Filed by a Partyparty other than the Registrant☐
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
| ☒ | No fee required. | |||
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Fee paid previously with preliminary materials. |
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| Fee computed on table in exhibit required by Item 25(b) per Exchange Act 14a-6(i)(1) and0-11. | ||
April 13, 2023
Dear Fellow BXP Stockholders,
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I am honored that my independent director colleagues asked me to continue serving as BXP’s Lead Independent Director. In this role, I have the opportunity to work closely with the other directors to support BXP’s long-term strategy and provide independent risk oversight during this critical time for BXP. As we approach the 2023 Annual Meeting, rather than highlighting BXP’s financial and operational data that are |
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April 3, 2020
Dear Fellow Stockholder:
On behalf of the Board of Directors, I am delighted to invite you to attend the 2020 Annual Meeting of Stockholders of Boston Properties, Inc., or BXP. The meeting will be held on Wednesday, May 20, 2020 at 9:00 a.m., Eastern Time, at Metropolitan Square, 655 15th Street, NW, 2nd Floor, Washington, DC 20005. However, as discussedcontained elsewhere in detail in the Notice of Meeting that follows this letter, depending on the status of theCOVID-19 pandemic, we may decide to hold the meeting “virtually.”
As I write this letter, we are quickly approaching the 50th anniversary of the founding of Boston Properties, Inc.proxy statement and our 23rd year as a public company listed on the NYSE. In light of these milestones,annual report, I want to take this opportunity to share with you some notable achievementsof the ways that the Board has worked together over the past year in 2019,areas that are important to you.
Board Composition and Process
As Lead Independent Director, one of my priorities is to work with our Nominating and Corporate Governance (“NCG”) Committee to help ensure that the Board as wella whole is independent and equipped to oversee the risks and opportunities of BXP’s business. In this regard, the Board is committed to maintaining an appropriate balance between director retention and refreshment. We believe that substantial benefits result from a sustained focus on BXP’s business, strategy and industry over a period of time and that continuity on the Board is essential to its effectiveness. Because it takes time to acquire sufficient company-specific knowledge and because commercial real estate development is, by its nature, long-term, our Board values the experience and institutional knowledge of our longer-serving directors.
However, our Board also values refreshment and believes that turnover in Board membership provides an opportunity to add significant value through the input of fresh ideas, skills, experiences and knowledge, and by expanding the diversity of directors’ perspectives. This can be particularly beneficial as highlight some key policy changes that we believea company’s business strategy evolves, when it enters new markets or when it faces new challenges, each of which may require different knowledge or skills. As a result, our Board strives to balance these competing perspectives through careful succession planning.
Nomination of Tony West
Consistent with the principles outlined above, the Board is thrilled to announce the nomination of Tony West for election to BXP’s Board at our 2023 Annual Meeting. Tony currently serves as the Chief Legal Officer and Corporate Secretary of Uber, Inc., positions he has held since 2017, and he previously served as the Executive Vice President of Public Policy and Government Affairs, General Counsel and Corporate Secretary at PepsiCo. Before joining PepsiCo, the United States Senate twice confirmed Tony to serve as a senior official in the Obama Administration. From 2012 to 2014, Tony was the Associate Attorney General of the United States, the U.S. Department of Justice’s third-highest ranking official, where he supervised many of the department’s divisions, including the Civil Rights, Antitrust, Tax, Environment and Natural Resources, and Civil Divisions.
Tony will enhance transparency and improve your understanding of Boston Properties’ affairs.
Boston Properties is certainly much larger and more complex today than at any time in its history,be a tremendous addition to BXP’s Board as we now operate in five regions on both U.S. coastlinesseek to benefit from his deep experience at the intersection of business and are developing premier buildings on a scale that is greater than ever before. Despite that growth, your Board is pleased to report that under the leadership of our CEO, Owen Thomas, and President, Doug Linde, the vision and strategy of our founders, Mort Zuckerman and the late Ed Linde, remain the foundation of what we do. That strategy has proven successful. An investment in BXP common stock on the date of our IPO has appreciated by more than 1,346% as of December 31, 2019, far surpassing the 456% return on an equal investmentgovernment, his executive experience in the S&P 500 Index.
2019 Business Highlights
2019 was an excellent year for Boston Properties, particularly considering that it followed a very strong 2018. Our success is demonstrated by our financial resultstechnology industry and other key accomplishments. While the accompanying proxy statement details yourwith risk management, team’s significant accomplishmentsand his unique perspective as BXP’s first director who principally lives and works in 2019, I want to highlight some that stand out and provide context for the discussion of the compensation of our named executive officers, or “NEOs”:California. Tony’s
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nomination is the result of the NCG Committee’s continued focus on Board composition and insights provided through the Board’s annual self-evaluation process, which includes evaluations of the Board and each of its committees.
Retirement of David Twardock
While it is exciting to welcome a new director nominee to BXP, David Twardock will not be standing for re-election to the Board in 2023. David has served BXP honorably and with distinction since 2003. At different times during his tenure, David served on each of the Audit, Compensation and NCG Committees and chaired the Audit and Compensation Committees. He also played a key Board role in helping guide BXP through many strategic challenges, including the Great Financial Crisis, two CEO successions, the Covid-19 pandemic and the current uncertainty in the banking industry, among others. Although we will miss greatly David’s knowledge and perspectives, particularly as BXP’s longest-tenured independent director, we will miss seeing our good friend at BXP Board meetings even more. Despite David’s retirement, the Board is confident that Tony West and the other independent directors will continue providing the effective oversight that BXP’s investors demand and deserve. On behalf of the entire Board of Directors, it is with deep gratitude that we thank David for his many significant contributions to BXP. We wish him well in his future endeavors and we say to him, “Job well done.”
Oversight of Strategy and Risk
The Board’s role in overseeing and working with management to refine BXP’s strategy is among the Board’s most important responsibilities, and we continue to work closely with management on matters regarding BXP’s business, its performance and its long-term outlook. The Board sees an incredible opportunity for BXP to continue to be a leader in the evolving market for premier workplaces, and, in 2022, our Board and committee meetings regularly included consideration and discussion of significant business and organizational initiatives, investment trends and opportunities, capital allocation and financing strategies, trends in the use of office space, succession planning, appropriate goal setting for compensation targets, and sustainability and human capital management. The Board also stayed informed of enterprise risks, risks related to climate change, risks related to cyber intrusions and the security of our technology infrastructure, legal and regulatory matters, and public policy developments (including state and local tax laws).
2023 and Beyond
Ultimately, the Board confronts every issue and makes decisions with a view to long-term sustainable growth, even at the expense of short-term earnings. U.S. companies, including BXP, have endured volatile markets, economic slowdowns and recessions before, and with prudent management, we believe BXP will do so again. While none of us is content with BXP’s recent short-term stock price performance, the Board understands that this is not a reflection of the superb leadership and workforce that BXP employs. We are confident that, together, BXP’s Board and management team are charting the proper course for enhancing long-term shareholder value in BXP – whether in deciding in which markets to invest, which properties to own and which to sell, managing the balance sheet or setting the path to achieving its ESG goals, to name a few. And we will continue to do so while maintaining rigorous oversight of the risks we face.
On behalf of my fellow independent directors and the entire Board, thank you for your continued support and interest in BXP. We appreciate the opportunity to serve BXP on your behalf, and we look forward to hearing your views at the 2023 Annual Meeting and through our ongoing engagement with you.
Sincerely,
Kelly A. Ayotte
Lead Independent Director
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Environmental, Social and Governance (ESG) Leadership
2019 was another strong year for BXP during which we made substantial progress and maintained our position as an industry leader on environmental, social and governance issues.
› Environmental. Our sustainability strategy is to 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. Our experience demonstrates that through our activities, we can contribute to environmental solutions as a positive force while improving our financial performance and becoming a stronger, more purposeful organization in the process. We deliver efficient, healthy and productive workspaces while simultaneously mitigating operational costs and potential external impacts of energy, water, waste, and greenhouse gas emissions. We are also keenly focused on the climate resilience of our existing portfolio of assets, and we are preparing for long-term climate risks, such as extreme heat, severe storms and sea level rise, by considering climate change scenarios.
Your Board of Directors and CEO are committed to building a company culture in which the commitment to these tenets extends to every region in which we operate, every department and function, and every employee. As a result of these focused efforts, BXP won various industry and other awards in 2019, and we are recognized as a global industry leader in sustainability. Your Board is especially proud of these accomplishments because they are a direct result of our sustained commitment throughout the enterprise over several years. A list of these various awards is on page 5 of the accompanying proxy statement.
› Social. Boston Properties has an established reputation for excellence and integrity, and these core values are inherent in our culture; defining our strategy, achieving our business goals, and contributing to our overall success. Our teams are highly engaged with their local communities in determining how our projects can enhance neighborhoods, improve public amenities and provide high-quality space for working and living in order to positively impact the regions in which we operate. BXP and its employees also make a social impact through charitable giving and volunteerism.
Similarly, BXP is committed to providing an environment for its employees that fosters talent, energy and well-being. We seek an inclusive and diverse workforce that represents the communities we serve, and we design our programs to meet the needs of our workforce and support our employees and their families. The success of our efforts is demonstrated by the long tenure of our employees, nearly 40% of whom have worked at BXP for more than ten years.
› Governance. Your Board of Directors currently consists of eleven individuals with diverse backgrounds who are dedicated to serving the best interests of our stockholders. The accompanying proxy statement contains very detailed information on the composition of our Board and its responsibilities, including a snapshot of our policies on page 1 of the Proxy Summary.
Investor Outreach & Changes in Compensation Policies
At our 2019 annual meeting, our stockholders approved the“Say-on-Pay” resolution to ratify the compensation we paid to our named executive officers. Although the core philosophy and design of our compensation program remained materially consistent with prior years, Institutional Shareholder Services recommended that its clients vote against our 2019Say-on-Pay resolution and the percentage of votes cast in favor of theSay-on-Pay resolution decreased from approximately 91% in 2018 to approximately 67% in 2019.
The results of the vote reflected approval of our executive compensation program as a whole, but the level of support was less than we expected and less than we desire. As a result, your independent directors, led by the Chair of the Compensation Committee and me, engaged directly with ten of our largest institutional investors representing ownership of more than 40% of the outstanding shares of BXP common stock to solicit feedback on our executive compensation program and our corporate governance policies generally and to better understand their individual concerns.
In addition to the feedback from investors, the Compensation Committee evaluated the advice received from its new independent consultant, Frederic W. Cook & Co., Inc. on the reasonableness of the Company’s executive compensation levels in comparison with those of other similarly situated companies and recommendations for the components and amounts of compensation paid to our top executive officers.
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The “Compensation Discussion and Analysis” section of the accompanying proxy statement includes a discussion of the feedback we received from investors, as well as the advice received from FW Cook. Each contributed to the Compensation Committee taking policy actions, and I want to highlight the following key changes:
› New Annual Cash Bonus Program – The Compensation Committee established a new 2020 Annual Incentive Plan. Under this plan, beginning in 2020, annual cash bonuses paid to our executive officers will be directly linked to their performance against goals in three, equally-weighted categories:
FFO per Share
Leasing
Business/Individual Goals
Some of our investors expressed a desire for more objectivity and structure in BXP’s annual cash bonus program, including specific weightings ascribed to each measure and transparent disclosure of goals and results. The new bonus plan addresses investors’ feedback on the discretionary nature of BXP’s traditional bonus program, reduces the number of performance goals and includes specific weightings for each measure.
› Target and Maximum Cash Bonus Opportunities – Beginning in 2020, all executive officers have target and maximum annual cash bonus opportunities. Amounts actually earned may range from zero (0) to 150% of target, depending on performance versus theirpre-established goals in each category. The Compensation Committee incorporated the target and maximum bonus opportunities in the new bonus plan in response to investors expressing a preference for a clearly defined ranges of bonus opportunities.
› Allocation to Performance-based Equity Awards – The Compensation Committee increased the percentage of equity awards that are granted to our CEO in the form of performance-based equity awards from 50% to 55%, so the allocation between performance-based and time-based equity awards is now55%-45%. (The allocation for all other NEOs remains50%-50%.) In addition, the Compensation Committee increased the allocation of total compensation to long-term equity compensation and decreased the allocation to short-term cash compensation to increase alignment with stockholders and focus on long-term performance. As a result, performance-based equity awards for all NEOs represent a greater percentage of total direct compensation than they did in 2018.
We trust that you will view these changes as a demonstration of the commitment of Boston Properties’ Board to engage with you and to proactively respond to your concerns.
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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. Whether or not you are able to attend the annual meeting, we welcome your participation in our affairs and thank you for your continued support.
Sincerely,
Joel I. Klein
Chairman of the Board
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NOTICE OF 20202023 ANNUAL
MEETING OF STOCKHOLDERS
OF BOSTON PROPERTIES, INC.
| Location: Prudential Tower 800 Boylston Street, Suite 1900 Boston, Massachusetts 02199-8103 Date: Tuesday, May Time: 9:00 a.m., Eastern Time | |||
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*Depending on the status of health concerns about the coronavirus, orCOVID-19, we may decide to hold the annual meeting by live audio webcast instead of holding the annual meeting in person at Metropolitan Square. The Company will publicly announce a decision to hold the annual meeting, at the same date and time, solely by audio webcast in a press release available athttp://investors.bxp.com/press-releases as soon as practicable before the annual meeting. In the event the annual meeting is not held at Metropolitan Square, you or your proxyholder may participate, vote and examine our stockholder list by visitingwww.virtualshareholdermeeting.com/BXP2020 and using your16-digit control number.
Since becoming a public company in 1997, we have always held our annual meetings in person, and it remains our intention to do so under normal circumstances.
ITEMS OF BUSINESSBusiness:
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 hold a non-binding, advisory vote on the frequency of holding the advisory vote on named executive officer compensation. 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, |
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. | ||
Record Date: March 29, 2023. Only holders of record of BXP common stock at the close of business on the record date are entitled to receive notice of, and to vote at, the annual meeting. |
PROXY VOTINGProxy Voting
Whether or not you 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.
By Order of the Board of Directors,
Frank D. Burt,ERIC G. KEVORKIAN, ESQ.
Secretary
April 3, 202013, 2023
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 20, 2020. 23, 2023.The proxy statement and our 20192022 annual report to stockholders are available atwww.proxyvote.com.atwww.proxyvote.com.
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| › | PROXY SUMMARY |
This summary highlights information contained elsewhere in the proxy statement. This summaryIt 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,” “BXP” and the “Company” in this proxy statement refer to Boston Properties, Inc. and references to “BPLP” and the “Operating Partnership” in this proxy statement refer to Boston Properties Limited Partnership, our operating partnership.
20202023 ANNUAL MEETING INFORMATION
Date and Time |
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9:00 a.m., Eastern Time |
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VOTING MATTERS AND RECOMMENDATIONS
recommendation | Where to find more | |||||||
Proposal 1 | Election of Eleven (11) Directors |  | FOReach nominee | Page 7 | ||||
Proposal 2 | Non-binding, Advisory Vote on Named Executive Officer Compensation | | FOR | Page 124 | ||||
Proposal | Non-binding, Advisory Vote on the Frequency of Holding the Advisory Vote on Named Executive Officer Compensation. | EVERY YEAR (“1 Year” on proxy card) | ||||||
Proposal | Ratification of Appointment of Independent | |||||||
| Registered Public Accounting Firm | ||||||||
GOVERNANCE AND COMPENSATION POLICIES AND KEY DATA
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DIRECTOR SUCCESSION
Led by our Nominating and Corporate Governance (“NCG”) Committee, our Board of Directors (“Board”) remains focused on ensuring (1) a smooth transition when directors retire or otherwise leave our Board and (2) that the composition of our Board is systematically refreshed so that, taken as a whole, it has the desired mix of skills, experience, continuity, 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 and oversight expected by investors. For more information on this process, see “Corporate Governance – Board Refreshment and Evaluations” beginning on page 30 of this proxy statement.
Consistent with this approach, since 2016, our Board nominated, and our stockholders elected, six new directors, and our Board of Directors is delighted to nominate a new candidate – Mr. Derek Anthony (Tony) West – for election to our Board at the 2023 annual meeting of stockholders. Mr. David A. Twardock, a director of BXP since 2003, is not standing for re-election.
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| › | PROXY SUMMARY |
BOARD NOMINEES
Following the recommendation of the Nominating and Corporate Governance (“NCG”)NCG Committee, our Board of Directors has nominated the following eleven (11) candidates for election as directors at the 20202023 annual meeting of stockholders.
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 | 73 | 2013 | Yes | (2) | |||||
Kelly A. Ayotte | Former United States Senator for the State of New Hampshire | 51 | 2018 | Yes | Compensation; NCG | |||||
Bruce W. Duncan(3) | Chairman and former Chief Executive Officer of First Industrial Realty Trust, Inc. | 68 | 2016 | Yes | Compensation (Chair); NCG | |||||
Karen E. Dykstra(3) | Former Chief Financial and Administrative Officer of AOL, Inc. | 61 | 2016 | Yes | Audit | |||||
Carol B. Einiger | President of Post Rock Advisors, LLC | 70 | 2004 | Yes | Compensation | |||||
Diane J. Hoskins | Chair andCo-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc. | 62 | 2019 | Yes | NCG | |||||
Douglas T. Linde | President of Boston Properties, Inc. | 56 | 2010 | No | ||||||
Matthew J. Lustig | Chairman of North America Investment Banking and Head of Real Estate & Lodging at Lazard Fréres & Co. | 59 | 2011 | Yes | NCG (Chair) | |||||
Owen D. Thomas | Chief Executive Officer of Boston Properties, Inc. | 58 | 2013 | No | ||||||
David A. Twardock(3) | Former President of Prudential Mortgage Capital Company, LLC | 63 | 2003 | Yes | Audit (Chair); Compensation | |||||
William H. Walton, III | Managing Member &Co-Founder of Rockpoint Group, LLC | 68 | 2019 | Yes | Audit | |||||
Name | Principal Occupation | Age(1) | Director Since | Independent | Current Committee Memberships | |||||||
 | Owen D. Thomas Chairman of the Board | Chief Executive Officer of Boston Properties, Inc. | 61 | 2013 |  | • Sustainability | ||||||
 | Kelly A. Ayotte Lead Independent Director | Former United States Senator for the State of New Hampshire
| 54 | 2018 |  | • ex officio(2) | ||||||
 | Bruce W. Duncan(3) | Former President and Chief Executive Officer of CyrusOne Inc. | 71 | 2016 | | • Audit • NCG | ||||||
 | Carol B. Einiger | President of Post Rock Advisors, LLC | 73 | 2004 | | • Compensation(4) • NCG | ||||||
 | Diane J. Hoskins |
Co-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc. | 65 | 2019 | | • NCG • Sustainability - Chair | ||||||
| Mary E. Kipp(3) | President & Chief Executive Officer of Puget Sound Energy | 55 | 2021 | | • Audit(5) • Sustainability | ||||||
 | Joel I. Klein | Chief Executive Officer of Retromer Therapeutics | 76 | 2013 | | • Compensation - Chair • NCG | ||||||
 | Douglas T. Linde | President of Boston Properties, Inc. | 59 | 2010 | | • Sustainability | ||||||
 | Matthew J. Lustig | Chairman of North America Investment Banking and Head of Real Estate & Lodging at Lazard Frères & Co.
| 62 | 2011 | | • NCG - Chair • Sustainability | ||||||
 | William H. Walton, III | Co-Founder and Managing Member of Rockpoint Group, LLC | 71 | 2019 | | • Compensation | ||||||
 | Derek Anthony (Tony) West | Senior Vice President, Chief Legal Officer and Corporate Secretary of Uber Technologies, Inc.
| 57 | New Nominee | | • N/A(6) | ||||||
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| (3) | Our Board of Directors determined that each of Ms. |
| (4) | Assuming her re-election to our Board of Directors |
| (5) | Assuming her re-election to the Board of Directors at the 2023 annual meeting, the Board expects to appoint Ms. Kipp as the Chair of the Audit Committee. |
| (6) | Assuming his election to our Board of Directors at the 2023 annual meeting, the Board expects to appoint Mr. West to the Compensation Committee. |
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| › | PROXY SUMMARY |
SNAPSHOT OF 20202023 BOARD NOMINEES
Presented below is a snapshot of the expected composition of our Board of Directors immediately following the 20202023 annual meeting, assuming the election of the eleven (11) nominees named in thethis proxy statement. Our Board of Directors believes that, collectively, the nominees exhibit an effective mix of qualifications, experience, diversity and diversity.tenure. For comparison purposes, we have also presented comparablebelow are metrics on age, tenure and diversity for BXP and the constituents of the S&P 500 Index, of which Boston PropertiesBXP is a member. Data for the S&P 500 Index is based on theSpencer Stuart Board Index2019. 2022.
The following summarizes the qualifications and experience of the eleven (11) nominees for election as directors. For additional information, see “Proposal 1: Election of Directors – Nominees for Election” beginning on page 910 of thethis proxy statement.
| | 2023 Proxy Statement 3 |
| › | PROXY SUMMARY |
GOVERNANCE HIGHLIGHTS
We are committed to strong corporate governance policies and practices that not only reflect regulatory requirements, New York Stock Exchange (“NYSE”) listing standards and broadly recognized governance practices, but also foster effective leadership and independent oversight by our Board of Directors. We intend for our governance policies and practices to help us execute our long-term strategy and believe such polices and practices are aligned with our stockholders’ interests.
Board Composition, Leadership & Independence | Stockholder Rights | |||
• Ms. Ayotte currently serves as our Lead Independent Director and Mr. Thomas serves as Chairman and CEO • Eleven (11) directors • Nine (9) directors (82%) are independent • On our current Board, four directors are women and one director is African American • Of the seven, first-time nominees for director since 2016, four (57%) were women and two (29%) were African American | • Incorporated in Delaware › The Maryland Unsolicited Takeovers Act does not apply to us • Proxy Access By-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 | |||
Director Policies | Compensation | |||
• Independent directors hold regular executive sessions • Each Board committee is authorized to retain separate legal counsel and engage other third-party advisors in its sole discretion • All directors, officers and employees are subject to our Code of Business Conduct and Ethics • Annual self-evaluations for the Board and each committee conducted using written assessments or interviews of individual directors by our Lead Independent Director; process overseen by our NCG Committee • Each director attended more than 75% of the meetings of the Board and committees on which he or she served in 2022; in the aggregate, our directors attended more than 97% of the total number of meetings held in 2022 | • Approximately 90% of votes cast FOR our “Say-on-Pay” proposal at the 2022 annual meeting • Stock ownership requirements for executives (for CEO, 6x base salary) • Stock ownership requirements for directors (5x annual retainer) • Double-trigger vesting for time-based equity awards • Compensation clawback policy • Policy against new tax gross-up provisions • Non-employee directors are compensated under a stockholder-approved plan • Anti-hedging, anti-pledging and anti-short-sale policies |
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| › | PROXY SUMMARY |
SUSTAINABILITY
The BXPWe strive to maintain and improve our sustainability strategy is to conduct our business — the developmentperformance across three pillars: climate action, climate resilience and operation of new and existing buildings — in a manner that contributes to positive economic, social and environmental outcomes for our customers, shareholders, 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.good. 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 addition, we have been an active participant in the green bond market since 2018, 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 society while mutually benefiting our stakeholders.
› INDUSTRY LEADERSHIP
We arewidely recognized as an industry leader in sustainability. Our sustainability as demonstrated by the following awards and achievements.
Achievementshighlights include:
Sustainability Highlights | ||
• Corporate member of the U.S. Green Building Council® • Fitwel Champion through a 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 • Since 2018, BPLP has issued an aggregate of $4.3 billion of green bonds in five separate offerings; use of net proceeds is restricted to “eligible green projects” | • The Science Based Targets initiative (SBTi) Target Validation Team classified BXP’s emissions reduction target as in line with a 1.5°C trajectory, the most ambitious designation available at the time of submission • 33.5 million square feet LEED certified, of which 94% is certified at the highest Gold and Platinum levels • We publish an annual ESG report, which is available on our website at http://www.bxp.com under the heading “Commitment,” but is not incorporated by reference into this proxy statement or any other document we file with the SEC | |
2022 Awards and Recognitions | ||
• Ranked among the top real estate companies in the GRESB assessment, earning a seventh consecutive 5-Star rating; and an eleventh consecutive “Green Star” designation • MSCI rating improved from A to AA, and Carbon Disclosure Project score improved from C to B • Named to Newsweek’s List of America’s Most Responsible Companies in 2023 for the third consecutive year; BXP ranked first in the Real Estate & Housing industry with an increased ranking of 29th overall out of the 500 companies | • Named to the Dow Jones Sustainability Index (DJSI) North America for the second consecutive year; one of eight real estate companies that qualified and the only office REIT in the index, scoring in the 95th percentile of real estate companies assessed for inclusion • Recipient of Nareit’s prestigious Leader in the Light Award • Recognized by the U.S. Environmental Protection Agency as an ENERGY STAR Partner of the Year - Sustained Excellence Award Winner • Recognized as an inaugural Platinum Level Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy | |
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| | 2023 Proxy Statement 5 |
| › | PROXY SUMMARY |
HUMAN CAPITAL MANAGEMENT
| Diversity, Equity & Inclusion Achievements in 2022 | ||||
In 2022, we advanced the mission of BXP’s Diversity, Equity & Inclusion (“DEI”) Council, which is to promote diversity, equity, inclusion and transparency as part of our culture, decision-making practices and business activities, while also providing a mechanism for positive impact in the communities in which we operate. Notable actions and achievements in 2022 included the following: | ||||
• Conducted a two-part training for DEI Council members to enhance DEI leadership skills • Launched partnerships with CareerSpring and Project Destined to further enhance BXP’s community involvement, BXP employees’ volunteerism, as well as expand BXP’s diverse candidate pools to include program alumni and young professionals • Proactively contracted with women-owned and/or minority-owned recruiting firms and firms with DEI programs representing 50% of BXP’s contracted recruiting firms (as of December 2022). • Commenced a new depository relationship with a Black-led bank and continued our relationship with a minority- and women-owned bank | • Advanced diversity in the BXP workforce:(1) New Hires: › 39% ethnically diverse › 57% women Total Workforce:(2) › 4.5% increase in ethnically diverse employees › 2% increase in women employees Officer Level:(2) › 6.5% increase in ethnically diverse officers › 9% increase in women officers | |||
The following is a snapshot of the diversity of our workforce as of December 31, 2022: | ||||
Total Workforce(1)(3) | Managers & Above(3) | |||
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Employee Engagement & Education | ||||
• Continued cultural awareness education for the BXP workforce through interactive DEI event offerings and educational content regarding cultural holidays and awareness months • Launched DEI Council page on BXP’s internal portal that provides DEI resources and announces future events and initiatives | • Launched three Employee Resource Groups (“ERGs”) designed to connect employees who have similar backgrounds and shared experiences with the goal of working with BXP on diversity, equity and inclusion | |||
| (1) | Excludes union employees for which the unions control primary aspects of the hiring process; for new hires, data also excludes interns. |
| (2) | Compared to the 2020 base year. |
| (3) | We determine race and gender based on our employees’ self-identification. “Other” represents American Indian/Alaskan Native, Native Hawaiian or other Pacific Islander, two or more races or those who did not self-identify. |
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Awards and Ratings
› GREEN FINANCE
In 2018 and 2019, BXP marketed and issued an aggregate of $1.85 billion of green bonds in two separate bond offerings and subsequently provided impact reporting for the first offering in 2019. Green bonds restrict the use of proceeds to eligible green projects. Eligible Green Projects are defined as: (1) building developments or redevelopments; (2) renovations in existing buildings; and (3) tenant improvement projects, in each case, that have received, or are expected to receive, in the three years prior to the issuance of the notes or during the term of the notes, a LEED Silver, Gold or Platinum certification (or environmentally equivalent successor standards). The definition of Eligible Green Projects includes the Salesforce Tower development project, which has received LEED Platinum certification, and was the project associated with BXP’s inaugural green bond offering.
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› CLIMATE RESILIENCE
We are focused on climate preparedness and resiliency in advancement of our sustainability strategy. As a long-term owner and active manager of real estate assets in operation and under development, we strive to obtain adaptive capacity by continuing to proactively implement measures and 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. 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 our Board of Directors on climate change and other environmental, social and governance (“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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We are committed to transparent reporting of 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.bxp.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.
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| PROPOSAL 1: ELECTION OF DIRECTORS |
PROXY STATEMENT
This proxy statement is being made available to stockholders of Boston Properties, Inc. (“we,” “us,” “our,” “Boston Properties”“BXP” or the “Company”) on or about April 3, 202013, 2023 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 20202023 annual meeting of stockholders to be held on Wednesday,Tuesday, May 20, 202023, 2023 at 9:00 a.m., Eastern Time, at Metropolitan Square, 655 15thPrudential Tower, 800 Boylston Street, NW, 2nd Floor, Washington, DC 20005,Suite 1900, Boston, Massachusetts 02199-8103, and any adjournments or postponements thereof.
Depending on the status of health concerns about the coronavirus, orCOVID-19, we may decide to hold the annual meeting by live audio webcast instead of holding the meeting in person at Metropolitan Square. The Company will publicly announce a decision to hold the annual meeting, at the same date and time, solely by audio webcast in a press release available athttp://investors.bxp.com/press-releases as soon as practicable before the annual meeting. In the event the annual meeting is not held at Metropolitan Square, you or your proxyholder may participate, vote and examine our stockholder list by visitingwww.virtualshareholdermeeting.com/BXP2020 and using your16-digit control number.
Since becoming a public company in 1997, we have always held our annual meeting in person, and it remains our intention to do so under normal circumstances.
ELECTION OF DIRECTORS
Boston PropertiesBXP 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, Diane J. Hoskins, Joel I. Klein, Douglas T. Linde, Matthew J. Lustig, Owen D. Thomas, David A. Twardock and William H. Walton, III. At the 20202023 annual meeting of stockholders, directors will be elected to hold office for aone-year term expiring at the 20212024 annual meeting of stockholders. Directors shall hold office until their successors are duly elected and qualified, or until their 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 allthe following directors for election at the 2023 annual meeting of stockholders:
› Kelly A. Ayotte › Mary E. Kipp › Owen D. Thomas | › Bruce W. Duncan › Joel I. Klein › William H. Walton, III | › Carol B. Einiger › Douglas T. Linde › Derek Anthony West | › Diane J. Hoskins › Matthew J. Lustig |
Each nominee other than Mr. West currently serving forre-election.serves as a director of BXP. 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
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 PropertiesBXP 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 Propertieswe first mails itsmail the notice for such meeting to the stockholders.
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
The majority voting standard will apply to the election of directors at the 20202023 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 contain a related resignation policy, 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 then act on an expedited basis to determine whether it is advisable to accept the director’s resignation and will submit theits 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. TheAny 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.
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
The following biographical descriptions set forth certain information with respect to the nominees for election as directors at the annual meeting, based on information furnished to Boston Properties by each nominee, including 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.
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› SUMMARY OF BOARD NOMINEE QUALIFICATIONS EXPERIENCE AND DIVERSITYEXPERIENCE
In addition to the minimum qualifications that our Board of Directors believes are necessary for all directors, the following chart highlights certainsome of the key qualifications and experience that our Board believes are relevant to the effective oversight of BXP and the execution of our long-term strategy and therefore relevant when considering candidates for election to our Board.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 PropertiesBXP 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.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, 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 biographical descriptions above.below.
| (1) | None of the nominees self-identifies as a member of the LBGTQ+ community. |
| (2) | As of May 23, 2023, the date of the 2023 annual meeting. |
| | 2023 Proxy Statement 9 |
| 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 2023 annual meeting, based on information furnished to us 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 BXP.
