been earned pursuant to 20162018 MYLTIP awards, 20172019 MYLTIP awards and 20182020 MYLTIP awards are valued based on the closing price of the Company’s common stock on December 31, 2018,2020, which was $112.55$94.53 per share.

 

(4)(2)

Includes the following unvested shares of restricted common stock and LTIP units (including outstanding performance-based LTI equity awards for which the three-year performance period has ended and that have been earned (i.e., 20152017 MYLTIP awards)) that would have vested upon the occurrence of each triggering event:

 

 • 

Involuntary not for cause termination or a good reason termination prior to a change in control: Mr. Thomas – 36,525— 68,575 LTIP units; Mr. Linde –— an aggregate of 15,15230,250 LTIP units and shares of restricted common stock; Mr. Ritchey – 3,800— 9,749 LTIP units; Mr. LaBelle –— an aggregate of 7,86712,032 LTIP units and shares of restricted common stock; and Mr. Koop – 6,138— 4,856 LTIP units.

 

 • 

Involuntary not for cause termination or a good reason termination within 24 months following a change in control and death or disability: Mr. Thomas – 55,938— 91,118 LTIP units; Mr. Linde –— an aggregate of 37,87560,500 LTIP units and shares of restricted common stock; Mr. Ritchey – 5,140— 9,749 LTIP units; Mr. LaBelle –— an aggregate of 20,06023,236 LTIP units and shares of restricted common stock; and Mr. Koop – 14,996— 10,918 LTIP units.

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COMPENSATION OF EXECUTIVE OFFICERS

 

 • 

Qualified retirement:Retirement: Mr. Ritchey – 2,461— 9,749 LTIP units and Mr. Koop — 10,918 LTIP units.

 

(5)(3)

As of December 31, 2018,2020, the three-year performance periods had not ended for the 20162018 MYLTIP awards, 20172019 MYLTIP awards and 20182020 MYLTIP awards. The values set forth above relating to the number of LTIP units that would have been earned in the event of qualified retirement,a Qualified Retirement, involuntary not for cause termination/good reason termination, or death or disability assume our performance for the three-year performance period under the 20162018 MYLTIP awards, 20172019 MYLTIP awards and 20182020 MYLTIP awards continued at the same annualized rate as we experienced from the first day of the respective performance period through December 31, 20182020 with proration, as applicable, but are not discounted to reflect the fact that such LTIP units would not be earned until a later date and would be subject to continuing transfer restrictions in the case of qualified retirementQualified Retirement and involuntary termination prior to a change in control.

 

(6)
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8› COMPENSATION OF EXECUTIVE OFFICERS

(4)

Assumes termination occurs simultaneously with a change in control.

(5)

Includes outplacement services valued at 15% of the sum of current base salary plus bonus with respect to the immediately preceding year up to a maximum of $75,000 paid in a lump sum, and financial counseling and tax preparation services valued at $25,000 per year for 36 months.

 

(7)(6)

Under his employment agreement, Mr. Thomas is not entitled to receive taxgross-up payments in the event he becomes subject to the golden parachute excise tax. However, in the event thatInstead, if any payment or benefit to be paid or provided to Mr. Thomas would have beenbe subject to the golden parachute excise tax, the payments and benefits will be reduced to the extent necessary to avoid the imposition of such excise tax if such reduction would result in a greaterafter-tax benefit to Mr. Thomas. The amounts set forth in the table above have not been adjusted to reflect any such reduction that might be applicable.

(8)

All of Mr. Ritchey’s shares of restricted common stock and LTIP units (other than LTIP units earned pursuant to the 2015 MYLTIP awards and LTIP units granted on February 6, 2018) were fully vested as of December 31, 2018 because he had previously attained age 65 (see Note 3 beginning on page 72).apply.

The above discussion and the amounts shown in the above tables do not include payments and benefits to the extent they have been earned prior to the termination of employment or are provided on anon-discriminatory basis to salaried employees upon termination of employment. These include:

 

accrued salary and vacation pay;

•

accrued salary and vacation pay;

 

 • 

distribution of plan balances under our 401(k) plan and thenon-qualified deferred compensation plan (see “– Nonqualified Deferred Compensationin 2020” beginning on page 77 for the plan balances of each NEO under thenon-qualified deferred compensation plan); and

 

life insurance proceeds in the event of death.

PAY RATIO DISCLOSURE

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K,SEC regulations, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Thomas, our CEO:

For 2018,2020, our last completed fiscal year:

 

the median of the annual total compensation of all employees of the Company (other than our CEO) was $109,173;$108,126; and

 

the annual total compensation of our CEO, as reported in the Summary Compensation Table on page 70,77, was $11,694,946.$10,737,289.

Based on this information, for 20182020, the ratio of the annual total compensation of Mr. Thomas to the median of the annual total compensation of all other employees was 10799 to 1.

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COMPENSATION OF EXECUTIVE OFFICERS1.

The median employee that was used for purposes of calculating the ratio of the annual total compensation of our CEO to the median of the total compensation of all employees is the same employee that was identified for purposes of our 2017 disclosure. The median employee works in Boston, Massachusetts. There has been no change in our employee population or employee compensation arrangement since that median employee was identified that we believe would significantly impact our pay ratio disclosure. We identified the median employee by totaling (1) cash compensation (i.e., wages, overtime and bonus) as reflected on our payroll records for 20172020 and (2) the value of LTI equity awards that were granted in 20172020 and subject to time-based vesting, for all individuals, excluding our CEO, who we employed on December 31, 20172020 (whether on a full-time, part-time, temporary or seasonal basis). In addition, we annualized the wages of full-time employees who were hired during 20172020 but did not work for us the entire fiscal year. We did not make any other assumptions, adjustments, or estimates with respect to total cash compensation or LTI compensation.

WeAfter identifying the median employee, we calculated annual total compensation for 20182020 for the median employee using the same methodology we use for our NEOs as set forth in the Summary Compensation Table.

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8› COMPENSATION OF EXECUTIVE OFFICERS

As of December 31, 2018, our employee population consisted of 747 individuals2020, we employed 740 full-time and 10 part-time employees, all of whom are located in the United States. This population consisted of 732 full-time and 15 part-time employees. The average tenure of our employee population was 10.49.8 years. The average tenure of our officers andnon-officers was 18.118.2 years and 9.58.7 years, respectively. Our employees are organized into the following functions: Accounting (87), Accounting Operations (17), Administrative Management (18), Construction (45), Development (27), Executive Management (12), Finance & Capital Markets (27), Human Resources (10), Information Systems (26), Internal Audit (3), Leasing (31), Legal (36), Property Management (405), and Risk Management (3).

In promulgating Item 402(u) of RegulationS-K, the

  FunctionNumber of
Employees

Accounting

96

Accounting Operations

16

Administrative Management

19

Construction

46

Development

25

Executive Management

12

Finance & Capital Markets

28

Human Resources

11
  FunctionNumber of
Employees

Information Systems

35

Internal Audit

3

Leasing

31

Legal

37

Marketing

24

Property Management

373

Risk Management

3

SEC permitsregulations permit registrants to use reasonable estimates and certain prescribed alternative methodologies. As a result, our calculation of the CEO pay ratio may differ from the calculations used by other companies and therefore may not be comparable.

COMPENSATION COMMITTEE REPORT    

The Compensation Committee of Boston Properties has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation BOSTON PROPERTIES, INC.  |S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

2019 Proxy StatementSubmitted by the Compensation Committee:    89

Kelly A. Ayotte, Chair

Carol B. Einiger

David A. Twardock

William H. Walton, III

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91

9› PROPOSAL 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

PROPOSAL 2:

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

PROPOSAL

Section 14A(a)(1) of the Exchange Act generally requires each public company to include in its proxy statement a separate resolution subject to anon-binding stockholder vote to approve the compensation of the Company’s NEOs, as disclosed in its proxy statement pursuant to Item 402 of RegulationS-K, not less frequently than once every three years. This is commonly known as a“Say-on-Pay” proposal or resolution.

At our 2017 annual meeting of stockholders, our stockholders voted on, among other matters, a proposal regarding the frequency of holding anon-binding, advisory vote on the compensation of our NEOs. More than 85% of the votes cast on the frequency proposal were cast in favor of holding anon-binding, advisory vote on the compensation of the Company’s named executive officersNEOs every year, which was consistent with the recommendation of our Board of Directors. Our Board of Directors considered the voting results with respect to the frequency proposal and other factors, and the Board of Directors currently intends for the Company to hold anon-binding, advisory vote on the compensation of the Company’s NEOs every year until the next required advisory vote on the frequency of holding thenon-binding, advisory vote on the compensation of our NEOs, which will occur not later than the 2023 annual meeting of stockholders.

Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the 20192021 annual meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to the Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

The vote is advisory, and therefore not binding on Boston Properties, the Compensation Committee or our Board of Directors.Directors or the Compensation Committee. However, our Board of Directors and our Compensation Committee value the opinions of our stockholders and intend to take into account the results of the vote when considering future compensation decisions for our named executive officers.NEOs.

The Board of Directors unanimously recommends a voteFOR the approval of the Company’s NEO compensation on an advisory basis. Properly authorized proxies solicited by the Board of Directors will be votedFORthis proposal unless instructions to the contrary are given.

VOTE REQUIRED

The affirmative vote of a majority of shares of common stock present in person or represented by proxy at the meeting and entitled to vote on this proposal is required for the approval of this proposal. Abstentions shall be included in determining the number of shares present and entitled to vote on the proposal, thus having the effect of a vote against the proposal. Brokernon-votes, if any, are not counted in determining the number of shares present and entitled to vote and will therefore have no effect on the outcome.

 

90    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

COMPENSATION OF DIRECTORS

Our directors who are also employees receive no additional compensation for their services as directors. During 2018, we paid ournon-employee directors the following cash compensation:

Annual cash retainer for their services(1)

  $67,500 

Annual cash retainer to the lead independent director(1)

  $15,000 

Annual cash retainer to the Chair of each of the Audit Committee, Compensation Committee and NCG Committee(1)

  $15,000 

Fee for each Board meeting attended

   $1,500 

Fee for each Committee meeting attended

   $1,500 

(1)

Payable in quarterly installments

Committee attendance fees are received whether or not the committee meeting is held on the same day as a meeting of our Board of Directors.Non-employee directors also are reimbursed for reasonable expenses incurred to attend Board of Directors and committee meetings.

Non-employee directors may elect, in accordance with our 2012 Plan and our Amended and Restated Rules and Conditions for Directors’ Deferred Compensation Program (the “Directors’ Deferred Compensation Program”), to defer all cash retainer and meeting attendance fees payable to such director and to receive his or her deferred cash compensation in the form of our common stock or in cash following the director’s retirement from our Board of Directors. Each director is credited with the number of deferred stock units determined by dividing the amount of the cash compensation deferred during each calendar quarter by the closing market price of our common stock on the NYSE on the last trading day of the quarter. Hypothetical dividends on the deferred stock units are “reinvested” in additional deferred stock units based on the closing market price of the common stock on the cash dividend payment date. Payment of a director’s account may be made in either a lump sum of shares of our common stock equal to the number of deferred stock units in a director’s account or in ten annual installments following the director’s retirement from our Board of Directors. In addition, non-employee directors who elect a deferred payout following their retirement from the Board may elect to change their notional investment from our common stock to a deemed investment in one or more measurement funds. This election to convert may only be made after the director’s service on the Board ends, the election is irrevocable and the director must convert 100% of his or her deferred stock account if any is converted. Payment of a director’s account that has been converted to measurement funds will be in cash instead of shares of our common stock. The measurement funds available to directors are the same as those available to our executives under our Nonqualified Deferred Compensation Plan. See “Compensation of Executive Officers – Nonqualified Deferred Compensation” on page 77.

In 2018, each continuingnon-employee director was also entitled to receive, on the fifth business day after the annual meeting of stockholders, a number of shares of restricted common stock or, if elected by such director, LTIP units (or a combination of both) valued at $127,500. In addition, any newnon-employee director that is appointed to our Board of Directors other than at an annual meeting of stockholders would be entitled to receive, on the fifth business day after the appointment, a number of shares of restricted common stock (or, if offered by the Board of Directors and elected by such director, LTIP units) valued at $127,500 (prorated based on the number of months from the date the director is first appointed to our Board of Directors to the date of the Company’s next annual meeting of stockholders).

Annual and initial grants of restricted common stock or, if elected by the director, LTIP units (or a combination of both) are made pursuant to a policy adopted by the Board of Directors so that the equity compensation ofnon-employee directors will be determined by a formula. The actual number of

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COMPENSATION OF DIRECTORS

shares of restricted common stock or LTIP units that we grant is determined by dividing the fixed value of the grant by the closing market price of our common stock on the NYSE on the grant date. Pursuant to this policy, on May 31, 2018, Mses. Ayotte, Einiger and Dykstra and Messrs. Duncan, Frenkel, Klein, Lustig, Turchin and Twardock each received 1,047 LTIP units, shares of restricted common stock or a combination of both. Annual and initial grants of LTIP units and restricted common stock will vest 100% on the earlier of (1) the first anniversary of the grant date and (2) the date of the next annual meeting of stockholders.

Historically, our Board of Directors has not chosen to review the compensation payable to ournon-employee directors on an annual basis; instead, it reviews the compensation every two or three years and when circumstances otherwise dictate. As a result, the current program has been in place since 2016.

In February 2019, our Board approved the Boston Properties, Inc.Non-Employee Director Compensation Plan, which sets forth the cash and equity compensation that is to be paid to ournon-employee directors in a specific, formulaic manner. This plan implements recommendations that our Compensation Committee made to the full Board based on a comprehensive review of the structure and amount of our existing compensation fornon-employee directors. For this review, our Compensation Committee engaged FW Cook.

When our Board of Directors approved the structure and amounts of the new compensation program, effective January 1, 2019, it believed that the new program is fair and in the best interest of all stockholder of the Company. Nevertheless, because of the interests that ournon-employee directors have in the establishment of the compensation they receive, our Board determined to seek stockholder approval for theNon-Employee Director Compensation Plan. Therefore, please see“Proposal 3 – Approval of the Boston Properties, Inc.Non-Employee Director Compensation Plan” beginning on page 95 of this proxy statement for more detail on the terms and conditions of the Boston Properties, Inc.Non-Employee Director Compensation Plan.

DIRECTOR COMPENSATION TABLE

The following table summarizes the compensation earned by ournon-employee directors during the year ended December 31, 2018.

Name  

Fees Earned

or Paid in

Cash ($) (1)

   

Stock

Awards ($)(2)

   

Option

Awards ($)

   

All Other

Compensation ($)

   Total
($)		 

Kelly A. Ayotte

   55,982    114,750    —    —    170,732 

Bruce W. Duncan

   96,000    114,750    —    —    210,750 

Karen E. Dykstra

   90,000    127,500    —    —    217,500 

Carol B. Einiger

   105,000    114,750    —    —    219,750 

Dr. Jacob A. Frenkel

   91,434    114,750    —    —    206,184 

Joel I. Klein

   106,500    114,750    —    —    221,250 

Matthew J. Lustig

   94,607    114,750    —    —    209,357 

Alan J. Patricof

   40,203    114,750    —    —    154,953 

Martin Turchin

   91,500    114,750    —    —    206,250 

David A. Twardock

   120,000    127,500    —    —    247,500 

(1)

Ms. Einiger and Messrs. Klein, Lustig, Patricof and Twardock deferred their cash fees earned during 2018 and received in lieu thereof deferred stock units. The following table summarizes the deferred stock units credited to the director accounts during 2018.

92    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

COMPENSATION OF DIRECTORS

NameDeferred Stock
Units Earned
during 2018
(#)		 

Carol B. Einiger

✓		 882.83

Joel I. KleinTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
COMPENSATION PAID TO THE COMPANY’S NEOS AS DISCLOSED IN THIS PROXY STATEMENT. PROPERLY
AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS PROPOSAL
UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.

882.38

Matthew J. Lustig

783.45

Alan J. Patricof(a)

329.09

David A. Twardock

1,008.82

 

(a)

On May 23, 2018, the date of Mr. Patricof’s retirement from our Board of Directors, the Company issued 36,835 shares of common stock to Mr. Patricof in settlement of his deferred stock award account.

(2)

Represents the total fair value of common stock and LTIP unit awards granted tonon-employee directors in 2018, determined in accordance with ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. A discussion of the assumptions used in calculating these values can be found in Note 16 to our 2018 audited financial statements beginning on page 175 of our annual report on Form10-K for the year ended December 31, 2018 included in the annual report that accompanied this proxy statement.

 

NameLTIP Units
(#)		Common Stock
(#)

Kelly A. Ayotte

1,047—

Bruce W. Duncan

1,047—

Karen E. Dykstra

—1,047

Carol B. Einiger

1,047—

Dr. Jacob A. Frenkel

1,047—

Joel I. Klein

1,047—

Matthew J. Lustig

1,047—

Martin Turchin

1,047—

David A. Twardock

—1,047

DIRECTOR STOCK OWNERSHIP GUIDELINES

Our Board believes it is important to align the interests of the directors with those of the stockholders and for directors to hold equity ownership positions in Boston Properties. Accordingly, eachnon-employee director is expected to retain an aggregate number of shares of our common stock, our deferred stock units (and related dividend equivalent rights), and LTIP units and common units in our Operating Partnership, whether vested or not, equal to at least the aggregate number of such shares or units received by the director as annual retainers during the first three years following the later of: (a) our 2007 annual meeting of stockholders or (b) our annual meeting of stockholders at which the director was initially elected or, if earlier, the first annual meeting of stockholders following the initial appointment of the director. Compliance with these ownership guidelines will be measured as of the end of each fiscal year. Any director who is prohibited by law or by applicable regulation of his or her employer from owning equity in the Company shall be exempt from this requirement. The NCG Committee may consider whether exceptions should be made for any director on whom this requirement could impose a financial hardship.

Based on FW Cook’s recommendations, our Board also approved new stock ownership guidelines fornon-employee directors to better align their interests with those of the stockholders and conform to

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COMPENSATION OF DIRECTORS

“best” practices. Under the new guidelines, eachnon-employee director is expected to retain an aggregate number of shares of common stock of the Company, deferred stock units (and related dividend equivalent rights) in the Company, and LTIP units, and common units in the Operating Partnership, whether vested or not, equal to at least five (5) times the value of the then current annual cash retainer paid tonon-employee directors for their service on the Board without respect to service on committees of the Board or as lead independent director or Chairman. Eachnon-employee director, until such director complies with the ownership guidelines set forth above, is expected to retain all equity awards granted by the Company or the Operating Partnership (less amounts sufficient to fund any taxes owed relating to such equity awards). The deferred stock units (and related dividend equivalent rights) in the Company and LTIP units and common units in the Operating Partnership shall be valued by reference to the market price of the number of shares of common stock of the Company issuable upon the settlement or exchange of such units assuming that all conditions necessary for such settlement or exchange have been met. For shares of common stock of the Company or equity valued by reference to common stock of the Company for purposes of these ownership guidelines, the market price of the common stock of the Company used to value such equity shall be the greater of (1) the market price on the date of purchase or grant of such equity or (2) the market price as of the date compliance with these ownership guidelines is measured.