SENATOR KELLY A. AYOTTE Former United States Senator for the State of New Hampshire | Qualifications: Former Senator Ayotte provides significant leadership experience and expertise in the areas of public policy, government and the law. Professional Background: • 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 • Various positions with the State of New Hampshire from 1998 to 2004, including 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. since May 2019, Caterpillar Inc. since August 2017 and News Corporation since April 2017 • 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, Saint Christopher Academy, and Veterans Count of New Hampshire • Member of the Board of Advisors for the Center on Military and Political Power at the Foundation for Defense of Democracies • Graduated with honors from the Pennsylvania State University and received a JD from the Villanova University School of Law | ||||||||||||||||||||
Director since: May 2018 Age: 54 Independent Lead Independent Director Current BXP Board Committees: •ex officio member of all committees 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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BOARD COMPOSITION | ||||||||
| 9 of 11 | 7.2 years | 63.2 years | 4 | 1 | ||||
Independent Directors | Average Tenure of all Nominees | Average Age of all Nominees | Women | Ethnic Minority | ||||
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
BRUCE W. DUNCAN Former President and Chief Executive Officer of CyrusOne Inc. | Qualifications: Mr. Duncan provides more than 40 years of diverse real estate management and investment experience, including as a chairman, chief executive officer and a director of other publicly traded companies. Professional Background: • Former President, Chief Executive Officer and director of CyrusOne Inc., a real estate investment trust (“REIT”) that develops, owns, operates and invests in data centers, from July 2020 to July 2021 • 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 • Former senior Advisor to Kohlberg Kravis Roberts & Co. (“KKR”), a global investment firm, from November 2018 to December 31, 2022; 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 • Former member of the Executive Committee of the Board of Governors of Nareit • 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 | ||||
Director since: May 2016 Age: 71 Independent Current BXP Board Committees: • Audit • NCG Other Public Company Boards: • Current: None • Former (past 5 years): CyrusOne Inc., First Industrial Realty Trust, Inc. and Marriott International, Inc. |
| | 2023 Proxy Statement 11 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
CAROL B. EINIGER President of Post Rock Advisors, LLC | Qualifications: Ms. Einiger has more than 45 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 family investment office, since June 2018 • Senior Advisor at Roundtable Investment Partners LLC, a registered investment advisory firm, from January 2017 to June 2018 • Founder and President of Post Rock Advisors, LLC, a registered investment advisory firm, from 2005 to 2016 • Chief Investment Officer of The Rockefeller University, responsible for management of the University’s endowment, from 1996 to 2005 • Chief Financial Officer and 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 • Managing Director, Head of the Capital Markets Department and various positions at The First Boston Corporation from 1973 to 1988 • Various positions at Goldman, Sachs & Co. from 1971 to 1972 | Other Leadership Experience, Community Involvement and Education: • Trustee and member of the Investment Committee, Albert Einstein College of Medicine • Chair of the Executive Council, Montefiore Einstein Cancer Center • Member of the Investment Committee, JPB Foundation • Former Director and Chair of the Investment Committee, UJA-Federation of New York • Former Trustee and member of the Investment Committees of the University of Pennsylvania, the Lasker Foundation and Horace Mann School • Former Vice Chair of the Investment Committee of The Museum of Modern Art • Former member of the Board of Overseers, Columbia Business School • Former member of the Advisory Board of Blackstone Alternative Asset Management • Former Director, Credit Suisse First Boston (USA) and the New York Stem Cell Foundation • Honored by numerous organizations, including the AJC, the Anti-Defamation League, Catalyst, UJA-Federation of New York, The Washington Institute for Near East Policy, Columbia Business School and the University of Pennsylvania • Received a BA from the University of Pennsylvania and an MBA with honors from Columbia Business School | ||||
Director since: May 2004 Age: 73 Independent Current BXP Board Committees: • Compensation • NCG Other Public Company Boards: • Current: None • Former (past 5 years): None |
| | 2023 Proxy Statement 12 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
DIANE J. HOSKINS Co-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc. | Qualifications: Ms. Hoskins has more than 40 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”) since 2005, the world’s largest architecture, design, and planning firm, where Ms. Hoskins has broad responsibility for overseeing the company’s global platform and managing its day-to-day operations, including more than 6,500 employees networked across 53 offices in the Americas, Europe, Asia, and the Middle East • Director of Gensler since 2004; former Co-Chair of the Gensler Board of Directors from 2016 to 2021 • Various positions at Gensler since 1995, including Southeast Regional Managing Principal and Managing Director of the Washington, DC office • Founded the Gensler Research Institute in 2005 to generate new knowledge and develop a deeper understanding of the connection between design, business and the human experience • Senior Vice President of A. Epstein & Sons 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: • Trustee of the MIT Corporation serving on the Risk and Audit Committee, Serves on the Visiting Committee of the MIT School of Architecture and School of Environmental and Civil Engineering, Trustee of the Board of Advisors of the University of California, Los Angeles (UCLA) Anderson School of Management, Fellow of the Royal Society of Arts, Manufacturers and Commerce, London, UK, Executive Committee for ACE Scholarship Program • 2023 Global Chair 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 • Fellow of the American Institute of Architects • Ms. Hoskins has been honored by several organizations for her work, including the 2022 Global Visionary Award from the World Trade Center Institute; 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 | ||||
Director since: May 2019 Age: 65 Independent Current BXP Board Committees: • Sustainability (Chair) • NCG Other Public Company Boards: • Current: None • Former (past 5 years): None |
| | 2023 Proxy Statement 13 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
MARY E. KIPP President & Chief Executive Officer of Puget Sound Energy | Qualifications: Ms. Kipp has extensive executive and leadership experience with public companies in the energy services industry, particularly in implementing the transition to supplying 100% clean electricity. As a resident in the Company’s newest market of Seattle, she adds a geographically diverse perspective to the Board. Professional Background: • President, Chief Executive Officer and a director of both Puget Energy, Inc. (“PEI”), an energy services holding company, and its wholly owned subsidiary, Puget Sound Energy, Inc. (“PSE”), the largest electric and natural gas utility in the State of Washington, since January 2020 • Joined PEI and PSE as President in August 2019 • Member of the Board of Directors of Hawaiian Electric Company, Inc. since January 2023 • President and Chief Executive Officer of El Paso Electric Company (“EPE”) from May 2017 to August 2019 • Director of EPE from December 2015 to August 2019 • Various positions at EPE from 2007 to 2019, including Chief Executive Officer from December 2015 to May 2017 and President from September 2014 to December 2015, Senior Vice President, General Counsel and Chief Compliance Officer and Vice President, Legal and Chief Compliance Officer • Former prosecuting attorney for the Federal Energy Regulatory Commission (FERC) • Former attorney for El Paso Natural Gas Company and Greenberg Traurig, LLP • Director of Landis+Gyr from June 2018 to June 2019 | Other Leadership Experience, Community Involvement and Education: • Co-chair of Edison Electric Institute’s Institute for Electric Innovation • Former member of the Seattle Metropolitan Chamber of Commerce • Former member of the Boards of Directors of Alliance to Save Energy and Energy Insurance Mutual • Former member of the Board of Trustees of Seattle University • Former Chair of Smart Electric Power Alliance and Borderplex Alliance • Former Deputy Chair of the Federal Reserve Bank of Dallas • Former member of the executive committee of the Texas Business Leadership Council • Received a BA from Williams College and a JD from The University of Texas School of Law, and is an alumna of Exeter College, Oxford University | ||||
Director since: December 2021 Age: 55 Independent Current BXP Board Committees: • Audit • Sustainability Other Public Company Boards: • Current: None • Former (past 5 years): El Paso Electric Company and Landis+Gyr |
| | 2023 Proxy Statement 14 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
JOEL I. KLEIN Chief Executive Officer of Retromer Therapeutics | Qualifications: Mr. Klein has worked for more than 50 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 Executive Officer of Retromer Therapeutics Corp., a biotech start-up, since December 2020 • Senior Advisor to CEO, Oscar Health Corporation, a health insurance company (“Oscar”), since January 2022; Chief Policy and Strategy Officer at Oscar from January 2016 to January 2022 • Director of Juul Labs since March 2021 • 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: • Chair of the Board of StudentsFirstNY • Member of the Board of The Foundation for Excellence in Education (ExcelinEd) • 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 | ||||
Director since: January 2013 Age: 76 Independent Current BXP Board Committees: •Compensation (Chair) • NCG Other Public Company Boards: • Current: None • Former (past 5 years): News Corporation |
| | 2023 Proxy Statement 15 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
DOUGLAS T. LINDE President of Boston Properties, Inc. | Qualifications: Mr. Linde has more than 37 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 BXP 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 at 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 • Former Director of the Boston Municipal Research Bureau and Jobs for Massachusetts • Former 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 | ||||
Director since: January 2010 Age: 59 Current BXP Board Committees: • Sustainability Other Public Company Boards: • Current: None • Former (past 5 years): None |
| | 2023 Proxy Statement 16 |
| 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 in the real estate industry for more than 35 years, during which time he has gained extensive experience providing strategic and financial advice and transaction execution to clients and their boards of directors, 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, and 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. In recent years, Mr. Lustig has played an active role in more than $400 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 more than $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., until it 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 Wharton School of Business at the University of Pennsylvania (former Chairman of the Advisory Board) and Columbia Business School • Member of the Board of Advisors at the School of Foreign Service at Georgetown University • Received a BSFS from Georgetown University | ||||
Director since: January 2011 Age: 62 Independent Current BXP Board Committees: • NCG (Chair) • Sustainability Other Public Company Boards: • Current: Ventas, Inc. • Former (past 5 years): None |
| | 2023 Proxy Statement 17 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
OWEN D. THOMAS Chairman of the Board and Chief Executive Officer of Boston Properties, Inc. | Qualifications: Mr. Thomas is a recognized leader in the real estate industry with more than 30 years of executive leadership, strategic planning, management and international experience, as well as substantial experience in financial and capital markets. Professional Background: • Chairman of the Board of Directors of Boston Properties, Inc. since May 2022 • Chief Executive Officer and a director of Boston Properties, Inc. since April 2013 • Member of the Board of Directors of Lehman Brothers Holdings Inc. (“LBHI”) since March 2012; Chairman of the Board of LBHI from March 2012 to March 2013 • 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: • Director and former Global Chairman of the Urban Land Institute • Director of the Real Estate Roundtable • Member of the Executive Board of Nareit • Member of The Economic Club of New York • Member and former Chairman of the Pension Real Estate Association • Chairman of the Board of Trustees of Woodberry Forest School • 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 Our Board of Directors agreed to nominate Mr. Thomas for re-election to the Board for so long as he remains CEO, and he has agreed to resign from the Board upon termination of employment. | ||||
Director since: April 2013 Age: 61 Current BXP Board Committees: • Sustainability Other Public Company Boards: • Current: None • Former (past 5 years): None |
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
WILLIAM H. WALTON, III Co-Founder and Managing Member of Rockpoint Group, LLC | Qualifications: Mr. Walton has more than 40 years of real estate investment, development and executive experience, as well as having served 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 $80 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, since January 2021, and FRP Holdings, Inc., a publicly traded real estate investment and development company, since February 2015 • Director of Crow Holdings, a privately owned real estate and investment firm, since December 2007 •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, trustee or advisory board member 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, the University of Florida Investment Corporation, as well as Princeton University’s Andlinger Center for Energy and the Environment, Griswold Center for Economic Policy Studies, Mpala Research Center and Art Museum • Former member of the boards of Communities in Schools, the Episcopal School of Jacksonville, KIPP Jacksonville Schools, Princeton University and Princeton University Investment Company • Received an AB from Princeton University and an MBA from Harvard Business School | ||||
Director since: May 2019 Age: 71 Independent Current BXP Board Committees: • Compensation Other Public Company Boards: • Current: Dream Finders Homes, Inc., FRP Holdings, Inc. • Former (past 5 years): None |
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
DEREK ANTHONY (TONY) WEST Senior Vice President, Chief Legal Officer and Corporate Secretary of Uber Technologies, Inc. | Qualifications: Mr. West has more than 25 years of experience working in the public and private sectors, including the federal government and leading technology and private equity companies, during which time he has gained extensive experience in the areas of public policy, executive management, governance and the law. Professional Background: • Senior Vice President, Chief Legal Officer, and Corporate Secretary of Uber Technologies, Inc. (“Uber”), a global technology platform providing mobility as a service, since 2017, where Mr. West leads Uber’s global Legal, Compliance and Ethics, and Security functions • Director of Ro, a direct-to-patient healthcare company, since 2020 • Former Director of Khosla Ventures Acquisition Co. from 2021 to 2023 • Former Executive Vice President of Public Policy and Government Affairs, General Counsel and Corporate Secretary at PepsiCo from 2014 to 2017 • Former Associate Attorney General of the United States from 2012 to 2014 • Former Assistant Attorney General for the Civil Division in the U.S. Department of Justice from 2009 to 2012 • Former litigation partner at Morrison & Foerster LLP from 2001 to 2009 • Former Special Assistant Attorney General, California Department of Justice from 1999 to 2001 • Former Assistant United States Attorney in the Northern District of California, U.S. Department of Justice from 1994 to 1999 • Former Special Assistant to the Deputy Attorney General, U.S. Department of Justice from 1993 to 1994 | Other Leadership Experience, Community Involvement and Education: • Member of the board of the NAACP Legal Defense and Educational Fund • Part of the Obama Foundation’s My Brother’s Keeper Alliance Advisory Council • Graduated with honors from Harvard College, where he served as publisher of the Harvard Political Review, and received a JD from Stanford Law School, where he was President of the Stanford Law Review | ||||
New Director Nominee Age: 57 Independent Current BXP Board Committees: • N/A Other Public Company Boards: • None • Former (past 5 years): None |
| | 2023 Proxy Statement 20 |
| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
DIRECTOR INDEPENDENCE
Under the rules of the New York Stock Exchange (the “NYSE”),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.
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 |
| 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; |
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| (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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| (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.
› 2020 2023 INDEPENDENCE DETERMINATIONS
The Board of Directors concluded that the following directors and Mr. West qualify as independent directors under NYSE rules because (1) none of them (1) has any relationships with the Company or any executive officer of the Company that would disqualify him or her from being considered independent under the minimum objective standards contained in the NYSE rules orand (2) none of them has any relationships other than those deemed to be immaterial under the categorical standards adopted by the Board of Directors.
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| › Kelly A. Ayotte › Diane J. Hoskins › Matthew J. Lustig | › Bruce W. Duncan
› Mary E. Kipp › David A. Twardock | › Carol B. Einiger
› Joel I. Klein › William H. Walton, III |  | |||||
In determining that each of Ms. Ayotte and Messrs. Duncan and Twardock qualifiedMr. Klein qualifies as an independent director and for purposes of his or her service on the Compensation Committee, our Board considered that (1) eachMr. Klein is the Chief Executive Officer of a start-up company that signed a lease agreement with BXP in September 2021 for approximately 2,700 square feet in the ordinary course of business, (2) in the professional opinion of a third-party real estate professional, the fixed rent and other financial obligations under the lease represented the fair rental value for the space, and (3) Mr. Klein has no direct pecuniary interest in the transaction.
In determining that Mr. Twardock qualifies as an independent director for purposes of his service on the Compensation Committee, our Board considered that (1) he serves or previously served as an executive officer or anon-employee director (or advisory board member) for a company with which Boston PropertiesBXP has a commercial relationship and engaged in 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 directorhe had no pecuniary interest in the success of the transaction.
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
CONSIDERATION OF DIRECTOR NOMINEES
› 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, Massachusetts 02199-8103, who will forward all recommendations to the NCG Committee. We did not receive any securityholder recommendations for director candidates for election at the 20202023 annual meeting in compliance with the procedures set forth below. All securityholder recommendations for director candidates for election at the 20212024 annual meeting of stockholders must be submitted to our Secretary on or before December 4, 202015, 2023 and must include the following information:
| • | the name and address of record of the securityholder;
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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; |
| • | 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. |
In addition, stockholders who intend to solicit proxies in support of director nominees other than the qualifications and background ofCompany’s nominees must provide notice that sets forth the proposedinformation required by Rule 14a-19 under the Exchange Act. No proxies are being solicited for director candidate which addressescandidates other than the minimum qualifications and other criteria for Board membership as approved byCompany’s nominees at the Board from time to time;
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 our2023 annual meeting of stockholders and (2) to serve as a director if elected at such annual meeting; andmeeting.
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 Securities and Exchange Commission (“SEC”).
› 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 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 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 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 candidate may serve;
| • | the candidate must have sufficient time and availability to devote to our affairs, particularly in light of the number of boards on which the candidate 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
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
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.
| • | 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;
| • | 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
| • | 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.
| • | 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 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 (including geography, gender and ethnicity) and experience. |
whether the candidate, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience.
› IDENTIFYING AND EVALUATING NOMINEES
The NCG Committee may solicit recommendations for director nominees from any or all of the following sources:non-managementnon-employee directors, theour Chief Executive Officer, our President, other executive officers, third-party search firms or any other source it deems appropriate.
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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 NCGCommittee-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. NeitherBoard, and whether 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 |
Boston PropertiesBXP is committed to strongadopting and adhering to corporate governance policies and practices that foster effective leadership and procedures designed to make the Board effective in exercising itsindependent oversight role.of management. Our Board of Directors oversees management performance on behalf of our stockholders to ensure that theour stockholders’ long-term interests of our stockholders are being served, to monitor adherence to Boston Properties standards’BXP’s standards and policies (including policies to manage risk), and to promote the exercise of responsible corporate citizenship. Our Board values and considers the feedback we receive from our stockholders, and we have taken a number of actions over the last several years to increase stockholder rights, enhance the Board’s structure, and augment our commitment to sustainability and corporate responsibility taking into account those perspectives.
Our Corporate Governance Guidelines provide that our› BXP’S POLICY ON BOARD LEADERSHIP STRUCTURE
The Board of Directors doesis responsible for broad corporate policy and overall performance of the Company through the oversight of management and stewardship of the Company. Among other duties, the Board is responsible for overseeing the strategy, ESG priorities and risk management for the Company. The Board appoints the Company’s officers, assigns responsibility for management of the Company’s operations to such officers, and reviews their performance.
We do not have a firm policy with respect to whether or not the roleroles of Chairman of the Board and CEO should be separate or combined. However, ourOur Board of Directors believes it is important to maintain flexibility to determine its board leadership structure based on the best interests of the Company and its stockholders from time to time. As the following timeline shows, BXP has operated under both structures in the past.
History of Board Leadership
Regardless of the specific leadership structure in effect, the Company incorporates a strong defined leadership role for an independent director. Our Board has determined, and our Corporate Governance Guidelines provide, that itsour Board leadership structure shouldwill include either an independent,non-executive Chairman of the Board or a lead independent director who satisfies our standards for independence. Accordingly,Lead Independent Director.
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| 2› | CORPORATE GOVERNANCE |
Specifically, 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 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.if:
When our Board of Directors amended our
› | the positions of Chairman of the Board and CEO are held by the same person, or |  | the independent directors Lead Independent Director. | |||
› | the position of Chairman of the Board is held by a non-independent director, or | |||||
› | none of the directors has been elected to serve as Chairman of the Board, | |||||
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 Guidelinesfurther provide that an independent director selected to serve as lead independent directorLead 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 Boardhe or she shall assume the responsibilities of the lead independent directorLead Independent Director referenced abovebelow and there will not be a separate lead independent director.Lead Independent Director.
› DUTIES AND RESPONSIBILITIES OF THE 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 believes the roles, and therefore the duties and responsibilities, of Directors appointed Mr. Klein asthe independentnon-executive Chairman of the Board and Lead Independent Director should be, and at BXP they are, substantially similar, and they should further the same goals of ensuring effective immediately following the 2019 annual meeting of stockholders.leadership and risk oversight. In addition to responsibilities that may be assigned from time to time by the fullindependent directors of the Board, Mr. Klein’sthe duties and responsibilities as Chairmanof a Lead Independent Director include:
•Approving information sent to the Board
•Approving Board meeting agendas and schedules to
•Coordinating the work of each committee with the activities of the full Board
•Calling meetings of the independent directors and special meetings of the Board, as necessary
•Presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of independent directors
•Attending meetings of Board committees regularly
• •Providing leadership to the Board if circumstances arise in which the Chairman may have an actual or perceived conflict of interest with the
•Serving as liaison between the CEO and the independent directors, including communicating feedback and direction to the CEO following executive sessions
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•Ensuring that she is available, if requested by major investors, to engage in direct consultation and communication •Working with the CEO on matters of strategic importance to the Board and the Company
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•Working with the CEO and the Compensation Committee to establish and review annual and long-term goals for assessing performance •Working with the Compensation Committee to evaluate the performance of the CEO
•Conductingbi-annual interviews with individual directors regarding individual contributions and development opportunities, as well as overall Board composition and planning
•Independently reviewing with the CEO the Company’s succession plan for executive officers |
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
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› BOARD LEADERSHIP STRUCTURE DETERMINATIONS & DISCLOSURE
Our Board annually determines who will serve as its Chairman and considers, among other things, the skills, experiences and qualifications of our director nominees, the industries in which they gained their experience, the evolving needs of our Company, how well our leadership structure is functioning, the age and tenure of each director nominee and the views of our stockholders. The Board typically makes this determination during the first quarter of each year, and disclosure of the Board’s determination is made in the proxy statement used for the annual meeting of stockholders at which director nominees are elected, which is filed each year in late March or early-to-mid April. The proxy statement discloses (1) who the Board selected to serve as Chairman and (2) if the Chairman is also serving as CEO or is otherwise a non-independent director or if no Chairman has been elected, the person selected by the independent directors to serve as the Lead Independent Director. Our Board considers the views of our stockholders regarding our board leadership structure as expressed through their respective voting policies, their actual votes at our annual meetings, and our discussions with them.
› BXP’S 2023 BOARD LEADERSHIP STRUCTURE
Mr. Thomas joined BXP in April 2013 as CEO and a director. At that time, Mortimer B. Zuckerman, co-founder of BXP, retired as CEO and became Executive Chairman. To ensure independent oversight of the Company’s management, strategy and business, the Company established the role of Lead Independent Director in 2014, which was first held by Mr. Ivan Seidenberg. In May 2016, Mr. Zuckerman retired as Executive Chairman and became Chairman Emeritus, Mr. Seidenberg did not stand for re-election and the independent directors selected Mr. Klein as Lead Independent Director. Mr. Klein served as Lead Independent Director until May 2019 when he was appointed as Chairman of the Board. In 2022, following six years of Board leadership, Mr. Klein stepped down as Chairman of the Board and our independent directors determined that it was in the independent committeesbest interests of BXP and our stockholders to elect Mr. Thomas as its Chairman thus combining the role of Chairman and CEO.
Combined Role of Chairman & CEO
Mr. Thomas is a seasoned industry veteran with more than 30 years of real estate and executive leadership experience. He has deep financial and operational experience and extensive knowledge of the Company, the real estate industry and risk management practices gained from various executive and leadership roles. Our Board of Directors has determined that it continues to be in the overall compositionbest interests of BXP and our stockholders to maintain the combined role of Chairman and CEO and re-appoint Mr. Thomas as Chairman and CEO. The independent directors believe Mr. Thomas is in the best position to identify key issues facing the industry and Company and effectively communicate with various internal and external constituencies about critical business matters, as demonstrated by his critical leadership in BXP’s responses to the rapidly evolving environment since March 2020 as a result of the COVID-19 pandemic and the economic volatility and market shifts that followed. In addition to acknowledging his superb leadership through the Covid-19 pandemic and the resulting economic and industry challenges that followed, the Board believes that appointing Mr. Thomas to serve as both Chairman and CEO confirms internally and externally the Board’s high confidence in his unified leadership and elevates Mr. Thomas’ stature within the industry to potentially generate additional market opportunities and better commercial outcomes for the Company and its stockholders.
Having Mr. Thomas serve as Chairman and CEO promotes clear accountability and strong leadership with one person setting the tone for our employees, investors, clients, vendors and other stakeholders and having primary responsibility for executing our strategy. Prior to his appointment to the combined role, Mr. Thomas worked closely as CEO with then-Chairman of the Board, Mr. Klein, to preserve transparency between management and the Board and serve as an effective bridge for communication between the Board and management on significant business developments and time-sensitive matters. As Chairman and CEO, Mr. Thomas works with the Lead Independent Director, Ms. Ayotte, in the same manner.
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| 2› | CORPORATE GOVERNANCE |
Lead Independent Director
The independent directors again selected Ms. Ayotte to serve as Lead Independent Director. Ms. Ayotte was selected in 2022 to serve as Lead Independent Director following a process led by the then-Chairman of the Board, Mr. Klein. Mr. Klein led discussions among the independent directors to seek input and reach agreement on the best candidate for the role. These discussions took into account independent director tenures and committee membership histories along with independent directors’ willingness and capacity to serve as Lead Independent Director, understanding that the position entails significant responsibility.
In selecting Ms. Ayotte to serve as Lead Independent Director, the independent directors considered, among other things, Ms. Ayotte’s
| • | understanding of the Company and its business gleaned from her five years of service on our Board and her track record during that time of actively contributing as a member of the Board, |
| • | public policy, government and legal experience as a former United States Senator and former Attorney General of New Hampshire, |
| • | significant public company and corporate governance experience as a director on several other boards of large, multinational public companies that operate in different industries, and as a member of board committees for these public companies, |
| • | prior service as chair of BXP’s Compensation Committee and a member of the NCG Committee, |
| • | demonstrated willingness to represent the independent directors and personally engage with the Company’s stockholders, |
| • | reputation for being able to forge consensus, and |
| • | willingness and capacity to devote the time required to serve in this role. |
The independent directors believe that Ms. Ayotte is exceptionally well-qualified to continue serving as the Lead Independent Director.
In addition to the clearly defined role of our Board of DirectorsLead Independent Director and contributions from all ofMs. Ayotte’s experience and qualifications, our Board’s independent directors and other corporate governance processes in place.oversight is further bolstered by:
| • | the overall composition of our Board of Directors and contributions from all of our independent directors: each current Board member other than our CEO and President is independent (9 out of 11 directors), |
| • | the independent committees of our Board of Directors: each of the Audit Committee, Compensation Committee and NCG Committee is led by independent committee chairs and is comprised solely of independent directors, and |
| • | BXP’s other corporate governance policies in effect. |
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| 2› | CORPORATE GOVERNANCE |
BOARD AND COMMITTEE MEETINGS
Number of Meetings and Attendance. Our Board of Directors met eight times during 2019. Each incumbent director attended at least 75% of the aggregate of (1) the total number of meetings of our Board of Directors in 2019 held during the period for which he or she was a director and (2) the total number of meetings in 2019 of all committees of our Board of Directors on which the director served during the periods that he or she served.As a whole, during 2019, our directors attended more than 98% of the aggregate number of Board meetings and meetings of committees on which they served.
Number of Meetings and Attendance. Our Board of Directors met ten (10) times during 2022. Each incumbent director attended at least 75% of the aggregate of (x) the total number of meetings of our Board of Directors in 2022 held during the period for which he or she was a director and (y) the total number of meetings in 2022 of all committees of our Board of Directors on which the director served during the periods that he or she 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 2022 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 Chairman of the Board, if one is elected, or our Lead Independent Director. Each director has the right to call an executive session. Currently, all of our non-management directors are independent. | 10 Board meetings in 2022 100% attendance at the 2022 Annual Meeting In the aggregate, during 2022, our directors attended more than 97% 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. Nine of the eleven directors then serving, along with two first-time nominees, attended the 2019 annual meeting of stockholders. Two directors then serving did not attend the 2019 annual meeting of stockholders because they were not standing forre-election.
| | 2023 Proxy Statement 29 |
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Meetings ofNon-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 thenon-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 ournon-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 (1) a smooth transition if and when directors decide to retire or otherwise leave our Board and (2) that the composition of our Board is systematically refreshed so that, taken as a whole, our Boardit has the desired mix of skills, experience, continuity, reputation and diversity relevant to our strategic direction and operating environment, as well as the knowledge, ability and independence to continue to deliver athe high standard of governance and oversight 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
| • | 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 |
Of the seven, first-time nominees for director since 2016, four (57%) were women and two (29%) were African American. Mr. West was initially recommended for consideration by Mr. Lustig, the Chair of our NCG Committee.
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Board Committee Rotation.
› 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 balancefulfillment 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 anon-employee director following his or her 75th birthday.committees’ duties.
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› BOARD AND COMMITTEE EVALUATIONS
The feedback received from each member of our Boarddirector during the Board and committee evaluation processprocesses plays a criticalkey role in ensuring that our Board and its committees function effectively.effectively and in overall director succession planning. To this end, the NCG Committee is responsible for establishing the process used and the criteria for the evaluations.
| Topics considered during the Board and committee evaluations include:
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| Board and Committee Operations | › |
• Board and committee membership, including independence, director skills, background, expertise and diversity
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• Proper scope of each committee’s authority and responsibilities • Process for director nominations
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• Number and conduct of meetings, including time allocated for, and encouragement of, candid dialogue and executive sessions
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• Materials and information, including quality, quantity and timeliness of information received from management, and suggestions for educational sessions
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• Risk oversight › Financial › Cyber- attacks and intrusions › ESG • Identification of topics that should receive more attention and discussion
• Management succession
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Our Board of Directors has an (1) Audit, (2) Compensation and (3) NCG Committee. Each of the Audit Committee, Compensation Committee and NCG Committeethese committees operates pursuant to a charter that was approved by our Board of Directors and that is reviewed and reassessed at least annually. AAs required by the rules of the NYSE, a copy of each of these charters is available onin the Investors section of our website athttp:https://www.bxp.cominvestors.bxp.com/under the heading “Corporate Governance.“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 PropertiesBXP 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,these committees, and the number of meetings each held during 2019,2022, are described below.
| Current Committee Assignments | ||||||||
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Kelly A. Ayotte(1) |
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Carol B. Einiger |
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Diane H. Hoskins |
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Mary E. Kipp | |
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Joel I. Klein |
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Douglas T. Linde |
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Matthew J. Lustig |
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Owen D. Thomas |
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David A. Twardock(2) |  | |
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William H. Walton |
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Number of Meetings in 2022 | 9 | 7 | 3 | 2 | ||||
| Committee Chair |
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| Audit Committee Financial Expert | |||||
| (1) | As Lead Independent Director, Ms. Ayotte serves ex officio as a member of each of the Board’s committees. |
| (2) | Mr. Twardock is not standing for re-election to the Board. |
| | 2023 Proxy Statement 32 |
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› AUDIT COMMITTEE
Members: David A. Twardock (Chair)
Mary E.
Number of Meetings in
| 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 security 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 an “independent” director as that term is defined in the rules of
For additional disclosures regarding the Audit Committee, including the Audit Committee Report, see “Proposal
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› COMPENSATION COMMITTEE
Members:
Carol B. Einiger David A. Twardock William H. Walton, III
Number of Meetings in
*Mr. Klein was appointed to the Compensation Committee on May 19, 2022. | 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 ofnon-employee directors; and
• performing other functions and duties deemed appropriate by our Board of Directors.
The Compensation Committee makes all compensation decisions for all executive officers. The Compensation Committee reviews and approves all equity awards for all employees and has delegated limited authority to the CEO to make equity grants to employees who are not executive officers.
In
The Compensation Committee Report is included in this proxy statement on page
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› NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Members: Matthew J. Lustig (Chair)
Bruce W. Duncan Carol B. Einiger Diane J. Joel I. Klein*
Number of Meetings in
* | The NCG
• 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
• 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
Each member of the NCG Committee is an independent director | |
| | 2023 Proxy Statement 35 |
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› SUSTAINABILITY COMMITTEE
Members: Diane J. Hoskins (Chair) Mary E. Kipp Douglas T. Linde Matthew J. Lustig Owen D. Thomas Number of Meetings in 2022: 2 | 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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›BOARD’S ROLE IN RISK OVERSIGHT
Our Board of Directors plays an important role in thehas overall responsibility for our risk oversight of Boston Properties. Ouroversight. The 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 administersexercises its risk oversight function through:
throughout the reviewyear, both at the full Board level and discussion of regular periodic reports to ourthrough its committees. While the Board of Directors and its committees on topics relatingoversee key risk areas, the Company’s risk management is facilitated through a top-down and bottom-up communication structure whereby the Board provides oversight and direction from the top and, among other things, reviews the reports from management and outside advisors and consultants engaged by the Board that identify any key existing and potential risks, future threats or trends, and management is charged with the day-to-day management of risks, frequent assessment of the risk environment and regular reporting to the risks that Boston Properties faces, including, among others:Board.
BXP’s risk management framework is designed to:
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The Board fulfills its risk oversight function by, among other things, reviewing regular reports provided to the required approvalBoard and to appropriate Board committees from management and outside advisors and consultants engaged by the Board, discussing material risks and opportunities with management, selecting director candidates with diverse experience and qualifications, designating to committees the oversight of certain specific risks as needed, and staying informed about developments in our Board of Directors (or a committee thereof) of significant transactionsindustry and other decisions, including, among others:current events that may impact the Company.
Roles in Risk Management
| | 2023 Proxy Statement 37 |
acquisitions and dispositions of properties;
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BOARD OF DIRECTORS Our Board of Directors administers its risk oversight function through: | ||
›Regular periodic reports from management on material risks that we face, including, among others: | › Required approval by our Board of Directors (or a committee thereof) of significant transactions and other matters, including, among others: | |
› market conditions › tenant concentrations, credit worthiness and possible tenant bankruptcies › leasing activity and expected expirations › the status of development › 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 › environmental, social and governance risks › potential cyber-attacks and intrusions › public health crises, pandemics and epidemics › succession planning | › 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 › the compensation of 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 advisors and consultants, including ESG, climate-related risk, legal, accounting and tax professionals, regarding various areas of potential risk | ||
› COMMITTEE ROLES
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The Board discharges its responsibility either directly or indirectly through its committees. While 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 REIT for tax purposes and Boston Properties’ internal control over financial reporting.
Ourfull Board of Directors also reliesis 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. Issues escalated to the full Board may be addressed in several ways, as appropriate, depending on the risk assessed and immediacy required to address the risk. For example, oversight of risk may remain with the applicable committee of the Board, the Board may establish an ad hoc committee or direct an existing committee to oversee such matters, or the Board may ask management to bring significant matters impacting Boston Properties to its attention.
Pursuantpresent more frequently to the Audit Committee’s charter,full Board on 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 discussed with 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“– Other Governance Matters – Communications with the Board” below).issue.
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BOARD COMMITTEES Our Board of Directors uses its committees to assist in risk oversight as follows: | ||||||||||||
| Audit Committee | Compensation Committee | NCG 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; • cyber security; • REIT compliance; • pending and threatened litigation, legal and regulatory requirements, and insurance; • the performance of our internal audit function; • the independence and performance of our independent auditors; 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 — V. Other Compensation Policies — Assessment of Compensation-Related Risks” on page 97. | 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 self-evaluations and bi-annual interviews; • 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 BXP’s business objectives. The results of the risk assessment are used to develop BXP’s annual internal audit plan. |
Absent an express delegation of authority from the Board, no one independent director, including the Lead Independent Director, has the authority to make decisions on behalf of the Company or override a decision of management. The role of our Lead Independent Director includes certain authorities (such as the authority to call meetings of the independent directors and special meetings of the Board, as necessary) that empower our
| | 2023 Proxy Statement 39 |
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independent directors to effectively discharge the Board’s oversight responsibilities. 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’our 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 whilethese risks. We believe our Board believes itsrisk management framework is well-supported by our current board leadership structure and enables itthe Board to effectively manage such risks, it was not the primary reason our Board of Directors selected its current leadership structure over other potential alternatives.risks. See the discussion under the heading “–“— Board Leadership Structure” abovebeginning on page 25 for a discussion of why our Board of Directors has determined that its current leadership structure is appropriate.
We have not designated a single person to serve as the Company’s chief compliance officer; instead, we have internal processes, an effective internal control environment and a risk management framework that facilitate the identification and management of risks and regular communication with the Board. These processes include:
| • | an Internal Audit Department that (a) reports directly to the Audit Committee, (b) is designed to enhance BXP’s operations through its objective, systematic and disciplined testing and evaluation of the internal controls applicable to BXP’s significant activities, systems and processes and (c) conducts an annual enterprise risk assessment involving all departments, functions and regions of the Company and reports the results directly to the Audit Committee, |
| • | regular internal meetings among senior management from multiple departments, including internal audit, risk management, legal and information systems/technology, responsible for specified risk management activities with regular reports to the Audit Committee, |
| • | a Disclosure Committee established to assist senior management in designing, establishing, maintaining, reviewing and evaluating BXP’s disclosure controls and procedures, |
| • | a Code of Business Conduct and Ethics that governs business decisions and actions taken by our employees and directors and that allows for the confidential and anonymous reporting of questionable business practices by employees and third parties, and |
| • | a comprehensive internal and external audit process. As set forth in BXP’s Corporate Governance Guidelines, all directors have complete access to officers and employees of the Company, as well as the Company’s outside counsel, auditors and advisors. |
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 athttp://investors.bxp.com/code-conduct-and-ethics
| • | 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 athttp://investors.bxp.com/governance-guidelines
| • | 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 |
Policy on Company Political Spending available on our website athttp://investors.bxp.com/policy-political-spend
| | 2023 Proxy Statement 40 |
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› COMMUNICATIONS WITH THE BOARD
Stockholders and other interested parties who wish to communicate with our Board, any ofdirector, our non-managementdirectors or the Board of Directors as a group, or our Audit Committee may do so as shown below. We recommend that all correspondence be sent via certified U.S. mail, return receipt requested. All correspondence received by writingthe compliance officer designated for purposes of administering the Code of Ethics will be forwarded 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:addressee(s).
Communicate with any of our directors or the Board of Directors as a group: | Communicate with our non-management directors as a group: | |||
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 |
c/o Compliance Officer Boston Properties, Inc. 800 Boylston Street, Suite 1900 Boston, Massachusetts 02199-8103 | |||
Communicate with our Audit Committee to report complaints or concerns regarding accounting, internal accounting controls or auditing matters: | ||||
Follow 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 | 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 | |||
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 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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› COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current membersEach of the Compensation Committee are Mses. Ayotte and Einiger and Messrs. DuncanKlein, Twardock and Twardock.Walton served on the Compensation Committee during 2022. None of these persons has served as an officer or employee of Boston Properties. NoneBXP. Except as described below, none of these persons had any relationships with Boston PropertiesBXP requiring disclosure under Item 404 of RegulationS-K. None of Boston Properties’BXP’s 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 PropertiesBXP or a member of the Compensation Committee during 2019.2022.
We lease approximately 2,700 square feet of office space to a start-up company of which Mr. Klein is the Chief Executive Officer. The start-up company made aggregate payments to the Company of approximately $584,755 and $44,000 during the years ended 2022 and 2021, respectively. Of the amount paid by the start-up company in 2022, approximately $264,000 represented aggregate monthly rental payments while the remainder represented payments for assistance with tenant fit-out work that the start-up company requested. The Company does not expect such services or payments to recur. The total amount due under the lease in 2023 is approximately $220,000.
| | 2023 Proxy Statement 41 |
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› 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:
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;
| • | 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
| • | 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).
| • | 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, Boston Properties Limitedour Operating 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 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.