The effectiveness of these new stock ownership guidelines is conditioned upon stockholder approval of the Boston Properties, Inc.Non-Employee Director Compensation Plan at the 2019 annual meeting of stockholders.

94    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

PROPOSAL

On February 26, 2019, our Board of Directors approved the Boston Properties, Inc.Non-Employee Director Compensation Plan (the “Director Compensation Plan”), which sets forth the cash and equity compensation that is to be paid to ournon-employee directors in a specific, formulaic manner. Although we are not legally required to seek or receive stockholder approval for the Director Compensation Plan, we are submitting the plan to stockholders for approval. Our Compensation Committee and Board of Directors last reviewed ournon-employee director compensation in 2016, or three years ago.

The Director Compensation Plan implements recommendations that our Compensation Committee made to the full Board based on a comprehensive review of the structure and amounts of our existing compensation fornon-employee directors. For the 2019 review, our Compensation Committee engaged FW Cook to help ensure that ournon-employee director compensation remains competitive and is generally consistent with “best” practices. Our Compensation Committee also sought recommendations from FPL regarding compensation for the role ofnon-executive chairman.

The Director Compensation Plan does not reserve any additional shares of common stock for issuance; all equity grants made under the Director Compensation Plan must be made pursuant to the 2012 Plan or another separately approved equity plan.

When our Board of Directors approved the structure and amount of the new compensation program for ournon-employee directors, effective January 1, 2019, it believed that the new program is fair and in the best interests of all stockholders of the Company. Nevertheless, because of the interests that ournon-employee directors have in the establishment of the compensation they receive for their service as our directors, our Board of Directors also determined that it would be advisable to submit the Director Compensation Plan to stockholders for their approval. Our Board unanimously recommends that stockholders voteFOR the Director Compensation Plan.

BACKGROUND

Ournon-employee director compensation is intended to attract, retain and appropriately compensate highly qualified individuals to serve on our Board of Directors. Historically, our Compensation Committee and Board of Directors have not reviewed ournon-employee director compensation on an annual basis – instead choosing to review the compensation every two or three years – and the current compensation program has been in place since 2016. Because of this practice and the fact that our Compensation Committee targets compensation levels that are competitive with the median of the Benchmarking Peer Group, the total compensation payable to ournon-employee directors tends to fall below the median in years following our most recent review until the program is benchmarked again. This is consistent with FW Cook’s findings.

In determining the amount and type ofnon-employee director compensation that we pay, our Compensation Committee received a thorough comparative benchmarking analysis ofnon-employee director compensation within the same Benchmarking Peer Group used by our Compensation Committee when benchmarking executive compensation, and it received and evaluated detailed advice from FW Cook that was developed on the basis of a targeted competitive approach and FW Cook’s expertise in recent trends and developments innon-employee director compensation generally. In connection with this analysis and evaluation (1) FW Cook advised that the compensation currently paid to ournon-employee directors, on an individual basis, is below the 25th percentile of our

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PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

Benchmarking Peer Group, and, on an aggregate basis, just slightly above the 25th percentile of our Benchmarking Peer Group; (2) our Compensation Committee sought to target compensation levels that would be competitive with the median of our Benchmarking Peer Group and the recommendations made by FW Cook were consistent with that goal; and (3) with respect to additional compensation payable to thenon-executive chairman, FW Cook and FPL advised our Compensation Committee that the compensation provided in the Director Compensation Plan is towards the lower end of the competitive range for similarly-situated board chairs based on role and responsibilities. Thenon-employee director compensation set forth in the Director Compensation Plan reflects changes to the current structure and amounts of ournon-employee director compensation that resulted from this detailed review.

Our Board of Directors believes the Director Compensation Plan provides appropriate compensation that is competitive with the median of our Benchmarking Peer Group and aligns the interests of ournon-employee directors and our stockholders in the future success of the Company, and recommends that our stockholders approve it.

SUMMARY OF THE DIRECTOR COMPENSATION PLAN

The following description of the Director Compensation Plan is a summary only and is qualified in its entirety by reference to the full text of the Director Compensation Plan that is attached hereto asAppendix B.

Compensation Payable under the Director Compensation Plan

The Director Compensation Plan provides that eachnon-employee director shall be entitled to the compensation described below while serving as a director. Our directors who are also employees are not entitled to receive compensation pursuant to the Director Compensation Plan. We currently have ninenon-employee directors.

Cash Compensation(1)

Annual cash retainer for Board services

$85,000

Annual cash retainer to the Chairman of the Board

$100,000(2)

Annual cash retainer to the Chair of the Audit Committee

$20,000(3)

Annual cash retainer to the members of the Audit Committee

$15,000

Annual cash retainer to the Chair of other standing committees(4)

$15,000(3)

Annual cash retainer to the members of other standing committees

$10,000

(1)

The sum of all cash retainers are payable in quarterly installments in arrears, subject to proration for periods of service less than a full quarter in length.

(2)

The retainer payable to the Chairman is in addition to all other retainers to which the Chairman may be entitled.

(3)

The retainer payable to each committee chair is in addition to the retainer payable to all members of the committee.

(4)

The term “other standing committees” includes the Compensation and NCG Committees, as well as other committees that may be constituted from time to time.

Under the Director Compensation Plan,non-employee directors will not receive meeting attendance fees for any meeting of our Board of Directors or a committee thereof that he or she attends.

96    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

Equity Compensation

Each continuingnon-employee director is entitled to receive, on the fifth business day after each annual meeting of stockholders, a number of shares of restricted common stock or, if elected by such director, LTIP units (or a combination of both) valued at $150,000, which grant will vest on the earlier of (1) the first anniversary of the grant date and (2) the date of the next annual meeting of stockholders, in each case subject to potential acceleration as set forth in the 2012 Plan or the applicable award agreement.

In addition, any newnon-employee director that is appointed to our Board of Directors other than at an annual meeting of stockholders would be entitled to receive, on the fifth business day after the appointment, a number of shares of restricted common stock or, if elected by such director, LTIP units (or a combination of both) valued at $150,000 (prorated based on the number of months from the date the director is first appointed to our Board of Directors to the first anniversary of the Company’s most recently held annual meeting of stockholders), which grant will vest on the earlier of (1) the first anniversary of the grant date and (2) the date of the next annual meeting of stockholders, in each case subject to potential acceleration as set forth in the 2012 Plan or the applicable award agreement.

Annual and initial grants of restricted common stock or, if elected by the director, LTIP units (or a combination of both) under the Director Compensation Plan are determined by a formula. The actual number of shares of restricted common stock or LTIP units that we grant is determined by dividing (1) the fixed value of the grant by (2) the closing market price of our common stock on the NYSE on the grant date. The closing price of our common stock on the NYSE on March 29, 2019 was $133.88.

All equity grants made under the Director Compensation Plan will be made pursuant to the 2012 Plan or another separately approved equity plan. The Director Compensation Plan does not increase the number of available shares of our common stock reserved for issuance under the 2012 Plan or any other plan.

Deferral of Compensation

Eachnon-employee directors may elect to defer all cash retainers payable to them in accordance with the 2012 Plan and our Directors’ Deferred Compensation Program. For a description of the current terms of this deferral program, see“Compensation of Directors” beginning on page 91 of this proxy statement.

Amendments and Termination

Our Board of Directors reserves the right to amend or terminate the Director Compensation Plan at any time in its sole discretion.

Non-Exclusivity

The Director Compensation Plan is not intended to be exclusive and will not prevent our Board of Directors from adopting other or additional compensation arrangements with respect to anynon-employee director(s).

Plan Administration

The Director Compensation Plan will be administered by the Compensation Committee.

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PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

NEW PLAN BENEFITS

No cash or equity compensation has yet been issued under the Director Compensation Plan. For a discussion regarding current director compensation and director compensation for 2018, see“Compensation of Directors” beginning on page 91 of this proxy statement.

The following table discloses the benefits that would have been allocated to ournon-employee directors as a group during 2018 if the Director Compensation Plan had been in place at that time. No one other thannon-employee directors is eligible to participate in the Director Compensation Plan.

 

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

PROPOSAL 3:

APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

On March 18, 2021, following the recommendation of the Compensation Committee, our Board of Directors approved the Boston Properties, Inc. 2021 Stock Incentive Plan (the “2021 Plan”), subject to the approval of our stockholders. The 2021 Plan will become effective if and when it is approved by our stockholders, and it will replace the Company’s existing equity plan, originally adopted in 2012 (the “Prior Plan”). From and after the effective date of the 2021 Plan, no further awards will be made under the Prior Plan.

We believe that having an equity incentive plan in place is critical to our ability to attract, retain and motivate employees in a highly competitive marketplace and to ensure that the Company’s compensation program is structured in a manner that aligns employee interests with the success of the Company. By adopting the 2021 Plan, we will be able to continue using equity awards to attract, retain and motivate employees.

The following highlights key reasons why we believe stockholders should approve the 2021 Plan:

›  Reasonable Plan Cost

We requested a reasonable number of shares of common stock – 5,400,000 shares less one (1) share for every one (1) share that was granted after March 4, 2021 under the Prior Plan. Following the effective date of the 2021 Plan, no awards may be granted under the Prior Plan.

Awards would not have a substantially dilutive effect (issuance of all shares is 3.1% the sum of the number of shares of common stock and common units of partnership interest in our Operating Partnership of outstanding as of the record date).

›  Stockholder-Friendly Plan Features

Liberal share recycling shall be limited to full-value awards; shares of stock tendered or withheld upon the exercise of a stock option or stock appreciation right for tax withholding, net settlement or exercise payment shall not be added back.

No evergreen feature providing for automatic increases.

•

We may not reprice stock options, nor exchange “underwater” stock options (i.e., options for which the exercise price is greater than the market value of the underlying common stock) for another award or cash, without stockholder approval.

No liberal change in control definition.

›  Responsible Grant Practices by the Company

Our Compensation Committee designs our executive compensation program to be competitive with our peers.

Low three-year average burn rate

Performance-based equity awards (in the form of LTIP units) for executive officers are tied to performance metrics, such as TSR, over three-year, overlapping measurement periods.

55% of our Chief Executive Officer’s LTI equity awards (and 50% of our other NEO’s LTI equity awards) for 2020 consisted of performance-based MYLTIP awards earned based on TSR performance over a three-year performance period.

Time-based restricted stock and LTIP unit awards generally vest ratably over four years for all executive officers.

Robust stock ownership requirements for our executive officers.

“Double-trigger” acceleration of vesting upon change in control, which requires a qualified termination of employment following a change in control before vesting of time-based equity awards is accelerated for executive officers.

Our clawback policy applies to equity awards granted to executive officers and certain other specified officers.

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

✓

Non-Employee Director Compensation PlanTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE BOSTON
PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE VOTED FOR THIS PROPOSAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE
GIVEN.

 

Shares Available for Issuance and Outstanding Awards

Under the 2021 Plan, the number of shares of common stock to be available for issuance for new awards will be 5,400,000 shares less one (1) share for every one (1) share that was granted after March 4, 2021 under the Prior Plan. Following the effective date of the 2021 Plan, no awards may be granted under the Prior Plan.

›  Overhang as of March 4, 2021

The following table sets forth, as of March 4, 2021:

all outstanding stock options granted pursuant to our equity compensation plans (including the weighted average exercise price and weighted average remaining term),

the number of shares of common stock subject to all outstanding unvested full value awards granted pursuant to our equity compensation plans,

the number of shares of common stock to be available for issuance of new awards under the 2021 Plan, and

the total number of outstanding shares of common stock and common units in our Operating Partnership (other than common units held by Boston Properties).

 

Name and Position  Overhang Detail  Dollar
Value ($)		Number
Status as of UnitsMarch 4, 2021		 

Non-Employee Director Group (9 directors)Stock options outstanding

   2,390,000297,558(1)(2)

Weighted-average exercise price

   —$98.80

Weighted-average remaining term

0.86 years

Unvested full value shares outstanding(1)

1,329,611

Proposed shares reserved under 2021 Plan(2)

5,400,000

Total Common Stock and Common Units outstanding(3)

171,916,558 

 

(1)

The “Dollar Value ($)” column includes equity awards valued at $150,000 pernon-employee director, totaling $1,350,000 in the aggregate. The number ofIncludes (x) 486,716 LTIP units and 67,680 restricted shares of common stock that remain subject to vesting based solely on continued employment or service and (y) 775,215 LTIP Units issued would have been determinedunits granted pursuant to 2019, 2020 and 2021 MYLTIP Awards, which remain subject to performance-based vesting conditions in addition to vesting conditions based on the closing price of the common stock on the NYSE on the fifth business day after our annual meeting of stockholders. The “Dollar Value ($)” column also includes the amount of cash compensation that would have been deferred in accordance with elections made by ournon-employee directors pursuant to the 2012 Plan and our Directors’ Deferred Compensation Program.continued employment or service.

 

(2)

Assumes that Mr. Klein served as ChairmanProposed share reserve is subject to reduction for any awards granted under the Prior Plan after March 4, 2021. Upon stockholder approval of our Board of Directors during all of 2018.the 2021 Plan, no awards may be granted under the Prior Plan.

 

(3)

Includes 155,858,332 shares of common stock and 16,058,226 common units in our Operating Partnership outstanding as of March 4, 2021. Excludes 1,576,297 LTIP units outstanding as of March 4, 2021 and common units in our Operating Partnership held by Boston Properties.

The Board of Directors unanimously recommends a voteFOR the approval of the Boston Properties, Inc.Non-Employee Director Compensation Plan. Properly authorized proxies solicited by the Board of Directors will be votedFORthis proposal unless instructions to the contrary are given.

Other than the foregoing and vested LTIP units (or common units into which they were converted) and vested deferred stock units that were outstanding but not yet settled or exchanged for shares of common stock, no other awards pursuant to which shares of common stock were issuable under any of our existing or prior equity compensation plans, including the Prior Plan, were outstanding as of March 4, 2021.

 

 

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

VOTE REQUIREDBurn Rate

The following table sets forth information regarding historical awards granted during 2018, 2019 and 2020, and the corresponding “burn rate,” which is defined as the number of stock options and time-based, full value shares/units granted plus the number of performance-based, full-value shares/units earned in a year divided by the weighted-average number of shares of common stock and common units outstanding for that year, for each of the last three fiscal years:

›  Burn Rate Detail: 2018-2020

  Award Type  2018   2019   2020 

Stock options granted (A)

   0    0    0 

Time-based, full-value shares/units granted(1) (B)

   232,481    216,998    249,101 

Performance-based, full-value shares/units earned(2) (C)

   28,771    106,599    123,979 

Total (A+B+C)

   261,252    323,597    373,080 

Weighted-average common shares + units(3) (D)

   171,912,377    172,199,852    172,642,577 

Burn Rate ((A+B+C)/D)

   0.15%    0.19%    0.22% 

(1)

Time-based, full-value shares/units granted consists of all restricted stock awards, deferred stock units and LTIP units granted during the applicable year that, upon grant, either were vested or were subject to vesting based solely on continued employment or service.

(2)

Performance-based, full-value shares/units earned consists of all LTIP units for which performance-based vesting occurred with respect to a performance period that ended during such year even if the LTIP units remained subject to vesting based on continued employment or service. All performance-based, full-value awards granted or earned during 2018 – 2020 were LTIP unit awards. 2018 performance-based, full-value shares/units earned reflects LTIP units earned from the 2015 MYLTIP awards. 2019 performance-based, full-value share/units earned reflects LTIP units earned from the 2016 MYLTIP awards. 2020 performance-based full-value share/units earned reflects LTIP units earned from the 2017 MYLTIP awards. The following table provides further detail regarding performance-based, full-value awards that were granted, earned, forfeited and outstanding during 2018, 2019 and 2020:

    2018   2019   2020 
Unearned at beginning of period(a)(b)   1,239,978   1,211,816   951,850
Units granted(b)   342,659   220,734   203,278
Units earned   28,771   106,599   123,979 
Units forfeited(c)   342,050   374,101   271,760 
Unearned at end of period(a)(b)   1,211,816   951,850   759,389

(a)

Includes the outstanding number of LTIP units subject to performance-based vesting.

(b)

For performance-based LTIP unit awards granted prior to 2019, the number of LTIP units that could be earned was based on a dollar amount earned divided by an average of the closing prices of our common stock measured at the end of the performance period. As a result, the number of LTIP units issued was an estimate of the maximum number of LTIP units that could be earned based on certain assumptions. The number of units granted and unearned is based on the number of LTIP units actually issued and outstanding, respectively.

(c)

Represents LTIP units forfeited (based on the number initially issued, which, for awards granted prior to 2019, was an estimate of the maximum number of LTIP units that could be earned based on certain assumptions) upon determination of performance-based vesting or due to termination of employment or service relationship.

(3)

For each applicable year, represents the weighted-average number of shares of common stock of the Company and common units in our Operating Partnership (other than common units held by Boston Properties) outstanding during the year. Because the Company is a REIT that conducts substantially all of its operations through the Operating Partnership, both shares of common stock of the Company and common units in our Operating Partnership not owned by Boston Properties are included for purposes of calculating our burn rate. Each common unit in our Operating Partnership is exchangeable into shares of common stock on a one-for-one basis, subject to certain conditions.

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

Summary of 2021 Plan

The following description of certain material features of the 2021 Plan is intended to be a summary only. This summary is qualified in its entirety by the full text of the 2021 Plan that is attached hereto as Appendix A.

Shares of Common Stock Available. The maximum number of shares of common stock to be available for issuance for new awards will be 5,400,000 shares less one (1) share for every one (1) share that was granted after March 4,2021 under the Prior Plan. Following the effective date of the 2021 Plan, no awards may be granted under the Prior Plan. Based solely on the closing price of our common stock as reported on the NYSE on March 24, 2021, the maximum aggregate market value of the 5,400,000 shares that could potentially be issued under the 2021 Plan is $554,850,000.

Shares of common stock underlying awards granted under the 2021 Plan or the Prior Plan that are forfeited, canceled or otherwise terminated (other than by exercise) will be added back to the shares of common stock available for issuance under the 2021 Plan. Additionally, with respect to full-value awards under the 2021 Plan or the Prior Plan (i.e., an award other than a stock option, stock appreciation right or partnership unit with an economic structure similar to that of a stock option or stock appreciation right), shares tendered, held back or otherwise reacquired to cover tax withholding and shares previously reserved for issuance pursuant to such an award to the extent that such shares are not issued and are no longer issuable pursuant to such an award (e.g., in the event that a full-value award that may be settled in cash or by issuance of shares of Stock is settled in cash) will be added back to the shares available for issuance under the 2021 Plan. Shares of common stock tendered or held back for taxes or to cover the exercise price of an option or stock appreciation right will not be added back to the reserved pool under the 2021 Plan. Upon the exercise of a stock appreciation right that is settled in shares of common stock, the full number of shares of common stock underlying the award will be charged to the reserved pool. In the event we repurchase shares of common stock on the open market, the shares shall not be added to the shares of common stock available for issuance under the 2021 Plan.

In addition, in connection with the acquisition of another company, the Company may assume outstanding awards granted by another company as if they had been granted under the 2021 Plan or grant awards under the 2021 Plan in substitution of such outstanding awards, in each case, to the extent the applicable award recipient is eligible to be granted such an award under the 2021 Plan. Any shares of common stock issued pursuant to such assumed or substituted awards will not reduce the number of shares authorized for grant under the 2021 Plan.

Plan Administration. The 2021 Plan will be administered by either the Compensation Committee, the Board or by such other committee of the Board performing the functions of the Compensation Committee (in either case, the “Administrator”). The Administrator has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, to determine the specific terms and conditions of each award, subject to the provisions of the 2021 Plan, to accelerate the exercisability or vesting of any award, to interpret the 2021 Plan and awards granted thereunder, and to otherwise administer the 2021 Plan and the awards granted thereunder. Subject to applicable law, the Administrator, in its sole discretion, may delegate to our Chief Executive Officer, all or part of the Administrator’s authority and duties with respect to the granting of awards to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act, subject to certain limitations.

Types of Awards. The types of awards permitted under the 2021 Plan include stock options, stock appreciation rights, restricted stock unit awards, restricted stock awards, unrestricted stock awards, dividend equivalent rights, cash-based awards and other equity-based awards. Subject to the overall limit on the number of shares that may be issued under the 2021 Plan, shares of common stock may be issued up to such maximum number pursuant to any type of award; provided that no more than 5,400,000 shares of common stock (plus, to the extent permitted by the Code, any shares added back to the 2021 Plan as described above) may be issued in the form of incentive stock options.

Eligibility. All officers, employees, non-employee directors, consultants and advisors of the Company and its subsidiaries will be eligible to receive awards under the 2021 Plan. Persons eligible to participate in the 2021 Plan will be those officers, employees, non-employee directors, consultants and advisors of the Company and its subsidiaries as selected from time to time by the Administrator, as well as such other persons selected from time to time by the Administrator to whom issuances of shares

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

under the 2021 Plan may be registered and permitted under applicable securities laws. As of March 24, 2021, approximately 700 individuals would have been eligible to participate in the 2021 Plan had it been effective on such date. All persons who are eligible to receive awards form a single class under the 2021 Plan, as awards are made on a discretionary basis and the terms of the 2021 Plan do not distinguish among various eligible persons.

Adjustments for Stock Dividends, Stock Splits, Etc. The 2021 Plan requires the Administrator to make appropriate equitable adjustments to the number and kind of shares of common stock that are subject to issuance under the 2021 Plan, to certain limits in the 2021 Plan, and to any outstanding awards under the 2021 Plan, as well as equitable adjustments to the purchase price or exercise price, as applicable, of outstanding awards under the 2021 Plan, to reflect any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or similar change in the Company’s capital stock, including as a result of any merger or consolidation or sale of all or substantially all of the assets of the Company.

Treatment of Awards in Certain Transactions. In the event of a “Transaction,” as defined in the 2021 Plan, the Board or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions as to outstanding awards under the 2021 Plan: provide that the awards may be assumed or substituted, or upon written notice to participants provide that all awards will terminate upon consummation of the Transaction. In the event that awards are not assumed or substituted, except as otherwise provided by the Compensation Committee in the award agreement or other agreement between the holder of an award and the Company, upon the effective time of the Transaction, all awards will become vested and exercisable and vested awards, other than stock options, shall be fully settled in cash or in kind at such appropriate consideration as determined by the Compensation Committee in its sole discretion after taking into account the consideration payable per share pursuant to the Transaction, or the “merger price”, and all stock options shall be fully settled in cash or in kind in an amount equal to the difference between the merger price and the exercise price of the options; provided that each participant may be permitted to exercise all outstanding options within a specified period determined by the Compensation Committee prior to the Transaction.

Term. No awards may be granted under the 2021 Plan ten years or more after the date of stockholder approval, and no incentive stock options may be granted after the tenth anniversary of the date the 2021 Plan is approved by the Board.

Repricing. The Administrator may not, without stockholder approval, reduce the exercise price of outstanding stock options or stock appreciation rights or effect repricing through cancellation and re-grants or cancellation of stock options or stock appreciation rights in exchange for cash or other awards, other than as a result of a proportionate adjustment made in connection with a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar event.

Stock Options. The 2021 Plan permits the granting of (1) options intended to qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. Options granted under the 2021 Plan will be non-qualified stock options if they fail to qualify as incentive stock options or exceed the annual limit on incentive stock options. Non-qualified stock options may be granted to any persons eligible to receive incentive stock options and to non-employee directors, consultants and advisors. Incentive stock options may be granted only to employees of the Company or any subsidiary. To qualify as incentive stock options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares of common stock subject to incentive stock options that first become exercisable by a participant in any one calendar year.

The exercise price of each option will be determined by the Administrator but may not be less than 100% of the fair market value of our shares of common stock on the date of grant, subject to certain exceptions set forth in the 2021 Plan. The term of each option will be fixed by the Administrator and may not exceed ten years from the date of grant. The Administrator will determine at what time or times each option may be exercised. Options may be made exercisable in installments and the exercisability of options may be accelerated by the Administrator. Options may be exercised in whole or in part by giving written or electronic notice to the Company. Upon exercise of options, the option exercise price must be paid in full either in cash, by certified or bank check or other instrument acceptable to the Administrator or by delivery (or attestation to the ownership following such procedures as we may prescribe) of shares of common stock that are not subject to restrictions under any Company plan. Subject to applicable law, the exercise price may also be delivered to the Company by a broker pursuant to irrevocable instructions to the broker from the optionee. In addition, the Administrator may permit non-qualified stock options to be exercised using a net exercise feature which reduces the number of shares of common stock issued to the optionee by the number of shares of common stock with a fair market value equal to the exercise price.

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

Stock Appreciation Rights. The Administrator may award stock appreciation rights to participants subject to such conditions and restrictions as the Administrator may determine, provided that the exercise price may not be less than 100% of the fair market value of our shares of common stock on the date of grant, subject to certain exceptions set forth in the 2021 Plan. Stock appreciation rights are settled in cash or shares of common stock. In addition, no stock appreciation right shall be exercisable more than ten years after the date the stock appreciation right is granted.

Restricted Stock Units. Restricted stock unit awards are payable in the form of shares of common stock (or cash, to the extent explicitly provided in the award agreement) and may be subject to such conditions and restrictions as the Administrator may determine. These conditions and restrictions may be based on, among other things, the achievement of certain performance goals and/or continued employment or service with the Company through a specified vesting period. To the extent permitted by the Administrator, restricted stock units may be deferred to one or more dates specified in the applicable award certificate or elected by the grantee. Restricted stock unit awards with a deferred settlement date may be referred to as “deferred stock unit awards.” In addition, in the Administrator’s sole discretion, and subject to the participant’s compliance with the procedures established by the Administrator, it may permit a participant to make an advance election to receive cash compensation otherwise due in the form of a restricted stock unit award.

Restricted Stock. The Administrator may award shares of common stock to participants subject to such conditions and restrictions as the Administrator may determine. These conditions and restrictions may include the achievement of certain pre-established performance goals and/or continued employment or service through a specified restriction period. If the lapse of restrictions with respect to the shares of common stock is tied to attainment of vesting conditions, any cash dividends paid by the Company during the vesting period will be retained by, or repaid by the grantee to, the Company until and to the extent the vesting conditions are met with respect to the award; provided, that to the extent provided for in the applicable award agreement or by the Administrator, an amount equal to such cash dividends retained or repaid by the grantee may be paid by the grantee upon the lapsing of such restrictions.

Unrestricted Stock. The 2021 Plan gives the Administrator discretion to grant stock awards free of any restrictions. Unrestricted stock may be granted to any participant in recognition of past services or other valid consideration and may be issued in lieu of cash compensation due to such participant.

Dividend Equivalent Rights. Dividend equivalent rights are awards entitling the grantee to current or deferred payments equal to cash dividends on a specified number of shares of common stock. Dividend equivalent rights may be settled in cash or stock and are subject to other conditions as the Administrator shall determine. Dividend equivalent rights may be granted to any grantee as a component of an award or as a freestanding award. Unless provided by the Administrator, dividend equivalent rights may be paid currently, be deemed reinvested in additional shares of stock, which may thereafter accrue additional dividend equivalents, or may otherwise accrue.

Other Equity-Based Awards. The Administrator may grant units in the Company’s Operating Partnership or other units or any other membership or ownership interests (which may be expressed as units or otherwise) in a subsidiary, with any stock being issued in connection with the conversion of (or other distribution on account of) an interest granted under the provisions of the 2021 Plan.

Cash-Based Awards. The Administrator may grant cash-based awards, such as annual cash bonuses, under the 2021 Plan. The cash-based awards may be subject to the achievement of one or more performance criteria selected by the Administrator, including those specifically referenced in the definition of Performance Criteria in the 2021 Plan. Cash-based awards may be paid in cash or shares of common stock. Cash-based awards that are only payable or actually paid in cash are not subject to and will have no impact on the number of shares of common stock available for issuance under the 2021 Plan.

Tax Withholding. Participants in the 2021 Plan are responsible for the payment of any federal, state or local taxes that we are required by law to withhold upon any exercise, vesting or settlement of awards, as applicable. Subject to approval by the Administrator, participants may elect to have the tax withholding obligations satisfied by authorizing the Company to withhold shares of common stock to be issued (or, in the case of a restricted stock award, to reacquire shares previously issued pursuant to such award). Additionally, the Administrator may provide for mandatory share withholding up to the required withholding amount. The Administrator may also require tax withholding obligations to be satisfied by an arrangement where shares issued pursuant to an award are immediately sold and proceeds from such sale are remitted to the Company in an amount to satisfy such tax withholding obligations.

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

Amendments and Termination. Generally, under current NYSE rules, all material amendments to the 2021 Plan, including those that materially increase the number of shares of common stock available (other than an increase solely to reflect a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or similar change), expand the types of awards available or the persons eligible to receive awards, extend the term of the 2021 Plan, change the method of determining the exercise price of options or delete or limit any provision prohibiting the repricing of options, must be approved by our common stockholders. The Board may determine to make amendments subject to the approval of the common stockholders for purposes of complying with the rules of the NYSE or to preserve the qualified status of incentive stock options. Otherwise, our Board may amend or discontinue the 2021 Plan at any time, provided that no such action will materially and adversely affect the rights under any outstanding awards without the holder’s consent.

United States Federal Income Tax Consequences – Options and Stock Appreciation Rights

The following is a summary of the principal federal income tax consequences of certain transactions under the 2021 Plan relating to options and stock appreciation rights. It does not describe all federal tax consequences under the 2021 Plan, nor does it describe state or local tax consequences.

Incentive Stock Options. No taxable income is generally realized by the optionee upon the grant or exercise of an incentive stock option. If shares of common stock issued to an optionee pursuant to the exercise of an incentive stock option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (1) upon sale of such shares of common stock, any amount realized in excess of the option price (the amount paid for the shares of common stock) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (2) we will not be entitled to any deduction for federal income tax purposes. The exercise of an incentive stock option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee.

If shares of common stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of the two-year and one-year holding periods described above, generally: (1) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of common stock at exercise (or, if less, the amount realized on a sale of such shares of common stock) over the option price thereof; and (2) we will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the incentive stock option is paid by tendering shares of common stock.

If an incentive option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a non-qualified option. Generally, an incentive option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the three-month rule does not apply.

Non-Qualified Stock Options. No taxable income is generally realized by the optionee upon the grant of a non-qualified stock option. Generally: (1) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option exercise price and the fair market value of the shares of common stock on the date of exercise, and we receive a tax deduction for the same amount; and (2) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the shares of common stock have been held. Special rules will apply where all or a portion of the exercise price of the non-qualified stock option is paid by tendering shares of common stock. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.

Stock Appreciation Rights. No income will be recognized by a recipient upon the grant of either tandem or freestanding stock appreciation rights. For the year in which the stock appreciation right is exercised, the recipient will generally be taxed at ordinary income rates on the amount equal to the cash received plus the fair market value of any unrestricted shares received on the exercise.

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

Parachute Payments. The vesting of any portion of an option or stock appreciation right that is accelerated due to the occurrence of a change in control may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments,” as defined in the Code. Any such parachute payments may be non-deductible to us, in whole or in part, and may subject the recipient to a non-deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).

Limitation on Deductions. Under Section 162(m) of the Code, the Company’s deduction for awards under the 2021 Plan may be limited to the extent that any “covered employee” (as defined in Section 162(m) of the Code) receives compensation in excess of $1 million a year.

New Plan Benefits

Because the grant of awards under the 2021 Plan is within the discretion of the Administrator, we cannot determine the dollar value or number of shares of common stock that will in the future be received by or allocated to any participant in the 2021 Plan.

Vote Required

Under our Charter and By-laws, the affirmative vote of a majority of shares of common stock present in person or represented by proxy at the meeting and entitled to vote on this proposal is required for the approval of the Director Compensation2021 Plan. Abstentions shall be included in determining the number of shares present and entitled to vote on the proposal, thus having the effect of a vote against the proposal. Brokernon-votes if any, are not counted in determining the number of shares present and entitled to vote and will therefore have no effect on the outcome.

Our Board of Directors has approved the compensation for ournon-employee directors set forth above effective January 1, 2019, with Mr. Klein recusing himself with respect to the consideration and approval of the annual retainer payable to thenon-executive Chairman, subject to stockholder approval of the Director Compensation Plan. In the event that the DirectorEquity Compensation Plan is not approved by stockholders, our existingnon-employee director compensation will remain in effect. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and, if the Director Compensation Plan is not approved, then we will take into account the results of the vote and views expressed by our stockholders in determining future compensation for ournon-employee directors, and we may engage in additional, specific outreach to our stockholders on the topic.

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EQUITY COMPENSATION PLAN INFORMATION

Information

The following table summarizes Boston Properties, Inc.’sthe Company’s equity compensation plans as of December 31, 2018.2020.

 

Plan category  

Number of
securities to
be issued
upon
exercise of
outstanding
options,
warrants
and rights

(a)

 

Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights

(b)

 

Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))

(c)

   Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights		 Weighted-average
exercise price of
outstanding options,
warrants and rights		 Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
  (a) (b) (c)

Equity compensation plans approved by security holders (1)

   4,111,534(2)   $96.35(2)   8,578,885(3)     3,886,774(2)  $96.97(2)   8,069,531(3) 

Equity compensation plans not approved by security holders(4)

   N/A  N/A  91,209        N/A  N/A  78,152

Total

   4,111,534  $96.35  8,670,094        3,886,774 $96.97  8,147,683

 

(1)

Includes information related to the Boston Properties, Inc. 1997 Stock Option and Incentive Plan and the 2012Prior Plan.

 

(2)

Includes (a) 540,441351,561 shares of common stock issuable upon the exercise of outstanding options (all of which are vested and exercisable), (b) 991,5771,336,115 LTIP units (682,077(914,572 of which are vested) that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to the Operating Partnership for redemption and acquired by the Companyus for shares of itsour common stock, (c) 1,292,7341,366,743 common units issued upon conversion of LTIP units, which may be presented to the Operating Partnership for redemption and acquired by the Companyus for shares of itsour common stock (all of which are vested), (d) 471,579 2016 MYLTIP awards that, upon336,195 LTIP units issued in the satisfactionform of certain conditions, are convertible into common units, which may be presented to the Operating Partnership for redemption and acquired by the Company for shares of its common stock, (e) 398,871 2017 MYLTIP awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to the Operating Partnership for redemption and acquired by the Company for shares of its common stock, (f) 341,366 2018 MYLTIP awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to the Operating Partnership for redemption and acquired by the Companyus for shares of itsour common stock, (e) 219,916 LTIP units issued in the form of 2019 MYLTIP awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to the Operating Partnership for redemption and acquired by us for shares of our common stock, (f) 203,278 LTIP units issued in the form of 2020 MYLTIP awards that, upon the satisfaction of certain conditions, are convertible into common units, which may be presented to the Operating Partnership for redemption and acquired by us for shares of our common stock and (g) 74,96672,966 deferred stock units (all of which are vested) which were granted pursuant to elections by certain of the Company’sour non-employee directors to defer all cash compensation to be paid to such directors and to receive their deferred cash compensation in shares of the Company’sour common stock upon their retirement from our Board of Directors.

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10› PROPOSAL 3: APPROVAL OF THE BOSTON PROPERTIES, INC. 2021 STOCK INCENTIVE PLAN

Does not include 50,14255,616 shares of restricted stock, as they have been reflected in the Company’sour total shares outstanding. Because there is no exercise price associated with LTIP units, common units, 20162018 MYLTIP awards, 20172019 MYLTIP awards, 20182020 MYLTIP awards or deferred stock units, such sharesawards are not included in the weighed-average exercise price calculation.

 

(3)

Represents awards available for issuance under the 2012Prior Plan. “Full-value” awards (i.e.,, awards other than stock options) are multiplied by a 2.32 conversion ratio to calculate the number of shares available under the 2012 Plan that are used for each full-value award (and thus the number that remains available) under the Prior Plan, as opposed to a 1.0 conversion ratio for each stock option awarded under the 2012Prior Plan.

 

(4)

Includes information related to the Boston Properties, Inc. 1999Non-Qualified Employee Stock Purchase Plan (the “ESPP”)(ESPP). The ESPP was adopted by our Board of Directors on October 29, 1998. The ESPP has not been approved by the Company’sour stockholders. The ESPP is available to allAll of our employees that are employed oneligible to participate in the first day of the purchase period.ESPP. Under the ESPP, each eligible employee may purchase shares of our common stock at semi-annual intervals each year at a purchase price equal to 85% of the average closing prices of our common stock on the New York Stock ExchangeNYSE during the last ten business days of the purchase period. Each eligible employee may contribute no more than $10,000 per year to purchase our common stock under the ESPP.

 

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101

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

11› PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The current members of the Compensation Committee are Mses. Ayotte and Einiger and Messrs. Duncan and Twardock. None of these persons has served as an officer or employee of Boston Properties. None of these persons had any relationships with Boston Properties requiring disclosure under Item 404 of Regulation S-K. None of Boston Properties’ executive officers served as a director or a member of a compensation committee (or other committee serving a similar function) of any other entity, an executive officer of which served as a director of Boston Properties or a member of the Compensation Committee during 2018.

100    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

PROPOSAL 4:

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PROPOSAL

The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our consolidated financial statements. The Audit Committee has selected and appointed PricewaterhouseCoopers LLP as our independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2019.2021. PricewaterhouseCoopers LLP has audited our consolidated financial statements continuously since our initial public offering in June 1997. In order to ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. Further, in conjunction with the mandated rotation of the PricewaterhouseCoopers LLP’s lead engagement partner, the Audit Committee and its Chair were directly involved in the selection of PricewaterhouseCoopers LLP’s lead engagement partner. The members of the Audit Committee and the Board of Directors believe that the continued retention of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm is in the best interests of Boston Properties and its stockholders.

Although ratification by stockholders is not required by law or by ourBy-laws, the Audit Committee believes that submission of its selection to stockholders is a matter of good corporate governance. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee believes that such a change would be in the best interests of Boston Properties and its stockholders. If our stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee will consider that fact, together with such other factors it deems relevant, in determining its next selection of independent auditors.