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HUMAN CAPITAL MANAGEMENT AND SUSTAINABILITY
HUMAN CAPITAL MANAGEMENT
Our 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, EQUITY & INCLUSION
We strive to create a diverse and inclusive workplace. It has been, and will continue to be, our policy 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, protected veteran status, or any other characteristic protected by local, state, or federal laws, rules, or regulations. By implementing this policy, we aim to ensure that all employees have the opportunity to make their maximum contribution to us and to their own career goals.
BXP’s DEI Council is an executive-sponsored, voluntary and employee-led committee unified by BXP’s mission to promote diversity, equity, inclusion and transparency as part of our organization’s culture, decision-making practices and business activities, while also providing a mechanism for positive impact in the communities in which we operate. Since its formation in 2020, the DEI Council has grown to over 33 Council members across our six regions, and each member contributes to the overall mission through leadership in one or more of the DEI Council’s three committees – the Recruiting & Development Committee, the Company Policies Committee and the Community Outreach Committee – and/or three Employee Resource Groups (“ ERGs”). Including ERG members, as of December 31, 2022, BXP’s DEI community consisted of 244 members, or 36% of BXP’s workforce (exclusive of union employees).
The DEI Council, in collaboration with BXP’s CEO, President and Human Resources Department, annually identify actionable diversity goals and proposes initiatives to advance its mission. In 2022, the DEI Council’s focus areas were: (1) training and workforce education, (2) recruiting and onboarding, (3) employee engagement, (4) social responsibility, (5) transparency and communication and (6) governance.
Diversity & Inclusion Goals and Initiatives | Notable 2022 Actions & Achievements(1) | |||
Training & Workforce Education | › | • Conducted a two-part training for DEI Council members to enhance DEI leadership skills • Continued cultural awareness education for the BXP workforce through interactive DEI event offerings, consistent communications with educational content regarding cultural holidays and awareness months and collaboration with property management teams to enhance visibility of important DEI dates and celebrations across BXP’s properties | ||
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Diversity & Inclusion Goals and Initiatives | Notable 2022 Actions & Achievements(1) | |||
Recruiting & Onboarding | › | • 57% women and 39% ethnically diverse new hires in 2022 • 4.5% increase in ethnically diverse employees and 6.5% increase in ethnically diverse officers compared to the 2020 base year • 2.0% increase in women employees and 9.0% increase in women officers compared to the 2020 base year • Launched partnerships with CareerSpring and Project Destined to further enhance BXP’s community involvement, BXP employees’ volunteerism, as well as expand BXP’s diverse candidate pools to include program alumni and young professionals • Proactively contracted with women-owned and/or minority-owned recruiting firms and firms with DEI programs representing 50% of BXP’s contracted recruiting firms (as of December 2022). | ||
Employee Engagement | › | • Launched three ERGs designed to connect employees who have similar backgrounds and shared experiences with the goal of working with BXP on diversity, equity and inclusion, bringing people together to share experiences and best practices, and ensuring that we are supporting each other across our communities • Participation rate across BXP for the ERGs’ inaugural year totaled approximately 25% of our workforce | ||
Social Responsibility | › | • Continued to facilitate relationships with minority-owned businesses to provide commercial real estate space • Conducted a comprehensive review of vendors identified as underrepresented business enterprises (“UBEs”) with the aim of increasing UBE usage by BXP resulting in a 34% year-over-year increase in UBE usage compared to 2021 • Commenced a new depository relationship with a Black-owned bank and continued our partnership with a minority- and women-owned bank in our 2022 unsecured notes offering • Increased community involvement through, among other efforts, regional charitable contributions to DEI-associated initiatives in our regions | ||
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Diversity & Inclusion Goals and Initiatives | Notable 2022 Actions & Achievements(1) | |||
Transparency & Communication | › | • Dedicated a company-wide Town Hall discussion to BXP’s DEI initiatives, achievements and future programming led by the DEI Council’s co-chairs • Launched a DEI Council page on BXP’s internal portal that provides DEI resources and announces future events, initiatives and other information | ||
Governance | › | • Formalized charters and mission statements for the DEI Council and each ERG • Undertook a voluntary refreshment process of DEI Council members to ensure appropriate representation across backgrounds, experience and regions that resulted in a 55% increase in DEI Council membership since its formation | ||
| (1) | Excludes union employees for which the unions control primary aspects of the hiring process; for new hires, data also excludes interns. |
The following is a snapshot of the diversity of our workforce as of December 31, 2022:
| TOTAL WORKFORCE(1) | MANAGER & ABOVE(1) | |
|  |
| (1) | We determine race and gender based on our employees’ self-identification. “Other” represents American Indian/Alaskan Native, Native Hawaiian or other Pacific Islander, or multiracial background. “Total Workforce” represents percentages for all of our employees excluding union employees for which the unions control primary aspects of the hiring process. |
› CULTURE & EMPLOYEE ENGAGEMENT
We believe that 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. By providing a quality workplace and comprehensive benefit programs, we recognize the commitment of our employees to bring their talent, energy, and experience to us. Our continued success is attributable to our employees’ expertise and dedication.
We periodically conduct employee engagement surveys to monitor our employees’ satisfaction in different aspects of their employment, including company performance, leadership, communication, career development and benefits offerings. Past employee responsiveness to the engagement surveys has been consistently high and the results help
| | 2023 Proxy Statement 45 |
| 3› | HUMAN CAPITAL MANAGEMENT AND SUSTAINABILITY |
inform us on matters that our employees view as key contributors to a positive work experience. Based on the most recent employee engagement survey conducted in 2022, with 96% responsiveness, the overall company-wide result was a “favorable” rating. The highest scoring statement on the survey with a 94% favorability score was “BXP conducts its business in accordance with the highest standards and ethical conduct.” We intend to continue to periodically evaluate employee engagement as needed on a meaningful basis.
Another indicator of the success of our efforts in the workplace is the long tenure of our employees. As of December 31, 2022:
| • | 35% worked at BXP for ten or more years |
| • | average tenure was approximately 9.42 years for all employees and 17.65 years for our officers |
| • | our voluntary workforce turnover rate was 15% in 2022. |
› CAREER DEVELOPMENT & TRAINING
We invest significant resources in our employees’ personal and professional growth and development and provide a wide range of tools and development opportunities that build and strengthen employees’ leadership and professional skills. These development opportunities include in-person and virtual training sessions, in-house learning opportunities, various management trainings, departmental conferences, executive townhalls and external programs. We foster an environment of growth and internal promotion and strive for a best-in-class candidate experience for our internal applicants. Open positions are posted, and employees are highly encouraged to apply for promotion within the organization. For 2022, 16% of our employees were promoted to elevated roles within our organization. Of the employees promoted, 50% were women and 29% were non-White.
SUSTAINABILITY
We actively work to promote our growth and operations in a sustainable and responsible manner across our six regions. The BXP ESG strategy is to conduct our business, the development, ownership and operation of new and existing buildings, in a manner that contributes to positive economic, social and environmental outcomes for our clients, shareholders, 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 (“GHG”) emissions and climate change. Positive social impact is also of great importance to BXP and our employees, which is exhibited by our commitments to charitable giving, volunteerism, public realm investments and promoting diversity, equity and inclusion in the workplace and our communities. Through these efforts, we demonstrate that operating and developing commercial real estate can be conducted with a conscious regard for the environment and broader society while mutually benefiting our stakeholders.
› Industry Leadership
We continue to address the needs of our stakeholders by making efforts to maintain and improve our performance across three pillars: climate action, climate resilience and social good. BXP is a widely recognized industry leader in sustainability. 2022 sustainability highlights include:
| • | BXP ranked among the top real estate companies in the GRESB assessment, earning a seventh consecutive 5-Star rating. 2022 was the eleventh consecutive year that BXP earned the GRESB “Green Star” designation |
| • | BXP’s MSCI rating improved from an A to AA, and CDP score improved from C to B |
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| 3› | HUMAN CAPITAL MANAGEMENT AND SUSTAINABILITY |
| • | BXP was named to Newsweek’s List of America’s Most Responsible Companies in 2023 for the third consecutive year. BXP ranked first in the Real Estate & Housing industry with an increased ranking of 29th overall out of the 500 companies and received the third highest environmental score |
| • | BXP was named to the Dow Jones Sustainability Index (DJSI) North America for the second consecutive year. BXP was one of eight real estate companies that qualified and the only office REIT in the index, scoring in the 95th percentile of the real estate companies assessed for inclusion |
| • | BXP was recognized by Commercial Property Executive for having the “Best ESG Program” |
| • | BXP was the recipient of Nareit’s prestigious Leader in the Light Award |
| • | BXP was named an ENERGY STAR Partner of the Year – Sustained Excellence Award Winner |
| • | BXP was recognized as an inaugural Platinum Level Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy |
Our leadership position is due, in part, to our establishment of environmental goals, the periodic reporting of progress towards our goals and the achievement of these goals. We have publicly adopted energy, emissions, water and waste goals that establish reduction targets aligned with the United Nations Sustainable Development Goals. As of the end of 2021, the combined impacts of efficiency measures, renewable energy and reduced physical occupancy due to the COVID-19 pandemic resulted in a 41% decrease in energy use intensity and over 70% reduction in Scope 1 and Scope 2 GHG emissions intensity below a 2008 base year. We have also aligned our emissions reduction targets with climate science and in 2020 became the first North American office REIT to establish an emissions reduction target ambition in line with a 1.5°C trajectory, the most ambitious designation available at the time of submission under the Science Based Targets initiative. In April 2021, we affirmed our commitment to achieving carbon-neutral operations (for direct and indirect Scope 1 and Scope 2 GHG emissions) by 2025 from our occupied and actively managed buildings where we have operational control.
We are focused on developing, owning and operating healthy and high-performance buildings. BXP is a corporate member of the U.S. Green Building Council® (“USGBC”) and has a long history of green buildings under USGBC’s Leadership in Energy and Environmental Design™ (LEED®) rating system. As of December 31, 2022, we have LEED-certified 33.5 million square feet of our total in-service portfolio, of which 94% is certified at the highest Gold and Platinum levels. 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. We completed our Fitwel Champion commitments and have added 23.8 million square feet of Fitwel certified buildings across our total in-service portfolio since 2018. In response to the COVID-19 pandemic, we completed the Fitwel Viral Response Module Enterprise and Asset-level Certification at all actively managed buildings.
› 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 on climate change risks and opportunities. We are focused on understanding how climate change may impact the performance of our portfolio and the steps we can take to increase climate resilience. We continue to evaluate the potential risks associated with climate change that could impact our portfolio and are taking steps to plan for and/or mitigate such risks.
As a vertically integrated, full-service real estate company, we are engaged in addressing climate-related issues at all levels of our organization. Management’s role in overseeing, assessing and managing climate-related risks, opportunities and initiatives is spread across multiple teams throughout our organization, including our Board of Directors, executive leadership and our Sustainability, Risk Management, Development, Construction and Property Management Departments. BXP has a dedicated team of sustainability professionals focused on ESG issues that coordinate and collaborate across corporate and regional teams to advance environmental sustainability issues and initiatives. Our
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Board of Directors has established a board-level Sustainability Committee to, among other things, increase Board oversight over environmental and sustainability issues, including climate-related risks and opportunities. The Board delegated to the Sustainability Committee its responsibility to oversee BXP’s sustainability program, which includes monitoring and addressing, as needed, environmental-, sustainability- and climate-related risks.
Our approach to climate-related issues is also informed by robust stakeholder engagement. We are in frequent dialogue with investors, customers, community members, governmental policymakers, consultants and other non-governmental organizations. We are heavily involved in industry associations and participate in conferences and workshops covering ESG, sustainability and climate resilience topics. Through these engagements, we enhance our knowledge of climate-related issues and those issues that are most important to our stakeholders and industry best practices.
We have aligned our climate-related disclosures with the recommendations of the Task Force on Climate-Related Financial Disclosures (“TCFD”). The TCFD framework has informed the development of our strategy for identifying and managing both physical and transition risks associated with climate change. As defined by the TCFD framework, physical risks associated with climate change include acute risks (extreme weather-related events) and chronic risks (such as extreme heat and sea-level rise), and transition risks associated with climate change include policy and legal risks, and other technology, market and reputation-related risks.
› PUBLIC SUSTAINABILITY GOALS AND PROGRESS
Our sustainability goals include targets for energy, GHG emissions, water consumption, building certifications and waste. In 2016, we achieved our first round of energy, emissions and water targets three years early. In 2021, we announced our Carbon-Neutral Operations Goal and added a sustainability linked pricing component to our credit facility, aligned with our new Building Certification Goal. 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 the noted baselines:
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| (1) | 2021 is the most recent year for which complete and third-party assured energy and water data is available. 2021 data reflects the combined impacts of efficiency measures, renewable energy and reduced physical occupancy due to the Covid-19 pandemic. |
| (2) | The status of these goals will remain “in progress” as we continue to monitor repopulation trends in 2022 and 2023. |
| (3) | The status of these goals are “in progress” pending final SBTi valuation. |
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› 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 ESG report that is aligned with the Global Reporting Initiative (GRI) Framework, United Nations Sustainable Development Goals and the SASB Framework. BXP’s ESG report includes our strategy, key performance indicators, annual like-for-like comparisons, and achievements. The report is available on our website at http://www.bxp.com under the heading “Commitment,” but it is not incorporated by reference in this proxy statement or any other document we file with the SEC. Our annual ESG reports, including all of our energy, water waste, building certifications and emissions metrics included therein, are assured by an independent, third-party assurance expert. The assurance expert performs an independent verification for certain of our ESG performance indicators and issues an opinion, which is attached to each ESG report, that opines on each ESG report’s inclusiveness, materiality, sustainability context, completeness, and reliability.
We have been an active participant in the green bond market since 2018, which provides access to sustainability-focused investors interested in the positive environmental externalities of our business activities. Since 2018, BPLP has issued an aggregate of $4.3 billion of green bonds in five separate offerings. The terms of the green bonds have restrictions that limit our allocation of the net proceeds to “eligible green projects.” We publish Green Bond Allocation Reports disclosing the full or partial allocation, as applicable, of net proceeds from the green bond offerings to eligible green projects. We have published four Green Bond Allocation Reports that fully allocate more than $3.5 billion in net proceeds to eligible green projects. The Green Bond Allocation Reports are available on our website at http://www.bxp.com under the heading “Commitment,” but it is not incorporated by reference in this proxy statement or any other document we file with the SEC. We expect to publish a Green Bond Allocation Report to allocate net proceeds from our most recent November 2022 green bond offering in the fourth quarter of 2023.
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EXECUTIVE OFFICERS
Biographies of our executive officers, other than Messrs. Thomas and Linde, are presented below, based on information furnished to Boston Propertiesus by each 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. Information for Messrs. Thomas and Linde is included above under “Proposal I: Election of Directors –— Nominees for Election”beginning on page 9.10.
Name | Age(1) | Position | Joined BXP | |||
Raymond A. Ritchey | 72 | Senior Executive Vice President | 1980 | |||
Michael E. LaBelle | 59 | Executive Vice President, Chief Financial Officer & Treasurer | 2000 | |||
Bryan J. Koop | 64 | Executive Vice President, Boston Region | 1999 | |||
Peter V. Otteni | 49 | Executive Vice President, Co-Head of the Washington, DC Region | 2000 | |||
Robert E. Pester | 66 | Executive Vice President, San Francisco Region | 1998 | |||
Hilary J. Spann | 47 | Executive Vice President, New York Region | 2021 | |||
John J. Stroman | 44 | Executive Vice President, Co-Head of the Washington, DC Region | 2005 | |||
Donna D. Garesché | 57 | Executive Vice President, Chief Human Resources Officer | 2010 | |||
Eric G. Kevorkian | 52 | Senior Vice President, Chief Legal Officer & Secretary | 2003 | |||
Michael R. Walsh | 56 | Senior Vice President, Chief Accounting Officer | 1986 | |||
| (1) | Ages are as of May 23, 2023, the date of the 2023 annual meeting. |
Raymond A. Ritchey Senior Executive Vice President
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• Senior Executive Vice President of | |
• Various positions at | ||
• Joined | ||
• A leading commercial real estate broker in the Washington, DC area with Coldwell Banker from | ||
• President of the Board of Spanish Education Development (SED) Center | ||
• Member of the Federal City Council and The Economic Club of Washington | ||
• Founding member of the National Association of Industrial and Office Properties (NAIOP), Northern Virginia | ||
• | ||
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• Graduate of the U.S. Naval Academy and U.S. Naval Post Graduate School in Monterey, California
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Michael E. LaBelle
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| • Executive Vice President, Chief Financial Officer & Treasurer of | ||
• Various positions at | ||||
• Former Vice President & Relationship Manager with Fleet National Bank from 1991 to 2000, with | ||||
• 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 | ||||
• Member of the National Advisory Board for the University of Colorado Real Estate Center | ||||
• Member of the Board of the Legacy Fund of the Medfield Foundation • Received a BS in Economics from the University of Colorado
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Bryan J. Koop Executive Vice
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• Executive Vice President, Boston Region of | ||
• Senior Vice President and Regional Manager of our Boston office from 1999 to 2016 | |||
• 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, including Managing Director and Regional Leader for Trammell Crow Company’s New England region, with responsibility for all commercial office and shopping center | |||
• Director of the Massachusetts Chapter of NAIOP, the Boston Green Ribbon Commission and the Kendall Square Association | |||
• Former chairman of the Back Bay Association | |||
• Received a BBA and an MBA from Texas Christian University
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Peter V. Otteni Executive Vice President, Co-Head of the Washington, DC Region | • Executive Vice President, Co-Head of the Washington, DC Region of BXP since January 2022, with joint responsibility for business activities and direct responsibility for overseeing project development, construction and marketing activities for our Washington, DC region • Various positions at BXP since 2000, including Vice President, Development from 2006 to 2016, Senior Vice President and Head of Development from 2017 to 2021 and Senior Vice President, Co-Head of the Washington, DC Region from April 2021 to December 2021 • Member of the Board of Directors of National Capital Area Region for the March of Dimes • Received a BS in Commerce from the University of Virginia and an MBA from the University of North Carolina, Kenan-Flagler Business School
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Robert E. Pester Executive Vice
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• Executive Vice President, San Francisco Region of | |
• Senior Vice President and Regional Manager of our San Francisco office from 1998 to 2016 | ||
• Executive Vice President and Chief Investment Officer of Bedford Property Investors, a REIT in Lafayette, California, | ||
• President of Bedford Property Development, a private West Coast development concern that held more than $2 billion in real estate assets from | ||
• A leading commercial real estate broker with Cushman & Wakefield in northern California, from 1980 to 1989, where he last served as Vice President | ||
• Licensed California officer and real estate broker • Received a BA in Economics and Political Science from the University of California at Santa Barbara
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Hilary J. Spann Executive Vice
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• Executive Vice President, New York Region of • Various positions at CPP Investments from March 2016 to July 2021, including (1) Managing Director, Head of Real Estate Investments Americas from July 2017 to July 2021, with responsibility for leading all aspects of the real estate business, including investment strategy, talent acquisition and management, and portfolio management, and (2) Managing Director, Head of United States Real Estate Investments from March 2016 to July 2017 • Various positions at the Global Real Assets Group at J.P. Morgan Asset Management, including Managing Director, Head of Northeast Acquisitions, from May 2001 to February 2016 • Independent Director and member of the Sustainability Committee of Goodman Group (ASX: GMG) since April 2022 • Trustee of the Urban Land Institute (“ULI”) • Director of the ULI Foundation • Received a BS in Architecture and an MA of City Planning both from the College of Architecture at the Georgia Institute of Technology • Studied architecture at the Ecole d’Architecture de Paris – La Villette | ||
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• Senior Vice President and Regional Manager of our New York office from January 2014 to January 2016
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John J. Stroman Executive Vice
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• Executive Vice President, Co-Head of the Washington, DC Region of BXP since January 2022, with joint responsibility for business activities and direct responsibility for overseeing the leasing, legal and property management activities for our Washington, DC region • Various positions at BXP since 2005, including Vice President, Development from 2011 to 2019, Vice President, Leasing from 2019 to 2020, Senior Vice President, Leasing from 2020 to April 2021 and Senior Vice President, Co-Head of the Washington, DC Region of BXP from April 2021 to December 2021 • Received a BS in Civil Engineering from Johns Hopkins University and an MBA, Real Estate Development from the University of North Carolina, Kenan-Flagler Business School | |
Donna D. Garesché Executive Vice President, Chief Human Resources Officer | • Executive Vice President, Chief Human Resources Officer since February 2023, with responsibility for leading and executing BXP’s human capital strategy, providing strategic direction on human resource initiatives related to talent management, leadership development, succession planning, structuring competitive benefit and compensation systems, performance management, training and development, and employee relations • Various positions at BXP since 2010, including Vice President, Human Resources from 2010 to 2016, Senior Vice President, Human Resources from 2016 to 2020 and Senior Vice President, Chief Human Resources Officer 2020 to February 2023 • Former Vice President, Human Resources for AEW Capital Management • Former Director, Human Resources for Beacon Properties • Received a BA from Saint Anselm College, an MA from Boston College, and holds an Executive & Organizational Coaching Professional certification from Columbia University | |
Eric G. Kevorkian Senior Vice President, Chief Legal Officer | • Senior Vice President, Chief Legal Officer & Secretary of | |
• • Former attorney at Goodwin Procter LLP from 1995 to 2003, where he was a member of the | ||
• | ||
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• | ||
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| 4› | EXECUTIVE OFFICERS |
Michael R. Walsh Senior Vice
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• Senior Vice President, Chief Accounting Officer of | |
• Executive Vice President, Chief Financial Officer and Treasurer of Paramount Group, Inc., a REIT focused on Class A office properties in New York City, Washington, DC and San Francisco, from March 2015 to March 2016 | ||
• Various positions at | ||
• Co-chair of Nareit’s Accounting Committee • Member of Nareit’s Best Financial Practices Council | ||
• Board member of the Boston Athletic Academy, a non-profit youth development organization that combines athletics with education • Received a BS, magna cum laude, from Eastern Nazarene College
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| PRINCIPAL AND MANAGEMENT STOCKHOLDERS |
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The table below shows the amount of BXP common stock of Boston Properties, Inc. and units of partnership interest in our Operating Partnership beneficially owned as of February 15, 202010, 2023 by:
each director;
| • | each director and nominee for director; |
each of our named executive officers (“NEOs”);
| • | each of our named executive officers (“NEOs”); |
all directors and executive officers of Boston Properties as a group; and
| • | all directors and executive officers of BXP as a group; and |
each person known by Boston Properties to be the beneficial owner of more than 5% of our outstanding common stock.
| • | each person known by us to be the beneficial owner of more than 5% of our outstanding common stock. |
On February 15, 2020,10, 2023, there were:
154,904,043 shares of our common stock outstanding;
| • | 156,822,702 shares of our common stock outstanding; |
16,791,848 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);
| • | 16,531,172 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 BXP common stock (if BXP elects to issue common stock rather than pay cash upon such redemption); |
1,368,429 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 2018 Multi-Year Long-Term Incentive Program (“MYLTIP”) awards, 2019 MYLTIP awards and 2020 MYLTIP awards, each of which, upon the satisfaction of certain conditions, is convertible into one common unit; and
| • | 2,131,536 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 2021 Multi-Year Long-Term Incentive Program (“MYLTIP”) awards, 2022 MYLTIP awards and 2023 MYLTIP awards, each of which, upon the satisfaction of certain performance and service conditions, is convertible into one common unit; and |
61,090 deferred stock units outstanding.
| • | 99,182 deferred stock units outstanding. |
All references in this proxy statement to LTIP units exclude LTIP units issued pursuant to 20182021 MYLTIP awards, 20192022 MYLTIP awards and 20202023 MYLTIP awards because the three-year performance periods of these awards had not ended by February 15, 2020.10, 2023. LTIP units issued pursuant to 20182021 MYLTIP awards, 20192022 MYLTIP awards and 20202023 MYLTIP awards are collectively referred to herein as “Unearned Performance Awards.” None of our directors or NEOs beneficially ownsowned any preferred units or shares of our preferred stock.
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| PRINCIPAL AND MANAGEMENT STOCKHOLDERS |
| 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) | ||||||||||||
Directors and Named Executive Officers |
| |||||||||||||||
Kelly A. Ayotte(4) | 80 | * | * | 2,267 | * | * | ||||||||||
Bruce W. Duncan(5) | — | * | * | 4,250 | * | * | ||||||||||
Karen E. Dykstra(6) | 5,689 | * | * | 6,214 | * | * | ||||||||||
Carol B. Einiger(7) | 19,207 | * | * | 26,467 | * | * | ||||||||||
Diane J. Hoskins(8) | 1,140 | * | * | 1,140 | * | * | ||||||||||
Joel I. Klein(9) | 6,642 | * | * | 12,992 | * | * | ||||||||||
Douglas T. Linde(10) | 259,860 | * | * | 513,574 | * | * | ||||||||||
Matthew J. Lustig(11) | 7,173 | * | * | 16,381 | * | * | ||||||||||
Owen D. Thomas(12) | 63,488 | * | * | 340,708 | * | * | ||||||||||
David A. Twardock(13) | 5,999 | * | * | 5,999 | * | * | ||||||||||
William H. Walton, III(14) | 465 | * | * | 1,605 | * | * | ||||||||||
Raymond A. Ritchey(15) | — | * | * | 338,725 | * | * | ||||||||||
Michael E. LaBelle(16) | 28,479 | * | * | 136,817 | * | * | ||||||||||
Bryan J. Koop(17) | 15,919 | * | * | 73,182 | * | * | ||||||||||
All directors and executive officers as a group (19 persons)(18) | 470,507 | * | * | 1,687,979 | * | * | ||||||||||
5% Holders | ||||||||||||||||
The Vanguard Group(19) | 20,235,548 | 13.06 | % | 20,235,548 | 11.69 | % | ||||||||||
BlackRock, Inc.(20) | 15,053,881 | 9.72 | % | 15,053,881 | 8.70 | % | ||||||||||
Norges Bank (The Central Bank of Norway)(21) | 13,037,554 | 8.42 | % | 13,037,554 | 7.53 | % | ||||||||||
State Street Corporation(22) | 9,721,252 | 6.28 | % | 9,721,252 | 5.62 | % | ||||||||||
| 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) | ||||||||||||
Directors and Named Executive Officers(4) |
| |||||||||||||||
Kelly A. Ayotte | 506 | ** | 7,191 | ** | ||||||||||||
Bruce W. Duncan(5) | 21,000 | ** | 29,748 | ** | ||||||||||||
Carol B. Einiger(6) | 33,225 | ** | 44,983 | ** | ||||||||||||
Diane J. Hoskins | 6,938 | ** | 6,938 | ** | ||||||||||||
Mary E. Kipp | 542 | ** | 2,046 | ** | ||||||||||||
Joel I. Klein | 13,421 | ** | 24,269 | ** | ||||||||||||
Douglas T. Linde(7) | 183,563 | ** | 572,097 | ** | ||||||||||||
Matthew J. Lustig | 12,056 | ** | 25,762 | ** | ||||||||||||
Owen D. Thomas | 64,292 | ** | 540,200 | ** | ||||||||||||
David A. Twardock | 11,367 | ** | 11,367 | ** | ||||||||||||
William H. Walton, III | 3,817 | ** | 9,455 | ** | ||||||||||||
Tony West | — | ** | — | ** | ||||||||||||
Raymond A. Ritchey(8) | — | ** | 295,807 | ** | ||||||||||||
Michael E. LaBelle | 14,408 | ** | 167,328 | ** | ||||||||||||
Bryan J. Koop | 9,752 | ** | 102,352 | * | * | |||||||||||
All directors and executive officers as a group (22 persons)(4) | 438,704 | ** | 2,120,137 | 1.22% | ||||||||||||
5% Holders | ||||||||||||||||
The Vanguard Group(9) | 23,591,706 | 15.04% | 23,591,706 | 13.44% | ||||||||||||
BlackRock, Inc.(10) | 18,146,691 | 11.57% | 18,146,691 | 10.34% | ||||||||||||
Norges Bank (The Central Bank of Norway)(11) | 12,695,570 | 8.10% | 12,695,570 | 7.23% | ||||||||||||
State Street Corporation(12) | 11,123,759 | 7.09% | 11,123,759 | 6.34% | ||||||||||||
| * | 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 BXP common stock “beneficially owned” by each beneficial owner is determined under rules issued by the |
| (2) | The total number of shares outstanding used in calculating this percentage assumes (a) the exercise of all options to acquire shares of BXP common stock that are exercisable on or within 60 days after February |
| | 2023 Proxy Statement 57 |
| 5› | PRINCIPAL AND MANAGEMENT STOCKHOLDERS |
| (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 |
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| (4) |
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| Name | Common Stock(a) | Stock Options | Deferred Stock Units(b) | Common Units | LTIP Units(a) | |||||||||||||||
Kelly A. Ayotte | — | — | 506 | — | 6,685 | |||||||||||||||
Bruce W. Duncan | 21,000 | — | — | — | 8,748 | |||||||||||||||
Carol B. Einiger | 8,000 | — | 25,225 | — | 11,758 | |||||||||||||||
Diane J. Hoskins | 6,938 | — | — | — | — | |||||||||||||||
Mary E. Kipp | 542 | — | — | — | 1,504 | |||||||||||||||
Joel I. Klein | — | — | 13,421 | — | 10,848 | |||||||||||||||
Douglas T. Linde | 183,563 | — | — | — | 388,534 | |||||||||||||||
Matthew J. Lustig | — | — | 12,056 | — | 13,706 | |||||||||||||||
Owen D. Thomas | 10,010 | 54,282 | — | — | 475,908 | |||||||||||||||
David A. Twardock | 10,399 | — | 968 | — | — | |||||||||||||||
William H. Walton, III | — | — | 3,817 | — | 5,638 | |||||||||||||||
Tony West | — | — | — | — | — | |||||||||||||||
Raymond A. Ritchey | — | — | — | 130,570 | 165,237 | |||||||||||||||
Michael E. LaBelle | 14,408 | — | — | — | 152,920 | |||||||||||||||
Bryan J. Koop | 9,752 | — | — | — | 92,600 | |||||||||||||||
All directors and executive officers as a group (22 persons) | 328,429 | 54,282 | 55,993 | 147,857 | 1,533,576 | |||||||||||||||
| (a) | Includes the following unvested shares of common stock and unvested LTIP units: Ms. Ayotte — 1,504 LTIP units; Mr. Duncan — 1,504 LTIP units; Ms. Einiger — 1,504 LTIP units; Ms. Hoskins — 1,504 shares of common stock; Ms. Kipp — 1,504 LTIP units; Mr. Klein — 1,504 LTIP units; Mr. Linde — 86,064 LTIP units; Mr. Lustig — 1,504 LTIP units; Mr. Thomas — 123,404 LTIP units; Mr. Twardock — 1,504 shares of common stock; Mr. Walton — 1,504 LTIP units; Mr. Ritchey — 3,920 LTIP units; Mr. LaBelle — 27,254 LTIP units and 3,726 shares of common stock; and Mr. Koop — 22,890 LTIP units. |
| (b) | Excludes deferred stock units, the |
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| (6) | Includes |
| (7) |
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Includes |
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Includes, only under the “Number of Shares and Units Beneficially Owned” column, |
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Information regarding The Vanguard Group (“Vanguard”) is based solely on a Schedule 13G/A filed by Vanguard with the SEC on February |
| | 2023 Proxy Statement 58 |
| 5› | PRINCIPAL AND MANAGEMENT STOCKHOLDERS |
| (10) | Information regarding BlackRock, Inc. (“BlackRock”) is based solely on a Schedule 13G/A filed by BlackRock with the SEC on |
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 February |
Information regarding State Street Corporation (“State Street”) is based solely on a Schedule |
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| COMPENSATION OF DIRECTORS |
Ournon-employee director compensation is intended to attract, retain and appropriately compensate highly qualified individuals to serve on our Board of Directors. At our 20192022 annual meeting of stockholders, our stockholders approved the Boston Properties, Inc.Non-Employee Director Compensation Plan (the “Director Compensation Plan”), effective January 1, 2019.2022. The Director Compensation Plan sets forth the cash and equity compensation that is to be paid to ournon-employee directors in a specific, formulaic manner.
Our directorsDirectors who are also employees of BXP 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 COMPENSATIONRETAINERS
During 2019,2022, we paid ournon-employee directors the following cash compensation pursuant toretainers for Board and committee service under the Director Compensation Plan:
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Role/Committee | Annual Cash Retainer(1) | Committee Chair Retainer(1)(2) | Committee Member Retainer(1) | |||||||||
All Non-Employee Directors for Board Services | $85,000 | |||||||||||
Chairman of the Board(2) | $125,000 | |||||||||||
Lead Independent Director(2) | $50,000 | |||||||||||
Audit Committee | $20,000 | $15,000 | ||||||||||
Compensation Committee | $15,000 | $10,000 | ||||||||||
NCG Committee | $15,000 | $10,000 | ||||||||||
Sustainability Committee | $15,000 | $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) | Mr. Klein served as our independent, non-executive Chairman of the Board until May 19, 2022, at which time Mr. Thomas became Chairman and Ms. Ayotte became our Lead Independent Director. The |
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Under the Director Compensation Plan,non-employeeNon-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.Non-employee directorsare also are reimbursed for reasonable expenses incurred to attend Board of Directors and committee meetings.
› EQUITY COMPENSATION
The Director Compensation Plan providesprovided for grants of equity tonon-employee directors in 2022 as follows:
Annual Grant. Each continuingnon-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.
| • | Annual Grant. Each continuing non-employee director received, on the fifth business day after the annual meeting of stockholders, an annual equity award with an aggregate value of $165,000. |
Initial Grant. 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, 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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| COMPENSATION OF DIRECTORS |
| • | 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 $165,000 (prorated based on the number of months from the date of appointment to the first anniversary of the Company’s most recently held annual meeting of stockholders). |
The actual number of shares of restricted common stock or LTIP units that we grant is
| • | Annual and initial equity awards are made in the form of shares of restricted common stock or, if elected by the director, LTIP units (or a combination of both). |
| • | The actual number of shares of restricted common stock or LTIP units that we granted was 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 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 26, 2022, the last reported sale price of a share of our common stock on the NYSE on the grant date.
Annualwas $109.66, and initial grantswe granted each 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 29, 2019, Mses. Ayotte, Einiger, DykstraHoskins and HoskinsKipp and Messrs. Duncan, Klein, Lustig, Twardock and Walton each received 1,1401,504 LTIP units or shares of restricted common stock.
Non-employee directors may elect, inIn accordance with the Boston Properties, Inc. 2012 Stock Option and Incentive Plan (the “2012 Plan”) and 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 such directorthem and to receive his or herthe deferred cash compensation in the form of our common stock or in cash following the director’stheir 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. Payment
Directors may elect to receive payment of a director’s account may be madeamounts 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 in(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 ourBXP 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 made 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”Compensation in 2022” on page 72.104.
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.BXP. Accordingly, eachnon-employee director is expected to retain an aggregate number of shares of our 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 currentthen-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 directorLead Independent Director or Chairman. Eachnon-employee director, untilChairman, as applicable. Until such director complies with the ownership guidelines set forth above, each non-employee director is
| | 2023 Proxy Statement 61 |
| 6› | COMPENSATION OF DIRECTORS |
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 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 purposes of valuing shares of our common stock of the Company or other equity securities valued by reference to our common stock of the Company for purposes ofunder these ownership guidelines, the market price of theour 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.
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The following table summarizes the compensation earned by ournon-employee directors during the year ended December 31, 2019.2022.
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total($) | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Total | ||||||||||||||||||
Kelly A. Ayotte | 105,000 | 135,000 | 240,000 | $ | 129,368 | $ | 148,500 | $ | 277,868 | |||||||||||||||
Bruce W. Duncan | 139,190 | 135,000 | 274,190 | $ | 110,000 | $ | 148,500 | $ | 258,500 | |||||||||||||||
Karen E. Dykstra | 110,000 | 150,000 | 260,000 | |||||||||||||||||||||
Carol B. Einiger | 100,852 | 135,000 | 235,852 | $ | 105,000 | $ | 148,500 | $ | 253,500 | |||||||||||||||
Dr. Jacob A. Frenkel(3) | 37,060 | — | 37,060 | |||||||||||||||||||||
Diane J. Hoskins | 58,200 | 150,000 | 208,200 | $ | 120,000 | $ | 165,000 | $ | 285,000 | |||||||||||||||
Mary E. Kipp | $ | 110,000 | $ | 148,500 | $ | 258,500 | ||||||||||||||||||
Joel I. Klein | 185,000 | 135,000 | 320,000 | $ | 154,712 | $ | 148,500 | $ | 303,212 | |||||||||||||||
Matthew J. Lustig | 120,000 | 135,000 | 255,000 | $ | 120,000 | $ | 148,500 | $ | 268,500 | |||||||||||||||
Martin Turchin(3) | 39,011 | — | 39,011 | |||||||||||||||||||||
David A. Twardock | 130,000 | 150,000 | 280,000 | $ | 130,000 | $ | 165,000 | $ | 295,000 | |||||||||||||||
William H. Walton, III | 61,264 | 135,000 | 196,264 | $ | 95,000 | $ | 148,500 | $ | 243,500 | |||||||||||||||
| (1) | Mses. Ayotte, Einiger and |
Name | Deferred Stock Units Earned During | ||||||
Kelly A. Ayotte | |||||||
Bruce W. Duncan | |||||||
Carol B. Einiger | |||||||
Mary E. Kipp | 1,272.67 | ||||||
Joel I. Klein | |||||||
Matthew J. Lustig | |||||||
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David A. Twardock | |||||||
William H. Walton, III | |||||||
| | 2023 Proxy Statement 62 |
| 6› | COMPENSATION OF DIRECTORS |
| (2) | Represents the total fair value of common stock and LTIP unit awards granted tonon-employee directors in |
| LTIP Units(#) | Common Stock(#) | ||||||
Kelly A. Ayotte | 1,504 | — | ||||||
Bruce W. Duncan | 1,504 | — | ||||||
Carol B. Einiger | 1,504 | — | ||||||
Diane J. Hoskins | — | 1,504 | ||||||
Mary E. Kipp | 1,504 | — | ||||||
Joel I. Klein | 1,504 | — | ||||||
Matthew J. Lustig | 1,504 | — | ||||||
David A. Twardock | — | 1,504 | ||||||
William H. Walton, III | 1,054 | — | ||||||
| | | |
| COMPENSATION DISCUSSION AND ANALYSIS | ||
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 theBXP’s Board of Directors of Boston Properties, Inc. Our NEOs for 2019 were:Directors.
2022 Named Executive Officers (“NEOs”) | ||||||||
| 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 | ||||||||
| Bryan J. Koop | ||||||||
Executive Vice President, Boston Region | ||||||||
›POLICY CHANGES TO COMPENSATION PROGRAM
During 2019, based on feedback received from investors following the voting results on our 2019Say-on-Pay resolution and in connection with the onboarding of, and advice received from, Frederic W. Cook & Co., Inc. (“FW Cook”), the Committee’s new compensation consultant, the Committee made significant changes to the design and structure of our executive compensation program.
Engaged FW Cook as New Consultant(April 2019)Annual Meeting Say-on-Pay Results(May 2019)Investor Outreach(July Oct. 2019)Evaluated Feedback & Advice;Modified & Improved Policies2019Pensation"Increased performance-based equity allocation"Decreased cash compensation2020 CompensationEstablished new 2020 Annual Incentive Plan
At our 2019 annual meeting, our stockholders voted on anon-binding, advisory resolution to ratify the compensation paid to our NEOs (the“Say-on-Pay resolution”). Although the core philosophy and design of our compensation program remained materially consistent with prior years, Institutional Shareholder Services (“ISS”), a proxy advisory firm, recommended that its clients vote against our 2019Say-on-Pay resolution and the percentage of votes cast in favor of theSay-on-Pay resolution decreased from approximately 91% at our 2018 annual meeting to approximately 67% at our 2019 annual meeting. The outcome of the vote in 2019 was sufficient to approve the resolution, but the level of support was less than we expected, less than we received on ourSay-on-Pay resolution in any of the last five years and less than we desire.
In light of the voting results, our Board, led by the Chairman of the Board and the Chair of our Compensation Committee, directly engaged with our larger institutional investors, some of whom voted against theSay-on-Pay resolution, to solicit feedback on our overall executive compensation program and corporate governance and to better understand their individual concerns. After evaluating the feedback received from our investors and the advice of FW Cook, the Committee made policy changes that impacted compensation paid with respect to 2019 and will impact 2020 compensation decisions, including the establishment of the new 2020 Annual Incentive Plan (see“II.Say-on-Pay Results & Investor Outreach” and “VII. New 2020 Annual Incentive Plan”).
As discussed in this CD&A, for 2019, total compensation paid to our CEO did not change from 2018 and, for our NEOs as a group, total compensation was essentially flat compared to 2018 (a decrease of (0.7%)).
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CD&A Roadmap | Page | |
| Executive Summary | | 64 |
2022 BXP Performance Highlights | 65 | |
2022 Compensation Decisions & Highlights | 67 | |
| Our Executive Compensation Program | 68 | |
Executive Compensation Philosophy | 68 | |
Components of Executive Compensation | 69 | |
Compensation Governance Practices | 70 | |
2022 Say-on-Pay Vote & Investor Outreach | 71 | |
| 2022 Executive Compensation | 72 | |
2022 Annual Target Compensation | 72 | |
Cash Compensation | 73 | |
LTI Equity Compensation | 85 | |
| Determining Executive Compensation | 91 | |
Process for Determining Executive Compensation | 91 | |
Compensation Advisor’s Role & Benchmarking Peer Group | 91 | |
Role of Management in Compensation Decisions | 92 | |
| Other Compensation Policies | 93 | |
| Compensation Committee Report | 98 | |
›2019 PERFORMANCE HIGHLIGHTSI. EXECUTIVE SUMMARY
The Committee determined thatA fundamental principle of BXP’s executive compensation program is to align the NEO’s performance in 2019 was strong, particularly given that it followed very strong performance in 2018. Overall, management met or exceededinterests of our NEOs with those of our stockholders. Its application is evidenced by the primary corporate goals for 2019 that were established atdesign of our executive compensation program and the beginningresulting shared experiences of the year. These goalsour NEOs and our NEOs’ performance against each are detailed in “V. Assessing Performance–2019 Corporate Goals” below. We believe our NEOs’investors as BXP’s total stockholder return (“TSR”) fluctuates. For 2022, the Committee retained the overall strong performance in 2019 is reflected in the following highlights:design, structure and categories of BXP’s executive compensation program.
2019 Performance Highlights | ||||||
11% | 7.6 Million | 9% | 26% | |||
Y-o-Y Growth in Diluted FFO per Share* | Square Feet Leased | Y-o-Y Increase in Cash Dividend | Total Stockholder Return (“TSR”) for 2019 | |||
6.7% | 5.4% | 8th | 5th | |||
Y-o-Y Growth in Same Property NOI (BXP’s Share)** | Y-o-Y Growth in Same Property NOI – Cash (BXP’s Share)** | Consecutive Green Star Recognition from GRESB | Nareit “Leader in the Light Award” since 2014 | |||
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›HIGHLIGHTS OF 2019 COMPENSATION DECISIONS
Based on the Committee’s assessment of 2019 performance, the Committee awarded total compensation that was unchanged from 2018 for our CEO and was essentially flat for all NEOs as a group. In addition, the Committee (1) reallocated a portion of total compensation from cash compensation to long-term incentive (LTI) equity compensation and (2) increased the amount of performance-based LTI equity compensation as a percentage of total compensation. The following are highlights of 2019 compensation:
2019 Compensation Highlights | ||||||||
CEO: | ||||||||
No Change | 93% | 72% | (11.3)% | 55% | ||||
in total compensation from 2018 | of pay that is variable and not guaranteed | paid in equity* with remaining 28% | decrease in cash bonus from 2018 | of total equity awarded as TSR-based performance equity (increase from 50% for 2018*) | ||||
All NEOs (as a group): | ||||||||
(0.7)% | 90% | 64% | (9.9)% | 52% | ||||
decrease in total compensation | of pay that is variable and not guaranteed | paid in equity* with remaining 36% paid in cash | decrease in cash bonus from 2018 | of total equity awarded asTSR-based performance equity | ||||
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| COMPENSATION DISCUSSION AND ANALYSIS |
› 2022 BXP PERFORMANCE HIGHLIGHTS
In 2022, our NEOs and other executive officers provided strong leadership in the face of significant adverse geopolitical and economic conditions, including, among other things, escalating inflation, rapid interest rate increases, volatile financial markets and worsening industry-specific conditions that resulted therefrom, as well as the lingering effects of the pandemic. Despite these challenges, BXP produced strong leasing results and growth in diluted Funds from Operations (“FFO”) per share; allocated capital and made selective investments intended to enhance long-term growth and value; executed our development pipeline; deepened our existing relationships with institutional partners; and advanced our diversity, equity and inclusion (“DEI”) and carbon-neutral operations initiatives. The Committee believes our NEOs executed our overall strategy exceptionally well in 2022, and that execution produced strong operating results in 2022 and longer-term growth opportunities. The following are highlights of BXP’s 2022 operational performance:
FINANCIAL GROWTH
| ✓Grew year-over-year diluted FFO per share by 14.8%(1) ✓ Grew our share of same property net operating income (NOI) by 3.7% year-over-year and our share of same property NOI – cash by 6.2% year-over-year(1) | |
STRONG LEASING
| | ✓ Signed leases for a total of approximately 5.7 million square feet (SF) in 2022, which represents approximately 95% of BXP’s historical annual leasing average, despite industry headwinds ✓ Signed leases in 2022 with an aggregate weighted-average lease term of 9.2 years(2) |
CAPITAL MANAGEMENT
| ✓ Enhanced liquidity and access to capital despite challenging capital market conditions ✓ Executed a $730 million unsecured term loan in May 2022, which was subsequently increased to $1.2 billion in January 2023 ✓ Completed secured refinancings totaling approximately $945 million (of which our share was $305 million) and a $750 million unsecured “green bond” offering | |
BXP LIFE SCIENCES EXPANSION
| ✓ Expanded BXP’s life sciences presence nationally in the two largest life sciences markets in the United States – Cambridge, Massachusetts and San Francisco, California • In Cambridge, we: › acquired 125 Broadway, a fully leased lab/life sciences property, › signed a 15-year lease at 290 Binney Street, which is part of the initial phase of a life sciences development project, and › signed agreements to facilitate the conversion and expansion of 300 Binney Street, including a 15-year lease for 100% of the redeveloped property • In San Francisco, we commenced a life sciences conversion project at 651 Gateway | |
| | 2023 Proxy Statement 65 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
RECYCLING & DEPLOYING CAPITAL
| ✓ Completed the disposition of 15 properties for aggregate gross sale proceeds of $864.2 million and acquired three premier workplaces, including joint venture interests in an entity that owns a premier workplace, for a gross aggregate cash purchase price of $1.6 billion ✓ Fully delivered three projects totaling more than 1.7 million SF, each of which is at least 90% leased(3) ✓ Commenced the development/redevelopment of seven projects | |
LEADERSHIP IN SUSTAINABILITY
| ✓Maintained industry leadership position in sustainability with continued recognition by industry groups and other key distinctions, including: • ranking among the top real estate companies in the GRESB assessment, earning a seventh consecutive 5-Star rating and BXP’s eleventh consecutive GRESB “Green Star” designation • being named (1) an ENERGY STAR Partner of the Year – Sustained Excellence Award, (2) a Green Lease Leader at the highest Platinum level by the Institute for Market Transportation and the U.S. Department of Energy, (3) to Newsweek’s List of America’s Most Responsible Companies in 2023 for the 3rd consecutive year, ranking 1st in the Real Estate & Housing industry, and (4) to the Dow Jones Sustainability Index (DJSI) North America for the 2nd consecutive year • recognition by Commercial Property Executive for having the “Best ESG Program” • recipient of Nareit’s prestigious Leader in the Light Award | |
| (1) | Our share of same property NOI and NOI – cash excludes termination Income. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
| (2) | Represents 100% of consolidated and unconsolidated workplace properties (excludes residential and hotel properties) based on lease term and square footage. |
| (3) | Data as of February 21, 2023; includes leases with future commencement dates. |
| | 2023 Proxy Statement 66 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
› 2022 COMPENSATION GOVERNANCEDECISIONS AND HIGHLIGHTS
The
| 2022 Executive Compensation Framework | In January 2022, the Committee determined to maintain the following framework: - the percentage of target pay that is variable: ~ 93% of our CEO’s target - the design, structure and categories of the annual cash incentive plan (“AIP”), - the LTI equity allocations: 55% performance-based and 45% time-based - the design and structure of the performance-based MYLTIP program. | |
| 2022 AIP Payouts | In January 2023, the Committee determined, in accordance with the 2022 AIP: - BXP’s diluted FFO per share for 2022 resulted in a payout of 141.7% of each Total cash bonuses awarded to our NEOs ranged between 86.7% to 140.3% of their | |
2022 Long-Term Incentive | For 2022, the Committee awarded the NEOs their target LTI equity amounts, except that Mr. LaBelle received an above-target LTI equity award. Earned values for these awards will depend on BXP’s stock price performance over the multi-year performance and vesting periods. | |
2022 Actual Compensation Paid | Overall, the total actual compensation paid to our CEO for 2022 was approximately | |
| | 2023 Proxy Statement 67 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
II. OUR EXECUTIVE COMPENSATION PROGRAM
› EXECUTIVE COMPENSATION PHILOSOPHY
We designed the executive compensation program that covers our NEOs to:
| Ø | attract and retain talented and experienced executives in the commercial real estate markets in which we operate, |
| Ø | set total compensation opportunities to be competitive with companies in our benchmarking peer group, considering the skill sets required to implement our strategy and the market for such talent (see “IV. Determining Executive Compensation – Compensation Advisor’s Role & Benchmarking Peer Group – Benchmarking Peer Group”), |
| Ø | align our NEOs’ compensation with the Company’s strategy, business objectives and the creation of long-term value for our stockholders without encouraging unnecessary or excessive risk-taking, |
| Ø | provide NEOs incentives to achieve key corporate and regional goals by linking formulaically annual cash incentive awards to the achievement of those goals, as well as goals set for each individual, and |
| Ø | provide a majority of target total direct compensation opportunity for the NEOs in the form of long-term incentive (“LTI”) equity awards, a majority of which are performance-based (55% for our CEO) and the value of which is dependent on BXP’s total stockholder return (“TSR”) over three years, both on a relative basis compared to the Company’s most directly comparable peers and on an absolute basis. |
Given the competitive nature of the market for labor talent and the fact that many of our competitors are private enterprises, the Committee reviews and evaluates the competitiveness of our executive compensation program areannually to attract, retain and reward executives who haveensure it is designed to achieve the motivation, experience and skills to lead the Company and continue our long-term track record of profitability, growth and TSR. Committee’s objectives.
| | 2023 Proxy Statement 68 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
› COMPONENTS OF EXECUTIVE COMPENSATION
| COMPONENT | WHY WE PAY IT | |
Base Salary | Provide a fixed, competitive level of cash compensation that reflects the NEO’s leadership role and the market rate for the executive’s experience and responsibilities | |
Annual Cash Incentive | Reward NEOs for the achievement of annual financial, operational 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 outperformance • Create a direct link between executive pay and relative and absolute TSR performance • Enhance executive officer retention with 100% vesting after completion of a 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 outperformance • 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 | |
| | 2023 Proxy Statement 69 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
› COMPENSATION GOVERNANCE PRACTICES
The following table highlights key features of our executive compensation program that demonstrate the Company’s ongoing commitment to promoting stockholder interests through sound compensation governance practices.
| WHAT WE DO | WHAT WE DON’T DO | |||||
| 93% of CEO’s total target compensation is at risk. The vast majority of total compensation is variable |
| No tax gross-ups.We do not provide any new executive with tax gross-ups for payments made in connection with a change of control. | |||
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| No hedging, pledging or short sales. We do not allow hedging, pledging or short sales of Company securities. | ||||
| Two-thirds of total target compensation is paid in equity. We align our NEOs with our long-term investors by awarding |
| Risk mitigation factors in compensation policies and procedures. Our compensation policies do notencourage unnecessary or excessive risk taking by our NEOs because, among other reasons, incentive compensation is not based on a single performance metric, it covers both short-term and long-term business objectives, and we do not have guaranteed minimum payouts. | |||
| Capped bonuses and LTI awards. We have caps on annual and long-term incentives. |
| No stock option repricing. We do not allow for the repricing of stock options. | |||
| Clawback policy. We have a clawback policy that allows for the recovery of previously paid incentive compensation in the event of a financial restatement. |
| We do not pay full dividends on unearned performance-based LTI awards. Recipients of performance-based LTI equity awards receive only 10% of the dividends paid on a share of BXP common stock unless and until they are earned. | |||
| Stock ownership guidelines for all executives. We have robust stock ownership guidelines for our executives (for our CEO, 6.0x base salary). | |||||
| Independent compensation consultant. We engage an independent compensation consultant to advise the Committee. | |||||
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II.SAY-ON-PAY RESULTS & INVESTOR OUTREACH
The following timeline highlights the key events that factored into the Committee’s compensation decisions for 2019 and other policy changes, including the establishment of the new 2020 Annual Incentive Plan:
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›HistoricalSay-on-Pay Results
At the 2019 annual meeting of stockholders, our stockholders voted on theSay-on-Pay resolution to ratify the compensation paid to our NEOs. Although the core philosophy and design of our compensation program remained materially consistent with prior years, ISS recommended that its clients vote against our 2019Say-on-Pay resolution and the percentage of votes cast in favor of theSay-on-Pay resolution decreased from approximately 91% at our 2018 annual meeting to approximately 67% at our 2019 annual meeting.
SAY-ON-PAY RESULTS | ||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||
67% | 91% | 92% | 90% | 86% | ||||
The outcome of the vote in 2019 was sufficient to approve the resolution, but the level of support was less than we expected, less than we received on ourSay-on-Pay resolution in any of the last five years and less than we desire.
›Investor Outreach
Stockholder Engagement Process
In light of the voting results on theSay-on-Pay resolution, our Board directly engaged with our larger institutional investors, some of whom voted against the resolution, to solicit feedback and better understand their individual concerns on our overall executive compensation program and corporate governance. Between July and October 2019, one or more of the Chair of our Compensation Committee (Bruce W. Duncan), the Chairman of the Board (Joel I. Klein), a member of the Compensation
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Committee (Sen. Kelly A. Ayotte) and the Chair of the NCG Committee (Matthew J. Lustig) met in person with ten (10) of our largest institutional investors representing ownership of more than 40% of the outstanding shares of BXP common stock.
Mr. Duncan attended nine of the ten meetings
Messrs. Duncan and Klein also participated in a teleconference with representatives of ISS to better understand the methodology and key policies underlying its negative voting recommendation, and to discuss potential changes to the overall program
Neither our CEO, nor any other NEO, participated in any of these meetings with investors or ISS
Although our Board sought specific feedback on the topics identified as issues of concern in ISS’ 2019 proxy report on the Company, we did not limit the agenda, and the meetings generally allowed for free-flowing discussions. In addition to executive compensation, these discussions included topics such as:
our strategy and growth drivers,
overall business trends,
Board composition, director tenure, director succession and recruitment, and the process used to conduct Board and committee self-evaluations,
diversity and human capital strategy,
ESG and sustainability, and
corporate governance policies, generally.
All of the feedback received was shared with the full Board of Directors.
Feedback from Stockholders
The general feedback our Board received included support for our strategy, confidence in the strength of our management team and Board, and our demonstrated leadership among REITs in ESG and sustainability. Investors also openly shared their policies and perspectives with respect to our compensation program. Overall, they conveyed that our CEO’s pay and performance were reasonably aligned in 2018 and that our benchmarking peer group included appropriate and high-quality REITs. While acknowledging the limitations inherent in using relative TSR as the performance metric for our MYLTIP program (which is the performance-based component of LTI equity awards) and being open to the use of one or more operational metrics, investors generally support the MYLTIP program as currently designed.
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While the general consensus was positive, our investors also offered some specific suggestions to improve our program. The Committee evaluated the feedback received and responded as summarized below.
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| COMPENSATION DISCUSSION AND ANALYSIS | ||
III.› 2022 SAY-ON-PAY VOTE & INVESTOR OUTREACH
Say-on-Pay Vote
At our 2022 annual meeting of stockholders, approximately 90% of the votes cast supported our “Say-on-Pay” advisory vote. This outcome reflects continued investor support for our executive compensation program, including the changes our Committee made in 2019, COMPENSATION DECISIONS
Basedbased on the Committee’s assessment of 2019 performance, investor feedback, to implement a more objective, formulaic annual bonus plan starting in 2020. The 2022 compensation year was our third year utilizing the formulaic bonus plan. Stockholder support for our executive compensation program has been relatively consistent over that period, as evidenced by our Say-on-Pay advisory votes receiving approximately 90% support each year since 2020. The continued support of our stockholders is a direct result of our commitment to actively engage with our investors on all matters, including executive compensation, and our responsiveness to the feedback received.
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 is essential as we shape our policies and practices. We conduct outreach throughout the year to ensure that management and the adviceBoard understand the issues of FW Cook, the Committee awarded total compensation that was unchanged from 2018importance to our investors and address them appropriately. The Board regularly reviews stockholder feedback, which informs Board discussions on various topics, including our approaches to corporate governance, risk oversight, ESG initiatives, human capital management, DEI, and executive compensation.
We believe our engagement efforts have been meaningful for our investors and us, and we are pleased that in 2022 Institutional Investor Magazine ranked us #1 among Office REITs and #2 among all REITs (improved from #3 in 2021) in seven categories: Best CEO, Best CFO, Best Company Board, Best ESG, Best IR program, Best IR Professional and essentially flat for all NEOsBest Investor Event.
In 2022, we engaged directly and frequently with our investors in various forums and through different media (including in-person and virtual meetings) as a group.part of our outreach program. We allocate time each quarter following our earnings release and public conference call to speak with our investors regarding any additional questions and their topics of interests. In addition to discussions in the Committee (1) reallocated a portionordinary course of total compensation from cash compensation to LTI equity compensation and (2) increasedbusiness, BXP successfully hosted the amount of performance-based LTI equity compensation as a percentage of total compensation. When determining specific individual compensation amounts, the Committee considered the following factors:following:
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individual contributions to overall results and development opportunities,
results of a compensation benchmarking analysis among peers with respect to 2018 compensation, and
anticipated market compensation increases and trends.
The following table presents the total direct compensation of our NEOs, inclusive of salary, bonus and LTI equity awards, for 2019 compared to 2018. LTI equity includes MYLTIP awards whose ultimate value will be determined over a three-year period from the grant date based on our relative TSR. To link annual awards of long-term equity incentive compensation to annual performance, the Committee typically makes equity awards for a particular year in late January or early February of the following year. SEC rules for equity awards (unlike for cash bonuses) require that they be presented as compensation for the year in which the awards were actually granted, and therefore equity awards shown in the Summary Compensation Table presented under “Compensation of Executive Officers” on page 68 lag one year (i.e., awards made in January 2020 to reward performance in 2019 are not reflected in this year’s Summary Compensation Table).
| Salary(1) | Cash Bonus | |||||||||||||||||||||||
| Executive | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||||
Owen D. Thomas | $ | 900,000 | $ | 875,000 | 2.9% | $ | 2,550,000 | $ | 2,875,000 | (11.3)% | ||||||||||||||
Douglas T. Linde | $ | 750,000 | $ | 725,000 | 3.4% | $ | 2,095,000 | $ | 2,180,000 | (3.9)% | ||||||||||||||
Raymond A. Ritchey | $ | 740,000 | $ | 720,000 | 2.8% | $ | 1,820,000 | $ | 2,080,000 | (12.5)% | ||||||||||||||
Michael E. LaBelle | $ | 510,000 | $ | 500,000 | 2.0% | $ | 1,295,000 | $ | 1,450,000 | (10.7)% | ||||||||||||||
Bryan J. Koop | $ | 410,000 | $ | 400,000 | 2.5% | $ | 1,370,000 | $ | 1,550,000 | (11.6)% | ||||||||||||||
Total | $ | 3,310,000 | $ | 3,220,000 | 2.8% | $ | 9,130,000 | $ | 10,135,000 | (9.9)% | ||||||||||||||
| LTI Equity Awards | Total Compensation | |||||||||||||||||||||||
| Executive | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||||
Owen D. Thomas | $ | 9,050,000 | $ | 8,750,000 | 3.4% | $ | 12,500,000 | $ | 12,500,000 | 0% | ||||||||||||||
Douglas T. Linde | $ | 5,655,000 | $ | 5,395,000 | 4.8% | $ | 8,500,000 | $ | 8,300,000 | 2.4% | ||||||||||||||
Raymond A. Ritchey | $ | 4,240,000 | $ | 4,200,000 | 1.0% | $ | 6,800,000 | $ | 7,000,000 | (2.9)% | ||||||||||||||
Michael E. LaBelle | $ | 1,945,000 | $ | 1,950,000 | (0.3)% | $ | 3,750,000 | $ | 3,900,000 | (3.8)% | ||||||||||||||
Bryan J. Koop | $ | 1,370,000 | $ | 1,300,000 | 5.4% | $ | 3,150,000 | $ | 3,250,000 | (3.1)% | ||||||||||||||
Total | $ | 22,260,000 | $ | 21,595,000 | 3.1% | $ | 34,700,000 | $ | 34,950,000 | (0.7)% | ||||||||||||||
| ✔ | its event at Nareit’s REITworld conference in San Francisco, California, for BXP’s investors and analysts, attended by more than 110 individuals. |
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In addition, we participated in numerous conferences throughout the year, including the 2022 Citi Global Property CEO Conference, Nareit REITweek Investor Conference, Bank of America 2022 Global Real Estate Conference, 2022 Evercore ISI Conference and the 2022 Nareit REITworld Conference. We held one-on-one meetings with various current and potential investors at these conferences, from which we gained helpful insight into the matters at the forefront of our investors’ agendas.
In the aggregate, in 2022, we engaged directly with representatives of more than 300 firms, including approximately 132 US and international institutional investors who own, in the aggregate, approximately 60% of the total number of outstanding shares of BXP common stock as of December 31, 2022. Through these engagement efforts and discussions with our investors, we received overall positive feedback regarding our executive compensation program and governance practices. This feedback is consistent with the support we received in the last three years on our advisory Say-on-Pay proposal.
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| COMPENSATION DISCUSSION AND ANALYSIS | ||
III. 2022 EXECUTIVE COMPENSATION
›2019 PAY MIX 2022 ANNUAL TARGET COMPENSATION
In January of each year, the Committee establishes a target amount for total direct compensation for each NEO by considering competitive benchmarking data, position, level of responsibility and experience, and, for executives other than our CEO, our CEO’s recommendations. Targets are reviewed annually and adjusted if the Committee determines that it is appropriate to do so. The Committee may also adjust target compensation to reflect changes in or new responsibilities for a particular executive. In considering the appropriate annual target amounts for each component for 2022, the Committee considered the significant global, national and industry-specific challenges the NEOs overcame in the last three years and their consistently strong performances in the face of those challenges.
For each NEO,2022, the Committee approved aggregate increases in total target compensation of 0.6% for our CEO and 0.9% for our NEOs as a group, in each case, as compared to 2021. As noted above and as described in more detail below, besides minor updates in the appropriate levelweightings for Mr. Ritchey, Mr. Koop and mix ofthe other regional EVPs intended to better link pay based on his role, responsibilities and performance. Thewith performance, the Committee believes that ourremained committed to the established executive compensation is well-aligned withframework and did not change the design, structure or categories under the 2022 executive compensation program. As a result, the Committee (1) maintained identical target cash bonus amounts for each NEO for 2022 and (2) approved modest increases to each NEO’s base salary (2.8% for our stockholders’ interestsCEO and in line with the Benchmarking Peer Group (see 2.7% for all NEOs as a group) and target LTI equity award (0.5% for our CEO and 1.0% for all NEOs as a group).
The total target direct compensation for 2022 for each NEO was as follows:
| Name | Salary | Target Bonus | Target LTI Equity | Total Target Compensation | ||||||||||||
Owen D. Thomas | $ 925,000 | $ 2,350,000 | $ 9,500,000 | $ 12,775,000 | ||||||||||||
Douglas T. Linde | $ 775,000 | $ 1,900,000 | $ 6,100,000 | $ 8,775,000 | ||||||||||||
Raymond A. Ritchey | $ 750,000 | $ 1,650,000 | $ 4,410,000 | $ 6,810,000 | ||||||||||||
Michael E. LaBelle | $ 525,000 | $ 1,250,000 | $ 2,000,000 | $ 3,775,000 | ||||||||||||
Bryan J. Koop | $ 425,000 | $ 1,250,000 | $ 1,600,000 | $ 3,275,000 | ||||||||||||
Variable or “VI. Determining Executive Compensation – Benchmarking Peer Group & Compensation Advisor’s Role”). Variableat-risk” pay, consisting of annual cash bonuses and LTI equity awards, constitutes the vast majority of our executive compensation. 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 all NEOs as a group, variable pay for 20192022 was approximately 93% and 90%, respectively.respectively, of total target compensation. This emphasis on variable pay allows the Committee to reward good performance and penalize poor performance.
The following presentgraphics illustrate the allocationsmix between fixed pay (base salary) and variable pay incentives (short-term incentives in the form of total paycash bonuses and long-term incentives in the form of both time-based and performance-based LTI equity awards) for 2019 among each component of compensation for (1) our CEO and (2) all NEOs as a group:
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›ALLOCATION OF LTI AWARDS
The Committee approved LTI equity awards to NEOs for 2019 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 4, 2020, the date of initial grant. After evaluating the feedback received from investors, the Committee increased the amount of performance-based equity as a percentage of total LTI equity for our CEO so that his allocation was 55% performance-based and 45% time-based. For the other NEOs, the Committee maintained the allocation at 50% performance-based and 50% time-based, which is generally accepted by our investors. In total for 2019, performance-based equity awards for all NEOs represent a greater percentage of total direct compensation than they did for 2018, and the total amount of LTI equity as a percentage of total compensation for all NEOs as a group, also increased to 64%.in each case, based on 2022 target compensation levels.
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| COMPENSATION DISCUSSION AND ANALYSIS | ||
The following table sets forth the dollar values of the performance-based and time-based equity awards granted to NEOs in 2020 for performance in 2019:› CASH COMPENSATION
| Executive | Total LTI Equity Awards | Total LTI Equity Awards as % of Total Compensation | Performance- Equity Awards | % of Total Equity Awards | Time-Based LTI Equity Awards | % of Total Equity Awards | ||||||||||||||||||
Owen D. Thomas | $ 9,050,000 | 72% | $ 4,977,500 | 55% | $ 4,072,500 | 45% | ||||||||||||||||||
Douglas T. Linde | $ 5,655,000 | 67% | $ 2,827,500 | 50% | $ 2,827,500 | 50% | ||||||||||||||||||
Raymond A. Ritchey | $ 4,240,000 | 62% | $ 2,120,000 | 50% | $ 2,120,000 | 50% | ||||||||||||||||||
Michael E. LaBelle | $ 1,945,000 | 52% | $ 972,500 | 50% | $ 972,500 | 50% | ||||||||||||||||||
Bryan J. Koop | $ 1,370,000 | 43% | $ 685,000 | 50% | $ 685,000 | 50% | ||||||||||||||||||
Total | $22,260,000 | 64% | $11,582,500 | $10,677,500 | ||||||||||||||||||||
The performance-based portion of LTI equity awards for 2019 performance was granted in the form of 2020 MYLTIP awards, which have a three-year performance period (February 4, 2020 to February 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. Following completion of the three-year performance period, the Committee will determine the final payout based on computations from our appraisal expert for this plan, AON plc, and if the number of units initially awarded exceeds the number of units ultimately earned, then the excess will be forfeited. Therefore, while the award of 2020 MYLTIP units is in recognition for performance in 2019, award recipients must continue to perform over the three-year term of the 2020 MYLTIP program in order to earn and vest in any of the MYLTIP units and must generally remain employed for the four years to earn the full amount. The aggregate target number of units for NEOs is approximately 85,663 LTIP units and an aggregate payout opportunity ranging from zero to a maximum of 171,326 LTIP units. The baseline share price for 2020 MYLTIP awards was $143.52 (the average closing price per share of our common stock on the NYSE for the five trading days prior to and including February 4, 2020).Base Salary
The 2020 MYLTIP awards are generally amortized into earnings overCommittee determines the four-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 2020 MYLTIP awards to NEOs will have an aggregate value of approximately $11.6 million.
The time-based LTI equity awards granted to the NEOs for 2019 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 including attaining retirement eligibility. See “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards.” Pursuant to our Equity Award Grant Policy discussed below, time-based LTI equity awards were issued as of the close of business on January 31, 2020 based on the closing price per share of our common stock on the NYSE on that date of $143.35.
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IV. COMPONENTS OF EXECUTIVE COMPENSATION
›OUR EXECUTIVE COMPENSATION PROGRAM
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›CASH COMPENSATION
Base Salary
The base salary for each NEO is determined by the Committee andNEO. It is intended to provide a fixed level of compensation that reflects the NEO’s leadership role and the relative market rate for similarly-situatedsimilarly situated executives in the NEO’s position. The Committee determines whether to adjust base salaries based on a range ofvarious 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.February.
The 2019 base salaries represented an increase of 2.8% over 2018 for all NEOs as a group. For the 2020 compensation year,In January 2022, the Committee did not increasemodestly increased the NEOs’ base salaries for the NEOs.first time in three years by approximately 2.7% in the aggregate. In January 2023, the Committee again modestly increased the base salaries of the NEOs other than Mr. Ritchey with whom the Company entered a new employment relationship. See “Compensation of Executive Officers – Employment Agreements – Summary of Mr. Ritchey’s Employment Agreement.” Base salaries for 2022 and 2023, and the year-over-year percentage increases, for each NEO are set forth below.
Name
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2023 Salary
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Year-over-Year % Change
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Owen D. Thomas | $925,000 | 2.8% | $950,000 | 2.7% | ||||||||
Douglas T. Linde | $775,000 | 3.3% | $800,000 | 3.2% | ||||||||
Raymond A. Ritchey | $750,000 | 1.4% | $750,000 | — | ||||||||
Michael E. LaBelle | $525,000 | 2.9% | $550,000 | 4.8% | ||||||||
Bryan J. Koop | $425,000 | 3.7% | $440,000 | 3.5% | ||||||||
2022 Annual Incentive ProgramPlan
TheProgram Design and Structure
In January 2020, based mainly on feedback received from our investors in 2019, the Committee established a new, more formulaic annual incentive program is designed to provide NEOs with the opportunity to earnplan (“AIP”) under which annual cash bonuses based onpayable to our executive officers are directly linked to the achievement of specific, pre-established goals. We continue to use the same AIP structure except for small shifts in weighting between categories to more closely link each executive’s performance to his or her goals, as described in more detail below.