It is anticipatedWe expect that a representative of PricewaterhouseCoopers LLP will attend the annual meeting of stockholders, will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

 

✓

The Board of Directors unanimously recommends a voteTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR the ratification of the appointment of PricewaterhouseCoopers THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP as the Company’s independent registered public accounting firm for the year ending DecemberAS THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2019. Properly authorized proxies solicited by the Board of Directors will be voted2021. PROPERLY AUTHORIZED
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS PROPOSAL UNLESS
INSTRUCTIONS TO THE CONTRARY ARE GIVEN. this proposal unless instructions to the contrary are given.

 

 

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PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

11› PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

FEES TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee is responsible for the audit fee negotiations associated with the retention of PricewaterhouseCoopers LLP.LLP (“PwC”). Aggregate fees for professional services rendered by PricewaterhouseCoopers LLPPwC for the years ended December 31, 20182020 and 20172019 were as follows:

 

  2018   2017  2020 2019 

Audit Fees

      

Recurring audit, quarterly reviews and accounting assistance for new accounting standards and potential transactions

  $2,711,004   $2,204,421  $2,733,710  $2,681,649 

Comfort letters, consents and assistance with documents filed with the SEC and securities offerings

   115,107    173,580  189,000  168,644 
  

 

   

 

 

Subtotal

   2,826,111    2,378,001  2,922,710  2,850,293 

Audit-Related Fees

      

Audits required by lenders, joint ventures and tenants

   420,350    341,042 

Audits required by lenders, joint ventures, tenants and other attestation reports

 416,648  447,575 

Tax Fees

      

Recurring tax compliance and REIT and other compliance matters

   420,084    409,640  524,332(1)  444,241 

Tax planning and research

   84,595    120,810  62,025  55,999 

Tax assistance for potential transactions

   —    7,480 

State and local tax examinations

   28,447    37,750  8,937  28,307 
  

 

   

 

 

Subtotal

   533,126    575,680  595,294  528,547 

All Other Fees

      

Software licensing fee

   2,700    2,700  2,756  2,756 
  

 

   

 

 

Total

  $3,782,287   $3,297,423  $3,937,408  $3,829,171 

(1)

Includes an annual subscription fee for tax allocation software of $50,000 for 2019 but billed in 2020.

AUDIT ANDNON-AUDIT SERVICESPRE-APPROVAL POLICY

The Audit Committee has approved a policy concerning thepre-approval of audit andnon-audit services to be provided by PricewaterhouseCoopers LLP,PwC, our independent registered public accounting firm. The policy requires that all services provided by PricewaterhouseCoopers LLPPwC to us, including audit services, audit-related services, tax services and other services, must bepre-approved by the Audit Committee. In some cases,pre-approval is provided by the full Audit Committee for up to a year, relates to a particular category or group of services and is subject to a particular budgeted maximum. In other cases, specificpre-approval is required. The Audit Committee has delegated authority to the Chair of the Audit Committee topre-approve additional services, and any suchpre-approvals must then be communicated to the full Audit Committee.

The Audit Committee approved all audit andnon-audit services provided to us by PricewaterhouseCoopers LLPPwC during the 20182020 and 20172019 fiscal years and none of the services described above were approved pursuant to Rule2-01(c)(7)(i)(c) of RegulationS-X, which relates to circumstances where the Audit Committeepre-approval requirement is waived.

VOTE REQUIRED

The affirmative vote of a majority of shares of common stock present in person or represented by proxy at the meeting and entitled to vote on this proposal is required for the ratification of the appointment of PricewaterhouseCoopers LLP.PwC. Abstentions shall be included in determining the number

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PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

of shares present and entitled to vote on the proposal, thus having the effect of a vote against the proposal. Broker non-votes, if any, are not counted in determining the number of shares present and entitled to vote and will therefore have no effect on the outcome.

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11› PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

AUDIT COMMITTEE REPORT

The members of the Audit Committee of the Board of Directors of Boston Properties submit this report in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 20182020 as follows:

 

1.

The Audit Committee has reviewed and discussed with management the audited financial statements for Boston Properties, Inc. for the fiscal year ended December 31, 2018.2020.

 

2.

The Audit Committee has discussed with representatives of PricewaterhouseCoopers LLPPwC the matters required to be discussed pursuant to Auditing Standard No. 1301, as adoptedwith the Audit Committee by the applicable requirements of the Public Company Accounting Oversight Board.Board and the SEC.

 

3.

The Audit Committee has received the written disclosures and the letter from the independent accountant required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 20182020 for filing with the SEC.

The Audit Committee operates pursuant to a charter that was approved by our Board of Directors. A copy of the Audit Committee Charter is available on our website athttp://www.bostonproperties.comwww.bxp.com under the heading “Corporate Governance.”

Submitted by the Audit Committee:

David A. Twardock, Chair

Bruce W. Duncan

Karen E. Dykstra

Martin Turchin

 

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

12› INFORMATION ABOUT THE ANNUAL MEETING

 

The Board of Directors has adopted a Related Person Transaction Approval and Disclosure Policy for the review, approval or ratification of any related person transaction. This written policy provides that all related person transactions, other than a transaction for which an obligation to disclose under Item 404 of RegulationS-K (or any successor provision) arises solely from the fact that a beneficial owner of more than 5% of a class of the Company’s voting securities (or an immediate family member of any such beneficial owner) has an interest in the transaction, must be reviewed and approved by a majority of the disinterested directors on our Board of Directors in advance of us or any of our subsidiaries entering into the transaction; provided that, if we or any of our subsidiaries enter into a transaction without recognizing that such transaction constitutes a related person transaction, the approval requirement will be satisfied if such transaction is ratified by a majority of the disinterested directors on the Board of Directors promptly after we recognize that such transaction constituted a related person transaction. Disinterested directors are directors that do not have a personal financial interest in the transaction that is adverse to our financial interest or that of our stockholders. The term “related person transaction” refers to a transaction required to be disclosed by us pursuant to Item 404 of RegulationS-K (or any successor provision) promulgated by the SEC. For purposes of determining whether such disclosure is required, a related person will not be deemed to have a direct or indirect material interest in any transaction that is deemed to be not material (or would be deemed not material if such related person was a director) for purposes of determining director independence pursuant to the Company’s categorical standards of director independence. Please refer to the categorical standards under “Corporate Governance Principles and Board Matters – Director Independence” beginning on page 15.

Since January 1, 2018, the Company has paid a firm controlled by Mr. Raymond A. Ritchey’s brother aggregate leasing commissions of approximately $921,000. The Company expects to pay additional commissions to this firm during 2020. In January 2018, Mr. Ritchey’s brother became an employee of a real estate firm with which the Company has entered into a contract for services that is nearly identical to the previous contract with the firm controlled by Mr. Ritchey’s brother. Given current and anticipated leasing activity, it is currently expected that the Company will pay equivalent or increased leasing commissions to Mr. Ritchey’s brother in 2019, as compared to leasing commissions paid to the firm controlled by him. Mr. Ritchey is the Senior Executive Vice President of Boston Properties. The Company believes the terms of the related agreements are comparable to, and in most cases more favorable to us than, similar arrangements with other brokers in relevant markets.

We are partners with affiliates of Norges Bank Investment Management in joint ventures relating to Times Square Tower, 601 Lexington Avenue, 100 Federal Street and Atlantic Wharf Office. Based on a Schedule 13G/A filed with the SEC on January 24, 2019, Norges Bank (The Central Bank of Norway), an affiliate of Norges Bank Investment Management, is the beneficial owner of more than 5% of our common stock.

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INFORMATION ABOUT THE ANNUAL MEETING

ATTENDING THE VIRTUAL ANNUAL MEETING

Our preference is to hold an in-person annual meeting. However, due to the ongoing public health concerns resulting from the COVID-19 pandemic and to support the health and well-being of our stockholders, employees and community, this year’s annual meeting will be a virtual meeting conducted via live audio webcast. We have structured our virtual annual meeting to provide stockholders the same rights as if the meeting were held in person, including the ability to vote shares electronically during the meeting and ask questions in accordance with the rules of conduct for the meeting.

All stockholders of record of shares of common stock of Boston Properties at the close of business on March 24, 2021, which is referred to in this proxy statement as the “record date,” or their designated proxies, are authorized to attend the annual meeting. Cameras, recording devices and other electronic devices will not be permitted and attendees may be subject to other security precautions.

›  MEETING ACCESS

In order to attend the virtual annual meeting, you must be a holder of Boston Properties stock as of March 24, 2021. To participate in the virtual annual meeting, visit www.virtualshareholdermeeting.com/BXP2021 and enter your unique 16-digit voting control number found on your proxy card, email, notice of internet availability of proxy materials or voting instruction form. The annual meeting is scheduled to begin at 9:00 a.m., Eastern Time, on May 20, 2021. Online access will open at 8:45 a.m. Eastern Time to allow time for you to log in and test your device’s audio system. We encourage you to access the meeting prior to the start time. If you encounter any difficulties accessing the virtual annual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual annual meeting website. Technical support will be available starting at 8:45 a.m. Eastern Time and until the end of the meeting.

›  SUBMITTING QUESTIONS

If you wish to submit a question during the annual meeting, type your question into the “Submit a question” field, and click “Submit.” Questions may be submitted beginning at 8:45 a.m. Eastern Time. We will endeavor to answer as many questions submitted by stockholders as time permits. We reserve the right to exclude questions regarding topics that are not pertinent to meeting matters or company business. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition. Responses to questions relevant to meeting matters that we do not have time to respond to during the meeting will be posted to our Investor Relations website following the meeting. Questions regarding personal matters or matters not relevant to meeting matters will not be answered.

›  VOTING DURING THE VIRTUAL ANNUAL MEETING

You will be able to vote your shares electronically during the annual meeting, except that if you hold shares through a Shareworks account, voting instructions for those shares must be submitted by May 17, 2021 at 11:59 p.m., Eastern Time. Voting online during the annual meeting will replace any previous votes. See “– How to Vote” below for additional information on voting.

›  ADDITIONAL MEETING INFORMATION

In the event of technical difficulties with the virtual annual meeting, we expect that an announcement will be made on www.virtualshareholdermeeting.com/BXP2021. If necessary, the announcement will provide updated information regarding the date, time, and location of the annual meeting. Any updated information regarding the annual meeting will also be posted on our Investor Relations website at http://www.bxp.com/proxy.

A replay of the annual meeting webcast, including the Q&A portion of the annual meeting, will be available on www.virtualshareholdermeeting.com/BXP2021 for at least 30 days following the annual meeting.

 

Why did I receive a Notice of Internet Availability of Proxy Materials?

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12› INFORMATION ABOUT THE ANNUAL MEETING

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

In order to both save money and help conserve natural resources, we are making this proxy statement and our 2018 annual report,2020 Annual Report, including a copy of our annual report on Form10-K and financial statements for the year ended December 31, 2018,2020, available to our stockholders electronically via the Internet instead of mailing the full set of printed proxy materials, in accordance with the rules of the SEC. On or about April 5, 2019,2021, we began mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this proxy statement and our annual report online, as well as instructions on how to vote. Also on or about April 5, 2019,2021, we began mailing printed copies of these proxy materials to stockholders that have requested printed copies. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy statement and annual report. The Notice also instructs you on how you may vote via the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice. Our 20182020 annual report is not part of the proxy solicitation material.

What is the purpose of the annual meeting?    PURPOSE OF THE ANNUAL MEETING

At the annual meeting, stockholders will be asked to vote upon the matters set forth in the accompanying notice of annual meeting, including the election of directors, an advisory resolution on named executive officer compensation, the approval of ournon-employee director compensation planthe Boston Properties, Inc. 2021 Stock Incentive Plan and the ratification of the appointment of our independent registered public accounting firm.

Will other matters be voted on at the annual meeting?    PRESENTATION OF OTHER MATTERS AT THE ANNUAL MEETING

We are not currently aware of any other matters to be presented at the 20192021 annual meeting other than those described in this proxy statement. If any other matters not described in this proxy statement are properly presented at the meeting, any proxies received by us will be voted in the discretion of the proxy holders.

Who is entitled to vote?    STOCKHOLDERS ENTITLED TO VOTE

If you were a stockholder of record as of the close of business on March 27, 2019, which is referred to in this proxy statement as the “record date,”24, 2021, you are entitled to receive notice of the annual meeting and to vote the shares of common stock that you held as of the close of business on the record date. Each stockholder is entitled to one vote for each share of common stock you held by such stockholderas of the close of business on the record date. Holders of common units, LTIP units, preferred stock and deferred stock units are not entitled to vote such securities on any of the matters presented at the 20192021 annual meeting.

May I attend the meeting?    

All stockholders of record of shares of common stock of Boston Properties, Inc. at the close of business on the record date, or their designated proxies, are authorized to attend the annual meeting. Each stockholder and proxy will be asked to present a valid government-issued photo identification, such as a driver’s license or passport, before being admitted. If you are not a stockholder of record but you hold your shares in “street name” (i.e., your shares are held in an account maintained by a bank, broker or other nominee), then you should provide proof of beneficial ownership as of the record date, such as an account statement reflecting your stock ownership as of the record date, a copy of the voting instruction card provided by your broker, bank or other nominee, or other similar evidence of ownership. We reserve the right to determine the validity of any purported proof of beneficial

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INFORMATION ABOUTQUORUM FOR THE ANNUAL MEETING

ownership. If you do not have proof of ownership, you may not be admitted to the annual meeting. Cameras, recording devices and other electronic devices will not be permitted, and attendees may be subject to security inspections and other security precautions. You may obtain directions to the annual meeting on our website at http://www.bostonproperties.com/proxy.

What constitutes a quorum?    

The presence, in personvirtually or by proxy, of holders of at least a majority of the total number of outstanding shares of common stock entitled to vote is necessary to constitute a quorum for the transaction of business at the annual meeting. As of the record date, there were 154,515,486156,074,135 shares of common stock outstanding and entitled to vote at the annual meeting. Each share of common stock outstanding on the record date is entitled to one vote on each matter properly submitted at the annual meeting and, with respect to the election of directors, one vote for each director to be elected. Abstentions or “brokernon-votes” (i.e., shares represented at the meeting held by brokers, as to which instructions have not been received from the beneficial owners or persons entitled to vote such shares and with respect to which, on one or more but not all matters, the broker does not have discretionary voting power to vote such shares) will be counted for purposes of determining whether a quorum is present for the transaction of business at the annual meeting.

How do I vote? 

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12› INFORMATION ABOUT THE ANNUAL MEETING

HOW TO VOTE

Voting in Person at the Meeting›  VOTING DURING THE VIRTUAL ANNUAL MEETING

If you are a stockholder of record and attend the virtual annual meeting you may vote in person at the meeting. If your shares of common stock electronically during the annual meeting using your 16-digit control number on your proxy card or Notice of Internet Availability, except that if you hold shares through a Shareworks account, voting instructions for those shares must be submitted by May 17, 2021 at 11:59 p.m., Eastern Time. See “ – Voting Shares Registered Directly in the Name of the Stockholder or Held in Shareworks” below. If you hold your shares of common stock in “street name” (i.e., your shares are held in an account maintained by a bank, broker or other nominee) and your voting instruction form or Notice of Internet Availability indicates that you may vote those shares through the http://www.proxyvote.com website, then you may vote at the annual meeting with the 16-digit control number indicated on your voting instruction form or Notice of Internet Availability. Voting online during the meeting will replace any previous votes. If you hold your shares of common stock in street name and you wish to vote in person at the meeting,do not have a 16-digit control number, you will need to obtain a “legal proxy” from the bank, broker bank or other nominee that holds your shares of common stock of record.record to attend, participate in and vote at the annual meeting.

Voting by Proxy for Shares Registered Directly in the Name of the Stockholder›  VOTING SHARES REGISTERED DIRECTLY IN THE NAME OF THE STOCKHOLDER OR HELD IN SHAREWORKS

If you hold your shares of common stock in your own name as a holder of record with our transfer agent, Computershare Trust Company, N.A., you may instruct the proxy holders named in the proxy card how to vote your shares of common stock in one of the following ways:

 

•

Vote by Internet.You may vote via the Internet by following the instructions provided in the Notice or, if you received printed materials, on your proxy card. The website for Internet voting is printed on the Notice and also on your proxy card. Please have your Notice or proxy card in hand. Internet voting is available 24 hours per day until 11:59 p.m., Eastern Time, on May 20, 2019. You will receive a series of instructions that will allow you to vote your shares of common stock. You will also be given the opportunity to confirm that your instructions have been properly recorded.

Vote by Internet. You may vote via the Internet by following the instructions provided in the Notice or, if you received printed materials, on your proxy card. The website for Internet voting is printed on the Notice and also on your proxy card. Please have your Notice or proxy card in hand. Internet voting is available 24 hours per day until 11:59 p.m., Eastern Time, on May 19, 2021. You will receive a series of instructions that will allow you to vote your shares of common stock. You will also be given the opportunity to confirm that your instructions have been properly recorded.

If you vote via the Internet, you do not need to return your proxy card.

 

 • 

Vote by Telephone.If you received printed copies of the proxy materials, you also have the option to vote by telephone by calling the toll-free number listed on your proxy card. Telephone voting is available 24 hours per day until 11:59 p.m., Eastern Time, on May 20, 2019.19, 2021. When you call, pleasehave your proxy card in hand. You will receive a series of voice instructions that will allow you to vote your shares of common stock. You will also be given the opportunity to confirm that your instructions have been properly recorded. If you did not receive printed materials and would like to vote by telephone, you must request printed copies of the proxy materials by following the instructions on your Notice.

If you vote by telephone, you do not need to return your proxy card.

 

106    BOSTON PROPERTIES, INC.  |Vote by Mail. 2019 Proxy StatementIf you received printed materials, and would like to vote by mail, then please mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided. If you did not receive printed materials and would like to vote by mail, you must request printed copies of the proxy materials by following the instructions on your Notice.

If you are a Boston Properties employee or former employee holding shares of common stock on the Shareworks equity portal, the control number you receive on your Notice or proxy card also covers shares of common stock held in your Shareworks account. You may vote these shares via the Internet, by telephone or by completing and returning a proxy card as described above. Your submission of voting instructions for shares of common stock held in your Shareworks account instructs the plan administrator how to vote those shares; it does not result in the appointment of a proxy to vote those shares. Instructions regarding shares held in your Shareworks account must be received by 11:59 p.m., Eastern Time, on May 17, 2021.

INFORMATION ABOUT THE ANNUAL MEETING›

•

Vote by Mail.If you received printed materials, and would like to vote by mail, then please mark, sign and date your proxy card and return it promptly to our transfer agent, Computershare Trust Company, N.A., in the postage-paid envelope provided. If you did not receive printed materials and would like to vote by mail, you must request printed copies of the proxy materials by following the instructions on your Notice.

Voting by Proxy for Shares Registered in Street Name  VOTING BY PROXY FOR SHARES REGISTERED IN STREET NAME

If your shares of common stock are held in street name, then you will receive instructions from your broker, bank or other nominee that you must follow in order to have your shares of common stock voted.