Bonus Opportunity
Under the 2022 AIP, each NEO had a target bonus opportunity expressed in a fixed dollar amount. Actual earned amounts under the plan 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 Category | Payout (% of Target) | |
| >= Maximum | 150% | |
| Target | 100% | |
| Threshold | 50% | |
| <Threshold | Zero | |
| | 2023 Proxy Statement 73 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
2022 AIP Categories
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 goals. For 2019performance based on performance in three categories: (1) diluted FFO per Share, (2) Leasing and prior years, rather than rely on a strict formulaic framework, the Committee combined a quantitative and a qualitative assessment against the goals to:(3) Business & Individual goals.
| • | Diluted FFO per Share. The Committee selecteddiluted FFO per share as a key financial metric for the 2022 AIP because it is the earnings metric most commonly used by investors and analysts to evaluate |
| • | 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 and total to encourage the executives to focus on current addressable vacancies and near-term roll-over and avoid scenarios in which leasing goals are met solely due to unexpected early renewals. The Committee selected this category because it is an objective measure fundamental to the Company’s short-term and long-term success. It links corporate, regional and individual performance by formula to the amounts paid. The leasing goals are measured at the regional level for Mr. Ritchey, Mr. Koop and the other regional EVPs and the Company level for corporate executives. |
| • | Business & Individual Goals. Business goals include milestone-oriented objectives related to acquisitions, dispositions, delivering development and construction projects on time and budget, achieving the desired returns on investments, securing entitlements for future development projects, launching new developments, the opportunistic use of joint ventures, and the management of capital expenditures and G&A expense. Business goals are based on regional priorities for Mr. Ritchey, Mr. Koop and the other regional EVPs. For the CEO and President, business goals include a relevant subset of those regional goals and goals related to overall corporate strategy and executive management. The CFO’s business goals relate to balance sheet management, capital raising, and other Finance Department priorities. |
Individual goals include leadership and professional development goals, DEI initiatives, succession planning and ESG priorities for each executive. The Committee considers performance outcomes against Business & 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).
One of the Committee’s primary objectives when establishing Business & Individual goals each year, including in 2022, is to set annual goals that meaningfully advance the Company’s strategy for sustainable, long-term growth and value creation despite the short-term window for assessing performance against these goals. In some cases, performance against these Business & Individual goals may not be assessed quantitatively. In addition, the relative importance of some goals may be greater in one year than in another, depending on the circumstances when the Committee establishes the goals.
2022 AIP Weightings
As part of the Committee’s annual executive compensation process, in January 2022, the Committee reviewed and reassessed the AIP, including its categories and weightings. Based on its review of the AIP, the Committee concluded that the categories were appropriate but that an adjustment to the weightings of the leasing component for Mr. Ritchey, Mr. Koop and the other regional EVPs would be reasonable so that (1) their respective leasing goals would increase in weighting to 40% (from 30% under the 2021 AIP), split evenly between short-term and total leasing, and (2) the diluted FFO per share component would be weighted 20%. The Committee believed this change would better link pay with performance for Mr. Ritchey, Mr. Koop and the other regional EVPs because they are directly responsible for the leasing outcomes in those regions. In contrast, numerous factors impact diluted FFO per share, for many of which they are not directly accountable. We disclosed these changes prospectively in our 2022 proxy statement.
| | 2023 Proxy Statement 74 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
For the 2022 AIP, the performance measurement categories and weighting of each category were as follows:
| Weightings | ||||||||||||||||||||
| Annual Incentive Performance Measures | Thomas | Linde | LaBelle | Ritchey | Koop | |||||||||||||||
| FFO per Share | 30 | % | 30 | % | 30 | % | 20 | % | 20 | % | ||||||||||
| Leasing (Short-Term and Total) | ||||||||||||||||||||
Overall BXP | 30 | % | 30 | % | 30 | % | ||||||||||||||
DC Region(1) | 20 | % | ||||||||||||||||||
LA Region(1) | 20 | % | ||||||||||||||||||
Boston Region | 40 | % | ||||||||||||||||||
| Business & Individual Goals | ||||||||||||||||||||
Overall BXP | 40 | % | 40 | % | ||||||||||||||||
Finance | 40 | % | ||||||||||||||||||
DC Region + LA Region | 40 | % | ||||||||||||||||||
Boston Region | 40 | % | ||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| (1) | Mr. Ritchey’s leasing goal (weighted 40% in total) is evenly split between the Washington, DC and Los Angeles regions (20% each) and further bifurcated within each region between short-term and total leasing, consistent with all other NEOs. |
2022 NEO Scorecards
In January 2022, when the Committee set the target for diluted FFO per share goal for 2022, the US economy continued its strong recovery following the pandemic. The Committee determined to set a diluted FFO target of $7.38 per share, the midpoint of the Company’s diluted FFO per share guidance for 2022. If achieved, diluted FFO of $7.38 per share would have represented growth of approximately 13% compared to 2021. While this projected growth was greater than any of BXP’s office REIT peers, the Committee noted that 2021 was a year in which the pandemic’s lingering effects were still generally impacting the US economy and the Company. Compared to 2019, the last fiscal year before the Covid-19 pandemic, if the target FFO per share for 2022 were achieved, it would have represented growth of approximately 5%. The Committee believed the 2022 target FFO per share was appropriate because, although the economy was reaching its post-pandemic peak in the first two months of 2022, there were concerns regarding continued inflation, possible interest rate increases to combat inflation it and the economic implications that could directly and negatively impact our financial results, including FFO.
Following discussions with management, the Committee set the total leasing goal and the range for determining threshold, target and maximum achievement under the goal by focusing first on vacant and near-term (2022 and 2023) roll-over space for which there was not yet a replacement tenant or a renewal, then adding on longer-term leasing objectives (2024 and beyond) and goals for pre-leasing of development projects. Based on the foregoing, the Committee set the target total leasing goal at 5.25 million square feet for 2022. While the 2022 leasing goal target represented a slight decrease from BXP’s pre-pandemic average annual leasing volume, the Committee considered the uncertainties that could impact overall demand for office space and factored various outcomes when setting the leasing target for 2022 and the threshold and maximum payout opportunities. After consideration, the Committee believed the leasing target of 5.25 million square feet would sufficiently challenge executives to achieve the leasing goals despite the unclear outlook.
Set forth in the following tables is a summary of each NEO’s performance measures and weightings, with specific threshold, target and maximum payout opportunities for each of the diluted FFO per share and leasing performance categories, and the principal Business & Individual goals, along with each NEO’s performance results for 2022. The Committee considers absolute and/or relative performance outcomes against Business & Individual goals, 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), but no specific weightings are ascribed to each of the Business & Individual goals. The following scorecards include only the most material Business & Individual goals for each NEO that the Committee considered in assessing 2022 performance.
| | 2023 Proxy Statement 75 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Owen D. Thomas | ||||||||||||||||
Performance Category | Weighting | Threshold | Target | Maximum | 2022 Results | Category Payout % | ||||||||||
FFO per Share |
| $7.20 | $7.38 | $7.56 | $7.53(1) | 141.7% | ||||||||||
Leasing (in millions of square feet) |
| Short-term | 3.21 | 4.02 | 4.82 | 4.21 | 111.9% | |||||||||
| Total | 4.20 | 5.25 | 6.30 | 5.70 | 121.2% | |||||||||||
Business & Individual Goals |
| 120.0% | ||||||||||||||
| Key 2022 Business & Individual Goals |
| - | Provide leadership to the management team to complete 2022 operational, capital and ESG goals |
| - | Maintain key client and thought leader engagement for direct insight into evolving real estate industry trends and lead BXP’s strategic shift(s), as appropriate |
| - | Collaborate with BXP’s President and CFO to develop and execute 2022 capital funding plan |
| - | Leverage role and industry stature to solicit new clients, complete critical leases and foster relationships, and gain insights on industry trends, for the benefit of BXP |
| - | Grow BXP life sciences business through new developments and acquisitions |
| - | Advance and achieve, as applicable, BXP’s environmental and sustainability goals and determine strategies for continued industry leadership |
| - | Continue to lead and support HR and BXP’s DEI Council to advance DEI efforts and maintain progress against goals |
| - | Provide guidance and leadership to BXP Board of Directors and support, as needed, for individual directors, including onboarding |
| | 2023 Proxy Statement 76 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
| Assessment |
After assessing Mr. Thomas’ performance against his Business & Individual goals, the Committee concluded that he achieved substantially all of the goals established for him, many of which he exceeded. In particular, the Committee noted that Mr. Thomas:
| • | initiated and led strategic shifts to position BXP for continued growth and opportunities for long-term value creation |
| • | further grew BXP’s life sciences business through (1) transactions completed in Kendall Square in Cambridge, Massachusetts, including the acquisition of 125 Broadway, which is fully leased, and the |
| • | collaborated with BXP’s President and CFO to |
| • | successfully advanced BXP’s ESG and sustainability efforts and maintained BXP’s leadership position in the real estate industry. |
| • | worked closely with |
| • | exceeded individual DEI goals and initiatives and continued to set the appropriate tone-at-the-top driving BXP’s successful DEI efforts in 2022 (see “Human Capital Management and Sustainability – Human Capital Management” beginning on page 43). |
The Committee also noted that Mr. Thomas was individually recognized by Institutional Investor Magazine, improving his ranking as Best CEO among all REITs to #2 and maintaining his #1 ranking among office REITs.
Based on Mr. Thomas’ achievement of substantially all of his Business & Individual goals, many of which he exceeded, the Committee determined that Mr. Thomas earned 120% of the target for this category.
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 125.5% | ||||
| (1) | Represents diluted FFO per share. Under the terms of the 2022 AIP, diluted FFO per share is subject to adjustment for certain transactions, which in the case of 2022, netted to zero. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
| | 2023 Proxy Statement 77 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Douglas T. Linde | ||||||||||||||||
Performance Category | Weighting | Threshold | Target | Maximum | 2022 Results | Category Payout % | ||||||||||
FFO per Share |
| $7.20 | $7.38 | $7.56 | $7.53(1) | 141.7% | ||||||||||
Leasing (in millions of square feet) |
| Short-term | 3.21 | 4.02 | 4.82 | 4.21 | 111.9% | |||||||||
| Total | 4.20 | 5.25 | 6.30 | 5.70 | 121.2% | |||||||||||
Business & Individual Goals |
| 120.0% | ||||||||||||||
| Key 2022 Business & Individual Goals |
| - | Provide leadership to the management team to complete 2022 operational, capital and ESG goals, including close oversight and monitoring of progress towards company-wide leasing, development and capital spending goals |
| - | Work closely with leasing teams on pricing and other strategies to lease vacant and uniquely distinctive space |
| - | Directly supervise Sustainability Department and manage the successful transition of the new reporting structure |
| - | Collaborate with BXP’s CEO and CFO to develop and execute 2022 capital funding plan |
| - | Facilitate company-wide forums by department to boost collaboration and idea-sharing and execute professional development and leadership training opportunities |
| - | Oversee Finance, IT and HR Departments’ processing strategies and opportunities, and new technology initiatives |
| - | Work closely with the HR Department to review employee compensation programs and levels through market research |
| - | Assist in the selection of assets and execute the asset sale strategy |
| | 2023 Proxy Statement 78 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
| Assessment |
After assessing Mr. Linde’s performance against his Business & Individual goals, the Committee concluded that he achieved all of the goals established for him, some of which he exceeded. In particular, the Committee noted that Mr. Linde:
| • | provided direct oversight of progress toward achieving company-wide leasing, development and capital spending goals, which positively impacted BXP’s (1) successful execution of a total of approximately 5.7 million square feet of leases in 2022 despite industry headwinds and volatile financial markets, (2) delivery of three projects totaling more than 1.7 million square feet, including two life sciences projects and a premier workplace project, each of which was 90% leased or more (as of February 21, 2023), (3) commencement of seven development and redevelopment projects, and (4) management of general and administrative expenses. |
| • | meaningfully contributed to BXP’s 2022 asset sale strategy through his direct involvement in the selection of and execution of dispositions in the Boston and Washington, DC regions, and provided leadership to management team in executing dispositions, including the use of tax-deferral strategies that resulted in reallocated proceeds from an asset sale in our Washington, DC region to our Seattle region, which has a greater concentration of technology-based clients and relatively faster rent growth |
| • | oversaw BXP’s Finance, Information Systems and HR Departments’ processing strategies and opportunities and new technology initiatives to enhance operations and improve security. |
| • | directly supervised BXP’s Sustainability Department following a 2022 transition in reporting structure and oversaw BXP’s advancement or achievement of environmental and sustainability goals, as applicable. Among other ESG achievements in 2022, BXP (1) earned a seventh consecutive 5-Star rating and its eleventh consecutive GRESB “Green Star” designation, (2) was named to (a) Newsweek’s List of America’s Most Responsible Companies in 2023 for the 3rd consecutive year, ranking 1st in the Real Estate & Housing industry, and (b) the Dow Jones Sustainability Index (DJSI) North America for the 2nd consecutive year, (3) was recognized by Commercial Property Executive for having the “Best ESG Program” and (4) received Nareit’s prestigious Leader in the Light Award. |
| • | provided steady leadership to BXP’s employees, stockholders and Board of Directors throughout the shifting and volatile market and industry conditions in 2022 through credible and articulate internal and external communications. |
Based on Mr. Linde’s achievement of all of his Business & Individual goals, some of which he exceeded, the Committee determined that Mr. Linde earned 120% of the target for this category.
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 125.5% | ||||
| (1) | Represents diluted FFO per share. Under the terms of the 2022 AIP, diluted FFO per share is subject to adjustment for certain transactions, which in the case of 2022, netted to zero. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
| | 2023 Proxy Statement 79 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Raymond A. Ritchey | ||||||||||||||||
Performance Category | Weighting | Threshold | Target | Maximum | 2022 Results | Category Payout % | ||||||||||
FFO per Share |
| $7.20 | $7.38 | $7.56 | $7.53(1) | 141.7% | ||||||||||
Leasing(2) (in millions of square feet) |
| Short-term | ||||||||||||||
| DC: | 0.50 | 0.63 | 0.75 | 0.63 | 50.1% | |||||||||||
| LA: | 0.14 | 0.18 | 0.21 | 0.05 | ||||||||||||
| Total | ||||||||||||||||
| DC: | 0.64 | 0.80 | 0.96 | 0.75 | 41.7% | |||||||||||
| LA: | 0.14 | 0.18 | 0.21 | 0.05 | ||||||||||||
Business & Individual Goals |
| 100.0% | ||||||||||||||
| Key 2022 Business & Individual Goals |
| - | Complete a new investment |
| - | Complete a new investment in the Seattle region |
| - | Sell specified and |
| - | Assist DC regional team in creating a plan and/or monetizing the Virginia 95 assets |
| - | Facilitate initial occupancy of a key client at Reston Town Center property and close sale of Roger Bacon Drive asset |
| - | Continue to organize BXP’s monthly leasing calls and educate leasing teams across all regions |
| - | Continue to advise and provide strong mentorship to DC regional leadership |
| - | Continue mentorship of LA and Seattle regional leaders |
| Assessment |
After assessing Mr. Ritchey’s performance against his Business & Individual goals, the Committee concluded that he achieved substantially all of the goals established for him; volatile capital market and real estate conditions made it extremely difficult to achieve the three goals not met on satisfactory terms. In particular, the Committee noted that Mr. Ritchey exhibited evident business acumen by finding alternate solutions for goals that were impacted by adverse conditions that resulted in more than $827 million in gross sale proceeds from other asset sales and capital from two different equity partners for two residential development projects. Mr. Ritchey also continues to positively impact key BXP personnel and the Company as a whole through his mentorship and leadership. Mr. Ritchey continues to serve as an important mentor for the regional leaders in Los Angeles and
| | 2023 Proxy Statement 80 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Seattle and the Co-Heads of the Washington, DC region following their transition into leadership roles during 2021. In addition, Mr. Ritchey continued to play a key role in specific transactions, including BXP’s acquisition of Madison Centre, its second acquisition in the Seattle, WA market, and key leases signed at Safeco Plaza in Seattle, WA, as well as several other transactions in the Washington, DC Region.
Based on Mr. Ritchey’s achievement of substantially all of his Business & Individual goals, the Committee determined that Mr. Ritchey earned 100% of the target for this category.
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 86.7% | ||||
| (1) | Represents diluted FFO per share. Under the terms of the 2022 AIP, diluted FFO per share is subject to adjustment for certain transactions, which in the case of 2022, netted to zero. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
| (2) | Mr. Ritchey’s leasing goal (weighted 40% in total) is evenly split between the Washington, DC and Los Angeles regions (20% each) and further bifurcated within each region between short-term and total leasing, consistent with all other NEOs. |
| | 2023 Proxy Statement 81 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Michael E. LaBelle | ||||||||||||||||
Performance Category | Weighting | Threshold | Target | Maximum | 2022 Results | Category Payout % | ||||||||||
FFO per Share |
| $7.20 | $7.38 | $7.56 | $7.53(1) | 141.7% | ||||||||||
Leasing (in millions of square feet) |
| Short-term | 3.21 | 4.02 | 4.82 | 4.21 | 111.9% | |||||||||
| Total | 4.20 | 5.25 | 6.30 | 5.70 | 121.2% | |||||||||||
Business & Individual Goals |
| 150.0% | ||||||||||||||
| Key 2022 Business & Individual Goals |
| - | Collaborate with BXP’s CEO & President to develop and execute 2022 capital funding plan |
| - | Execute specified financing and refinancings & efficiently manage 2023 debt maturities |
| - | Continue to advance strategic capital initiatives by securing new and expanding existing relationships with private partners |
| - | Secure construction funding for a development project in the Washington, DC region using private equity funding |
| - | Oversee implementation of outsourcing efforts and schedules of projects in place for specified functions |
| - | Lead market research efforts of premier workplaces in BXP target markets |
| - | Target complete TCFD alignment of climate-related disclosures in public filings and reports |
| - | Plan and execute a successful Investor Day for BXP stockholders |
| Assessment |
After assessing Mr. LaBelle’s performance against his Business & Individual goals, the Committee concluded that he achieved all of the goals established for him, which included numerous financing goals that he successfully achieved despite the volatile debt market environment in 2022. In particular, the Committee noted Mr. LaBelle’s achievements in executing BXP’s 2022 capital funding strategy despite volatility in the capital markets and hesitancy of lenders to transact in 2022 by, among other things, leveraging BXP’s strong banking relationships. Mr. LaBelle oversaw the completion of (1) an unsecured $730 million term loan facility in May 2022 that was subsequently refinanced to $1.2 billion in January 2023, (2) a $750 million aggregate principal amount “green bond” offering in November 2022 and (3) numerous property-level refinancings totaling $945 million in
| | 2023 Proxy Statement 82 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
aggregate principal amount (of which our share was $305 million). In addition, he furthered BXP’s strategic capital initiatives by, among other things, assisting in the development of private equity funding from a new partner for a development project in Washington, DC and broadening existing partnerships to facilitate new investments.
In addition to Mr. LaBelle’s management of BXP’s balance sheet, he provided meaningful support to advance BXP’s ESG and DEI initiatives, and he worked with the Sustainability and HR Departments and DEI Council to enhance BXP’s public disclosures regarding human capital, DEI and ESG. He also provided strong leadership skills and advanced critical initiatives in his direct management of the Finance, Accounting, Tax and Investor Relations Departments.
The Committee also noted that Mr. LaBelle was individually recognized by Institutional Investor Magazine, ranking as the #2 Best CFO among all REITs (improved from #3 in 2021) and #1 among office REITs, and he was instrumental to BXP’s rankings as #2 Best ESG and #2 Best IR Program among all REITs, #1 Best ESG and #1 Best IR Program among office REITs, and Best Investor Event.
Based on Mr. LaBelle’s achievement of all of his Business & Individual goals despite market conditions that created unpredictable challenges and obstacles, the Committee determined that Mr. LaBelle earned 150% of the target for this category.
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 137.5% | ||||
| (1) | Represents diluted FFO per share. Under the terms of the 2022 AIP, diluted FFO per share is subject to adjustment for certain transactions, which in the case of 2022, netted to zero. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
| | 2023 Proxy Statement 83 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Bryan J. Koop | ||||||||||||||||
Performance Category | Weighting | Threshold | Target | Maximum | 2022 Results | Category Payout % | ||||||||||
FFO per Share |
| $7.20 | $7.38 | $7.56 | $7.53(1) | 141.7% | ||||||||||
Leasing (in millions of square feet) |
| Short-term | 1.06 | 1.32 | 1.59 | 1.75 | 150% | |||||||||
|
| Total
|
| 1.54
| 1.92
| 2.31
| 2.75
| 150% | |||||||||
Business & Individual Goals |
| 130.0% | ||||||||||||||
| Key 2022 Business & Individual Goals | ||
| - | Complete plans, commence construction and execute a lease for 250/290 Binney Street master development project |
| - | Deliver 325 Main Street on |
| - | Complete plans and/or commence development for specified lab developments/conversions in Waltham |
| - | Complete permitting process and/or plans for specified development and redevelopment projects in the Boston region |
| - | Develop strategic plans for a specified asset in the Boston region, including a sale of the asset or repositioning all or a portion of the asset |
| - | Complete enabling work for a specified future development project |
| - | Manage BXP’s operating expenses at a specified Boston region asset |
| - | Engage and develop relationships with new local governmental leaders in the City of Boston and the Commonwealth of Massachusetts |
| Assessment |
After assessing Mr. Koop’s performance against his Business & Individual goals, the Committee concluded that he achieved the majority of the goals established for him. In particular, the Committee noted Mr. Koop’s instrumental role in growing BXP’s life sciences business in Kendall Square, the top life sciences cluster in the US, through the following transactions that the Company expects to enhance long-term value for BXP stockholders:
| • | Acquired 125 Broadway, a fully leased 271,000 SF lab/life sciences property; |
| • | Signed a 15-year lease with AstraZeneca for approximately 566,000 SF at 290 Binney Street. 290 Binney Street is part of the initial phase of a life sciences development project located in the heart of Kendall Square; and |
|
| | | |
| COMPENSATION DISCUSSION AND ANALYSIS | ||
| • | Signed agreements to facilitate the conversion and expansion of 300 Binney Street, including a 15-year lease for 100% of the redeveloped property. |
strikeIn addition to the appropriate balance between short-term objectivesforegoing, Mr. Koop further contributed to the growth of BXP’s life sciences business by completing the lab conversion at 880 Winter Street in Waltham, MA. Mr. Koop also contributed to BXP’s asset sale strategy with the sale of 195 West Street and long-term strategies; andBXP’s development goals with the delivery of 325 Main Street, which was 92% leased (as of December 31, 2022).
properly emphasize quantitative results while also considering qualitative factors when assessing management’s performance.
For 2020,Based on Mr. Koop’s achievement of most of his Business & Individual goals, including his instrumental role in expanding BXP’s life sciences business in the top life sciences cluster in the country, the Committee established a new annual cash incentive plan underdetermined that Mr. Koop earned 130% of the target for this category.
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 140.3% | ||||
| (1) | Represents diluted FFO per share. Under the terms of the 2022 AIP, diluted FFO per share is subject to adjustment for certain transactions, which in the case of 2022, netted to zero. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
Based on the foregoing, the Committee awarded annual cash bonuses payable to our executive officers will have a direct link to the achievement of specific,pre-established goals. (See“—VII. New 2020 Annual Incentive Plan”)NEOs for 2022 as follows:
Name | 2022 Target Annual Incentive | 2022 Actual Annual Incentive | 2022 Actual as % of Target | |||
Owen D. Thomas | $ 2,350,000 | $2,949,250 | 125.5% | |||
Douglas T. Linde | $ 1,900,000 | $2,384,500 | 125.5% | |||
Raymond A. Ritchey | $ 1,650,000 | $1,430,550 | 86.7% | |||
Michael E. LaBelle | $ 1,250,000 | $1,718,750 | 137.5% | |||
Bryan J. Koop | $ 1,250,000 | $1,753,750 | 140.3% | |||
›LTI EQUITY COMPENSATION
The Committee’s assessmentequity component of management’s performance against operational, capital and management goals is a material factor in determining the annualour NEOs’ compensation awards. What our NEOs actually earn is driven to a significant extentsignificantly by our TSR through LTI equity awards consisting of a mix of time-based and performance-based LTIP unit awards.
Time-Based Equity Awards
Time-basedThe time-based LTI equity awards granted to the NEOs for 2022 performance consisted of LTIP units or restricted shares of our common stock that generally vest ratablyin equal, annual installments over a four-year periodfour years (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 “Compensation of Executive Officers – Potential Payments Upon Termination or retirement), and are intended to align the interests of management with those of stockholders because the ultimate value of the award is directly tied to the value of our stock over the vesting period.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 areis granted under our Multi-Year Long-Term Incentive Program, or “MYLTIP.” We grant MYLTIP awards to provide incentives for long-term outperformance and focus over a multi-year period. The valuedesign of thesethe MYLTIP awards is linkedlinks the ultimate payouts directly by formula to our relative TSR over a three-year overlapping measurement periods.
Consistent with the 2019 MYLTIP, under the 2020 MYLTIP:period.
| | 2023 Proxy Statement 85 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Allocation of LTI Equity Awards
2022 MYLTIP Structure & Design
In early 2022, the Company’sCommittee approved LTI equity awards to NEOs for 2021 performance as a mix of time-based, full-value equity awards and performance-based MYLTIP awards. It was the third consecutive year in which the Committee maintained the same allocation of performance-based equity as a percentage of total LTI equity for all of our NEOs.
The 2022 performance-based MYLTIP consists of two equally weighted components, each providing a payout opportunity ranging from zero to 200% of a target number of LTIP units based on BXP’s relative and absolute TSR performance is measured againstover a single index – the FTSE Russell Nareit Office Index (the “Nareit Office Index”three-year performance period.
| Ø | Relative TSR Component |
One-half (50%) (which is adjusted to include Vornado Realty Trust because it is one of the six publicly-traded office REITs that we consider our most directly comparable peers (the “Office Peers”) despite being categorized as a diversified REIT by FTSE Nareit);
2022 MYLTIP target grant value was awarded in the awards are denominated in LTIP units; and
relative TSR is the sole determinant of how many LTIP units are earned and eligible to vest; there are no upside or downside absolute TSR modifiers.
For 2020 MYLTIP awards, the numberform 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 200% of the target number of LTIP units, issued,based on BXP’s three-year, annualized relative TSR (“rTSR”) performance compared to an index of peer companies as follows:
BXP Annualized TSR Relative to Index | Percentage of Target MYLTIP Units that are Earned | |
| >= +1,000 basis points | 200% | |
| 0 basis points | 100% | |
| <= -1,000 basis points | Zero | |
The payout for performance between levels outlined in the table above will be interpolated on a straight-line basis depending onbasis.
For purposes of measuring relative performance, the 2022 MYLTIP awards provide that BXP’s TSR performanceshall be compared to the Nareit Office Index (as adjusted) as follows:
TSR of a custom peer group index (the “Custom Index”) consisting of the following eight (8) office REITs:
|
|
| ||||||||
| SL Green Realty Corp. | ||||
| Empire State Realty Trust | | Kilroy Realty Corporation | Vornado Realty Trust | |
| Hudson Pacific Properties, Inc. | Paramount Group, Inc. | |||
Reported Pay vs. Realized Pay
The Committee recognizes that a perfect correlation does not exist between the successful execution of our long-term strategy, as demonstrated over time 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.
The following graph shows for our CEO (1) the reported value of the MYLTIP awards as of the respective grant dates, (2) the actual realized pay for the 2015-2017 MYLTIP awards for which the measurement periods have ended and (3) the interim valuations as of December 31, 2019 for the 2018 and 2019 MYLTIP awards:
| (1) |
|
|
| | | |
| COMPENSATION DISCUSSION AND ANALYSIS | ||
V. ASSESSING PERFORMANCEThe purpose of using a peer group is to provide a mechanism for comparing 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 which performance data is not readily available, if at all. We selected the Custom Index 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 US gateway markets in which the Company operates.
› COMPANY STRATEGYFor 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.
| Ø | Absolute TSR Component |
The remaining one-half (50%) of the 2022 MYLTIP target grant value was awarded in the form of LTIP units that can be earned from zero to 200% of the target number of LTIP units, based on BXP’s non-annualized, cumulative absolute TSR (“aTSR”) during the three-year performance period as follows:
| BXP Cumulative aTSR | Percentage of Target MYLTIP Units that are Earned | |
| >= +60% | 200% | |
| +10% | 100% | |
| <= -40% | Zero | |
The payout for performance between levels outlined in the table above will be interpolated on a straight-line basis.
The key tenetsCommittee added the aTSR component during its re-design of the MYLTIP in 2020, in part, to limit the scenarios in which our business strategy are to:
maintaininvestors may suffer losses due to 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;
investdecline in the highest quality buildings (primarily office) with unique amenities and desirable locations that are able to maintain high occupancy rates and achieve premium rental rates through economic cycles;
maintain scale and a full-service real estate capability (leasing, development, construction and property management) inabsolute TSR while our markets 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 acquisitions, dispositions, repositioning and development, throughout the real estate investment cycle, (3) provide superior service to our tenants and (4) develop and manage our assets in the most sustainable manner possible;
be astute in market timingNEOs realize above-target payouts for investment decisions by acquiring properties in times of opportunity, developing new properties in times of growth and selling assets at attractive prices, resulting in continuous portfolio refreshment;
ensure a strong balance sheet to maintain consistent access to capital and the resultant ability to make new investments at opportune points in time; and
foster a culture and reputation of integrity, excellence and purposefulness, making us the employer of choice for talented real estate professionals, the landlord and developer of choice for our customers and the counterparty of choice for real estate industry participants.
› FOCUS ON LONG-TERM VALUE CREATION
We are a fully integrated real estate company, organized as a real estate investment trust (“REIT”), that develops, manages, operates, acquires and owns a diverse portfolio of primarily Class A office space. We are well-known for our development expertise,in-house building management and responsiveness to tenants’ needs, and we hold a superior track record of developing and operating premium Central Business District office buildings, successfulmixed-use complexes andbuild-to-suit projects for a diverse array of creditworthy tenants. The real estate business is long-term in nature, and our success requires that we make business decisions with a focus on our long-term objectives.relative TSR outperformance. As a result, BXP performance above the maximum goal under the rTSR component does not automatically result in a payout equal to the maximum 200% of target because the total payout would be offset if performance is below target under the aTSR component. The Committee concluded that this “offsetting” feature helps align our Committee strives to make compensation decisions that provide managementNEOs’ interests with appropriateour stockholders while providing incentives to executeoutperform our strategy and promotepeers.
| Ø | Other Features of 2022 MYLTIP |
Distributions. During the bestthree-year performance period, holders of 2022 MYLTIP Units are not entitled to receive full distributions on the 2022 MYLTIP Units. Instead, to support the units’ characterization as profits interests for tax purposes, the holders of the Companyunits are entitled to receive only a partial distribution on each unit equal to 10% of the dividend payable on a share of BXP common stock. In addition, BXP will make a “catch-up” cash payment on the 2022 MYLTIP Units that are ultimately earned in an amount equal to the regular and its stockholdersspecial dividends, if any, declared during the performance period on BXP common stock, less the distributions paid to holders of 2022 MYLTIP Units during the performance period on all of the awarded 2022 MYLTIP Units.
Post-vesting Transfer Restrictions. Subject to the provisions on “Qualified Retirement” and the other terms of the award agreement, after the three-year performance period, all earned 2022 MYLTIP Units shall be deemed “vested.” Still, they 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 January 31, 2025, but may not be monetized until January 31, 2026.
| | 2023 Proxy Statement 87 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
2022 LTI Awards for 2021 Performance
Based on the NEOs’ strong performance, especially in light of the continued economic challenges during 2021, the Committee awarded the dollar values set forth below for performance-based and time-based equity awards to the NEOs on February 1, 2022, and January 28, 2022, respectively, for performance in 2021, which reflect 100% of each NEO’s target LTI award value for 2021.
Executive | 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 | $ 9,450,000 | $ 5,197,500 | 55% | $ 4,252,500 | 45% | |||||||||||||||
Douglas T. Linde | $ 6,045,000 | $ 3,022,500 | 50% | $ 3,022,500 | 50% | |||||||||||||||
Raymond A. Ritchey | $ 4,410,000 | $ 2,205,000 | 50% | $ 2,205,000 | 50% | |||||||||||||||
Michael E. LaBelle | $ 1,990,000 | $ 995,000 | 50% | $ 995,000 | 50% | |||||||||||||||
Bryan J. Koop | $ 1,490,000 | $ 745,000 | 50% | $ 745,000 | 50% | |||||||||||||||
Total | $23,385,000 | $12,165,000 | 52% | $11,220,000 | 48% | |||||||||||||||
The 2022 MYLTIP awards were denominated in a fixed number of LTIP units and granted as of February 1, 2022. The 2022 MYLTIP awards have a three-year performance period (February 1, 2022, to January 31, 2025) and an additional one-year, post-vesting holding period (see “– 2022 MYLTIP Structure & Design – Other Features of 2022 MYLTIP”). Following the completion of the three-year performance period, the Committee will determine the final payout based on computations from our independent valuation consultant for this plan. If the number of units initially awarded exceeds the number of units ultimately earned, then the award recipient must forfeit the excess. Therefore, while the award of 2022 MYLTIP units was partially in recognition of performance in 2021, award recipients must continue to perform over the long term.three-year term of the 2022 MYLTIP to earn and vest in any of the MYLTIP units and hold the units for an additional year. As a result, recipients must generally remain employed for four years before they may monetize the awards.
Execution2023 MYLTIP Structure & Design
The structure and design of our strategy spans multiple markets with different economic drivers over long periods. Development projects, whichthe 2023 MYLTIP 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 fromthe same as that of many of our competitorsthe 2022 MYLTIP, except JBG Smith Properties is not included in the office REIT segment, which makes direct comparisons difficultcustom peer group index because it publicly announced a strategic shift to change the composition of its portfolio to majority multifamily. Therefore, the Committee concluded that including JBG Smith Properties in the Custom Index is no longer appropriate.
2023 LTI Awards for 2022 Performance
For the fourth consecutive year, the Committee maintained the same allocation of performance-based equity as a percentage of total LTI equity for our CEO (55% performance-based and underlies our less formulaic approach45% time-based) and for the other NEOs (50% performance-based and 50% time-based). In January 2023, the Committee approved LTI equity awards to assessingNEOs for 2022 performance as contrasted with a purely quantitative “actual versus target” framework.
In addition to maintainingmix of time-based, full-value equity awards and performance-based MYLTIP awards. The 2023 MYLTIP awards were denominated in a full-service real estate platformfixed number of LTIP units and providing superior service to our tenants, our focus on long-term performance involves managementgranted as 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 of 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 appropriately compensate, incentivize and retain our executives.
› PERFORMANCE METRICS
We focus on key drivers of value creation such as growth in diluted FFO per share, leasing, development starts, deliveries and economics, and new investments. While the Committee is aware that different companies may calculate relevant performanceFebruary 7, 2023.