May I revoke my proxy instructions?    

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12› INFORMATION ABOUT THE ANNUAL MEETING

REVOKING PROXY INSTRUCTIONS

You may revoke your proxy at any time before it has been exercised by:

 

filing a written revocation with the Secretary of Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103;

 

submitting a new proxy by telephone, Internet or proxy card after the time and date of the previously submitted proxy; or

 

appearing in personattending the virtual annual meeting and voting by ballot atelectronically during the annual meeting.

If you are a stockholder of record as of the record date attending the virtual annual meeting, you may vote in personelectronically during the meeting whether or not a proxy has been previously given, but your presence (without further action) at the virtual annual meeting will not constitute revocation of a previously given proxy.

How can I access Boston Properties’ proxy materials electronically?    ACCESSING BOSTON PROPERTIES’ PROXY MATERIALS ELECTRONICALLY

This proxy statement and our 20182020 annual report are available at http://www.edocumentview.com/bxp.www.bxp.com/proxy. Instead of receiving copies of our future annual reports, proxy statements, proxy cards and, when applicable, Notices of Internet Availability of Proxy Materials, by mail, we encourage you to elect to receive an email that will provide electronic links to our proxy materials and also will give you an electronic link to the proxy voting site. Choosing to receive your future proxy materials online will save us the cost of producing and mailing the proxy materials or Notices of Internet Availability of Proxy Materials to you and help conserve natural resources. You may sign up for electronic delivery by visiting http://www.bostonproperties.com/proxy.www.bxp.com/proxy.

What is householding?    HOUSEHOLDING

If you and other residents at your mailing address own shares of common stock in street name, your broker, bank or other nominee may have sent you a notice that your household will receive only one annual report, Notice of Internet Availability of Proxy Materials, notice of annual meeting and/or proxy statement. This procedure, known as “householding,” is intended to reduce the volume of duplicate information stockholders receive and also reduce our printing and postage costs. Under applicable law, if you consented or were deemed to have consented, your broker, bank or other nominee may send one copy of our annual report, Notice of Internet Availability of Proxy Materials, notice of annual meeting and/or proxy statement to your address for all residents that own shares of common stock in street name. If you wish to revoke your consent to householding, you must contact your broker, bank or other nominee. If you are receiving multiple copies of our annual report, Notice of Internet Availability of Proxy Materials, notice of annual meeting and/or proxy statement, you may be able to request householding by contacting your broker, bank or other nominee.

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INFORMATION ABOUT THE ANNUAL MEETING

If you wish to request extra copies free of charge of our 2020 annual report or proxy statement, please send your request to Investor Relations, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103; call us with your request at(617) 236-3822; or visit our website athttp://www.bostonproperties.comwww.bxp.com.

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OTHER MATTERS

EXPENSES OF SOLICITATION

The cost of solicitation of proxies will be borne by Boston Properties. In an effort to have as many votes cast at the annual meeting as possible, special solicitation of proxies may, in certain instances, be made personally or by telephone, electronic communication or mail by one or more employees of Boston Properties. We also may reimburse brokers, banks, nominees and other fiduciaries for postage and reasonable clerical expenses of forwarding the proxy material to their principals who are beneficial owners of shares of our common stock. In addition, MacKenzie Partners, Inc., a proxy solicitation firm, has been engaged by Boston Properties to act as proxy solicitor and will receive a fee of $7,500 plus reimbursement of reasonableout-of-pocket expenses.

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13› OTHER MATTERS

OTHER MATTERS

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

The Board of Directors has adopted a Related Person Transaction Approval and Disclosure Policy for the review, approval or ratification of any related person transaction. This written policy provides that all related person transactions, other than a transaction for which an obligation to disclose under Item 404 of Regulation S-K (or any successor provision) arises solely from the fact that a beneficial owner of more than 5% of a class of the Company’s voting securities (or an immediate family member of any such beneficial owner) has an interest in the transaction, must be reviewed and approved by a majority of the disinterested directors on our Board of Directors in advance of us or any of our subsidiaries entering into the transaction; provided that if we or any of our subsidiaries enter into a transaction without recognizing that such transaction constitutes a related person transaction, the approval requirement will be satisfied if such transaction is ratified by a majority of the disinterested directors on the Board of Directors promptly after we recognize that such transaction constituted a related person transaction. Disinterested directors are directors that do not have a personal financial interest in the transaction that is adverse to our financial interest or that of our stockholders. The term “related person transaction” refers to a transaction required to be disclosed by us pursuant to Item 404 of Regulation S-K (or any successor provision) promulgated by the SEC. For purposes of determining whether such disclosure is required, a related person will not be deemed to have a direct or indirect material interest in any transaction that is deemed to be not material (or would be deemed not material if such related person was a director) for purposes of determining director independence pursuant to the Company’s categorical standards of director independence. Please refer to the categorical standards under “Proposal 1: Election of Directors – Director Independence” beginning on page 21.

Since January 1, 2020, the Company has paid a firm controlled by Mr. Raymond A. Ritchey’s brother aggregate leasing commissions of approximately $3,587,393. The Company expects to pay additional commissions to this firm during 2021. In January 2018, Mr. Ritchey’s brother became an employee of a real estate firm with which the Company has entered into a contract for services that is nearly identical to the previous contract with the firm controlled by Mr. Ritchey’s brother. Given current and anticipated leasing activity, the Company expects to pay equivalent or increased leasing commissions to the real estate firm that currently employs Mr. Ritchey’s brother in 2021 as compared to leasing commissions paid to the firm controlled by him in prior years. Mr. Ritchey is the Senior Executive Vice President of Boston Properties. The Company believes the terms of the related agreements are comparable to, and in most cases more favorable to us than, similar arrangements with other brokers in relevant markets.

We are partners with affiliates of Norges Bank Investment Management in joint ventures that own Times Square Tower, 601 Lexington Avenue, 100 Federal Street and Atlantic Wharf Office. Based on a Schedule 13G/A filed with the SEC on February 1, 2021, Norges Bank (The Central Bank of Norway), an affiliate of Norges Bank Investment Management, is the beneficial owner of more than 5% of our common stock.

We lease office space at our Santa Monica Business Park property to an entity that was acquired by an affiliate of BlackRock, Inc. in August 2018. Based on a Schedule 13G/A filed with the SEC on January 27, 2021, BlackRock is the beneficial owner of more than 5% of our common stock. Since January 1, 2020, BlackRock paid the Company $1,413,434 in lease payments.

STOCKHOLDER NOMINATIONS FOR DIRECTOR AND PROPOSALS FOR THE 20202022 ANNUAL MEETING OF STOCKHOLDERS

Rule14a-8›   ProposalsSTOCKHOLDER PROPOSALS SUBMITTED FOR INCLUSION IN OUR PROXY STATEMENT

Any stockholder proposals submitted pursuant to Exchange Act Rule14a-8 for inclusion in Boston Properties’ proxy statement and form of proxy for its 20202022 annual meeting of stockholders must be received by Boston Properties on or before December 7, 20196, 2021 in order to be considered for inclusion in our proxy statement and form of proxy. The proposals must also comply with the requirements as to form and substance established by the SEC if they are to be included in the proxy statement and form of proxy. Any such proposal should be mailed to: Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103, Attn.: Secretary.

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109

13› OTHER MATTERS

Director Nominees (Proxy Access)›   PROXY ACCESS DIRECTOR NOMINATIONS FOR INCLUSION IN OUR PROXY STATEMENT

In order for an eligible stockholder or group of stockholders to nominate a director nomineecandidate for election at Boston Properties’ 20202022 annual meeting pursuant to the proxy access provision of ourBy-laws, notice of such nomination and other required information must be received by Boston Properties on or before December 7, 20196, 2021, unless our 20202022 annual meeting of stockholders is scheduled to take place before April 21, 202020, 2022 or after July 20, 2020.19, 2022. OurBy-laws state that such notice and other required information must be received by Boston Properties not less than 120 days prior to the anniversary of the date of the proxy statement for the prior year’s annual meeting of stockholders; provided, however, that in the event the annual meeting is scheduled to be held on a date more than 30 days before the anniversary of the date of the immediately preceding annual meeting, or the annual meeting anniversary date, or more than 60 days after the annual meeting anniversary date, or if no annual meeting was held in the preceding year, the deadline for the receipt of such notice and other required information shall be the close of business on the later of (1) the 180th180th day prior to the scheduled date of such annual meeting or (2) the 15th15th day following the day on which public announcement of the date of such annual meeting is first made.

In addition, ourBy-laws require the eligible stockholder or group of stockholders to update and supplement such information (or provide notice stating that there are no updates or supplements) as of specified dates. Notices and other required information must be received by our Secretary at our principal executive office, which is currently Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

Other Proposals or Nominees›   OTHER PROPOSALS OR NOMINATIONS

Stockholder proposals and nominations of directors to be presented at Boston Properties’ 20202022 annual meeting, other than stockholder proposals submitted pursuant to Exchange Act Rule14a-8 for

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    109

OTHER MATTERS

inclusion in Boston Properties’ proxy statement and form of proxy for our 20202022 annual meeting or submitted pursuant to the proxy access provision of ourBy-laws, must be received in writing at our principal executive office not earlier than January 22, 2020,20, 2022, nor later than March 7, 2020,6, 2022, unless our 20202022 annual meeting of stockholders is scheduled to take place before April 21, 202020, 2022 or after July 20, 2020.19, 2022. OurBy-laws state that the stockholder must provide timely written notice of such proposal or a nomination and supporting documentation as well as be present at such meeting, either in person or by a representative. A stockholder’s notice shall be timely received by Boston Properties at its principal executive office not less than seventy-five (75)75 days nor more than one hundred twenty (120)120 days prior to the annual meeting anniversary date; provided, however, that in the event the annual meeting is scheduled to be held on a date more than thirty (30)30 days before the annual meeting anniversary date or more than sixty (60)60 days after the annual meeting anniversary date, a stockholder’s notice shall be timely if received by Boston Properties at its principal executive office not later than the close of business on the later of (1) the seventy-fifth (75th)75th day prior to the scheduled date of such annual meeting or (2) the fifteenth (15th)15th day following the day on which public announcement of the date of such annual meeting is first made by Boston Properties. Proxies solicited by our Board of Directors will confer discretionary voting authority with respect to these proposals, subject to SEC rules and regulations governing the exercise of this authority. Any such proposals must be received by our Secretary at our principal executive office, which is currently Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.

 

110    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

110

LOGO

 |  2021 Proxy Statement

APPENDIX A

Reconciliation of Net Income Attributable to Boston Properties, Inc. Common Shareholders to BXP’s Share of Same Property Net Operating Income (NOI)

(excluding termination income)

   For the year ended
December 31,		 
         2018              2017       
   (unaudited and in thousands) 

Net Income Attributable to Boston Properties, Inc. Common Shareholders

  $572,347  $451,939 

Preferred dividends

   10,500   10,500 
  

 

 

  

 

 

 

Net Income Attributable to Boston Properties, Inc.

   582,847   462,439 

Net Income Attributable to Noncontrolling Interests:

   

Noncontrolling interest – common units of the Operating Partnership

   66,807   52,210 

Noncontrolling interests in property partnerships

   62,909   47,832 
  

 

 

  

 

 

 

Net Income

   712,563   562,481 

Other Expenses:

   

Add:

   

Interest expense

   378,168   374,481 

Impairment losses

   11,812   — 

Other Income:

   

Less:

   

Gains (losses) from early extinguishments of debt

   (16,490)   496 

Gains (losses) from investments in securities

   (1,865)   3,678 

Interest and other income

   10,823   5,783 

Gains on sales of real estate

   182,356   7,663 

Income from unconsolidated joint ventures

   2,222   11,232 

Other Expenses:

   

Add:

   

Depreciation and amortization expense

   645,649   617,547 

Transaction costs

   1,604   668 

Payroll and related costs from management services contracts

   9,590   — 

General and administrative expense

   121,722   113,715 

Other Revenue:

   

Less:

   

Direct reimbursements of payroll and related costs from management services contracts

   9,590   — 

Development and management services

   45,158   34,605 
  

 

 

  

 

 

 

NOI

  $1,649,314  $1,605,435 

Less:

   

Termination income

   8,205   23,058 

NOI from non Same Properties (excluding termination income)

   59,980   24,165 
  

 

 

  

 

 

 

Same Property NOI (excluding termination income)

   1,581,129   1,558,212 

Less:

   

Partners’ share of NOI from consolidated joint ventures (excluding termination income and after priority allocations)(1)

   180,398   172,658 

BXP’s share of NOI from non Same Properties from unconsolidated joint ventures (excluding termination income)

   13,296   (25) 

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    A-1

   For the year ended
December 31,		 
   2018   2017 
   (unaudited and in
thousands)		 

Add:

    

Partners’ share of NOI from non Same Properties from consolidated joint ventures (excluding termination income and after priority allocations)

   1,018    (1,853) 

BXP’s share of NOI from unconsolidated joint ventures (excluding termination income)(2)

   79,588    62,799 
  

 

 

   

 

 

 

BXP’s Share of Same Property NOI (excluding termination income)

  $1,468,041   $1,446,525 
  

 

 

   

 

 

 

(1)

See “Consolidated Joint Ventures” in this Appendix for additional details.

(2)

See “Unconsolidated Joint Ventures” in this Appendix for additional details.

A-2    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

Reconciliation of Net Income Attributable to Boston Properties, Inc. Common Shareholders to BXP’s Share of Same Property Net Operating Income (NOI) – Cash (excluding termination income)

   For the year ended
December 31,		 
         2018              2017       
   (unaudited and in thousands) 

Net Income Attributable to Boston Properties, Inc. Common Shareholders

  $572,347  $451,939 

Preferred dividends

   10,500   10,500 
  

 

 

  

 

 

 

Net Income Attributable to Boston Properties, Inc.

   582,847   462,439 

Net Income Attributable to Noncontrolling Interests:

   

Noncontrolling interest – common units of the Operating Partnership

   66,807   52,210 

Noncontrolling interests in property partnerships

   62,909   47,832 
  

 

 

  

 

 

 

Net Income

   712,563   562,481 

Other Expenses:

   

Add:

   

Interest expense

   378,168   374,481 

Impairment losses

   11,812   — 

Other Income:

   

Less:

   

Gains (losses) from early extinguishments of debt

   (16,490)   496 

Gains (losses) from investments in securities

   (1,865)   3,678 

Interest and other income

   10,823   5,783 

Gains on sales of real estate

   182,356   7,663 

Income from unconsolidated joint ventures

   2,222   11,232 

Other Expenses:

   

Add:

   

Depreciation and amortization expense

   645,649   617,547 

Transaction costs

   1,604   668 

Payroll and related costs from management services contracts

   9,590   — 

General and administrative expense

   121,722   113,715 

Other Revenue:

   

Less:

   

Direct reimbursements of payroll and related costs from management services contracts

   9,590   — 

Development and management services

   45,158   34,605 
  

 

 

  

 

 

 

NOI

   1,649,314   1,605,435 

Less:

   

Straight-line rent

   48,054   53,511 

Fair value lease revenue

   23,811   22,290 

Termination income

   8,205   23,058 

Add:

   

Straight-line ground rent expense adjustment(1)

   3,559   3,729 

Lease transaction costs that qualify as rent inducements

   8,692   920 
  

 

 

  

 

 

 

NOI – cash (excluding termination income)

   1,581,495   1,511,225 

Less:

   

NOI – cash from non Same Properties (excluding termination income)

   81,841   23,217 
  

 

 

  

 

 

 

Same Property NOI – cash (excluding termination income)

   1,499,654   1,488,008 

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    A-3

   For the year ended
December 31,		 
         2018               2017       
   (unaudited and in thousands) 

Less:

    

Partners’ share of NOI – cash from consolidated joint ventures (excluding termination income and after priority allocations)(2)

   166,973    163,514 

BXP’s share of NOI – cash from non Same Properties from unconsolidated joint ventures (excluding termination income)

   10,532    (33) 

Add:

    

Partners’ share of NOI – cash from non Same Properties from consolidated joint ventures (excluding termination income and after priority allocations)

   2,190    (1,763) 

BXP’s share of NOI – cash from unconsolidated joint ventures (excluding termination income)(3)

   66,742    50,437 
  

 

 

   

 

 

 

BXP’s Share of Same Property NOI – cash (excluding termination income)

  $1,391,081   $1,373,201 
  

 

 

   

 

 

 

(1)

In light of the front-ended, uneven rental payments required by the Company’s99-year ground and air rights lease for the 100 Clarendon Street garage and Back Bay Transit Station in Boston, MA, and to makeperiod-to-period comparisons more meaningful to investors, the adjustment does not include the straight-line impact of approximately $414 and $(1,240) for the twelve months ended December 31, 2018 and 2017, respectively. As of December 31, 2018, the Company has remaining lease payments aggregating approximately $26.1 million, all of which it expects to incur by the end of 2021 with no payments thereafter. Under GAAP, the Company is recognizing expense of $(348) per year on a straight-line basis over the term of the lease. However, unlike more traditional ground and air rights leases, the timing and amounts of the rental payments by the Company correlate to the uneven timing and funding by the Company of capital expenditures related to improvements at Back Bay Transit Station. As a result, the amounts excluded from the adjustment each quarter through 2021 may vary significantly.

(2)

See “Consolidated Joint Ventures” in this Appendix for additional details.

(3)

See “Unconsolidated Joint Ventures” in this Appendix for additional details.