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| COMPENSATION DISCUSSION AND ANALYSIS | ||
metrics differently, particularlynon-GAAP financial measures,Based on the NEOs’ strong performance, especially in light of the volatile economic conditions and industry headwinds during 2022, the Committee finds it usefulawarded the dollar values set forth below for performance-based and time-based equity awards granted to comparethe NEOs on February 7, 2023, and February 3, 2023, respectively, for performance in 2022. These total LTI equity award amounts reflect 100% of each NEO’s target LTI award value for 2022, except for Mr. LaBelle. The Committee awarded Mr. LaBelle 113% of his target LTI award value, or an additional $250,000 above target, in acknowledgment of his role in the successful execution of BXP’s 2022 financing and balance sheet management goals, his consistent ranking as one of the top CFOs among REITs (#2) and the #1 office REIT CFO, and based on the Committee’s compensation benchmarking review.
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 | $ 9,500,000 | 100% | $ 5,225,000 | 55% | $ 4,275,000 | 45% | ||||||||||||||||||
Douglas T. Linde | $ 6,100,000 | 100% | $ 3,050,000 | 50% | $ 3,050,000 | 50% | ||||||||||||||||||
Raymond A. Ritchey | $ 4,410,000 | 100% | $ 2,205,000 | 50% | $ 2,205,000 | 50% | ||||||||||||||||||
Michael E. LaBelle | $ 2,250,000 | 113% | $ 1,125,000 | 50% | $ 1,125,000 | 50% | ||||||||||||||||||
Bryan J. Koop | $ 1,600,000 | 100% | $ 800,000 | 50% | $ 800,000 | 50% | ||||||||||||||||||
Total | $23,860,000 | 101% | $12,405,000 | 52% | $11,455,000 | 48% | ||||||||||||||||||
The aggregate target number of 2023 MYLTIP units for NEOs is approximately 152,425 LTIP units, and an aggregate payout opportunity ranging from zero to a maximum of 304,850 LTIP units. The baseline share price for 2023 MYLTIP awards was $75.02 (the average closing price per share of our performancecommon stock on the NYSE for the five trading days prior to whatand including February 7, 2023). The 2023 MYLTIP awards are generally amortized into earnings over the Office Peers disclosethree-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 similar measures, even though informationLTI Equity Awards.” Under ASC Topic 718, the aggregate grant-date fair value of 2023 MYLTIP awards to NEOs was approximately $12.4 million.
| | 2023 Proxy Statement 89 |
| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Realized Pay vs. Reported Pay for MYLTIP Awards
The total compensation of our NEOs, as reported in the 2022 Summary Compensation Table, is not always directly comparable among companies.
calculated under SEC rules, which require us to show the grant date fair value of equity and equity-based awards. The Committee believes that internalrealized pay better measures compensation for an annual period than reported pay because a significant portion of our NEOs’ compensation consists of long-term, performance- and external data are important toolsequity-based MYLTIPs. The ability of our executive officers to realize value from MYLTIP awards is contingent on achieving certain Company performance milestones. As a result, reported pay includes the accounting value of MYLTIP awards granted in the design and implementationgiven period, which may or may not be realized in the future. As illustrated in the following charts, our CEO realized approximately 57% 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 onreported pay for all MYLTIP awards granted since 2015 for 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 set 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 OFFICE 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 notmeasurement periods 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 approximate total capitalizations as of December 31, 2019 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.ended.
Douglas Emmett, Inc. ($13.6 billion)
JBG Smith Properties ($7.6 billion)
Kilroy Realty Corporation ($12.9 billion)
Paramount Group, Inc. ($7.8 billion)
SL Green Realty Corp. ($14.2 billion)
Vornado Realty Trust ($22.9 billion)
Boston Properties’ total capitalization as of the same date was approximately $38.0 billion (see “VI. Determining Executive Compensation–Benchmarking Peer Group & Compensation Advisor’s Role”).
› 2019 CORPORATE GOALS
In early 2019, 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, while not creating a strictly formulaic framework. 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;
| (1) | Amounts do not include 54,282 options to purchase shares of BXP’s common stock held by Mr. Thomas. His options expired on April 2, 2023, out-of-the-money. The grant date value of Mr. Thomas’ options was $900,000. |
excessive reliance on short-term goals could have negative implications for the execution of our strategy;
| (2) | Payout as % of Target percentages shown for the 2021 and 2022 MYLTIP are estimates as of December 31, 2022, based on interim valuations performed by our independent valuation consultant. Actual results could differ materially from the interim valuations. |
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, without the ability to exercise judgment to evaluate the quality of the results, may have unintended results.
During our outreach efforts, our investors told us that we use a relatively high number of performance goals when assessing performance, and they expressed a desire to better understand which goals were most important and how much the
| 2015 MYLTIP | 2016 MYLTIP | 2017 MYLTIP | 2018 MYLTIP | 2019 MYLTIP | 2020 MYLTIP | Total (2015-2020 MYLTIP) | ||||||||||||||||||||||
Reported Pay | $ | 4,145,625 | $ | 5,000,000 | $ | 5,150,000 | $ | 4,339,000 | $ | 4,375,000 | $ | 4,977,500 | $ | 27,987,125 | ||||||||||||||
Realized Pay | $ | 950,039 | $ | 3,950,943 | $ | 5,198,236 | $ | 1,543,905 | $ | 2,782,676 | $ | 1,389,360 | $ | 15,815,159 | ||||||||||||||
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| COMPENSATION DISCUSSION AND ANALYSIS | ||
IV. DETERMINING EXECUTIVE COMPENSATION
› PROCESS FOR DETERMINING EXECUTIVE COMPENSATION
Consistent with the prior year’s process, in January 2022, our Committee factored them into theestablished target total direct compensation decisions. The Committee attributes greater relative importance to certain goals based on whatopportunities for each of our NEOs consisting of base salary, target annual cash incentive, and target long-term incentive grant value. When establishing target total direct compensation levels, the Committee deems most important in the executionconsidered a variety of our strategy in that year and, for 2019, categorized all goals as “primary” or “secondary” goals. The table below lists the primary operational and capital goals for 2019 and the Committee’s overall assessment of management’s performance with respect to each denoting whether a goal was “exceeded,” “met” or “not met.” Although no specific formulaic weightings were attributed to the goals, the Committee’s assessment of performance against the primary goals was the most material factor in their determination of 2019 compensation.
› PRIMARY GOALSfactors, including:
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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.
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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,
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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.
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Why it is important:The Committee evaluated the pre-established performance goals under the Annual Incentive Plan to determine earned annual incentives for 2022 (refer to page 85). The Committee determined 2023 LTI equity grant values (earned for 2022) by reference to the targets established at the beginning of the year (refer to pages 88-89). The ultimate earned value of these LTI equity awards depends on our stock’s performance on both a relative and an absolute basis.
› COMPENSATION ADVISOR’S ROLE & BENCHMARKING PEER GROUP
Compensation Advisor’s Role
In addition2022, the Committee again retained FW Cook as its independent, third-party compensation consultant. FW Cook advises the Committee on the reasonableness of executive compensation levels compared to overall leasing volume, we established individual leasing goals for specific properties that are intended to motivate our executives to (1) anticipate and proactively manage rollover and lease terminations at ourin-service properties and (2) lease and stabilize our development properties. The specific leases and properties that comprisethose of other similarly situated companies, consults on the goal are important componentsstructure of our annualexecutive compensation program to optimally support our business plan.
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Why it is important:Development deliveries measure our abilityobjectives and advises the Committee on executive compensation trends among REITs and the broader market. FW Cook reports directly to execute our development pipeline on timethe Committee and within budget. In addition,only provides services to management under the successCommittee’s purview. A representative of our development projects and realization of our plans for growth depend on the stabilized unleveraged cash yields we generate.
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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 constructionFW Cook attends meetings of the building. Our investments in new developmentsCommittee, as requested, 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.
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Why it is important:New investments help sustain 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.
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› SECONDARY GOALS
In addition to the primary goals, the Committee established the goals listed below for our executive officers for 2019. AlthoughChair and management between meetings. Consistent with its charter and as required by SEC rules and NYSE listing standards, the Committee considered these secondary goals as part of the overall assessment of the NEOs’ performance for the year, no single goal was a material factor in awarding compensation for 2019.
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VI. DETERMINING EXECUTIVE COMPENSATION
› PROCESS FOR DETERMINING EXECUTIVE COMPENSATION
Our Committee followed the same general process when setting executive compensation for 2019 as in recent years, which includes:
using the median (50th percentile) of 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;
considering an analysis prepared byall factors relevant to FW Cook’s independence from management before retaining FW Cook that benchmarks each executive officer, and the NEOs as a group, against the its consultant.
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 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 FW Cook; and
based on the foregoing, establishing a dollar amount for total compensation for each NEO and then allocating it among base salary, cash bonus and LTI equity awards (including time-based LTI awards and performance-based LTI awards that use relative TSR over overlapping three-year measurement periods as the performance metric, to further align management’s objectives with the interests of our investors).
› BENCHMARKING PEER GROUP & 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 tomust 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 assessingto assess and determiningdetermine pay for our executive officers. OtherHowever, 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.
In 2019,one of many factors the Committee retained FW Cook to serve as its new independent, third-party compensation consultant. FW Cook reports directly to the Committee and does not provide services to management that are not under the Committee’s purview. A representative of FW Cook attends meetings of the Committee, as requested, and communicates with the Committee Chair between meetings. Consistent with its charter and as required by SEC rules and NYSE listing standards, prior to retaining FW Cook as its consultant, the Committee considered all factors relevant to FW Cook’s independence from management.
The Committee engaged FW Cook to provide a fresh perspective on our overall executive compensation program, advise the Committee 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. It also advised the Committee on executive compensation trends among REITs and the broader market, noting specifically that, in aggregate, total direct compensation levels for the NEOs were competitive and reasonably aligned with relative performance, but theconsiders when setting target pay mix was more heavily weighted to cash and less to equity than the peer group overall. As a result, the Committee initiated its plan to gradually reduce cash compensation and shift the pay mix toward LTI equity awards for all NEOs. Accordingly, the Committee awarded aggregate cash bonuses to the NEOs that were (9.9)% less than awarded to the same NEOs for 2018, and the performance-based equity awards for all NEOs in 2019 represent a greater percentage of total direct compensation than they did in 2018. FW Cook also recommended changes to the 2020 compensation program design and structure. The Committee relied on this advice, and the feedback received from the investor outreach process, in deciding to establish the 2020 Annual Incentive Plan (see“—VII. New 2020 Annual Incentive Plan”).opportunities.
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| COMPENSATION DISCUSSION AND ANALYSIS | ||
Benchmarking Peer Group
The Committee selected the same peer group for benchmarking 2019 executive compensation that it used for 2018. That peer group consists of sixteen publicly traded real estate companies that are of comparable size to the Company in terms of total capitalization and assets, irrespective of property focus. FW Cook (i) advised the Committee that size, as measured by total capitalization, best depicts the scale, complexity and breadth of the Company’s operations as well asand the amount of capital and assets managed, and therefore is the most appropriate scope measure for peer company selection and (ii) reviewedselection. Following a review of the peer group for 20182021, FW Cook recommended, and recommended that the Committee agreed, to maintain the same peer group for 2019.2022. Notably, fourteenthirteen out of the sixteen members of this Benchmarking Peer Group also list uslisted BXP as a peer company in their 20192022 proxy statements.
The following table provides the names and key information for each peer company:
| Company | Sector | Location | Total Capitalization | ||||||||||||||||||||||||||||||||
| Number of Employees(1) | UPREIT Market Capitalization (in millions)(2) | Total Capitalization (in millions)(3) | |||||||||||||||||||||||||||||||||
Alexandria Real Estate Equities, Inc. | Office | Pasadena, CA | 439 | $ | 19,519 | $ | 27,869 | Office | Pasadena, CA | $ | 39,150 | ||||||||||||||||||||||||
American Tower Corporation | Specialty | Boston, MA | 5,454 | $ | 101,785 | $ | 134,377 | Specialty | Boston, MA | $ | 152,533 | ||||||||||||||||||||||||
AvalonBay Communities, Inc. | Multifamily | Arlington, VA | 3,122 | $ | 29,495 | $ | 36,932 | Multifamily | Arlington, VA | $ | 31,079 | ||||||||||||||||||||||||
Digital Realty Trust, Inc. | Specialty | San Francisco, CA | 1,550 | $ | 26,073 | $ | 38,544 | Specialty | Austin, TX | $ | 48,752 | ||||||||||||||||||||||||
Equity Residential | Multifamily | Chicago, IL | 2,700 | $ | 31,187 | $ | 40,593 | ||||||||||||||||||||||||||||
Douglas Emmett, Inc. | Office | Santa Monica, CA | $ | 8,469 | |||||||||||||||||||||||||||||||
Essex Property Trust, Inc. | Multifamily | San Mateo, CA | 1,822 | $ | 20,577 | $ | 26,683 | Multifamily | San Mateo, CA | $ | 20,348 | ||||||||||||||||||||||||
Host Hotels & Resorts, Inc. | Hotel | Bethesda, MD | 175 | $ | 13,375 | $ | 17,781 | Hotel | Bethesda, MD | $ | 16,566 | ||||||||||||||||||||||||
Kilroy Realty Corporation | Office | Los Angeles, CA | $ | 9,137 | |||||||||||||||||||||||||||||||
Prologis, Inc. | Industrial | San Francisco, CA | 1,712 | $ | 57,998 | $ | 73,220 | Industrial | San Francisco, CA | $ | 134,615 | ||||||||||||||||||||||||
Public Storage | Self-Storage | Glendale, CA | 5,900 | $ | 37,194 | $ | 43,178 | ||||||||||||||||||||||||||||
Regency Centers Corporation | Shopping Center | Jacksonville, FL | 450 | $ | 10,619 | $ | 14,802 | Shopping Center | Jacksonville, FL | $ | 14,729 | ||||||||||||||||||||||||
Simon Property Group, Inc. | Regional Mall | Indianapolis, IN | 3,750 | $ | 52,674 | $ | 77,619 | Regional Mall | Indianapolis, IN | $ | 69,703 | ||||||||||||||||||||||||
SL Green Realty Corp. | Office | New York, NY | 1,033 | $ | 7,663 | $ | 14,186 | Office | New York, NY | $ | 9,276 | ||||||||||||||||||||||||
UDR, Inc. | Multifamily | Highlands Ranch, CO | 1,341 | $ | 14,776 | $ | 19,841 | Multifamily | Highlands Ranch, CO | $ | 19,351 | ||||||||||||||||||||||||
Ventas, Inc. | Health Care | Chicago, IL | 516 | $ | 21,697 | $ | 34,309 | Health Care | Chicago, IL | $ | 30,821 | ||||||||||||||||||||||||
Vornado Realty Trust | Diversified | New York, NY | 4,008 | $ | 13,509 | $ | 22,917 | Office | New York, NY | $ | 14,995 | ||||||||||||||||||||||||
Welltower Inc. | Health Care | Toledo, OH | 443 | $ | 33,551 | $ | 50,382 | Health Care | Toledo, OH | $ | 47,961 | ||||||||||||||||||||||||
Median | 1,631 | $ | 23,885 | $ | 35,621 | $ | 25,585 | ||||||||||||||||||||||||||||
Average | 2,151 | $ | 30,731 | $ | 42,077 | $ | 41,718 | ||||||||||||||||||||||||||||
Boston Properties, Inc. | 760 | $ | 23,808 | $ | 37,981 | Office | Boston, MA | $ | 28,073 | ||||||||||||||||||||||||||
Relative Percentile Rank | 30%-ile | 50%-ile | 58%-ile | 52nd%-ile | |||||||||||||||||||||||||||||||
Source: Market Intelligence, a Division of S&P Global.Capital IQ. Data as of December 31, 2019.
2022
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Total capitalization includes debt and the book value of any preferred stock. |
The benchmarking review was based, in part, on information disclosed in the peer companies’ proxy statements filed in 20192022 (the latest year for which comprehensive data were publicly available), supplemented by data from the 2019 Nareit Compensation Survey..
›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 performance versus corporate and individual goals and a variety of other factors (e.g., compensation history, tenure, responsibilities, market data for competitive positions and retention concerns). AllThe Committee makes all executive compensation decisions are made by the Committee.decisions.
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VII. NEW 2020 ANNUAL INCENTIVE PLAN
Based on feedback received from our investors and advice received from FW Cook, the Committee established a new annual cash incentive plan for 2020 under which annual cash bonuses payable to our executive officers will have a direct link to the achievement of specific,pre-established goals.
Beginning in 2020 (the first fiscal year following the 2019Say-on-Pay vote), individual target bonus opportunities will be expressed in fixed dollar amounts. Actual earned amounts may range from zero (0) to 150% of target, depending on performance versuspre-established annual goals in each category.
Annual bonuses will be based on performance in three categories: FFO per share, leasing and business/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. The FFO per share goal is subject to adjustment for acquisitions, dispositions, financings, lease terminations and similar transactions and circumstances.
Leasing. For the 2020 Annual Incentive Plan, the Committee established specific corporate and regional leasing goals. Leasing will be evaluated in terms of short-term leasing and total leasing 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.
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The following table summarizes the performance measurement categories and weightings under the new 2020 Annual Incentive Plan.
| Weightings | ||||||||||||||||||||
| Annual Incentive Performance Measures | Thomas | Linde | LaBelle | 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 | % | ||||||||||||||
LA Region + DC Region | 33.3 | % | ||||||||||||||||||
Boston Region | 33.3 | % | ||||||||||||||||||
| Business & Individual Goals | ||||||||||||||||||||
Overall BXP | 33.3 | % | 33.3 | % | ||||||||||||||||
Finance – Capital Raising | 25.0 | % | ||||||||||||||||||
Finance – Other | 25.0 | % | ||||||||||||||||||
LA Region + DC Region | 33.3 | % | ||||||||||||||||||
Boston Region | 33.3 | % | ||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
The Committee approved the foregoing categories and specific goal targets in January 2020, prior to theCOVID-19 outbreak becoming a global pandemic that has had a material adverse effect on the global economy. In light of the changing business environment, the Committee mayre-evaluate the categories and targets, as appropriate.
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VIII.V. OTHER COMPENSATION POLICIES
›DOUBLE-TRIGGER ACCELERATION OF VESTING OF EQUITY AWARDS UPON A CHANGE OF CONTROL
All time-based equity awards made after 2014 include “double-trigger” vesting, meaning that if there is a “change of control” and the awards are not otherwise cancelledcanceled 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 thisThis policy regarding acceleration of vesting upon a change of control is in linealigns with current best practicepractices 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 CEO, who 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:When a change of control may be imminent, it is important to ensure that executives’ interests are aligned with stockholders to maximize stockholder value. |
| • | Minimizing conflicts of interest:Double-trigger vesting in the context of a potential change of control (1) reduces distraction and the risk that executives leave the Company before a transaction is completed and (2) prevents executives from receiving a windfall because executives’ time-based equity vests only if their employment is terminated. |
›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 current 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 periodthree years 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 accountconsider 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.
On October 26, 2022, the US Securities and Exchange Commission adopted final rules implementing the Dodd-Frank Act’s incentive-based compensation recovery (clawback) provisions. The final rules direct the stock exchanges to establish listing standards requiring listed companies to develop and implement a policy to recover erroneously awarded incentive-based compensation received by current or former executive officers and to satisfy related disclosure obligations, which must be effective no later than November 28, 2023. As of April 8, 2023, the stock exchanges had proposed final listing standards. The Committee intends to periodically review thisconform its clawback policy and, as appropriate, conform it to any applicable final rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.New York Stock Exchange’s listing standards once the SEC formally approves them.
›GROSS-UP FOR EXCESS PARACHUTE PAYMENTS
In January 2014, we adopted a formal “no taxgross-up” policy with respect to our senior executives. Pursuant toUnder 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 tounder arrangements
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
applicable to our management employees generally, such as a relocation policy. All of theThe employment agreements that we have entered into with senior executives since 2013, including our original and current employment agreements with our CEO, Mr. Thomas, do not provide for taxgross-up payments. In addition, the recently amended and restated employment agreement with Mr. Ritchey provides that he will no longer be eligible to receive a tax gross-up payment under any plan or agreement. (See “Compensation of Executive Officers – Employment Agreements – Summary of Mr. Ritchey’s Employment Agreement.”) Accordingly, this policy formalized the Committee’s 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 after 2013 will not be entitled to any taxgross-up payments under the plans.
›POLICY CONCERNING HEDGING AND PLEDGING TRANSACTIONS
We prohibit 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 purchases and sales of publicly traded put and call options, short sales, hedging transactions such as prepaid variable forwards,
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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 employee or director is aware of material,non-public information or otherwise is not permitted to trade in Company securities. Our Board has never been asked to grantTherefore, we prohibit 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 waiver, nor has it ever granted such a waiver, of this policy.loan.
›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 |
| CEO Actual Stock Ownership | ||||||||
| 6x Base Salary |
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| 38x Base Salary |
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Mr. Thomas actual stock ownership represents 38 times his base salary (based on the closing stock price on February 10, 2023), substantially greater than the mandatory minimum equity requirement. In fact, since Mr. Thomas joined BXP in 2013, he has never sold any shares of BXP common stock or redeemed any units in BPLP.
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 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.
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
Employees who are hired or promoted to senior management positions will have a five-year periodfive years 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 beare 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 willare not be counted.
›LTIP UNITS
Since 2003, we have used a class of partnership interests in our Operating Partnership, called long-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.
Under the MYLTIP awards, during the performance period, holders of LTIP units will receive distributions equal toone-tenth (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
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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). For the 2021 MYLTIP – 2023 MYLTIP awards, following the completion of their respective three-year performance periods, BXP will also make a “catch-up” cash payment on the LTIP units that are ultimately earned in an amount equal to the regular and special dividends, if any, declared during the performance period on BXP common stock, less the distributions paid to holders of the applicable MYLTIP awards, during the applicable performance period on all of the corresponding LTIP 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 distributions payable on a common unit.
›EMPLOYMENT AGREEMENTS
We have employment agreements with each of our NEOs. (See “Compensation of Executive Officers – Employment Agreements.”) 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 NEO 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 believe that these agreements are fair to the NEOs 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.
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
›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 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 an 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”) 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 the 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 often eliminated following a change in control. The Committee believes that agreeing in advance to provide severance benefits in the event of an involuntary termination or constructive termination of employment following a change in control helps 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.
›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 atsince 2013. We provide Messrs. Linde, Ritchey and Koop a monthly car allowance of $750 and all times since 2013.of our executive officers a designated parking space. Apart from these arrangements, we do not provide any other perquisites to our executive officers.
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›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 thefunds. The deferred amounts are increased or 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 upcompensate 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.Compensation in 2022.”
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
›RETIREMENT AND HEALTH AND WELFARE BENEFITS
We have never had a traditional or defined benefit pension plan. 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. 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 ($280,000305,000 in 2019)2022)). Other benefits, such as health and dental plans, group term life insurance, short- and long-term disability insurance and travel accident insurance, are also generally 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
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.” 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. However, in December 2019, the Internal Revenue Service proposed new regulations that may cause the limits on deductibility under Section 162(m) to apply to such compensation. 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
We account for stock-based awards in accordance withunder the requirements of ASC Topic 718.
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›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 |
• our policies and programs are generally intended to encourage executives to focus on
• overall compensation is maintained at levels that are competitive with the market;
• the mix of compensation
•
• long-term equity incentives align management’s interests with those of stockholders with the performance-based component rewarding both absolute and relative TSR performance and being capped at 200% of target shares; • 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 – Retirement Eligibility Provisions for LTI Equity Awards”);
• 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. |
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS |
›EQUITY AWARD GRANT POLICY
We have a policy that annual grants to employees are approved by the Committee in late January or early February of 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 thisThis 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.718. 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 granting such awards. For example, consistent with our past practice for performance- basedwhen granting multi-year, performance-based equity awards, the Committee determined that the 2023 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.
VI. 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 S-K with management. 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:
Joel I. Klein, Chair
Carol B. Einiger
David A. Twardock
William H. Walton, III
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| COMPENSATION OF EXECUTIVE OFFICERS |
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation for each of our NEOs in accordance with Item 402(c) of Regulation S-K.
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(6) | Total ($)(7) | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(5) | All Other Compensation ($)(6) | Total ($) | ||||||||||||||||||||||||||||||||
Owen D. Thomas Chief Executive Officer | 2019 | 898,077 | 2,550,000 | 8,452,063 | (3) | 17,460 | 11,917,600 | 2022 | $ | 925,000 | $ | 9,157,428 | (2) | $ | 2,949,250 | td9,110 | $ | 13,050,788 | ||||||||||||||||||||||||||
| 2018 | 875,000 | 2,875,000 | 7,927,786 | (4) | 17,160 | 11,694,946 | 2021 | $ | 900,000 | $ | 8,745,377 | (3) | $ | 3,231,250 | td7,910 | $ | 12,894,537 | |||||||||||||||||||||||||||
| 2017 | 875,000 | 2,425,000 | 6,745,617 | (5) | 16,680 | 10,062,297 | 2020 | $ | 900,000 | $ | 8,644,379 | (4) | $ | 1,175,000 | td7,910 | $ | 10,737,289 | |||||||||||||||||||||||||||
Douglas T. Linde President | 2019 | 748,077 | 2,095,000 | 5,211,300 | (3) | 34,680 | 8,089,057 | 2022 | $ | 775,000 | $ | 5,837,052 | (2) | $ | 2,384,500 | $37,110 | $ | 9,033,662 | ||||||||||||||||||||||||||
| 2018 | 725,000 | 2,180,000 | 5,163,416 | (4) | 34,380 | 8,102,796 | 2021 | $ | 750,000 | $ | 5,443,503 | (3) | $ | 2,612,500 | $35,310 | $ | 8,841,313 | |||||||||||||||||||||||||||
| 2017 | 725,000 | 1,935,000 | 4,777,500 | (5) | 33,600 | 7,471,100 | 2020 | $ | 750,000 | $ | 5,373,381 | (4) | $ | 950,000 | $35,310 | $ | 7,108,691 | |||||||||||||||||||||||||||
Raymond A. Ritchey Senior Executive Vice President | 2019 | 738,462 | 1,820,000 | 3,990,000 | (3) | 33,876 | 6,582,338 | 2022 | $ | 750,000 | $ | 4,079,250 | (2) | $ | 1,430,550 | $35,526 | $ | 6,295,326 | ||||||||||||||||||||||||||
| 2018 | 720,000 | 2,080,000 | 4,278,466 | (4) | 33,576 | 7,112,042 | 2021 | $ | 740,000 | $ | 4,079,250 | (3) | $ | 2,268,750 | $34,326 | $ | 7,122,326 | |||||||||||||||||||||||||||
| 2017 | 720,000 | 2,080,000 | 4,077,125 | (5) | 33,096 | 6,910,221 | 2020 | $ | 740,000 | $ | 4,028,000 | (4) | $ | 1,103,850 | $34,326 | $ | 5,906,176 | |||||||||||||||||||||||||||
Michael E. LaBelle Executive Vice President, Chief Financial Officer and Treasurer | 2019 | 509,231 | 1,295,000 | 1,916,801 | (3) | 25,680 | 3,746,712 | |||||||||||||||||||||||||||||||||||||
| 2018 | 500,000 | 1,450,000 | 1,973,150 | (4) | 25,380 | 3,948,530 | ||||||||||||||||||||||||||||||||||||||
| 2017 | 500,000 | 1,325,000 | 2,100,000 | (5) | 24,600 | 3,949,600 | ||||||||||||||||||||||||||||||||||||||
Michael E. LaBelle Executive Vice President, Chief Financial Officer & Treasurer | 2022 | $ | 525,000 | $ | 1,921,544 | (2) | $ | 1,718,750 | td8,110 | $ | 4,193,404 | |||||||||||||||||||||||||||||||||
| 2021 | $ | 510,000 | $ | 2,139,966 | (3) | $ | 1,618,750 | td6,310 | $ | 4,295,026 | ||||||||||||||||||||||||||||||||||
| 2020 | $ | 510,000 | $ | 1,848,139 | (4) | $ | 937,500 | td6,310 | $ | 3,321,949 | ||||||||||||||||||||||||||||||||||
Bryan J. Koop Executive Vice President, Boston Region | 2019 | 409,231 | 1,370,000 | 1,235,000 | (3) | 34,680 | 3,048,911 | 2022 | $ | 425,000 | $ | 1,438,744 | (2) | $ | 1,753,750 | $37,110 | $ | 3,654,604 | ||||||||||||||||||||||||||
| 2018 | 400,000 | 1,550,000 | 1,257,523 | (4) | 34,380 | 3,241,903 | 2021 | $ | 410,000 | $ | 1,653,900 | (3) | $ | 1,711,250 | $35,310 | $ | 3,810,460 | |||||||||||||||||||||||||||
| 2017 | 400,000 | 1,280,000 | 1,316,874 | (5) | 33,600 | 3,030,474 | 2020 | $ | 410,000 | $ | 1,301,500 | (4) | $ | 625,000 | $35,310 | $ | 2,371,810 | |||||||||||||||||||||||||||
| (1) |
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A discussion of the assumptions used in calculating these values can be found in Note |
Represents the aggregate grant date fair value of time-based restricted common stock and LTIP unit awards and |
| NEO | Restricted Common Stock and LTIP Unit Awards Grant Date Value ($) | 2019 MYLTIP Awards Grant Date Value ($) | 2019 MYLTIP Awards Maximum Value ($) | Time-Based Awards Grant Date Value | 2022 MYLTIP Awards Grant Date Value | 2022 MYLTIP Awards Maximum Value | ||||||||||||||||||
| Mr. Thomas | 4,077,063 | 4,375,000 | 8,750,000 | $ | 3,959,928 | $ | 5,197,500 | $ | 10,416,873 | |||||||||||||||
| Mr. Linde | 2,513,800 | 2,697,500 | 5,395,000 | $ | 2,814,552 | $ | 3,022,500 | $ | 6,057,619 | |||||||||||||||
| Mr. Ritchey | 1,890,000 | 2,100,000 | 4,200,000 | $ | 1,874,250 | $ | 2,205,000 | $ | 4,419,189 | |||||||||||||||
| Mr. LaBelle | 941,801 | 975,000 | 1,950,000 | $ | 926,544 | $ | 995,000 | $ | 1,994,227 | |||||||||||||||
| Mr. Koop | 585,000 | 650,000 | 1,300,000 | $ | 693,744 | $ | 745,000 | $ | 1,493,156 | |||||||||||||||
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| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| (3) | Represents the aggregate grant date fair value of time-based restricted common stock and LTIP unit awards and |
| (4) | Represents the aggregate grant date fair value of time-based restricted common stock and LTIP unit awards and 2020 MYLTIP awards granted, all of which were granted in |
| (5) |
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| (6) | The table below shows the components of “All Other Compensation” for |
| NEO | Life Insurance ($) | 401(k) Company Match ($) | Car Allowance ($) | Parking ($) | Total ($) | Life Insurance | 401(k) Company Match | Car Allowance | Parking | Total | ||||||||||||||||||||||||||||||
| Mr. Thomas | 660 | 16,800 | — | — | 17,460 | $ | 810 | $ | 18,300 | $ | — | $ | — | $ | 19,110 | |||||||||||||||||||||||||
| Mr. Linde | 660 | 16,800 | 9,000 | 8,220 | 34,680 | $ | 810 | $ | 18,300 | $ | 9,000 | $ | 9,000 | $ | 37,110 | |||||||||||||||||||||||||
| Mr. Ritchey | 660 | 16,800 | 9,000 | 7,416 | 33,876 | $ | 810 | $ | 18,300 | $ | 9,000 | $ | 7,416 | $ | 35,526 | |||||||||||||||||||||||||
| Mr. LaBelle | 660 | 16,800 | — | 8,220 | 25,680 | $ | 810 | $ | 18,300 | $ | — | $ | 9,000 | $ | 28,110 | |||||||||||||||||||||||||
| Mr. Koop | 660 | 16,800 | 9,000 | 8,220 | 34,680 | $ | 810 | $ | 18,300 | $ | 9,000 | $ | 9,000 | $ | 37,110 | |||||||||||||||||||||||||
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GRANTS OF PLAN-BASED AWARDS IN 20192022
The following table provides information about the awards granted to our NEOs during the year ended December 31, 2019.2022.
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 ($)(4) | Date of Compensation Committee Approval (1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | Grant Date Fair Value of Stock and Option Awards ($)(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold (#)(2) | Target (#)(2) | Maximum (#)(2) | Grant Date | Threshold ($)(2) | Target ($)(2) | Maximum ($)(2) | Threshold (#)(3) | Target (#)(3) | Maximum (#)(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Owen D. Thomas | 2/1/2019 | 1/23/2019 | — | — | — | 33,351 | 4,077,063 | — | 2/15/2022 | $ | 1,175,000 | $ | 2,350,000 | $ | 3,525,000 | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 2/5/2019 | 1/23/2019 | — | 35,784 | 71,569 | — | 4,375,000 | 1/28/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | — | — | 37,533 | $ | 3,959,928 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/1/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | 45,102 | 90,205 | — | $ | 5,197,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas T. Linde | 2/1/2019 | 1/23/2019 | — | — | — | 20,563 | 2,513,800 | — | 2/15/2022 | $ | 950,000 | $ | 1,900,000 | $ | 2,850,000 | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/28/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | — | — | 26,676 | $ | 2,814,552 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/5/2019 | 1/23/2019 | — | 22,064 | 44,127 | — | 2,697,500 | 2/1/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | 26,228 | 52,456 | — | $ | 3,022,500 | ||||||||||||||||||||||||||||||||||||||||||||||||
Raymond A. Ritchey | 2/1/2019 | 1/23/2019 | — | — | — | 16,008 | 1,890,000 | — | 2/15/2022 | $ | 750,000 | $ | 1,500,000 | $ | 2,250,000 | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 2/5/2019 | 1/23/2019 | — | 17,176 | 34,353 | — | 2,100,000 | 1/28/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | — | — | 19,461 | $ | 1,874,250 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/1/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | 19,134 | 38,268 | — | $ | 2,205,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael E. LaBelle | 2/1/2019 | 1/23/2019 | — | — | — | 7,432 | 941,801 | — | 2/15/2022 | $ | 625,000 | $ | 1,250,000 | $ | 1,875,000 | — | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 2/5/2019 | 1/23/2019 | — | 7,975 | 15,950 | 0 | 975,000 | 1/28/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | — | — | 8,781 | $ | 926,544 | ||||||||||||||||||||||||||||||||||||||||||||||||
Bryan J. Koop | 2/1/2019 | 1/23/2019 | — | — | — | 4,955 | 585,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/5/2019 | 1/23/2019 | — | 5,317 | 10,633 | — | 650,000 | 2/1/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | 8,634 | 17,269 | — | $ | 995,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
| | 2023 Proxy Statement 100 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
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 ($)(5) | ||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($)(2) | Target ($)(2) | Maximum ($)(2) | Threshold (#)(3) | Target (#)(3) | Maximum (#)(3) | |||||||||||||||||||||||||||||||||
Bryan J. Koop | — | 2/15/2022 | $ | 625,000 | $ | 1,250,000 | $ | 1,875,000 | — | — | — | — | $ | — | ||||||||||||||||||||||||||
| 1/28/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | — | — | 6,575 | $ | 693,744 | |||||||||||||||||||||||||||
| 2/1/2022 | 1/18/2022 | $ | — | $ | — | $ | — | — | 6,465 | 12,930 | — | $ | 745,000 | |||||||||||||||||||||||||||
| (1) | For a discussion of the Company’s policy with respect to the effective grant dates for |
| (2) | Represents |
| (3) | Represents 2022 MYLTIP awards for each NEO. Performance-based vesting of |
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 |
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The amounts included in this column represent the grant date fair |
| | 2023 Proxy Statement 101 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END
The following table sets forth information regarding outstanding equity awards held by our NEOs as of December 31, 20192022 pursuant to Item 402(f) of Regulation S-K.
| Option Awards(1) | Stock Awards(1) | Option Awards(1) | Stock Awards(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options | 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 ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market ($)(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 | 83,343 | 11,489,666 | 120,097 | 16,556,572 | 54,282 | $ | 95.69 | 4/2/2023 | 105,887 | $ | 7,155,843 | 193,082 | $ | 13,048,482 | |||||||||||||||||||||||||||||||||||||||
Douglas T. Linde | 27,455 | 86.86 | 1/28/2021 | 54,155 | 7,465,808 | 79,313 | 10,934,090 | 41,092 | $ | 98.46 | 2/1/2023 | 72,526 | $ | 4,901,307 | 110,620 | $ | 7,475,700 | |||||||||||||||||||||||||||||||||||||||
| 34,476 | 100.77 | 2/3/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 41,092 | 98.46 | 2/1/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Raymond A. Ritchey | — | — | — | 9,582 | 1,320,974 | 60,224 | 8,302,481 | — | — | — | 5,926 | $ | 400,479 | 83,599 | $ | 5,649,620 | ||||||||||||||||||||||||||||||||||||||||
Michael E. LaBelle | 7,749 | 100.77 | 2/3/2022 | 23,304 | 3,212,690 | 27,269 | 3,759,304 | — | — | — | 25,777 | $ | 1,742,010 | 39,574 | $ | 2,674,411 | ||||||||||||||||||||||||||||||||||||||||
| 8,588 | 98.46 | 2/1/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Bryan J. Koop | 7,067 | 100.77 | 2/3/2022 | 15,886 | 2,190,043 | 16,357 | 2,254,977 | 8,267 | $ | 98.46 | 2/1/2023 | 19,384 | $ | 1,309,971 | 30,606 | $ | 2,068,353 | |||||||||||||||||||||||||||||||||||||||
| 8,267 | 98.46 | 2/1/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | This table does not include LTIP unit and restricted common stock awards and |
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| (2) | The following table sets forth the number of unvested time-based LTIP units and/or shares of restricted common stock, and unvested LTIP units earned |
| Award/Grant Date(a) | Mr. Thomas | Mr. Linde | Mr. Ritchey(d) | Mr. LaBelle | Mr. Koop | |||||||||||||||
| Time-Based Awards(b) | ||||||||||||||||||||
2/8/2016 | 3,749 | 2,632 | — | 1,782 | 1,506 | |||||||||||||||
2/3/2017 | 6,566 | 4,568 | — | 3,213 | 2,611 | |||||||||||||||
2/2/2018 | 24,195 | 15,523 | — | 5,735 | 3,519 | |||||||||||||||
2/6/2018 | — | — | 1,340 | 1,463 | 1,222 | |||||||||||||||
2/1/2019 | 33,351 | 20,563 | — | 7,432 | 4,955 | |||||||||||||||
| 2016 MYLTIP Award(c) | 15,482 | 10,869 | 8,242 | 3,679 | 2,073 | |||||||||||||||
Award/Grant Date(a) | Mr. Thomas | Mr. Linde | Mr. Ritchey(d) | Mr. LaBelle | Mr. Koop | |||||||||||||||
Time-Based Awards(b) | ||||||||||||||||||||
2/1/2019 | 8,338 | 5,141 | — | 1,858 | 1,239 | |||||||||||||||
1/31/2020 | 14,205 | 9,862 | — | 3,392 | 2,389 | |||||||||||||||
1/29/2021 | 33,465 | 23,235 | — | 8,994 | 7,347 | |||||||||||||||
1/28/2022 | 37,533 | 26,676 | — | 8,781 | 6,575 | |||||||||||||||
2019 MYLTIP Award(c) | 12,346 | 7,612 | 5,926 | 2,752 | 1,834 | |||||||||||||||
| (a) | The vesting of time-based LTI equity awards and performance-based LTI equity awards is subject to acceleration under certain circumstances and other exceptions discussed below under “– Potential Payments Upon Termination or Change in |
| (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 in the year following the |
| (c) | On February |
| (d) |
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| (3) | The market value of |
| | 2023 Proxy Statement 102 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| (4) | The following table sets forth the number of unearned performance-based LTI equity awards held by each NEO as of December 31, |
| Award(a) | Mr. Thomas | Mr. Linde | Mr. Ritchey | Mr. LaBelle | Mr. Koop | |||||||||||||||
| 2017 MYLTIP Award(b) | 45,506 | 31,661 | 24,266 | 11,133 | 6,031 | |||||||||||||||
| 2018 MYLTIP Award(c) | 38,807 | 25,588 | 18,782 | 8,161 | 5,009 | |||||||||||||||
| 2019 MYLTIP Award(d) | 35,784 | 22,064 | 17,176 | 7,975 | 5,317 | |||||||||||||||
Award(a) | Mr. Thomas | Mr. Linde | Mr. Ritchey | Mr. LaBelle | Mr. Koop | |||||||||||||||
2020 MYLTIP Award(b) | 36,813 | 20,912 | 15,679 | 7,193 | 5,066 | |||||||||||||||
2021 MYLTIP Award(c) | 86,606 | 49,197 | 38,366 | 19,044 | 15,555 | |||||||||||||||
2022 MYLTIP Award(d) | 69,663 | 40,511 | 29,554 | 13,337 | 9,985 | |||||||||||||||
| (a) | The vesting of performance-based LTI equity awards is subject to acceleration under certain circumstances |
| (b) | On February |
| (c) | On February |
| (d) | On February |
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|
| COMPENSATION OF EXECUTIVE OFFICERS |
20192022 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 2019 and the aggregate number of shares of common stock and LTIP units that vested in 2019. The Value Realized on Exercise is the product2022. None of (1) the fair market value of a shareour NEO’s excercised options to purchase shares 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 and LTIP units vesting. In each case, the value realized is before payment of any applicable taxes and brokerage commissions.in 2022.
| 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 Vesting (#) | Value Realized on Vesting(1) | ||||||||||||||||||
Owen D. Thomas | 0 | 0 | 36,910 | 4,653,402 | 55,405 | $ | 6,673,234 | |||||||||||||||||
Douglas T. Linde | 0 | 0 | 26,020 | 3,284,768 | 36,142 | $ | 4,357,832 | |||||||||||||||||
Raymond A. Ritchey | 96,802 | 4,075,439 | 28,050 | 3,676,589 | 29,453 | $ | 3,331,030 | |||||||||||||||||
Michael E. LaBelle | 0 | 0 | 11,545 | 1,433,372 | 13,469 | $ | 1,628,770 | |||||||||||||||||
Bryan J. Koop | 5,616 | 264,449 | 8,210 | 1,013,312 | 7,800 | $ | 939,499 | |||||||||||||||||
| (1) | The Value Realized on Vesting is the product of (a) the closing price on the NYSE of a share of BXP common stock on the vesting date (or, if the vesting date was not a trading day, the immediately preceding trading date), multiplied by (b) the number of shares and LTIP units vesting. In each case, the value realized is before payment of any applicable taxes and brokerage commissions. |
NONQUALIFIED DEFERRED COMPENSATION IN 2022
We provide our executives with the opportunity to defer up to 20% of their base salaries and cash bonuses. Deferrals are credited with earnings or losses based upon the executive’s selection of one or more of 2829 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, 20192022 for the 2829 measurement funds:
Name of Fund | Return (%) | ||||||
American Beacon Small Cap Value Fund R6 Class | |||||||
Artisan Mid Cap Fund Institutional Class | |||||||
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Dodge & Cox International Stock Fund Class X(1) | |||||||
Dodge & Cox Income Fund Class X(1) | -2.34 | ||||||
Oakmark Equity | |||||||
PIMCO Low Duration Fund Institutional Class | |||||||
T. Rowe Price Dividend Growth Fund | |||||||
T. Rowe Price Growth Stock Fund | |||||||
T. Rowe Price Mid-Cap Value Fund | |||||||
T. Rowe Price Retirement 2005 Fund | |||||||
T. Rowe Price Retirement 2010 Fund | |||||||
T. Rowe Price Retirement 2015 Fund | |||||||
T. Rowe Price Retirement 2020 Fund | |||||||
T. Rowe Price Retirement 2025 Fund | |||||||
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| COMPENSATION OF EXECUTIVE OFFICERS |
Name of Fund | Return (%) | |||
T. Rowe Price Retirement 2030 Fund | -16.98 | |||
T. Rowe Price Retirement 2035 Fund | ||||
T. Rowe Price Retirement 2040 Fund | ||||
T. Rowe Price Retirement 2045 Fund | ||||
T. Rowe Price Retirement 2050 Fund | ||||
T. Rowe Price Retirement 2055 Fund | ||||
T. Rowe Price Retirement 2060 Fund | ||||
T. Rowe Price Retirement 2065 Fund | -19.27 | |||
T. Rowe Price Retirement Balanced Fund | ||||
Vanguard FTSE Social Index Fund Admiral | -24.22 | |||
Vanguard Small-Cap Index Fund Admiral Shares | ||||
Vanguard Total Bond Market Index Fund Admiral Shares | ||||
Vanguard Total International Stock Index Fund Admiral Shares | ||||
Vanguard Total Stock Market Index Fund Institutional Shares | ||||
Virtus Duff & Phelps Real Estate Securities Fund Class | ||||
| ||||
| (1) | Effective |
BenefitsAccount balances under the deferred compensation plan are generally paid (1) 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 (2) in a lump sum upon the executive’s actual retirement or annual installments for a period of up to 15 years following such retirement (as previously selected by the executive) uponexecutive at the executive’s retirement. Paymenttime of deferral). Payments will generally start or be made by the later of (x) January 15 following the year of termination or retirement, or (y) six months after the executive’s termination or retirement, whichever is later.retirement. 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 an in-service withdrawal of the executive’s account balance attributable to pre-2005 deferrals, subject to a withdrawal penalty equal to 10% of the amount withdrawn.
The following table shows deferrals made by our NEOs tounder the deferred compensation plan during the year ended December 31, 2019,2022, 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, 2019.2022.
| Name | Executive Contributions in 2019 ($)(1)(2) | Registrant Contributions in 2019 ($) | Aggregate Earnings in 2019 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/2019($)(3) | Executive Contributions in 2022(1)(2) | Registrant Contributions in 2022 | Aggregate Earnings in 2022 | Aggregate Withdrawals/ Distributions | Aggregate Balance at 12/31/2022(3) | ||||||||||||||||||||||||||
Owen D. Thomas | 179,615 | — | 223,096 | — | 1,312,203 | $ | 184,808 | $— | $ | (389,592 | ) | $— | $ | 1,979,143 | ||||||||||||||||||||||
Douglas T. Linde | — | — | — | — | — | $ | — | $— | $ | — | $— | $ | — | |||||||||||||||||||||||
Raymond A. Ritchey | 416,000 | — | 722,304 | — | 4,044,820 | $ | — | $— | $ | (785,414 | ) | $— | $ | 4,697,165 | ||||||||||||||||||||||
Michael E. LaBelle | — | — | 278,115 | 161,133 | 1,165,973 | $ | — | $— | $ | (337,448 | ) | $— | $ | 1,123,024 | ||||||||||||||||||||||
Bryan J. Koop | 235,108 | — | 270,293 | — | 1,791,769 | $ | 256,688 | $— | $ | (476,201 | ) | $— | $ | 2,471,782 | ||||||||||||||||||||||
| | 2023 Proxy Statement 105 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| (1) | These amounts do not include any contributions out of bonus payments that were made in February |
| (2) | Of the amounts reported in the |
| (3) |
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Name | Salary for 2022 | Salary for 2021 | Salary for 2020 | Non-Equity Incentive Plan Compensation for 2021 (paid in 2022) | Non-Equity Incentive Plan Compensation for 2020 (paid in 2021) | |||||||||||||||
Mr. Thomas | $ | 184,808 | $ | 180,000 | $ | 186,923 | $ | — | $ | — | ||||||||||
Mr. Ritchey | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Mr. LaBelle | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Mr. Koop | $ | — | $ | 61,500 | $ | 63,866 | $ | 256,688 | $ | 93,750 | ||||||||||
EMPLOYMENT AGREEMENTS
We have employment agreements with each of our NEOs. The material terms of these agreements are summarized below.
› SUMMARY OF OWEN D. THOMAS’ 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 automatic one-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’ current employment agreement:
Term and Duties
April 2, 2018 through June 30, 2023
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.
Our Board agreed to continue 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.
| • | April 2, 2018 through June 30, 2023. There is no automatic renewal provision. |
| • | As CEO, Mr. Thomas reports directly to the Board of Directors, and he must devote substantially all of his working time and efforts to the performance of his duties. |
| • | Our Board agreed to nominate Mr. Thomas for re-election to the Board of Directors for so long as he remains CEO, and Mr. Thomas has agreed to resign from the Board upon termination of employment. |
| • | 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 |
| | 2023 Proxy Statement 106 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
Compensation and Benefits
| • |
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Target bonus equal to 250% of his base salary, with the actual amount to be determined at
| • | Target annual bonus equal to 250% of his annual base salary in effect from time to time, with the actual amount to be determined in the discretion of the Compensation Committee.
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| • | Mr. Thomas is entitled to the use of a Company-owned or leased automobile, a benefit he has declined every year since becoming CEO. |
Severance Benefits and Retirement Eligibility
| • | 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). |
| • | Mr. Thomas’ employment agreement provides for the acceleration of vesting of all 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 tax gross-up payments. 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 greater after-tax benefit to Mr. Thomas.
| • | Mr. Thomas is not entitled to participate in any of the Company’s change in control severance plans or programs and he is not entitled to receive any tax gross-up payments. 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 under Section 280G of the Internal Revenue Code, 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 greater after-tax benefit to Mr. Thomas. |
| • | 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 and related benefits) shall not apply. |
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 and related benefits) shall not apply.
Restrictive Covenants
While he is an officer and until the later of (1) one year after the termination of his employment for any reason or (2) the latest date of full vesting of any performance-based LTI equity award, Mr. Thomas is prohibited from:
| • | While he is an officer and until the later of (1) one year after the termination of his employment for any reason or (2) the latest date of full vesting of any performance-based LTI equity 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 trailing 12-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.
In addition, the non-competition covenant shall not apply if Mr. Thomas’ employment is terminated following a change in control (as defined in the 2012 Plan, as amended from time to time).
| | 2023 Proxy Statement 107 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| • | The non-competition covenant shall not apply if Mr. Thomas’ employment is terminated following a change in control (as defined in the Boston Properties, Inc. 2021 Stock Incentive Plan, as amended from time to time (the “2021 Plan”)). |
| • | Mr. Thomas is also subject to confidentiality requirements and post-termination litigation and regulatory cooperation obligations. |
› SUMMARY OF EMPLOYMENT AGREEMENTS WITH MESSRS. LINDE, RITCHEY, LABELLE AND KOOP
We also have employment agreements with the other 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 automatic one-year renewals commencing on the second anniversary of the start of the initial term and each anniversary date thereafter 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 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 contain non-competition, non-interference and non-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)Company’s Senior Executive Severance Plan discussed below)) and permit them to participate as an officer or director of, or advisor to, any charitable or other tax exempt organization only and theonly. The geographic scope of the noncompetition provision in each employment agreement is limited to our markets at the time of termination of theirthe NEO’s employment. In 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
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cooperation. These NEOs’ employment with us is at-will, but their employment agreements also provide for certain payments and benefits to them upon separation from the Company in certain circumstances as described below under “– Potential Payments upon Termination or Change in Control.” below.
› SUMMARY OF MR. RITCHEY’S EMPLOYMENT AGREEMENT
Mr. Ritchey has served as our Senior Executive Vice President since January 2016 and has been employed by BXP since 1980. On November 29, 2002, we entered into an employment agreement with Mr. Ritchey, the form of which was similar to the employment agreements with our other NEOs described above (the “Ritchey 2002 Agreement”). On February 28, 2023, we entered into a new employment agreement with Mr. Ritchey (the “ Ritchey 2023 Agreement”). The following is a summary of the Ritchey 2023 Agreement:
Term, Duties and Outside Activities
| • | February 28, 2023 through December 31, 2023. There is no automatic renewal provision. |
| • | Mr. Ritchey must, on average, devote at least 50% of his business time to BXP’s business and affairs. |
| • | During and following the term of the Ritchey 2023 Agreement, he may engage or invest in other business activities, including those that might be the same or similar to our business, subject to certain limitations with respect to Corporate Opportunities (as discussed below). |
| | 2023 Proxy Statement 108 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
Compensation and Benefits
| • | Annual base salary of $750,000. |
| • | Target annual bonus for the year ending December 31, 2023 of $1,650,000, with the actual amount to be determined at the discretion of the Compensation Committee based on Company and individual performance measured against a pre-established set of goals, and taking into account any business generated by the Company pursuant to a Corporate Opportunity, subject to continued employment through December 31, 2023, except in the event of certain qualified terminations. |
| • | Not eligible to receive new grants of LTI equity awards. |
| • | Eligible to participate in all of our employee benefit plans and 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. |
| • | Entitled to an automobile allowance. |
Severance Benefits and Retirement Eligibility
| • | Mr. Ritchey is not entitled to participate in any of the Company’s change in control severance plans or programs and he is not entitled to receive any tax gross-up payments. In the event that any payment or benefit to be paid or provided to Mr. Ritchey would be subject to the golden parachute excise tax under Section 280G of the Internal Revenue Code, 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 greater after-tax benefit to Mr. Ritchey. |
| • | If Mr. Ritchey’s employment is terminated by the Company without “Cause” or by Mr. Ritchey for “Good Reason” and he enters into a general release of claims and such release becomes effective, he will be entitled to the following payments or benefits: |
| › | salary continuation for the period from the date of termination through December 31, 2023, |
| › | payment of the 2023 target annual bonus amount, and |
| › | continued participation in the Company’s health insurance plan for 12 months. |
| • | The expiration of the Ritchey 2023 Agreement will not constitute or result in a termination of employment by the Company without Cause. |
| • | If Mr. Ritchey’s employment is terminated due to death or disability he will be entitled to the following payments or benefits: (i) payment of the 2023 target bonus amount prorated for the number of days he was employed by the Company in 2023 and (ii) continued participation in the Company’s health insurance plan for 18 months. |
| • | In connection with any termination, the Ritchey 2023 Agreement provides that outstanding and unvested equity awards held by Mr. Ritchey will be governed by the terms of the award agreements evidencing such awards, provided that, for purposes of performance-based LTI equity awards, any termination other than a termination by the Company for Cause shall be considered a “Qualified Retirement” as defined below. |
Restrictive Covenants
| • | Subject to certain qualified terminations under the Ritchey 2023 Agreement that may shorten the duration to the longer of the period until December 31, 2023 or three months from the date of termination, during the term of his employment and for a period of one year following the term, Mr. Ritchey may not: |
| › | pursue an actual or potential investment or business opportunity in which the Company could have an interest or expectancy that are within the Company’s geographic market areas and that involve property types that are within the scope of the Company’s business activities (a “Corporate Opportunity”), other than minority interest passive investments, unless he first presents the Corporate Opportunity to the Company in accordance with the procedures set forth in the Ritchey 2023 Agreement and the Company elects not to pursue such Corporate Opportunity; |
| | 2023 Proxy Statement 109 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| › | intentionally interfere with the Company’s relationships with its tenants, suppliers, contractors, lenders or employees or with any governmental agency; or |
| › | compete for, solicit or divert the Company’s tenants or employees, either for himself or any other business, person or entity. |
| • | Mr. Ritchey is also subject to confidentiality requirements and post-termination litigation and regulatory cooperation obligations. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Each NEO has the right to receive severance and other benefits in the event of a termination of theirhis 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.termination scenarios. 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 agreement or plan) or by the NEO with “good reason” (as defined in the applicable agreement or plan) prior to a change in control,
| • | a termination by the Company without “cause” (as defined in the applicable agreement or plan) or by the NEO with “good reason” (as defined in the applicable agreement or plan) 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 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,
| • | a change in control without termination, |
termination due to death or disability, or
| • | termination due to death or disability, or |
a qualified retirement.
| • | 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 areNEO is not entitled to any additional or special payments under their employment agreements, our Senior Executive Severance Plan, equity award agreementsany plan, agreement or other contractual arrangements,arrangement, and any unvested LTI equity awards will be immediately forfeited.
› EMPLOYMENT AGREEMENTS SUMMARY OF POTENTIAL PAYMENTS AND CHANGE IN CONTROL SEVERANCE PLANBENEFITS
The following chart summarizes payments and benefits that (1) our CEO is eligible to receive under his employment agreement, (2) Mr. Ritchey was eligible to receive as of December 31, 2022 under the Ritchey 2002 Agreement and (2) the Other NEOsour Senior Executive Severance Plan, (3) Messrs. Linde, LaBelle and Koop are eligible to receive under their respective employment agreements and our Senior Executive Severance Plan. NEOs other than our CEO participate inPlan and (4) each NEO is entitled to receive under his performance-based LTI equity award agreements. Prior to entering into the Ritchey 2023 Agreement on February 28, 2023, Mr. Ritchey was a covered employee under our Senior Executive Severance Plan. Mr. Thomas has never been a covered employee under the Senior Executive Severance Plan whereasand the severance and benefits to which our CEOhe is entitled following a termination within twenty-four (24) months after a change in control are provided in his employment agreement.
| | 2023 Proxy Statement 110 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| Scenario | Component | |||
Termination by the Company without “Cause” or by the NEO for “Good Reason” without a Change in Control | Bonus | • All NEOs: Target bonus prorated for the number of days employed in the year of termination | ||
| Cash Severance | • Mr. Thomas: 2x the sum of his base salary plus the amount of cash bonus, if any, received or payable with respect to the preceding year (but not less than his target bonus)
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• 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
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• Other NEOs: Additional 12 months of vesting | ||||
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› DOUBLE-TRIGGER ACCELERATION OF VESTING OF EQUITY AWARDS UPON A CHANGE OF CONTROL
Time-based LTI equity award agreements 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.”
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› PERFORMANCE-BASED LTI EQUITY AWARDS
The treatment of performance-based LTI equity awards (e.g., MYLTIP awards) upon certain terminations of employment or a change in control is governed by the NEOs’ relevant award agreements. The following chart summarizes the treatment of these awards under each scenario assuming it occurs prior to the end of the applicable three-year performance period.
| • All NEOs: The number of
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• Any earned | ||||
| 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 | |||
| | 2023 Proxy Statement 111 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| Scenario | Component | |||
Termination | Bonus | • | ||
• Other NEOs: Not applicable | ||||
| Cash Severance | • All NEOs: Lump-sum payment 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 (or, in the case of Mr. Thomas, his target bonus, if greater) | |||
| Time-Based LTI Equity Awards | • Full vesting for all NEOs | |||
| Health Benefits | • All NEOs: Participation by the NEO, | |||
| Tax Gross-Up Payment | • Mr. Thomas is not entitled to receive any tax gross-up payments. If any payment or benefit would be subject to the golden parachute excise tax under Section 280G of the Internal Revenue Code, the payments and benefits will be
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| Other Benefits | • All NEOs: Financial counseling, tax preparation assistance and outplacement counseling for up to 36 months | |||
Change in Control Without Termination | Performance-Based LTI Equity Awards(2) | • All NEOs The number of
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• Any earned | ||||
In the case of each of the foregoing scenarios following the end of the applicable three-year performance period,
| | 2023 Proxy Statement 112 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
| Scenario | Component | |||
Termination due to Death or Disability | Bonus | • Lump-sum payment equal to the NEO’s target bonus prorated for number of days employed in the year of termination | ||
| Time-Based LTI Equity Awards | • Full vesting for all NEOs | |||
| Performance-Based LTI Equity Awards(2) | • All NEOs: 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 based on service time and will be fully vested. | ||||
| Health Benefits | • All NEOs: Participation by the NEO, his spouse and dependents for up to 18 months, subject to payment of premiums at active employees’ rate | |||
| (1) | 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 against us. |
| (2) | The above tables summarize the treatment of performance-based LTI equity awards (e.g., MYLTIP awards) assuming each of the foregoing scenarios occurs prior to the end of the applicable three-year performance period. In the case 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 date of such termination or change in control will become fully vested, but, in the case of a termination by the Company without “cause” or by the NEO for “good reason” without a change in control, the NEO will not be permitted to transfer the LTIP units until they otherwise would have the right to transfer the LTIP units under the terms of the awards. |
› DOUBLE-TRIGGER ACCELERATION OF VESTING OF EQUITY AWARDS UPON A CHANGE OF CONTROL
Time-based LTI equity award agreements include “double-trigger” vesting provisions, meaning that, if there is a “change in control” (as defined in the 2021 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 will not be permitted to transfer the MYLTIP units until they otherwise would have vested under the terms of the awards.resigns for “good reason.”
› RETIREMENT ELIGIBILITY PROVISIONS FOR LTI EQUITY AWARDS
LTI Equity Awards Granted to Mr. ThomasRetirement Provisions
Retirement Provision.Mr. Thomas. Pursuant to Mr. Thomas’ employment agreement, all award agreements for LTI equity grantedaward agreements after 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, then his time-based LTI equity awards and performance-based LTI equity awards that are earned will vest in full (without any proration of the award due tobased on service time).
Unearned performance-based LTI equity awards.The full number of MYLTIPLTIP 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 at the same time as otherwise would have been the case if he had remained employed through the full vestingperformance 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 anyall service-based vesting requirements deemed satisfied, over the relevant service-vesting schedule, 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.award).
| | | |
| COMPENSATION OF EXECUTIVE OFFICERS |
LTI Equity Awards Granted to the Other NEOS
For employeesNEOs other than Mr. Thomas, the Thomas. The agreements governing time-based LTI equity awards and performance-based LTI equity awards granted to NEOs other than Mr. Thomas provide as follows:that the time-based LTI equity awards and performance-based LTI 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:
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| • | 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.” |
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 equity 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. Any earned, 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 the right to transfer the LTIP units under the terms of the awards.
Pre-2019 Policy
Time-based LTI equity awards granted prior to 2019 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”). In addition, 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 retain their status 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 Retirement as of December 31, 20192022
Based on their respective ageages and tenure as of December 31, 2019, each of Messrs. Ritchey and Koop is eligible for a Qualified Retirement with respect to awards granted in 2019. In addition, Mr. Ritchey satisfied the Pre-2019 Policy and is grandfathered under such policy with respect to his time-based LTI equity awards. Therefore, all of Mr. Ritchey’s time-based equity awards (other than LTIP units granted on February 6, 2018 (that provide that if an employee had attained age 65, or attained age 62 and completed 20 years of service with us prior to the grant date, the award will vest ratably over two years)) were fully vested as of December 31, 2019 and subsequent awards will continue to be vested on the grant date.2022:
| • | Each of Messrs. Linde, LaBelle and Koop is eligible for a Qualified Retirement (i.e., they satisfied the Rule of 70) with respect to all time-based and performance based LTI equity awards granted in 2019 and thereafter. |
| • | Mr. Ritchey satisfied the Pre-2019 Policy and thus retains his status 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, 2022. Mr. Ritchey is also eligible for a Qualified Retirement with respect to all performance-based LTI equity awards granted in 2019 and thereafter. |
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| COMPENSATION OF EXECUTIVE OFFICERS |
› ESTIMATED PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following tables show the potential payments and benefits thatto which our NEOs would have been provided to our NEOsentitled assuming each scenario occurred on December 31, 2019.2022.
| Scenario | Payments and Benefits Upon Termination | Owen D. ($) | Douglas T. ($) | Raymond ($) | Michael E. ($) | Bryan J. Koop ($) | Payments and Benefits Upon Termination | Owen D. Thomas | Douglas T. Linde | Raymond A. Ritchey(1) | Michael E. LaBelle | Bryan J. Koop | ||||||||||||||||||||||||||||||||
Involuntary Not for Cause or Good Reason Termination | Bonus | 2,250,000 | 750,000 | 740,000 | 510,000 | 410,000 | Bonus | $ | 2,350,000 | $ | 1,900,000 | $ | 1,500,000 | $ | 1,250,000 | $ | 1,250,000 | |||||||||||||||||||||||||||
| Severance | 7,550,000 | 2,930,000 | 2,820,000 | 1,960,000 | 1,960,000 | Severance | $ | 8,312,500 | $ | 3,387,500 | $ | 3,018,750 | $ | 2,143,750 | $ | 2,136,250 | ||||||||||||||||||||||||||||
| Unvested Equity Awards(1)(2) | 8,078,872 | 3,598,008 | 1,320,975 | 1,561,265 | 1,061,798 | Unvested Equity Awards(2)(3) | $ | 5,133,715 | $ | 2,169,183 | $ | 400,479 | $ | 777,102 | $ | 564,901 | ||||||||||||||||||||||||||||
| 2017 MYLTIP Awards(1)(3) | 4,918,948 | 3,422,312 | 2,622,950 | 1,203,447 | 651,901 | 2020 MYLTIP Awards(2)(4) | $ | 1,181,158 | $ | 670,990 | $ | 503,095 | $ | 230,757 | $ | 162,525 | ||||||||||||||||||||||||||||
| 2018 MYLTIP Awards(1)(3) | 3,182,734 | 2,098,585 | 1,540,370 | 669,370 | 410,765 | 2021 MYLTIP Awards(2)(4) | $ | 3,275,349 | $ | 1,860,543 | $ | 1,450,961 | $ | 720,194 | $ | 588,251 | ||||||||||||||||||||||||||||
| 2019 MYLTIP Awards(1)(3) | 847,431 | 522,493 | 406,785 | 188,872 | 125,887 | 2022 MYLTIP Awards(2)(4) | $ | 671,423 | $ | 390,461 | $ | 284,846 | $ | 284,056 | $ | 96,236 | ||||||||||||||||||||||||||||
| Benefits Continuation | 45,668 | 22,834 | 20,759 | 22,834 | 20,759 | Benefits Continuation | $ | 48,132 | $ | 24,066 | $ | 21,878 | $ | 24,066 | $ | 21,878 | ||||||||||||||||||||||||||||
| Total | 26,873,653 | 13,344,232 | 9,471,839 | 6,115,788 | 4,641,110 | Total | $ | 20,972,277 | $ | 10,402,743 | $ | 7,180,009 | $ | 5,429,925 | $ | 4,820,041 | ||||||||||||||||||||||||||||
Involuntary Not for Cause or Good Reason Termination Following Change in Control | Bonus | 2,250,000 | — | — | — | Bonus | $ | 2,350,000 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||
| Severance | 10,558,333 | 8,212,500 | 7,935,000 | 5,205,000 | 4,895,000 | Severance | $ | 9,825,000 | $ | 7,982,500 | $ | 7,442,600 | $ | 5,426,250 | $ | 4,981,250 | ||||||||||||||||||||||||||||
| Unvested Equity Awards(1)(2) | 11,489,666 | 7,465,808 | 1,320,975 | 3,212,689 | 2,190,044 | Unvested Equity Awards(2)(3) | $ | 7,155,843 | $ | 4,901,307 | $ | 400,479 | $ | 1,742,010 | $ | 1,309,971 | ||||||||||||||||||||||||||||
| 2017 MYLTIP Awards(1)(3) | 5,081,520 | 3,535,420 | 2,709,638 | 1,243,221 | 673,446 | 2020 MYLTIP Awards(2)(4) | $ | 1,219,008 | $ | 692,492 | $ | 519,217 | $ | 238,152 | $ | 167,734 | ||||||||||||||||||||||||||||
| 2018 MYLTIP Awards(1)(3) | 5,028,995 | 3,315,947 | 2,433,918 | 1,057,662 | 649,045 | 2021 MYLTIP Awards(2)(4) | $ | 5,191,949 | $ | 2,949,256 | $ | 2,300,003 | $ | 1,141,623 | $ | 932,471 | ||||||||||||||||||||||||||||
| 2019 MYLTIP Awards(1)(3) | 2,811,930 | 1,733,727 | 1,349,787 | 626,712 | 417,716 | 2022 MYLTIP Awards(2)(4) | $ | 2,288,747 | $ | 1,331,002 | $ | 970,984 | $ | 949,549 | $ | 328,050 | ||||||||||||||||||||||||||||
| Benefits Continuation | 68,502 | 70,482 | 64,257 | 70,482 | 64,257 | Benefits Continuation | $ | 72,198 | $ | 74,628 | $ | 68,065 | $ | 74,628 | $ | 68,065 | ||||||||||||||||||||||||||||
| Other Benefits(5) | 150,000 | 150,000 | 150,000 | 150,000 | 150,000 | Other Benefits(6) | $ | 150,000 | $ | 150,000 | $ | 150,000 | $ | 150,000 | $ | 150,000 | ||||||||||||||||||||||||||||
| Excise Tax Gross-Up(6) | — | 8,228,447 | 7,066,035 | 4,044,683 | 3,351,083 | Excise Tax Gross-Up(7) | $ | 0 | $ | 5,857,667 | $ | 4,675,120 | $ | 3,458,311 | $ | 3,045,130 | ||||||||||||||||||||||||||||
| Total | 37,438,946 | 32,712,331 | 23,029,610 | 15,610,449 | 12,390,591 | Total | $ | 28,252,745 | $ | 23,938,852 | $ | 16,526,468 | $ | 13,180,523 | $ | 10,982,671 | ||||||||||||||||||||||||||||
Change in Control Without Termination | 2017 MYLTIP Awards(1)(3) | 5,081,520 | 3,535,420 | 2,709,638 | 1,243,221 | 673,446 | 2020 MYLTIP Awards(2)(4) | $ | 1,219,008 | $ | 692,492 | $ | 519,217 | $ | 238,152 | $ | 167,734 | |||||||||||||||||||||||||||
| 2018 MYLTIP Awards(1)(3) | 5,028,995 | 3,315,947 | 2,433,918 | 1,057,662 | 649,045 | 2021 MYLTIP Awards(2)(4) | $ | 5,191,949 | $ | 2,949,256 | $ | 2,300,003 | $ | 1,141,623 | $ | 932,471 | ||||||||||||||||||||||||||||
| 2019 MYLTIP Awards(1)(3) | 2,811,930 | 1,733,727 | 1,349,787 | 626,712 | 417,716 | 2022 MYLTIP Awards(2)(4) | $ | 2,288,747 | $ | 1,331,002 | $ | 970,984 | $ | 949,549 | $ | 328,050 | ||||||||||||||||||||||||||||
| Total | 12,922,445 | 8,585,094 | 6,493,343 | 2,927,595 | 1,740,207 | Total | $ | 8,699,704 | $ | 4,972,750 | $ | 3,790,204 | $ | 2,329,324 | $ | 1,428,255 | ||||||||||||||||||||||||||||
Death or Disability | Bonus | 2,250,000 | 750,000 | 740,000 | 510,000 | 410,000 | Bonus | $ | 2,350,000 | $ | 1,900,000 | $ | 1,500,000 | $ | 1,250,000 | $ | 1,250,000 | |||||||||||||||||||||||||||
| Unvested Equity Awards(1)(2) | 11,489,666 | 7,465,808 | 1,320,975 | 3,212,689 | 2,190,044 | Unvested Equity Awards(2)(3) | $ | 7,155,843 | $ | 4,901,307 | $ | 400,479 | $ | 1,742,010 | $ | 1,309,971 | ||||||||||||||||||||||||||||
| 2017 MYLTIP Awards(1)(3) | 5,081,520 | 3,535,420 | 2,709,638 | 1,243,221 | 673,446 | 2020 MYLTIP Awards(2)(4) | $ | 1,219,008 | $ | 692,492 | $ | 519,217 | $ | 238,152 | $ | 167,734 | ||||||||||||||||||||||||||||
| 2018 MYLTIP Awards(1)(3) | 5,028,995 | 3,315,947 | 2,433,918 | 1,057,662 | 649,045 | 2021 MYLTIP Awards(2)(4) | $ | 5,191,949 | $ | 2,949,256 | $ | 2,300,003 | $ | 1,141,623 | $ | 932,471 | ||||||||||||||||||||||||||||
| 2019 MYLTIP Awards(1)(3) | 2,811,930 | 1,733,727 | 1,349,787 | 626,712 | 417,716 | 2022 MYLTIP Awards(2)(4) | $ | 2,288,747 | $ | 1,331,002 | $ | 970,984 | $ | 949,549 | $ | 328,050 | ||||||||||||||||||||||||||||
| Benefits Continuation | 34,251 | 34,251 | 31,139 | 34,251 | 31,139 | Benefits Continuation | $ | 36,099 | $ | 36,099 | $ | 32,818 | $ | 36,099 | $ | 32,818 | ||||||||||||||||||||||||||||
| Total | 26,696,362 | 16,835,153 | 8,585,457 | 6,684,535 | 4,371,390 | Total | $ | 18,241,646 | $ | 11,810,156 | $ | 5,723,501 | $ | 5,357,433 | $ | 4,021,044 | ||||||||||||||||||||||||||||
Qualified Retirement(7) | Unvested Equity Awards(1)(2) | — | — | 1,320,975 | — | 683,096 | ||||||||||||||||||||||||||||||||||||||
| 2017 MYLTIP Awards(1)(3) | — | — | 2,709,638 | — | — | |||||||||||||||||||||||||||||||||||||||
| 2018 MYLTIP Awards(1)(3) | — | — | 2,433,918 | — | — | |||||||||||||||||||||||||||||||||||||||
| 2019 MYLTIP Awards(1)(3) | — | — | 1,349,787 | — | 417,716 | |||||||||||||||||||||||||||||||||||||||
| Total | — | — | 7,814,318 | — | 1,100,812 | |||||||||||||||||||||||||||||||||||||||
| | | |
| COMPENSATION OF EXECUTIVE OFFICERS |
| Scenario | Payments and Benefits Upon Termination | Owen D. Thomas | Douglas T. Linde | Raymond A. Ritchey(1) | Michael E. LaBelle | Bryan J. Koop | ||||||||||||||||
Qualified Retirement | Unvested Equity Awards(2)(3) | $ | — | $ | 4,901,307 | $ | 400,479 | $ | 1,742,010 | $ | 1,309,971 | |||||||||||
| 2020 MYLTIP Awards(2)(4) | $ | — | $ | 692,492 | $ | 519,217 | $ | 238,152 | $ | 167,734 | ||||||||||||
| 2021 MYLTIP Awards(2)(4) | $ | — | $ | 2,949,256 | $ | 2,300,003 | $ | 1,141,623 | $ | 932,471 | ||||||||||||
| 2022 MYLTIP Awards(2)(4) | $ | — | $ | 1,331,002 | $ | 970,984 | $ | 949,549 | $ | 328,050 | ||||||||||||
| Total | $ | — | $ | 9,874,057 | $ | 4,190,683 | $ | 4,071,334 | $ | 2,738,226 | ||||||||||||
| (1) | The above table discloses potential payments and benefits Mr. Ritchey would have been entitled to receive under the Ritchey 2002 Agreement that was in effect on December 31, 2022. If the Ritchey 2023 Agreement was in effect on December 31, 2022, he would have been entitled to the following potential payments and benefits: |
| Payments and Benefits upon Termination(a) | Involuntary Not for Cause or Good Reason Termination | Involuntary Not for Cause or Good Reason Termination Following Change in Control(5) | Change in Control Without Termination | Death or Disability | Qualified Retirement | ||||||||||||||||||||
Severance | $ | 1,650,000 | $ | 1,650,000 | $ | — | $ | 1,650,000 | $ | — | |||||||||||||||
Unvested Equity Awards | $ | 400,479 | $ | 400,479 | $ | — | $ | 400,479 | $ | 400,479 | |||||||||||||||
2020 MYLTIP Awards | $ | 519,217 | $ | 519,217 | $ | 519,217 | $ | 519,217 | $ | 519,217 | |||||||||||||||
2021 MYLTIP Awards | $ | 2,300,003 | $ | 2,300,003 | $ | 2,300,003 | $ | 2,300,003 | $ | 2,300,003 | |||||||||||||||
2022 MYLTIP Awards | $ | 970,984 | $ | 970,984 | $ | 970,984 | $ | 970,984 | $ | 970,984 | |||||||||||||||
Benefits Continuation | $ | 21,878 | $ | 21,878 | $ | — | $ | 32,818 | $ | — | |||||||||||||||
Total | $ | 5,862,561 | $ | 5,862,561 | $ | 3,790,204 | $ | 5,862,561 | $ | 4,190,683 | |||||||||||||||
| (a) | Under the Ritchey 2023 Agreement, Mr. Ritchey is not entitled to receive tax gross-up payments in the event he becomes subject to the golden parachute excise tax. Instead, if any payment or benefit to be paid or provided to Mr. Ritchey 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 tax if doing so would result in a greater after-tax benefit to Mr. Ritchey. The amounts set forth in the table above have not been adjusted to reflect any such reduction that might apply |
Restricted common stock, LTIP units and LTIP units that would have been earned pursuant to |
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., |
| • |
|
| • | Involuntary not for cause termination or a good reason termination within 24 months following a change in control and death or disability: Mr. Thomas — |
| • | Qualified Retirement: Mr. Linde — 72,526 LTIP units; Mr. Ritchey — |
As of December 31, |
| | 2023 Proxy Statement 116 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
MYLTIP awards also includes a “catch-up” cash payment on the number of LTIP units that are ultimately earned in an amount equal to the regular and special distributions declared from the first day of the applicable performance period through December 31, 2022 on an equal number of shares BXP common stock, less the distributions actually paid to holders of 2021 MYLTIP awards and 2022 MYLTIP awards on all of the awarded 2021 MYLTIP awards and 2022 MYLTIP Awards. |
Assumes termination occurs simultaneously with a change in control. |
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. |
Under his employment agreement, Mr. Thomas is not entitled to receive tax gross-up payments in the event he becomes subject to the golden parachute excise tax. Instead, if any payment or benefit to be paid or provided to Mr. Thomas would |
|
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 a non-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 the non-qualified deferred compensation plan (see “— Nonqualified Deferred Compensation in 2022” for the plan balances of each NEO under the non-qualified deferred compensation plan); and |
| • | life insurance proceeds in the event of death. |
life insurance proceeds in the event of death.