A-4    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

CONSOLIDATED JOINT VENTURES

for the year ended December 31, 2018

(unaudited and in dollars in thousands)

     Norges Joint Ventures       
  767 Fifth Avenue
(The GM Building)		  Times Square Tower
601 Lexington Avenue/
One Five Nine East
53rd Street
100 Federal Street
Atlantic Wharf Office		  Salesforce Tower  Total
Consolidated
Joint Ventures		 

REVENUE

    

Rent

 $220,509  $299,299  $48,951  $568,759 

Straight-line rent

  4,593   12,095   (21,370)   (4,682) 

Fair value lease revenue

  17,644   960   —   18,604 

Termination income

  275   16   —   291 
 

 

 

  

 

 

  

 

 

  

 

 

 

Base rent

  243,021   312,370   27,581   582,972 

Recoveries from tenants

  50,625   62,926   13,952   127,503 

Parking and other

  2,976   6,095   736   9,807 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total rental revenue

  296,622   381,391   42,269   720,282 

EXPENSES

    

Operating

  116,403   134,219   20,166   270,788 
 

 

 

  

 

 

  

 

 

  

 

 

 

NET OPERATING INCOME (NOI)

  180,219   247,172   22,103   449,494 
 

 

 

  

 

 

  

 

 

  

 

 

 

Development and management services revenue

  1,942   3,008   1,219   6,169 

Interest and other income

  2,027   1,961   362   4,350 

Interest expense

  (82,158)   (25,455)   —   (107,613) 

Depreciation and amortization

  (90,955)   (82,823)   (10,207)   (183,985) 
 

 

 

  

 

 

  

 

 

  

 

 

 

SUBTOTAL

  (169,144)   (103,309)   (8,626)   (281,079) 
 

 

 

  

 

 

  

 

 

  

 

 

 

NET INCOME

 $11,075  $143,863  $13,477  $168,415 
 

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s ownership percentage

  60.00%   55.00%   95.00%  
 

 

 

  

 

 

  

 

 

  

Partners’ share of NOI (after priority allocations)(1)

 $70,703  $109,629  $183  $180,515 
 

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of NOI (after priority allocations)

 $109,516  $137,543  $21,920  $268,979 
 

 

 

  

 

 

  

 

 

  

 

 

 

Reconciliation of Partners’ share of NOI(1):

    

Rental revenue

 $118,650  $171,627  $2,114  $292,391 

Less: Termination income

  110   7   —   117 
 

 

 

  

 

 

  

 

 

  

 

 

 

Rental revenue (excluding termination income)

  118,540   171,620   2,114   292,274 

Less: Operating expenses (including partners’ share of management and other fees)

  47,946   62,040   1,082   111,068 

Priority allocations

  —   (42)   850   808 
 

 

 

  

 

 

  

 

 

  

 

 

 

NOI (excluding termination income and after priority allocations)

  70,594   109,622   182   180,398 
 

 

 

  

 

 

  

 

 

  

 

 

 

Rental revenue (excluding termination income)

 $118,540  $171,620  $2,114  $292,274 

Less: Straight-line rent

  1,837   5,443   (1,068)   6,212 

Fair value lease revenue

  7,059   431   —   7,490 

Add: Lease transaction costs that qualify as rent inducements(2)

  —   277   —   277 
 

 

 

  

 

 

  

 

 

  

 

 

 

Subtotal

  109,644   166,023   3,182   278,849 

Less: Operating expenses (including partners’ share of management and other fees)

  47,946   62,040   1,082   111,068 

Priority allocations

  —   (42)   850   808 
 

 

 

  

 

 

  

 

 

  

 

 

 

NOI – cash (excluding termination income and after priority allocations)

 $61,698  $104,025  $1,250  $166,973 
 

 

 

  

 

 

  

 

 

  

 

 

 

(1)

Amounts represent the partners’ share based on their respective ownership percentage.

(2)

Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP.

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    A-5

CONSOLIDATED JOINT VENTURES

for the year ended December 31, 2017

(unaudited and dollars in thousands)

     Norges Joint Ventures       
  767 Fifth Avenue
(The GM Building)		  Times Square Tower
601 Lexington Avenue/
One Five Nine East
53rd Street
100 Federal Street
Atlantic Wharf Office		  Salesforce Tower  Total
Consolidated
Joint Ventures		 

REVENUE

    

Rent

 $220,926  $298,550  $3,239  $522,715 

Straight-line rent

  7,229   (343)   (2,791)   4,095 

Fair value lease revenue

  15,372   944   —   16,316 

Termination income

  14,228   (1,415)   —   12,813 
 

 

 

  

 

 

  

 

 

  

 

 

 

Base Rent

  257,755   297,736   448   555,939 

Recoveries from tenants

  52,237   57,170   223   109,630 

Parking and other

  2,357   5,379   —   7,736 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total rental revenue

  312,349   360,285   671   673,305 

EXPENSES

    

Operating

  114,988   133,691   296   248,975 
 

 

 

  

 

 

  

 

 

  

 

 

 

NET OPERATING INCOME (NOI)

  197,361   226,594   375   424,330 
 

 

 

  

 

 

  

 

 

  

 

 

 

Development and management services revenue

  2,355   3,132   50   5,537 

Interest and other income

  773   1,308   60   2,141 

Interest expense

  (89,184)   (30,045)   —   (119,229) 

Interest expense – outside members’ notes

  (16,256)   —   —   (16,256) 

Fair value interest adjustment

  20,227   —   —   20,227 

Depreciation and amortization

  (103,314)   (82,189)   (129)   (185,632) 

Gain from early extinguishment of debt

  14,606   —   —   14,606 

Other

  —   (78)   —   (78) 
 

 

 

  

 

 

  

 

 

  

 

 

 

SUBTOTAL

  (170,793)   (107,872)   (19)   (278,684) 

NET INCOME

 $26,568  $118,722  $356  $145,646 
 

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s ownership percentage

  60.00%   55.00%   95.00%  
 

 

 

  

 

 

  

 

 

  

Partners’ share of NOI (after priority allocations)(1)

 $77,474  $100,411  $(172)  $177,713 
 

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of NOI (after priority allocations)

 $119,887  $126,183  $547  $246,617 
 

 

 

  

 

 

  

 

 

  

 

 

 

Reconciliation of Partners’ share of NOI(1)

    

Rental revenue

 $124,939  $162,129  $34  $287,102 

Less: Termination income

  5,691   (636)   —   5,055 
 

 

 

  

 

 

  

 

 

  

 

 

 

Rental revenue (excluding termination income)

  119,248   162,765   34   282,047 

Less: Operating expenses (including partners’ share of management and other fees)

  47,465   61,718   31   109,214 

Priority allocations

  —   —   175   175 
 

 

 

  

 

 

  

 

 

  

 

 

 

NOI (excluding termination income and after priority allocations)

  71,783   101,047   (172)   172,658 
 

 

 

  

 

 

  

 

 

  

 

 

 

Rental revenue (excluding termination income)

 $119,248  $162,765  $34  $282,047 

Less: Straight-line rent

  2,892   (155)   (140)   2,597 

Fair value lease revenue

  6,149   423   —   6,572 

Add: Lease transaction costs that qualify as rent inducements(2)

  25   —   —   25 
 

 

 

  

 

 

  

 

 

  

 

 

 

Subtotal

  110,232   162,497   174   272,903 

Less: Operating expenses (including partners’ share of management and other fees)

  47,465   61,718   31   109,214 

Priority allocations

  —   —   175   175 
 

 

 

  

 

 

  

 

 

  

 

 

 

NOI – cash (excluding termination income and after priority allocations)

 $62,767  $100,779  $(32)  $163,514 
 

 

 

  

 

 

  

 

 

  

 

 

 

(1)

Amounts represent the partners’ share based on their respective ownership percentage.

(2)

Consists of lease transaction costs that qualify as rent inducements in accordance with GAAP.

A-6    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

UNCONSOLIDATED JOINT VENTURES

for the year ended December 31, 2018

(unaudited and dollars in thousands)

  540
Madison
Avenue		  Market
Square
North		  Metropolitan
Square		  901
New York
Avenue		  Annapolis
Junction(1)		  500
North
Capitol
Street,
N.W.		  Colorado
Center		  Santa
Monica
Business
Park		  Other Joint
Ventures(2)		  Total
Unconsolidated
Joint
Ventures		 

REVENUE

          

Rental

 $22,049  $17,439  $23,262  $27,977  $10,558  $11,517  $52,325  $22,722  $6,301  $194,150 

Straight-line rent

  553   1,125   (214)   78   230   (31)   10,774   3,661   (243)   15,933 

Fair value lease revenue

  —   —   —   —   —   —   384   1,651   —   2,035 

Termination income

  3   —   (16)   50   —   —   —   —   —   37 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Base rent

  22,605   18,564   23,032   28,105   10,788   11,486   63,483   28,034   6,058   212,155 

Recoveries from tenants

  2,300   3,714   4,730   5,168   1,980   5,346   2,578   3,312   2,630   31,758 

Parking and other

  91   868   2,698   1,676   223   503   10,961   3,111   4,719   24,850 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total rental revenue

  24,996   23,146   30,460   34,949   12,991   17,335   77,022   34,457   13,407   268,763 

EXPENSES

          

Operating

  14,012   9,585   14,804   14,229   6,409   5,983   22,805   13,412   5,380   106,619 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

NET OPERATING INCOME

  10,984   13,561   15,656   20,720   6,582   11,352   54,217   21,045   8,027   162,144 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
          

Other income/(expense)

          

Development and management services revenue

  283   10   18   —   —   —   29   16   3   359 

Interest and other income

  249   256   17   249   284   65   508   —   1,185   2,813 

Interest expense

  (4,077)   (5,896)   (8,864)   (8,300)   (5,458)   (4,476)   (19,970)   (12,758)   (1,510)   (71,309) 

Depreciation and amortization expense

  (7,763)   (4,109)   (34,024)   (6,007)   (4,064)   (3,779)   (18,811)   (17,424)   (7,094)   (103,075) 

Gain on distribution of real estate

  —   —   —   —   16,959   —   —   —   —   16,959 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Subtotal

  (11,308)   (9,739)   (42,853)   (14,058)   7,721   (8,190)   (38,244)   (30,166)   (7,416)   (154,253) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

NET INCOME/(LOSS)

 $(324)  $3,822  $(27,197)  $6,662  $14,303  $3,162  $15,973  $(9,121)  $611  $7,891 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
          

BXP’s nominal ownership percentage

  60%   50%   20%   25%   50%   30%   50%   55%   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

BXP’s share of net income/(loss)

 $(194)  $1,913  $(5,439)  $1,808(3)  $7,461  $(359)  $6,154  $(5,016)  $3,487  $9,815 

Basis differential

          

Straight-line rent

  —   —   —   —   —   —   1,074(4)   —   1,360   2,434 

Fair value lease revenue

  —   —   —   —   —   —   820(4)   —   814   1,634 

Depreciation and amortization expense

  653   (174)   (48)   (1,793)   (99)   (57)   (4,872)(4)   —   (5,062)   (11,452) 

Gain on distribution of real estate

  —   —   —   —   (209)   —   —   —   —   (209) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total basis differential(5)

  653   (174)   (48)   (1,793)   (308)   (57)   (2,978)(4)   —   (2,888)   (7,593) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income/(loss) from unconsolidated joint ventures

 $459  $1,739  $(5,487)  $15(3)  $7,153  $(416)  $3,176  $(5,016)  $599  $2,222 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    A-7

  540
Madison
Avenue		  Market
Square
North		  Metropolitan
Square		  901
New York
Avenue		  Annapolis
Junction(1)		  500
North
Capitol
Street,
N.W.		  Colorado
Center		  Santa
Monica
Business
Park		  Other Joint
Ventures(2)		  Total
Unconsolidated
Joint
Ventures		 

Reconciliation of BXP’s share of Net Operating Income

          

BXP’s share of rental revenue

 $14,998  $11,574  $6,093  $17,004(3)  $6,497  $5,201  $42,580(4)  $18,952  $5,837  $128,736 

BXP’s share of operating expenses

  8,408   4,793   2,961   6,922(3)   3,206   1,796   11,404   7,377   2,257   49,124 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of net operating income

  6,590   6,781   3,132   10,082(3)   3,291   3,405   31,176   11,575   3,580   79,612 

Less:

          

BXP’s share of termination income

  2   —   (3)   25(3)   —   —   —   —   —   24 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of net operating income (excluding termination income)

  6,588   6,781   3,135   10,057(3)   3,291   3,405   31,176   11,575   3,580   79,588 

Less:

          

BXP’s share of straight-line rent

  331   563   (43)   42(3)   115   (9)   7,822(4)   2,014   (122)   10,713 

BXP’s share of fair value lease revenue

  —   —   —   —(3)   —   —   1,826(4)   908   —   2,734 

Add:

          

BXP’s share of lease transaction costs that qualify as rent inducements

  —   241   50   84(3)   —   —   180   46   —   601 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of net operating income – cash (excluding termination income)

 $6,257  $6,459  $3,228  $10,099(3)  $3,176  $3,414  $21,708  $8,699  $3,702  $66,742 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(1)

Annapolis Junction includes four in-service properties and two undeveloped land parcels. On December 31, 2018 the Company and its partner in the joint venture entered into a distribution agreement whereby the joint venture distributed one of the four in-service properties to the partner including the assumption by the partner of the mortgage indebtedness collateralized by the property. Mortgage indebtedness at the time of the distribution totaled $45.4 million including accrued interest. The gain on distribution of real estate is included within income from unconsolidated joint ventures in the Company’s consolidated statements of operations.

(2)

Includes The Hub on Causeway, 1001 6th Street, Dock 72, 7750 Wisconsin Avenue, 1265 Main Street, Wisconsin Place Parking Facility and 3 Hudson Boulevard.

(3)

Reflects the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture agreement.

(4)

The Company’s purchase price allocation under ASC 805 for Colorado Center differs from the historical basis of the venture resulting in the majority of the basis differential for this venture.

(5)

Represents adjustments related to the carrying values and depreciation of certain of the Company’s investment in unconsolidated joint ventures.

A-8    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

UNCONSOLIDATED JOINT VENTURES

for the year ended December 31, 2017

(unaudited and dollars in thousands)

  540
Madison
Avenue		  Market
Square
North		  Metropolitan
Square		  901
New York
Avenue		  Wisconsin
Place
Parking
Facility		  Annapolis
Junction(1)		  500
North
Capitol
Street,
N.W.		  Colorado
Center		  1265 Main
Street		  Other
Joint
Ventures(2)		  Total
Unconsolidated
Joint
Ventures		 

REVENUE

           

Rental

 $25,621  $14,842  $15,696  $25,763  $56  $7,720  $11,121  $42,725  $3,975  $154  $147,673 

Straight-line rent

  (550)   2,559   6,861   2,186   —   845   295   9,534   —   —   21,730 

Fair value lease revenue

  —   —   —   —   —   —   —   384   —   —   384 

Termination income

  694   —   (13)   —   —   —   —   (12)   —   —   669 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Base rent

  25,765   17,401   22,544   27,949   56   8,565   11,416   52,631   3,975   154   170,456 

Recoveries from tenants

  2,994   3,327   5,394   4,983   1,335   2,220   4,976   2,006   1,015   —   28,250 

Parking and other

  40   926   3,138   1,657   3,853   240   567   10,785   —   1,519   22,725 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total rental revenue

  28,799   21,654   31,076   34,589   5,244   11,025   16,959   65,422   4,990   1,673   221,431 

EXPENSES

           

Operating

  14,073   9,264   14,695   13,903   2,540   6,523   5,611   21,257   1,066   1,608   90,540 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

NET OPERATING INCOME

  14,726   12,390   16,381   20,686   2,704   4,502   11,348   44,165   3,924   65   130,891 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Other income/(expense)

           

Development and management services revenue

  282   2   11   —   —   —   —   32   6   —   333 

Interest and other income

  93   94   38   123   —   83   25   183   6   91   736 

Interest expense

  (3,336)   (6,010)   (9,433)   (8,301)   —   (4,696)   (4,475)   (8,588)   (1,538)   —   (46,377) 

Depreciation and amortization expense

  (7,745)   (5,956)   (7,676)   (6,089)   (5,540)   (4,269)   (3,811)   (16,806)   (1,635)   —   (59,527) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Subtotal

  (10,706)   (11,870)   (17,060)   (14,267)   (5,540)   (8,882)   (8,261)   (25,179)   (3,161)   91   (104,835) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

NET INCOME/(LOSS)

 $4,020  $520  $(679)  $6,419  $(2,836)  $(4,380)  $3,087  $18,986  $763  $156  $26,056 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s nominal ownership percentage

  60.00%   50.00%   20.00%   25.00%   33.33%   50.00%   30.00%   50.00%   50.00%   50.00%  
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

BXP’s share of net income/(loss)

 $2,410  $260  $(135)  $7,008(3)  $(946)  $(2,190)  $927  $9,465  $382  $276  $17,457 

Total basis differential(5)

  683   (561)   (214)   (300)   (30)   (102)   20   (5,704)(4)   (20)   3   (6,225) 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Income/(loss) from unconsolidated joint ventures

 $3,093  $(301)  $(349)  $6,708(3)  $(976)  $(2,292)  $947  $3,761  $362  $279  $11,232 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Reconciliation of BXP’s share of Net Operating Income

           

BXP’s share of rental revenue

 $17,279  $10,827  $6,215  $16,623  $1,748  $5,513  $5,088  $37,425  $2,495  $837  $104,050 

BXP’s share of operating expenses

  8,445   4,632   2,940   6,682   847   3,263   1,684   10,608   533   803   40,437 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of net operating income

  8,834   6,195   3,275   9,941(3)   901   2,250   3,404   26,817   1,962   34   63,613 

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    A-9

  540
Madison
Avenue		  Market
Square
North		  Metropolitan
Square		  901
New York
Avenue		  Wisconsin
Place
Parking
Facility		  Annapolis
Junction(1)		  500
North
Capitol
Street,
N.W.		  Colorado
Center		  1265 Main
Street		  Other
Joint
Ventures(2)		  Total
Unconsolidated
Joint
Ventures		 

Less:

           

BXP’s share of termination income

  416   —   (3)   —(3)   —   —   —   401   —   —   814 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of net operating income (excluding termination income)

  8,418   6,195   3,278   9,941(3)   901   2,250   3,404   26,416   1,962   34   62,799 

Less:

           

BXP’s share of straight-line rent

  (330)   1,279   1,372   1,050(3)   —   422   88   7,672   —   —   11,553 

BXP’s share of fair value lease revenue

  —   —   —   —(3)   —   —   —   1,857   —   ���   1,857 

Add:

           

BXP’s share of lease transaction costs that qualify as rent inducements

  —   381   470   34(3)   —   163   —   —   —   —   1,048 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

BXP’s share of net operating income – cash (excluding termination income)

 $8,748  $5,297  $2,376  $8,925(3)  $901  $1,991  $3,316  $16,887  $1,962  $34  $50,437 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(1)

Annapolis Junction includes four properties in service and two undeveloped land parcels.

(2)

Includes The Hub on Causeway, 1001 6th Street, Dock 72 and 7750 Wisconsin Avenue.

(3)

Reflects the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture agreement.

(4)

The Company’s purchase price allocation under ASC 805 for Colorado Center differs from the historical basis of the venture resulting in the majority of the basis differential for this venture.

(5)

Represents adjustments related to the carrying values and depreciation of certain of the Company’s investment in unconsolidated joint ventures.

A-10    BOSTON PROPERTIES, INC.  |2019 Proxy Statement

APPENDIX B

BOSTON PROPERTIES, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION2021 STOCK INCENTIVE PLAN

SECTION 1.    GENERAL PURPOSE OF THE DIRECTOR PLANPLAN; DEFINITIONS

ThisThe name of the plan is the Boston Properties, Inc. 2021 Stock Incentive Plan (the “Plan”). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Director Compensation Plan (the “Director Plan”) is intended to establish the cash compensationDirectors, Consultants and equity grants payable to members of the board of directorsother key persons of Boston Properties, Inc. (the “Company”), as constituted from time and the employees and other key persons of Boston Properties Limited Partnership (the “Operating Partnership”) and the Company’s other Subsidiaries, upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to time (the “Board”), who are not employeesacquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with those of the Company or any subsidiary ofand its stockholders, thereby stimulating their efforts on the Company(“Non-Employee Directors”). All equity grants made underCompany’s behalf and strengthening their desire to remain with the Director PlanCompany.

The following terms shall be made pursuant to the Boston Properties, Inc. 2012 Stock Option and Incentive Plan (as amended from time to time, the “2012 Plan”) or any other equity plan of the Company designated bydefined as set forth below:

“Administrator” means either the Board pursuant to whichor the grants provided for herein may be made (the “Incentive Plan”). Except as otherwise noted herein, the cash compensation and equity grants described in the Director Plan shall be paid or be made, as applicable, to eachNon-Employee Director automatically and without any further action by the Board. All capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the 2012 Plan.

SECTION 2.    ADMINISTRATION OF THE DIRECTOR PLAN

The Director Plan shall be administered by the Compensation Committee of the Board (the “Committee”). All decisions and interpretations of the Committee shall be made in the Committee’s sole and absolute discretion and shall be final and binding on all persons, including the Company andNon-Employee Directors.

SECTION 3.    BOARD AND COMMITTEE SERVICE FEES

(a)    Board Service. EachNon-Employee Director shall receive an annual cash retainer of $85,000 for serving on the Board.Non-Employee Directors shall not receive meeting attendance fees for any meetingcommittee of the Board or a similar committee thereof that he or she attends.

(b)    Chairmanperforming the functions of the Board. TheNon-Employee Director serving as Chairman of the Board shall receive an annual cash retainer of $100,000 for such service.

(c)    Compensation Committee. EachNon-Employee Director who serves on the Committee shall receive an annual cash retainer of $10,000 for such service. In addition, theNon-Employee Director serving as the chair of the Committee shall receive an additional annual cash retainer of $15,000 for service as chair.

(d)    Audit Committee. EachNon-Employee Director who serves on the Audit Committee shall receive an annual cash retainer of $15,000 for such service. In addition, theNon-Employee Director serving as the chair of the Audit Committee shall receive an additional annual cash retainer of $20,000 for service as chair.

(e)    Nominating and Corporate Governance Committee. EachNon-Employee Director who serves on the Nominating and Corporate Governance (“NCG”) Committee shall receive an annual cash retainer of $10,000 for such service. In addition, theNon-Employee Director serving as the chair of the NCG Committee shall receive an additional annual cash retainer of $15,000 for service as chair.

(f)    Other Standing Committees. EachNon-Employee Director who serves on any other standingcompensation committee of the Board that may be established from time to timeis designated by the Board shall receive an annual cash retainer of $10,000 for such service. In addition, theNon-Employee Director serving as the chairadministrator of such standing committee, ifthe Plan.

“Award” or “Awards,” means an award under the Plan and, except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Unit Awards, Unrestricted Stock Awards, Dividend Equivalent Rights, Cash-Based Awards and other equity-based awards as contemplated herein.

“Award Certificate” means a written or electronic agreement or document setting forth the terms and provisions applicable to an Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.

“Board” means the Board of Directors of the Company.

“Cash-Based Award” means an Award granted pursuant to Section 12 entitling the recipient to receive a cash denominated payment.

“Change in Control” means the occurrence of any shall receive an additional annual cash retainerone of $15,000 for service as chair.the following events:

 

(i)

any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Exchange Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25 percent or more of the combined voting power of the Company’s then- outstanding securities having the right to vote in an election of the Board (“Voting Securities”) (other than as a result of an acquisition of securities directly from the Company);

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(ii)

persons who, as of the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to such date shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election by either (A) a vote of at least two-thirds of the Incumbent Directors or (B) a vote of at least a majority of the Incumbent Directors who are members of a nominating committee comprised, in the majority, of Incumbent Directors;

(iii)

the consummation of (A) any consolidation or merger of the Company as a result of which the Voting Securities outstanding immediately prior to the consolidation or merger do not either (x) continue to represent 60 percent or more of the outstanding stock or other equity interests having the right to vote in an election of the board of directors (or other equivalent governing body) of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction or (y) convert into, or become immediately exchangeable for, 60 percent or more of the outstanding stock or other equity interest having the right to vote in an election of the board of directors (or other equivalent governing body) of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, or

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(B) any sale, lease, exchange or other transfer to an unrelated party (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; or

(g)    Payment and Deferral of Service Fees. Unless otherwise deferred pursuant

(iv)

the stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to the Director Deferral Program (as defined below), the sum of all annual cash retainers to which eachNon-Employee Director is entitled pursuant to Sections 3(a)-(f) shall be paid quarterly in arrears, subject to prorationhave occurred for periods of service less than a full quarter or full year in length, as applicable.

SECTION 4.    EQUITY COMPENSATION

(a)    Annual Equity Award. Unless otherwise deferred pursuant to the Director Deferral Program, on the fifth business day after each annual meetingpurposes of the Company’s stockholders (or, if any annual meeting is not completed on a single date,foregoing clause (i) solely as the date on which the polls are closed for voting on the electionresult of directors at such annual meeting) (the “Annual Meeting”), eachNon-Employee Director continuing to serve as a memberan acquisition of the Board immediately following the election and qualification of the directors elected at such Annual Meeting shall be granted, at his or her election, either a number of LTIP Units in Boston Properties Limited Partnership, or any successor thereto, or a number of restricted shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) (or a combination of LTIP Units and Common Stock), pursuant to the Incentive Plan equal to $150,000 dividedsecurities by the closing market price of the Company’s Common Stock on the New York Stock Exchange on the grant date,Company which, grant will vest on the earlier of (i) the first anniversary of the grant date and (ii) the date of the next Annual Meeting (the “Annual Equity Award”), subject to potential acceleration as set forth in the Incentive Plan or the applicable award agreement.

(b)    Initial Equity Awards. Unless otherwise deferred pursuant to the Director Deferral Program, on the fifth business day after the appointment of any newNon-Employee Director, suchNon-Employee Director shall be granted, at his or her election, either a number of LTIP Units in Boston Properties Limited Partnership, or any successor thereto, or a number of restricted shares of Common Stock (or a combination of LTIP Units and Common Stock), pursuant to the Incentive Plan equal to $150,000 (prorated based onby reducing the number of months fromshares of Voting Securities outstanding, increases the effective dateproportionate number of the appointmentshares of theNon-Employee Director to the Board to the first anniversary of the most recent prior Annual Meeting) dividedVoting Securities beneficially owned by the closing market price of the Company’s Common Stock on the New York Stock Exchange on the grant date, which grant will vest on the earlier of (i) the first anniversary of the grant date and (ii) the date of the next Annual Meeting (the “Initial Equity Award”), subject to potential acceleration as set forth in the Incentive Plan or the applicable award agreement.

(c)    Form of Equity Awards. Notwithstanding Sections 4(a) and (b), prior to the grant date of any Annual Equity Award or Initial Equity Award, the Committee may, in its sole discretion, determine to (i) grant such Annual Equity Award or Initial Equity Award in the form of any full value Awardperson (as defined in the Incentive Plan) issuable from timeforegoing clause (i)) to time25 percent or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if such person shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to the Incentive Plan (i.e., an Award other than an optiona stock split, stock dividend, or stock appreciation right)similar transaction or (ii) discontinue any ability for theNon-Employee Directors to elect to receive the form of equity for any such grants, in which case all equity awards granted hereunder shall be in the form of restricted shares of Common Stock. All equity awards granted hereunder shall be made pursuant to forms of award agreement having terms consistent with those set forth herein, as approved by the Committee or the Board from time to time for such purpose.

(d)    Availability of Awards. All equity grants made hereunder shall be subject to the availability of shares of Common Stock reserved for issuance pursuant to the Incentive Plan, and the Director Plan does not increase such number of available shares. To the extent insufficient shares of Common Stock are reserved and available to make the equity grants set forth herein, or at the discretion of the Board, any portion of any equity grant to which aNon-Employee Director is entitled shall be added to the next cash payment of annual cash retainers payable pursuant to Section 3 in an amount equal to the Fair Market Value of any such ungranted equity compensation, to be paid at such times and in the manner set forth in Section 3, unless otherwise determined by the Board.

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SECTION 5.    TAX WITHHOLDING

Except to the extent required by applicable law, eachNon-Employee Director shall be solely responsible for any tax obligations he or she incurs as a result of any compensation received underan acquisition of securities directly from the Director Plan.

SECTION 6.    DEFERRAL

EachNon-Employee Director may elect,Company), then a “Change in accordance with the Boston Properties, Inc. Amended and Restated Rules and ConditionsControl” shall be deemed to have occurred for Directors’ Deferred Compensation Program or any other planpurposes of the Company designated or established by the Board for such purpose, as (the “Director Deferral Program”), to defer the cash compensation described in the Director Plan.foregoing clause (i).

SECTION

7.    SECTION 409A

The provisions regarding all payments to be made hereunder shall be interpreted in such a manner that all such payments either comply with Section 409A of“Code” means the Internal Revenue Code of 1986, as amended, (the “Code”and any successor Code, and related rules, regulations and interpretations.

“Common Units” shall have the meaning set forth in the Partnership Agreement.

“Consultant” means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

“Dividend Equivalent Right” means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the grantee.

“Effective Date” means the date on which the Plan becomes effective as set forth in Section 20.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Fair Market Value” on any given date means the last reported sale price at which Stock is traded on such date or, if no Stock is traded on such date, the next preceding date on which Stock was traded, as reflected on the principal stock exchange or, if applicable, any other national stock exchange on which the Stock is traded or admitted to trading.

“Family Member” of a grantee means a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,father-in-law,son-in-law,daughter-in-law,brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50% of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50% of the voting interests.

“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.

“LTIP Units” shall have the meaning set forth in the Partnership Agreement.

“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

“Operating Partnership” means Boston Properties Limited Partnership, a Delaware limited partnership, and any successor thereto.

“Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of June 29, 1998, among the Company, as general partner, and the limited partners who are parties thereto, as amended, restated or supplemented from time to time.

“Performance Criteria” means the performance objectives that the Administrator selects for purposes of earning or attaining an Award for a Performance Cycle. The Performance Criteria which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, region, or Subsidiary of the Company, may include, but will not be limited to, any one or more of the following as selected by the Administrator: funds from operations (“FFO”), adjusted FFO, growth in FFO per share, leasing, rent growth, occupancy or percentage

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leased, operating income and/or net annual recurring revenue, net operating income, total stockholder return, revenue, earnings per share, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”), cash flow (including, but not limited to, operating cash flow and free cash flow), balance sheet management, ratios of net debt to EBITDAre and ratios of market capitalization, net income (loss) (either before or after interest, taxes, depreciation and/or amortization), stock price, economic value-added, acquisitions, dispositions, strategic transactions, portfolio or regional occupancy rates, return on capital, assets, equity, development, re-development, investment, capital deployment, development milestones or any other operational, financial or other performance metric selected by the Administrator, any of which may be (A) measured in absolute terms or compared to any incremental increase, (B) measured in terms of rate of change, (C) compared to another company or companies or to results of a peer group, (D) measured against the market as a whole and/or as compared to applicable market indices, (E) measured on an adjusted basis, by including or excluding categories of items specifically identified in advance by the Compensation Committee or, if not so specified, items that the Compensation Committee determines, in its discretion, are exemptappropriate to include or exclude whether or not specifically identified in advance, (F) measured on a pre-tax or post-tax basis (if applicable), (G) measured on an annualized basis, and/or (H) measured for all or a portion of the Company’s portfolio, including on a same property basis and/or relating to “BXP’s share” (calculated as the consolidated amount calculated in accordance with GAAP, plus the Company’s share of the amount from the requirementsCompany’s unconsolidated joint ventures (calculated based upon the Company’s percentage ownership interest and, in some cases, after priority allocations), minus the Company’s partners’ share of the amount from the Company’s consolidated joint ventures (calculated based upon the partners’ percentage ownership interests and, in some cases, after income allocation to private REIT shareholders and their share of fees due to the Company)).

“Performance Cycle” means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured.

“Person” means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal, state or municipal government or any bureau, department or agency thereof, any other legal entity, or a “group” as that term is used for purposes of Rule 13d-5(b) or Section 13(d) of the Exchange Act and any fiduciary acting in such capacity on behalf of the foregoing.

“Restricted Stock” means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of forfeiture or the Company’s right of repurchase.

“Restricted Stock Award” means an Award of Restricted Stock subject to such restrictions and conditions as the Administrator may determine at the time of grant.

“Restricted Stock Units” means the units underlying a Restricted Stock Unit Award, each of which represents the right to receive one share of Stock or a cash payment equal to the Fair Market Value of one share of Stock at the time and upon the conditions applicable to the Restricted Stock Unit Award.

“Restricted Stock Unit Award” means an Award of Restricted Stock Units subject to such restrictions and conditions as the Administrator may determine at the time of grant.

“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

“Service Relationship” means any relationship as “short-term deferrals”an employee, director or Consultant of the Company or any Subsidiary; provided, however, a change in an individual’s status from a full-time employee or director to part-time employee or Consultant or from a director or Consultant to an employee shall be deemed to continue the Service Relationship.

“Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustments pursuant to Section 3.

“Stock Appreciation Right” means an Award entitling the recipient to receive shares of Stock (or cash, to the extent explicitly provided for in the applicable Award Certificate) having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

“Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.

“Subsidiary” means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation.

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“Unit” means units of partnership interest in the Operating Partnership, including, without limitation, Common Units, LTIP Units or one or more other classes of units that are convertible into Common Units or LTIP Units on a specified date or at the election of the recipient based on appreciation in the value of the Stock, appreciation in the value of the assets of the Operating Partnership, total return generated by a specified number of shares of Stock or Common Units or such other basis as describedmay be determined by the Administrator. Units may include units of partnership interest in the Operating Partnership that are intended to constitute profits interests for U.S. federal income tax purposes.

“Unrestricted Stock Award” means an Award of shares of Stock free of any restrictions.

SECTION 2.    ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

(a)

Administration of Plan. The Plan shall be administered by the Administrator.

(b)

Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan and otherwise administer the Plan and the Awards granted hereunder, including, without limitation, the power and authority:

(i)

to select the individuals to whom Awards may from time to time be granted;

(ii)

to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Unit Awards, Unrestricted Stock Awards, Dividend Equivalent Rights and other equity-based awards, or any combination of the foregoing, granted to any one or more grantees;

(iii)

to determine the number of shares of Stock to be covered by any Award;

(iv)

to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates; provided, however, that except as otherwise provided in Section 3(b), the Administrator is not permitted to reduce the exercise price of Stock Options through cancellation and re-grants or cancellation in exchange for cash;

(v)

to accelerate at any time the exercisability or vesting of all or any portion of any Award;

(vi)

subject to the provisions of Section 5(c), to extend at any time the period in which Stock Options may be exercised;

(vii)

to determine at any time whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts constituting deemed interest, dividends, distributions or other earnings; and

(viii)

at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

All decisions and interpretations of the Administrator shall be made in the Administrator’s sole and absolute discretion and shall be binding and conclusive on all persons, including the Company, the Operating Partnership, the Company’s other Subsidiaries and Plan grantees.

(c)

Delegation of Authority to Grant Awards. Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act. Any such delegation by the Administrator shall include a limitation as to the amount of Stock underlying Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.

(d)

Award Certificate. Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award, which may include, without limitation, the term of an Award, and the provisions applicable in the event employment or service terminates.

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(e)

Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries may from time to time operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.

SECTION 3.    STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

(a)

Stock Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be (i) 5,400,000 shares less (ii) one share for every one share of Stock underlying awards granted under the Company’s 2012 Stock Option and Incentive Plan (the “Prior Plan”) after March 4, 2021, subject to adjustment as provided in this Section 3. For purposes of this limitation, the following shares of Stock shall be added back to the shares of Stock available for issuance under the Plan and, to the extent permitted under Section 422 of the Code and the regulations promulgated thereunder, the shares of Stock that may be issued as Incentive Stock Options: (i) the shares of Stock underlying any Awards under the Plan and any awards under the Prior Plan that are forfeited, canceled or otherwise terminated (other than by exercise) and (ii) with respect to a full-value award under the Plan or the Prior Plan (i.e., an award other than a stock option, stock appreciation right or Unit with an economic structure similar to that of a stock option or stock appreciation right), (A) any shares tendered, held back or otherwise reacquired from the grantee to cover tax withholding owed upon vesting, settlement or the occurrence of any other event with respect to such an award that results in amounts being includable in the gross income of the grantee for income tax purposes and (B) any shares previously reserved for issuance pursuant to such an award to the extent that such shares are not issued and are no longer issuable pursuant to such an award (e.g., in the event that a full-value award that may be settled in cash or by issuance of shares of Stock is settled in cash). Notwithstanding the foregoing, the following shares shall not be added to the shares authorized for grant under the Plan: (x) shares tendered or held back upon exercise of a Stock Option to cover the exercise price or tax withholding, and (y) shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right upon exercise thereof. In the event the Company repurchases shares of Stock on the open market, such shares shall not be added to the shares of Stock available for issuance under the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that no more than 5,400,000 shares of the Stock may be issued in the form of Incentive Stock Options. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.

(b)

Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make appropriate equitable adjustments to the Plan and any outstanding Awards, which may include, without limitation, appropriate or proportionate adjustments in (i) the maximum number and kind of shares reserved for issuance under the Plan, including the maximum number and kind of shares that may be issued in the form of Incentive Stock Options, (ii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if any, per share of Restricted Stock subject to each outstanding Restricted Stock Award, (iv) the exercise price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of shares subject to Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable and (v) other applicable terms of the Plan and any outstanding Awards.

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The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.

(c)

Mergers. In contemplation of and subject to the consummation of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Stock are exchanged for securities, cash or other property of an unrelated corporation or business entity or in the event of a liquidation of the Company (in each case, a “Transaction”), the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding Awards: (i) provide that such Awards shall be assumed or equivalent awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), and/or (ii) upon written notice to the participants, provide that all Awards will terminate upon the consummation of the Transaction. In the event that, pursuant to clause (ii) above, Awards will terminate upon the consummation of the Transaction, all Awards shall become vested and fully exercisable as of the effective time of such Transaction (unless otherwise specified in the applicable Award Certificate or other agreement between the holder of such Award and the Company) and vested Awards, other than Stock Options, shall be fully settled in cash or in kind at such appropriate consideration as determined by the Administrator in its sole discretion after taking into account the consideration payable per share of Stock pursuant to the business combination (the “Merger Price”) and all Stock Options shall be fully settled, in cash or in kind, in an amount equal to the difference between (A) the Merger Price times the number of shares of Stock subject to such outstanding Stock Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding Stock Options; provided, however, that each participant may be permitted, within a specified period determined by the Administrator prior to the consummation of the Transaction, to exercise all outstanding Stock Options, including those that are not then exercisable, subject to the consummation of the Transaction.

(d)

Substitute Awards. The Administrator may grant Awards under the Plan in substitution for stock and stock based awards issued by another corporation or other entity that is acquired by the Company or a Subsidiary; provided that the recipient of such substituted Award is eligible to be granted an Award under the Plan. The Administrator may direct that the substitute Awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Substitute Awards will not reduce the number of shares of Stock authorized for grant under the Plan.

SECTION 4.    ELIGIBILITY

Grantees under the Plan will be such full- or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion and such other Persons (to the extent the issuance of shares of Stock to such Person under the Plan may be registered by the Company on Form S-8 and would be permitted in an “employee benefit plan” as defined in Rule 405 under the Securities Act of 1933, as amended) as are selected from time to time by the Administrator in its sole discretion. For avoidance of doubt, no Award may be granted under the Plan to a Person unless the issuance of shares of Stock to such Person under the Plan may be registered by the Company on Form S-8 and such Person is permitted to participate in an “employee benefit plan” as defined in Rule 405 under the Securities Act of 1933, as amended.

SECTION 5.    STOCK OPTIONS

(a)

Award of Stock Options. The Administrator may grant Stock Options under the Plan. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.

Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 409A424(f) of the Code. To the extent that any amountsStock Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

Stock Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.

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(b)

Exercise Price. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the exercise price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date. Notwithstanding the foregoing, Stock Options may be granted with an exercise price per share that is less than 100 percent of the Fair Market Value on the date of grant (i) pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code, (ii) to individuals who are not subject to U.S. income tax on the date of grant or (iii) the Stock Option is otherwise compliant with Section 409A.

(c)

Stock Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.

(d)

Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.

(e)

Method of Exercise. Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods to the extent provided in the applicable Award Certificate:

(i)

In cash, by certified or bank check or other instrument acceptable to the Administrator;

(ii)

Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe) of shares of Stock that are not then subject to restrictions under any Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date;

(iii)

By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or

(iv)

With respect to Stock Options that are not Incentive Stock Options, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price and the remainder of the aggregate exercise price to be paid by the optionee in cash or other method of payment permitted hereunder.

Payment instruments will be received subject to collection. The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the applicable Award Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee). In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.

(f)

Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

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SECTION 6.    STOCK APPRECIATION RIGHTS

(a)

Award of Stock Appreciation Rights. The Administrator may grant Stock Appreciation Rights under the Plan. A Stock Appreciation Right is an Award entitling the recipient to receive shares of Stock (or cash, to the extent explicitly provided for in the applicable Award Certificate) having a value equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

(b)

Exercise Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant. Notwithstanding the foregoing, Stock Appreciation Rights may be granted with an exercise price per share that is less than 100 percent of the Fair Market Value on the date of grant (i) pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code, (ii) to individuals who are not subject to U.S. income tax on the date of grant or (iii) the Stock Appreciation Right is otherwise compliant with, or is not subject to, Section 409A.

(c)

Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.

(d)

Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined on the date of grant by the Administrator. The term of a Stock Appreciation Right may not exceed ten years. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.

SECTION 7.    RESTRICTED STOCK AWARDS

(a)

Nature of Restricted Stock Awards. The Administrator may grant Restricted Stock Awards under the Plan. A Restricted Stock Award is any Award of Restricted Stock subject to such restrictions and conditions as the Administrator may determine at the time of grant. Conditions may be based on continuing employment (or other Service Relationship) and/or achievement of pre-established performance goals and objectives.

(b)

Rights as a Stockholder. Upon the grant of a Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the Restricted Stock granted thereunder, including voting of the Restricted Stock and receipt of dividends; provided that if the lapse of restrictions with respect to the Restricted Stock Award is tied to the attainment of vesting conditions, the Administrator may require any cash dividends paid by the Company during the vesting period with respect to unvested Restricted Stock to be retained by, or repaid by the grantee to, the Company. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Stock shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Stock is vested as provided in Section 7(d) below, and (ii) certificated Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.

(c)

Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award Certificate. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 17 below, in writing after the Award is issued, if a grantee’s employment (or other Service Relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Stock that has not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other Service Relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder. Following such deemed reacquisition of Restricted Stock that is represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.

(d)

Vesting of Restricted Stock. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company’s right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed “vested.”

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SECTION 8.    RESTRICTED STOCK UNIT AWARDS

(a)

Nature of Restricted Stock Unit Awards. The Administrator may grant Restricted Stock Unit Awards under the Plan. A Restricted Stock Unit Award is an Award of Restricted Stock Units that, subject to the terms and conditions of the applicable Award Certificate, may be settled in shares of Stock (or cash, to the extent explicitly provided for in the Award Certificate) upon the satisfaction of applicable restrictions and conditions at the time of grant. Conditions may be based on, among other things, continuing employment (or other Service Relationship) and/or achievement of pre-established performance goals and objectives. The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. To the extent permitted by the Administrator, the settlement of Restricted Stock Units may be deferred to one or more dates specified in the applicable Award Certificate or elected by the grantee. Restricted Stock Unit Awards with a deferred settlement date may be referred to as Deferred Stock Unit Awards. Each Restricted Stock Unit Award that is subject to Section 409A may contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order to comply with the requirements of Section 409A.

(b)

Election to Receive Restricted Stock Unit Awards in Lieu of Compensation. The Administrator may, in its sole discretion, permit a grantee to elect to receive cash compensation otherwise due to such grantee in the form of a Restricted Stock Unit Award. Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with such rules and procedures established by the Administrator, which shall include rules and procedures intended to ensure compliance with Section 409A. Unless provided by the Administrator, any such cash compensation that the grantee elects to receive in Restricted Stock Units shall be converted to a fixed number of Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such election had not been made. The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate. Any Restricted Stock Units that are elected to be received in lieu of cash compensation shall be fully vested, unless otherwise provided in the Award Certificate.

(c)

Rights as a Stockholder. A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the stock units underlying his Restricted Stock Units, subject to the provisions of Section 10 and such terms and conditions as the Administrator may determine.

(d)

Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 17 below, in writing after the Award is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of Service Relationship) with the Company and its Subsidiaries for any reason.

SECTION 9.    UNRESTRICTED STOCK AWARDS

Grant or Sale of Unrestricted Stock. The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award under the Plan. An Unrestricted Stock Award is an Award of Stock free of any restrictions under the Plan. Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.

SECTION 10.    DIVIDEND EQUIVALENT RIGHTS

(a)

Dividend Equivalent Rights. The Administrator may grant Dividend Equivalent Rights under the Plan. A Dividend Equivalent Right is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other Award to which it relates) if such shares had been issued to the grantee. A Dividend Equivalent Right may be granted hereunder to any grantee as a component of an Award, including a Restricted Stock Unit Award, or as a freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the applicable Award Certificate. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently, may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents, or may otherwise accrue. Unless otherwise provided in the Award Certificate or by the Administrator, any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments.

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(b)

Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 17 below, in writing after the Award is issued, a grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the grantee’s termination of employment (or cessation of Service Relationship) with the Company and its Subsidiaries for any reason.

SECTION 11.    OTHER EQUITY-BASED AWARDS

The Administrator shall have the right (i) to grant other Awards based upon the Stock having such terms and conditions as the Administrator may determine, including, without limitation, the grant of convertible preferred shares, convertible debentures and other exchangeable or redeemable securities or equity interests, (ii) to grant limited-partnership or any other membership or ownership interests (which may be expressed as units or otherwise) in a Subsidiary or operating or other partnership, including, without limitation, Units, with any Stock being issued in connection with the conversion of (or other distribution on account of) an interest granted under the authority of this clause (ii) to be subject, for the avoidance of doubt, to Section 3 and the other provisions of the Plan, and (iii) to grant Awards valued by reference to book value, fair value or performance parameters relative to the Company or any Subsidiary or group of Subsidiaries.

SECTION 12.    CASH-BASED AWARDS

The Administrator may, in its sole discretion, grant Cash-Based Awards to any participant in such number or amount and upon such terms, and subject to such conditions, as the Administrator shall determine at the time of grant. The Administrator shall determine the Performance Cycle and Performance Criteria applicable to such Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Awards shall become vested or payable, hereunderand such other provisions as the Administrator shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator, which may include either a “target” (100 percent attainment of the Performance Criteria) and/or a “minimum” hurdle and/or a “maximum” amount. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash or in shares of Stock, as the Administrator determines.

SECTION 13.    TRANSFERABILITY OF AWARDS

(a)

Transferability. Unless otherwise provided in the Award Certificate or by the Administrator, during a grantee’s lifetime, his or her Stock Options and Stock Appreciation Rights shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity. Except as provided in Section 13(b) below and unless otherwise provided in the Award Certificate or by the Administrator, no Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order; provided that, for the avoidance of doubt, the foregoing shall not apply to shares of Stock issued pursuant to an Award following the date on which such shares are vested. No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.

(b)

Administrator Action. Notwithstanding Section 13(a), the Administrator, in its discretion, may provide either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee may transfer his or her Awards (other than Incentive Stock Options) to his or her Family Members for no value or consideration; provided that the transferee agrees in writing to be bound by all of the terms and conditions of this Plan and the applicable Award.

(c)

Designation of Beneficiary. To the extent permitted by the Company, each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Company and shall not be effective until received by the Company. If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.

SECTION 14.    TAX WITHHOLDING

(a)

Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any

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Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.

(b)

Payment in Stock. Subject to approval by the Administrator, a grantee may elect to have the Company’s required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award (or, in the case of a Restricted Stock Award, to reacquire shares of Stock previously issued pursuant such Restricted Stock Award) a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is necessary to avoid adverse accounting treatment or as determined by the Administrator. The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount. For purposes of share withholding, the Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the grantees. The Administrator may also require the Company’s tax withholding obligation to be satisfied, in whole or in part, by an arrangement whereby a certain number of shares of Stock issued pursuant to any Award are immediately sold and proceeds from such sale are remitted to the Company in an amount that would satisfy the withholding amount due.

SECTION 15.    SECTION 409A AWARDS

Awards are intended to be exempt from Section 409A to the greatest extent possible and to otherwise comply with Section 409A. The Plan and all Awards shall be interpreted in accordance with such intent. To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of(a “409A Award”), the Code, such amountsAward shall be subject to such additional rules and requirements as specified by the CommitteeAdministrator from time to time in order to comply with Section 409A. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who is then considered a “specified employee” (within the Codemeaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such amounts409A Award may not be accelerated or delayed except to the extent permitted by Section 409A409A.

SECTION 16.    TERMINATION OF SERVICE RELATIONSHIP, TRANSFER, LEAVE OF ABSENCE, ETC.

(a)

Termination of Service Relationship. If the grantee’s Service Relationship is with a Subsidiary and such Subsidiary ceases to be a Subsidiary, the grantee shall be deemed to have terminated his or her Service Relationship for purposes of the Plan.

(b)

For purposes of the Plan, the following events shall not be deemed a termination of a Service Relationship:

(i)

a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or

(ii)

an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.

SECTION 17.    AMENDMENTS AND TERMINATION

The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall materially and adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section 3(b), without prior stockholder approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Stock Options or Stock Appreciation Rights in exchange for cash or other Awards. The Board, in its discretion, may determine to make any Plan amendments subject to the approval of the Company’s stockholders for purposes of complying with the rules of any securities exchange or market system on which the Stock is listed or ensuring that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code. The Company makes no representationNothing in this Section 17 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(b).

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SECTION 18.    STATUS OF PLAN

With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or warranty andother consideration not received by a grantee, a grantee shall have no liability to anyNon-Employee Director or any other person if any payments under any provisionsrights greater than those of a general creditor of the Director Plan are determinedCompany unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to constitute deferred compensation under Section 409Ameet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the Code that are subject to the twenty percent (20%) additional tax under Section 409A of the Code.foregoing sentence.

SECTION 19.    GENERAL PROVISIONS

 

SECTION(a)

8.    AMENDMENTS AND TERMINATIONNo Distribution. The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.

The Board reserves the right to amend or terminate the Director Plan at any time in its sole discretion.

(b)

Delivery of Stock. Notwithstanding anything herein to the contrary, the Company shall not be required to issue shares of Stock or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and/or delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate or in the records of the Company or the transfer agent to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

(c)

Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.

(d)

Trading Policy Restrictions. All actions taken with respect to Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.

(e)

Clawback Policy. Awards under the Plan shall be subject to the Company’s Policy for Recoupment of Incentive Compensation, as in effect from time to time, to the extent holders thereof are subject to such policy.

(f)

No Further Awards Under the Prior Plan. On and after the Effective Date, no further awards will be issued under the Prior Plan, but outstanding awards granted under the Prior Plan prior to the Effective Date shall continue to be governed by the terms and conditions of the Prior Plan.

SECTION 9.    NON-EXCLUSIVITY; NO BOARD SERVICE RIGHTS

The Director Plan is not intended to be exclusive and nothing contained in the Director Plan shall prevent the Board from adopting other or additional compensation arrangements with respect to anyNon-Employee Directors or otherwise. The adoption of the Director Plan and the payment of compensation hereunder shall not confer upon anyNon-Employee Director any right to continued service on the Board.

SECTION 10.    20.    EFFECTIVE DATE OF DIRECTOR PLAN

The DirectorThis Plan shall become effective upon stockholder approval in accordance with Delaware law.law and the Company’s certificate of incorporation and bylaws, each as amended. No grants of Awards may be made hereunder after the tenth anniversary of the Effective Date and no grants of Incentive Stock Options may be made hereunder after the tenth anniversary of the date the Plan is approved by the Board.

SECTION 11.    21.    GOVERNING LAW

The DirectorThis Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

DATE APPROVED BY BOARD OF APPROVAL OF DIRECTOR PLAN BY BOARD: February 26, 2019DIRECTORS: March 18, 2021

DATE OF APPROVALAPPROVED BY STOCKHOLDERS: May     , 2019

 

BOSTON PROPERTIES, INC.  |2019 Proxy Statement    B-3

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Your vote matters - here’s how to vote!

You may vote online or by phone instead of mailing this card.

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Votes submitted electronically must be received by 11:59 p.m., Eastern Time, on May 20, 2019.

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  Annual Stockholders’ Meeting Proxy Card

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q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q

- - - - - - - - - - - - - - - - - - -  - - - - - - - - - - - - - - - - - - - - - - - - -  - - -  - - -  - -  - - - - - - - - - - - - -  - - -  - - - -  - - - - - - -  - - - - - - - - - -  - - -  - - -  - - - - - 

The Board of Directors recommends a vote “FOR” all of the nominees for director listed.

 

1.

To elect the eleven nominees for director named in the proxy statement, each to serve for a one-year term and until their respective successors are duly elected and qualified:

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ForAgainstAbstainForAgainstAbstainForAgainstAbstain
 

    01 - Kelly A. AyotteA-12

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05 - Diane J. Hoskins

☐☐☐

09 - Owen D. Thomas

☐☐☐

    02 - Bruce W. Duncan

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☐

☐

06 -  Joel I. Klein

☐

☐

☐

10 - David A. Twardock

☐

☐

☐

    03 - Karen E. Dykstra

☐

☐

☐

07 - Douglas T. Linde

☐

☐

☐

11 - William H. Walton, III

☐

☐

☐

    04 - Carol B. Einiger

☐

☐

☐

08 - Matthew J. Lustig

☐

☐

☐

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BOSTON PROPERTIES, INC.
800 BOYLSTON STREET, SUITE 1900 BOSTON, MA 02199 ATTN: INVESTOR RELATIONS
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on May 19, 2021 for shares held directly and by 11:59 P.M. ET on May 17, 2021 for shares held in a Shareworks account. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/BXP2021
You may attend the meeting via the Internet. Have the information that is printed in the box marked with the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on May 19, 2021 for shares held directly and by 11:59 P.M. ET on May 17, 2021 for shares held in a Shareworks account. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK THE BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D40576-P49725
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
BOSTON PROPERTIES, INC.
The Board of Directors recommends ayou vote “FOR” Proposals all of the nominees for director listed.
For Against Abstain
1. Election of Directors:
Nominees:
1a. Joel I. Klein
1b. Kelly A. Ayotte
1c. Bruce W. Duncan
1d. Karen E. Dykstra
1e. Carol B. Einiger
1f. Diane J. Hoskins
1g. Douglas T. Linde
1h. Matthew J. Lustig
1i. Owen D. Thomas
1j. David A. Twardock
1k. William H. Walton, III
For Against Abstain
The Board of Directors recommends you vote FOR proposals 2, 3 and 4.
2. To approve, by non-binding, advisory resolution, the Company’s named executive officer compensation.
3. To approve the Boston Properties, Inc. 2021 Stock Incentive Plan.
4. To ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.
NOTE: In their discretion, the proxies are authorized to vote upon any other matters that are properly brought by or at the direction of the Board of Directors before the Annual Meeting and at any adjournments or postponements thereof.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date

  For Against Abstain   For Against Abstain
2. To approve, by non-binding, advisory resolution, the Company’s named executive officer compensation. ☐ ☐ ☐ 

4.

 

 To ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. ☐ ☐ ☐
3. To approve the Boston Properties, Inc. Non-Employee Director Compensation Plan. ☐ ☐ ☐ 5. In their discretion, the proxies are authorized to vote upon any other matters that are properly brought by or at the direction of the Board of Directors before the Annual Meeting and at any adjournments or postponements thereof.   

IF VOTING BY MAIL, YOUMUST COMPLETE BOTH SIDES OF THIS CARD.

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qImportant Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 20, 2021: The Notice and Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
qD40577-P49725

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  Proxy

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BOSTON PROPERTIES, INC.


THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FOR THE 20192021 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 2019

20, 2021
The undersigned hereby appoints Douglas T. Linde and Frank D. Burt, and each of them, as proxies for the undersigned, each with the power to appoint his substitute, and hereby authorizes them to attend the 20192021 Annual Meeting of Stockholders of Boston Properties, Inc. (the “Annual Meeting”) to be held virtually via live audio webcast at 599 Lexington Avenue, 16th Floor, New York, NY 10022www.virtualshareholdermeeting.com/BXP2021 on May 21, 201920, 2021 at 9:00 a.m., Eastern Time, and at any adjournments or postponements thereof, to vote, as designated on the reverse side, all of the shares that the undersigned is entitled to vote at the Annual Meeting and otherwise to represent the undersigned with all of the powers the undersigned would possess if personally present at the Annual Meeting. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders, the Proxy Statement and the Annual Report to Stockholders and revokes any proxy heretofore given with respect to the Annual Meeting.


THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. UNLESS DIRECTION IS GIVEN TO THE CONTRARY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES FOR DIRECTOR AND “FOR” PROPOSALS 2, 3 AND 4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER MATTERS THAT ARE PROPERLY BROUGHT BY OR AT THE DIRECTION OF THE BOARD OF DIRECTORS BEFORE THE ANNUAL MEETING AND AT ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE PROXIES TO VOTE WITH RESPECT TO THE ELECTION OF ANY INDIVIDUAL FOR DIRECTOR WHERE ONE OR MORE NOMINEES ARE UNABLE TO SERVE, OR FOR GOOD CAUSE WILL NOT SERVE, AND WITH RESPECT TO MATTERS INCIDENTAL TO THE CONDUCT OF THE ANNUAL MEETING.
Continued and to be signed on reverse side

PLEASE MARK, SIGN AND DATE AND RETURN PROMPTLY, OR VOTE BY TELEPHONE OR INTERNET.

THIS PROXY IS CONTINUED ON REVERSE SIDE

Please sign exactly as name appears hereon. Joint owners should each sign. Executors, administrators, trustees, guardians or other fiduciaries should give full title as such. If signing for a company or partnership, please sign in full company or partnership name by a duly authorized officer or partner.

Date (mm/dd/yyyy) – Please print date below.

 Signature 1 – Please keep signature within the box.

 Signature 2 – Please keep signature within the box.

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LOGOIF VOTING BY MAIL, YOUMUST COMPLETE BOTH SIDES OF THIS CARD.

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