As required by 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 2019,2022, our last completed fiscal year:
the median of the annual total compensation of all employees of the Company (other than our CEO) was $115,266;
| • | the median of the annual total compensation of all employees of the Company (other than our CEO) was $127,081; and
|
|
|
|
Based on this information, for 2019,2022, the ratio of the annual total compensation of Mr. Thomas to the median of the annual total compensation of all other employees was 103 102.7 to 1.1.
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 20172022 and (2) the value of LTI equity awards that were granted in 20172022 and subject to time-based vesting, for all individuals, excluding our CEO, who we employed on December 31, 20172022 (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 20172022 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.
| | 2023 Proxy Statement 117 |
| 8› | COMPENSATION OF EXECUTIVE OFFICERS |
We calculated annual total compensation for 20192022 for the median employee using the same methodology we use for our NEOs as set forth in the Summary Compensation Table.
As of December 31, 2019, our employee population consisted of2022, we employed 769 individualsfull-time and 11 part-time employees, all of whom are located in the United States. This population consisted of 757 full-time and 12 part-time employees. The average tenure of our employee population was 10.19.5 years. The average tenure of our officers and non-officers was 18.017.6 years and 9.18.3 years, respectively. Our employees are organized into the following functions:
Function | Number of Employees | |||
Accounting | ||||
Accounting Operations | ||||
Administrative | ||||
Construction | ||||
Development | ||||
Executive Management | ||||
Finance & Capital Markets | ||||
Human Resources | ||||
Function | Number of Employees | |||
Information Systems | ||||
Internal Audit | ||||
Leasing | ||||
Legal & Risk Management | ||||
Marketing | ||||
Property Management | ||||
| 3 | |||
SEC regulations 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.
The Compensation Committee of Boston Properties has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation 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.
Submitted by the Compensation Committee:
Bruce W. Duncan, Chair
Kelly A. Ayotte
Carol B. Einiger
David A. Twardock
|
| | | |
8 › | COMPENSATION OF EXECUTIVE OFFICERS |
Value of Initial Fixed $100 Investment Based On: (3) | ||||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total for CEO (1) (2) | Compensation Actually Paid to CEO (3) | Average Summary Compensation Table Total for Other NEOs (1)(2) | Average Compensation Actually Paid to Other NEOs (3) | BXP Total Stockholder Return | Peer Group Total Stockholder Return (4) | Net Income (in millions) (5) | FFO Per Share (6) | ||||||||||||||||||||||||
| 2022 | $ | 13,050,788 | $ | 2,646,769 | $ | 5,794,249 | $ | 2,530,706 | $ | 55.54 | $ | 62.07 | $ | 848.9 | $ | 7.53 | ||||||||||||||||
| 2021 | $ | 12,894,537 | $ | 19,747,684 | $ | 6,017,281 | $ | 8,297,877 | $ | 90.43 | $ | 99.51 | $ | 496.2 | $ | 6.56 | ||||||||||||||||
| 2020 | $ | 10,737,289 | $ | (220,724 | ) | $ | 4,677,157 | $ | 1,126,865 | $ | 71.65 | $ | 81.56 | $ | 862.2 | $ | 6.29 | |||||||||||||||
| (1) | For all periods presented, our CEO is Owen D. Thomas and our Other NEOs are Douglas T. Linde, Raymond A. Ritchey, Michael E. LaBelle and Bryan J. Koop. |
| (2) | The amounts in this column reflect the “Total” compensation set forth in the Summary Compensation Table (“SCT”) on page 99 of this proxy statement for our CEO and Other NEOs. See the footnotes to the SCT for further detail regarding the amounts in this column. |
| (3) | In accordance with SEC rules, CAP is computed by replacing the amounts in the “Stock Awards” column of the SCT from the “Summary Compensation Table Total” column in this table with the amounts in the “Equity Award Adjustments” column in the table below, which includes the following amounts: (i) the fair value of as of the last day of the applicable year of unvested LTI equity awards that were granted during such year, (ii) as of the applicable vesting date, the fair value of LTI equity awards granted in the applicable year that vested during such year, (iii) as of the last day of the applicable year, the change in fair value of unvested LTI equity awards granted in prior years that remain unvested as of the last day of the applicable year compared to the last day of the previous year, (iv) as of the applicable vesting date, the change in fair value of LTI equity awards that vested during the applicable year compared to the last day of the previous year and (v) the value of dividends paid in cash on unvested LTI equity awards during the applicable year. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our CEO or Other NEOs during the applicable year. In accordance with Item 402(v) of Regulation S-K, CAP for our CEO and Average Cap for our Other NEOs was computed as follows: |
| | 2023 Proxy Statement 119 |
8 › | COMPENSATION OF EXECUTIVE OFFICERS |
Year | Summary Compensation Table Total | Grant Date Value of Equity Awards Reported in the Summary Compensation Table Total | Equity Award Adjustments (a) | Compensation Actually Paid | ||||||||||||
CEO | ||||||||||||||||
| 2022 | $ | 13,050,788 | $ | (9,157,428 | ) | $ | (1,246,591 | ) | $ | 2,646,769 | ||||||
| 2021 | $ | 12,894,537 | $ | (8,745,377 | ) | $ | 15,598,524 | $ | 19,747,684 | |||||||
| 2020 | $ | 10,737,289 | $ | (8,644,379 | ) | $ | (2,313,634 | ) | $ | (220,724 | ) | |||||
Average for Other NEOs | ||||||||||||||||
| 2022 | $ | 5,794,249 | $ | (3,319,148 | ) | $ | 55,605 | $ | 2,530,706 | |||||||
| 2021 | $ | 6,017,281 | $ | (3,329,155 | ) | $ | 5,609,751 | $ | 8,297,877 | |||||||
| 2020 | $ | 4,677,157 | $ | (3,137,755 | ) | $ | (412,537 | ) | $ | 1,126,865 | ||||||
| (a) | The amounts in this column are further detailed below. |
Year | Fair Value of Equity Awards Granted in the Applicable Year (i)(ii) | Change in Value of Prior Years’ Awards Unvested at Applicable Year End (i) | Change in Value of Prior Years’ Awards that Vested in the Applicable Year (ii) | Dividends Paid on Unvested Equity Awards During the Applicable Year | Total Equity Award Adjustments | |||||||||||||||
CEO | ||||||||||||||||||||
| 2022 | $ | 5,183,625 | $ | (7,437,052 | ) | $ | 642,971 | $ | 363,865 | $ | (1,246,591 | ) | ||||||||
| 2021 | $ | 13,972,914 | $ | 1,493,773 | $ | (206,106 | ) | $ | 337,943 | $ | 15,598,524 | |||||||||
| 2020 | $ | 4,950,613 | $ | (7,796,208 | ) | $ | 251,319 | $ | 280,642 | $ | (2,313,634 | ) | ||||||||
Average for Other NEOs | ||||||||||||||||||||
| 2022 | $ | 2,148,528 | $ | (2,412,962 | ) | $ | 203,632 | $ | 116,407 | $ | 55,605 | |||||||||
| 2021 | $ | 5,185,663 | $ | 427,396 | $ | (95,399 | ) | $ | 92,091 | $ | 5,609,751 | |||||||||
| 2020 | $ | 2,020,765 | $ | (2,568,567 | ) | $ | 58,798 | $ | 76,467 | $ | (412,537 | ) | ||||||||
| (i) | The fair values of time-based LTI equity awards are based on the closing price of BXP common stock as reported on the NYSE on the relevant valuation date. Performance-based LTI equity awards were valued on the relevant valuation date using a Monte Carlo simulation model in accordance with the provisions of ASC Topic 718. |
| (ii) | Includes the fair value of (x) LTI equity awards granted during the applicable year that remain unvested as of the end of the applicable year and (y) LTI equity awards granted during the applicable year that vested during the applicable year. |
| (3) | The calculations of TSR assume an investment of $100 in each of BXP and the FTSE Nareit Office REIT Index (the “Office REIT Index”) on December 31, 2019, and the reinvestment of dividends. The historical TSR information is not necessarily indicative of future performance. The data shown is based on the stock prices or index values, as applicable, at the end of each year shown. |
| (4) | The Office REIT Index includes all office REITs included in the FTSE Nareit Equity REIT Total Return Index (the “Equity REIT Index”). The Equity REIT Index includes all tax-qualified equity REITs listed on the New York Stock Exchange, the American Stock Exchange and the Nasdaq Stock Market. Equity REITs are defined as those with 75% or more of their gross invested book value of assets invested directly or indirectly in the equity ownership of real estate. |
| (5) | Represents net income attributable to Boston Properties, Inc. common shareholders. |
| (6) | Represents diluted Funds From Operations (“FFO”) per share. For 2021, FFO is adjusted for certain transactions in accordance with the terms of the 2021 Annual Incentive Plan. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
| | 2023 Proxy Statement 120 |
8 › | COMPENSATION OF EXECUTIVE OFFICERS |
| | 2023 Proxy Statement 121 |
8 › | COMPENSATION OF EXECUTIVE OFFICERS |
| | 2023 Proxy Statement 122 |
8 › | COMPENSATION OF EXECUTIVE OFFICERS |
| (1) | For 2021, FFO is adjusted for certain transactions in accordance with the terms of the 2021 Annual Incentive Plan. For disclosures required by Regulation G, refer to Appendix A to this proxy statement. |
Performance Measures |
| Diluted FFO Per Share |
| Leasing |
| TSR |
| Relative TSR |
| Same Property NOI |
| Development Activities |
| ESG |
| | 2023 Proxy Statement 123 |
| 9› | PROPOSAL 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION |
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
Section 14A(a)(1) of the Exchange Act generally requires each public company to include in its proxy statement a separate resolution subject to a non-binding stockholder vote to approve the compensation of the Company’s NEOs, as disclosed in its proxy statement pursuant to Item 402 of Regulation S-K, not less frequently than once every three years. This is commonly known as a “Say-on-Pay”“Say-on-Pay” proposal or resolution.
At our 2011 and 2017 annual meetingmeetings of stockholders, our stockholders voted on among other matters, a proposal regarding the frequency of holding a non-binding, advisory vote on the compensation of our NEOs. More than 85% of the votes cast on the frequency proposal in both years were cast in favor of holding a non-binding, advisory vote on the compensation of the Company’s NEOs 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 forcaused the Company to hold a non-binding, advisory vote on the compensation of the Company’s NEOs every year until thesince 2011. The next required advisory vote on the frequency of holding the non-binding, advisory vote on the compensation of our NEOs which will occur not later thanat the 2023 annual meeting of stockholders. See “Proposal 3: Frequency of Named Executive Officer Compensation.”
Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the 20202023 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 Regulation S-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,BXP, our Board of 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 accountwill consider the results of the vote when considering future compensation decisions for our NEOs.
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. 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.
 |
| |
The Board of Directors unanimously recommends a vote “FOR” the approval of the compensation
| ||
| | | |
|
| PROPOSAL 3: FREQUENCY OF ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION |
PROPOSAL 3:
FREQUENCY OF ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
PROPOSAL
Section 14A(a)(2) of the Exchange Act requires us to submit a non-binding, advisory proposal to stockholders not less frequently than every six years asking them to vote on whether advisory “Say-on-Pay” votes on named executive officer compensation, such as Proposal 2 of this proxy statement, should be held every one, two or three years.
Our Board has determined that, of the three alternatives, an advisory vote on NEO compensation that occurs every year is the most appropriate alternative for BXP, and therefore our Board recommends that you vote for a one-year interval for the advisory vote on executive compensation. Annual advisory votes will provide us with direct input on the compensation philosophy, policies and practices as disclosed in the proxy statement every year, and holding annual votes is consistent with our general policy of seeking input from, and engaging in discussions with, our investors on executive compensation and corporate governance matters. Holding annual advisory votes is also consistent with the frequency that was approved at each of our 2011 and 2017 annual meetings of stockholders, and it is the policy that we have followed since 2011. Accordingly, the administrative process of submitting a non-binding, advisory say-on-pay proposal to stockholders on an annual basis is not expected to impose substantial additional costs.
On this proposal, stockholders may vote for one of the following alternatives:
| • | every year (box “1 Year” on the proxy card), |
| • | every two years (box “2 Years” on the proxy card), |
| • | every three years (box “3 Years” on the proxy card), or |
| • | abstain. |
By selecting one of these alternatives, stockholders are voting to approve the alternative voted for (or abstain from this vote), and they are not voting to approve or disapprove of our recommendation. The vote on this proposal is advisory, and therefore not binding on BXP or our Board of Directors. Our Board of Directors currently intends for BXP to hold a “Say-on-Pay” vote every year. However, our Board values the opinions of our stockholders and intends to consider the results of this vote when determining how frequently to submit advisory votes on NEO compensation to our stockholders in the future. We understand that our stockholders may have different views as to what is the best approach for BXP, and we look forward to reviewing the voting results on this proposal.
| Recommendation of the Board | |
The Board of Directors unanimously recommends a vote for a frequency of EVERY YEAR(BOX “1 YEAR” |
VOTE REQUIRED
In order for any of the three alternatives regarding the frequency of future advisory votes on NEO compensation to be approved, it must receive 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. Because there are three alternatives, it is possible that none of the three alternatives will be approved. However, stockholders will still be able to communicate their preference with respect to this advisory vote by choosing from among these three alternatives even if none of the alternatives is approved. 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. 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.
| | 2023 Proxy Statement 125 |
| 11› | PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2020.2023. 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 PropertiesBXP and its stockholders.
Although ratification by stockholders is not required by law or by our By-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 changedoing so would be in the best interests of Boston PropertiesBXP 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.
We expect that a representative of PricewaterhouseCoopers LLP will attend the 2023 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.
| Recommendation of the Board | |
The Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment |
| | 2023 Proxy Statement 126 |
| 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 (“PwC”). Aggregate fees for professional services rendered by PwC for the years ended December 31, 2021 and 2022 were as follows:
| 2022 | 2021 | |||||||
Audit Fees | ||||||||
Recurring audit, quarterly reviews and accounting assistance for new accounting standards and potential transactions | $ | 2,688,026 | $ | 2,519,781 | ||||
Comfort letters, consents and assistance with documents filed with the SEC and securities offerings | 180,000 | 200,000 | ||||||
Subtotal | 2,868,026 | 2,719,781 | ||||||
Audit-Related Fees | ||||||||
Audits required by lenders, joint ventures, tenants and other attestation reports | 511,772 | 386,648 | ||||||
Tax Fees | ||||||||
Recurring tax compliance and REIT and other compliance matters | 360,524 | 474,511 | ||||||
Tax planning and research | 28,570 | 53,445 | ||||||
State and local tax examinations | 425 | 4,360 | ||||||
Subtotal | 389,519 | 532,316 | ||||||
All Other Fees | ||||||||
Software licensing fee | 4,206 | 4,206 | ||||||
Total | $ | 3,773,523 | $ | 3,642,951 | ||||
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
SEC rules require the Audit Committee to pre-approve all audit and non-audit services provided by our independent registered public accounting firm. In this regard, our Audit Committee adopted a policy concerning the pre-approval of these services to be provided by PwC, our independent registered public accounting firm. The policy requires that all services provided by PwC to us, including audit, audit-related, tax and other services, must be pre-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, specific pre-approval is required. The Audit Committee has delegated authority to the Chair of the Audit Committee to pre-approve additional services, and any such pre-approvals must then be communicated to the full Audit Committee.
The Audit Committee approved all audit and non-audit services provided to us by PwC during the 2021 and 2022 fiscal years, and none of the services described above were approved pursuant to Rule 2-01(c)(7)(i)(c) of Regulation S-X, which relates to circumstances where the Audit Committee pre-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 PwC. 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. 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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| PROPOSAL |
FEES TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the audit fee negotiations associated with the retention of PricewaterhouseCoopers LLP (“PwC”). Aggregate fees for professional services rendered by PwC for the years ended December 31, 2019 and 2018 were as follows:
| 2019 | 2018 | |||||||
Audit Fees | ||||||||
Recurring audit, quarterly reviews and accounting assistance for new accounting standards and potential transactions | $ | 2,681,649 | $ | 2,711,004 | ||||
Comfort letters, consents and assistance with documents filed with the SEC and securities offerings | 168,644 | 115,107 | ||||||
Subtotal | 2,850,293 | 2,826,111 | ||||||
Audit-Related Fees | ||||||||
Audits required by lenders, joint ventures, tenants and other attestation reports | 447,575 | 420,350 | ||||||
Tax Fees | ||||||||
Recurring tax compliance and REIT and other compliance matters | 444,241 | 420,084 | ||||||
Tax planning and research | 55,999 | 84,595 | ||||||
State and local tax examinations | 28,307 | 28,447 | ||||||
Subtotal | 528,547 | 533,126 | ||||||
All Other Fees | ||||||||
Software licensing fee | 2,756 | 2,700 | ||||||
Total | $ | 3,829,171 | $ | 3,782,287 | ||||
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
The Audit Committee has approved a policy concerning the pre-approval of audit and non-audit services to be provided by PwC, our independent registered public accounting firm. The policy requires that all services provided by PwC to us, including audit services, audit-related services, tax services and other services, must be pre-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, specific pre-approval is required. The Audit Committee has delegated authority to the Chair of the Audit Committee to pre-approve additional services, and any such pre-approvals must then be communicated to the full Audit Committee.
The Audit Committee approved all audit and non-audit services provided to us by PwC during the 2019 and 2018 fiscal years and none of the services described above were approved pursuant to Rule 2-01(c)(7)(i)(c) of Regulation S-X, which relates to circumstances where the Audit Committee pre-approval requirement is waived.
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The members of the Audit Committee of the Board of Directors of Boston Properties, Inc. submit this report in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 20192022 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, |
| 2. | The Audit Committee has discussed with representatives of PwC the matters required to be discussed with the Audit Committee by the applicable requirements of the Public Company Accounting Oversight 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 Form 10-K for the fiscal year ended December 31, 20192022 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 onin the Investors section of our website athttp:https://www.bxp.cominvestors.bxp.com/ under the heading “Corporate Governance.“Governance.”
Submitted by the Audit Committee:
David A. Twardock, Chair
KarenBruce W. Duncan
Mary E. Dykstra
William H. Walton, IIIKipp
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| 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 and approval of any related person transaction. This written policy provides that all related person transactions must be reviewed and approved by a majority of the independent directors of 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 enters into a transaction without recognizing that such transaction constitutes a related person transaction, the approval requirement will be satisfied if such transaction is promptly reviewed, approved and ratified by a majority of the independent directors of our Board of Directors. If any related person transaction is not approved or ratified by a majority of the independent directors of our Board, then to the extent permitted under applicable law, management shall use all reasonable efforts to amend, cancel or rescind the transaction. In addition, any related person transaction previously approved by a majority of the independent directors of our Board or otherwise already existing that is ongoing in nature shall be reviewed by a majority of the independent directors of our Board annually to ensure that such related person transaction has been conducted in accordance with the previous approval granted by such independent directors, if any, and remains appropriate.
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 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. For purposes of determining whether 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 immaterial (or would be deemed immaterial 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.
We lease approximately 2,700 square feet of office space to a start-up company of which Mr. Klein, a member of our Board, is the Chief Executive Officer. The start-up company made aggregate payments to the Company of approximately $584,755 and $44,000 during the years ended 2022 and 2021, respectively. Of the amount paid by the start-up company in 2022, approximately $264,000 represented aggregate monthly rental payments while the remainder represented payments for assistance with tenant fit-out work that the start-up company requested. The Company does not expect the fit-out services or payments to recur. The total amount due under the lease in 2023 is approximately $220,000.
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. Since January 1, 2022, the Company has paid this real estate firm approximately $1,930,681. The Company terminated its contract with this real estate firm and expects to pay decreased leasing commissions in 2023. Mr. Ritchey is the Senior Executive Vice President of BXP. The Company believes the terms of the related agreements are comparable to 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 14, 2023, 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 26, 2023, BlackRock is the beneficial owner of more than 5% of our common stock. Since January 1, 2022, BlackRock paid the Company approximately $1,652,497 in lease payments.
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| 12› | OTHER MATTERS |
STOCKHOLDER NOMINATIONS FOR DIRECTOR AND PROPOSALS FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS
› STOCKHOLDER PROPOSALS SUBMITTED FOR INCLUSION IN OUR PROXY STATEMENT
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in BXP’s proxy statement and form of proxy for its 2024 annual meeting of stockholders must be received by BXP on or before December 15, 2023 in order to be considered for inclusion. The proposals must also comply with the requirements as to form and substantive requirements established by the SEC if they are to be included in the proxy statement and form of proxy. Additionally, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act. Any such proposals should be mailed to: Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103, Attn.: Secretary.
› PROXY ACCESS DIRECTOR NOMINATIONS FOR INCLUSION IN OUR PROXY STATEMENT
In order for an eligible stockholder or group of stockholders to nominate a director candidate for election at Boston Properties’ 2024 annual meeting pursuant to the proxy access provision of our By-laws, notice of the nomination and other required information must be received by BXP on or before December 15, 2023, unless our 2024 annual meeting of stockholders is scheduled to take place before April 23, 2024 or after July 22, 2024. Our By-laws state that such notice and other required information must be received by BXP 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 180th day prior to the scheduled date of such annual meeting or (2) the 15th day following the day on which public announcement of the date of such annual meeting is first made.
In addition, our By-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 NOMINATIONS
Stockholder proposals and nominations of directors to be presented at BXP’s 2024 annual meeting, other than stockholder nominations submitted pursuant to Exchange Act Rule 14a-19, stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in BXP’s proxy statement and form of proxy for our 2024 annual meeting or stockholder proposals submitted pursuant to the proxy access provision of our By-laws, must be received in writing at our principal executive office not earlier than January 24, 2024, nor later than March 9, 2024, unless our 2024 annual meeting of stockholders is scheduled to take place before April 23, 2024 or after July 22, 2024. Our By-laws state that the stockholder must provide (1) timely written notice of such proposal or nomination and supporting documentation and (2) be present at such meeting, either in person or by a representative. A stockholder’s notice shall be timely received by BXP at its principal executive office not less than 75 days nor more than 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 30 days before the annual meeting anniversary date or more than 60 days after the annual meeting anniversary date, a stockholder’s notice shall be timely if received by BXP at its principal executive office not later than the close of business on the later of (1) the 75th day prior to the scheduled date of such annual meeting or (2) the
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| 12› | OTHER MATTERS |
15th day following the day on which public announcement of the date of such annual meeting is first made by BXP. 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.
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| 13› | INFORMATION ABOUT THE ANNUAL MEETING |
INFORMATION ABOUT THE ANNUAL MEETING
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
In orderAs permitted by SEC rules, to both save money and help conserve natural resources, we are making this proxy statement and our 20192022 Annual Report, including a copy of our annual report on Form 10-K and financial statements for the year ended December 31, 2019,2022, 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.them. On or about April 3, 2020,13, 2023, 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 3, 2020,13, 2023, 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 suchthe materials included in the Notice. Our 20192022 annual report is not part of the proxy solicitation material.
At the 2023 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 officerNEO compensation, an advisory vote on the frequency of holding an advisory vote on NEO compensation and the ratification of the appointment of our independent registered public accounting firm.
PRESENTATION OF OTHER MATTERS AT THE ANNUAL MEETING
We are not currently aware of any other matters to be presented at the 20202023 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.
If you were a stockholder of record as of the close of business on March 25, 2020, which is referred to in this proxy statement as the “record date,”29, 2023, you are entitled to receive notice of the 2023 annual meeting and to vote the shares of BXP common stock 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 as 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 suchthose securities on any of the matters presented at the 20202023 annual meeting.
All stockholders of record of shares of BXP common stock of Boston Properties, Inc. at the close of business on the record date, or their designated proxies, are authorized to attend the 2023 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 broker, 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 ownership. If you do not have proof of ownership, you may not be admitted
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| 13› | INFORMATION ABOUT THE ANNUAL MEETING |
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 2023 annual meeting on our website athttp:https://www.bxp.com/proxy.investors.bxp.com/proxy-materials.
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The presence, in person 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 155,309,004156,829,793 shares of common stock outstanding and entitled to vote at the 2023 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 “broker non-votes” (i.e., shares represented at the meeting held by brokers, banks or other nominees, as to which the proxy has been properly executed but 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.
›VOTING IN PERSON AT THEANNUAL MEETING
If you are a stockholder of record and attend the annual meeting you may vote your shares of BXP common stock in person at the meeting. If you hold your shares of BXP common stock are held in street name and you wish to vote in person at the meeting, you will need to obtain a “legal proxy” from the broker, bank or other nominee that holds your shares of common stock of record.to attend, participate in and vote at the annual meeting.
›VOTING SHARES REGISTERED DIRECTLY IN THE NAME OF THE STOCKHOLDER OR HELD IN SOLIUM 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 19, 2020. 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 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 22, 2023. 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 22, 2023. 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. | |
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| 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 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
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. Pursuant to the NYSE rules, if you do not give instructions to your broker, bank or other nominee, it will still be able to vote your shares with respect to certain “discretionary” items, but will not be allowed to vote your shares with respect to certain “non-discretionary” items. The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm (proposal 4) is considered to be a discretionary item under the NYSE rules and your broker, bank or other nominee will be able to vote on that item even if it does not receive instructions from you. The election of directors (proposal 1), the non-binding, advisory vote on NEO compensation (proposal 2) and the frequency of the vote for the non-binding advisory vote on NEO compensation (proposal 3) are considered non-discretionary items. If you do not instruct your broker, bank or other nominee how to vote your shares with respect to these non-discretionary items, it may not vote with respect to these proposals and those votes will be counted as broker non-votes. We strongly encourage you to submit your proxy with instructions and exercise your right to vote as a stockholder.
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;
| • | 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
| • | submitting a new proxy by telephone, Internet or proxy card after the time and date of the previously submitted proxy; or |
appearing in person and voting by ballot at the annual meeting.
| • | attending the annual meeting and voting by ballot at the annual meeting. |
If you are a stockholder of record as of the record date attending the annual meeting, you may vote in person whether or not a proxy has been previously given, but your presence (without further action) at the annual meeting will not constitute revocation of a previously given proxy.
ACCESSING BOSTON PROPERTIES’BXP’S PROXY MATERIALS ELECTRONICALLY
This proxy statement and our 20192022 annual report are available athttp:https://www.bxp.com/proxy.investors.bxp.com/proxy-materials. 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 visitinghttp:https://www.bxp.com/proxyinvestors.bxp.com/proxy-materials.
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| 13› | INFORMATION ABOUT THE ANNUAL MEETING |
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.
If you wish to request extra copies free of charge of our 2022 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.bxp.com.
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TheWe will bear the cost of solicitation of proxies will be borne by Boston Properties.proxies. 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.our employees. We also may reimburse brokers, banks, nominees and other fiduciaries for postage and reasonable clerical expenses of forwarding the proxy materialmaterials to their principals who are beneficial owners of shares of our common stock. In addition, we retained MacKenzie Partners, Inc., a proxy solicitation firm, has been engaged by Boston Properties to act as proxy solicitor and will receiveon our behalf. We agreed to pay Mackenzie Partners a fee of $7,500 plus reimbursement of its reasonableout-of-pocket expenses.
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APPENDIX A
Disclosures Relating to Non-GAAP Financial Measures
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
The BoardReconciliation 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 obligationNet Income Attributable 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 9.
Since January 1, 2019, the Company has paid a firm controlled by Mr. Raymond A. Ritchey’s brother aggregate leasing commissions of approximately $21,000. 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 2020, 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 February 11, 2020, 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.
STOCKHOLDER NOMINATIONS FOR DIRECTOR AND PROPOSALS FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS
› STOCKHOLDER PROPOSALS SUBMITTED FOR INCLUSION IN OUR PROXY STATEMENT
Any stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in Boston Properties’ proxy statement and form of proxy for its 2021 annual meeting of stockholders must be received by Boston Properties on or before December 4, 2020 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, Common Shareholders to Funds From Operations (FFO) attributable to Boston Massachusetts 02199-8103, Attn.: Secretary.Properties, Inc. common shareholder
| For the year ended December 31, | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| (unaudited and in thousands, except per share amounts) | ||||||||||||
Net income attributable to Boston Properties, Inc. common shareholders | $ | 848,947 | $ | 496,223 | $ | 862,227 | ||||||
Add: | ||||||||||||
Preferred stock redemption charge | — | 6,412 | — | |||||||||
Preferred dividends | — | 2,560 | 10,500 | |||||||||
Noncontrolling interest—common units of the Operating Partnership | 96,780 | 55,931 | 97,704 | |||||||||
Noncontrolling interests in property partnerships | 74,857 | 70,806 | 48,260 | |||||||||
Net income | 1,020,584 | 631,932 | 1,018,691 | |||||||||
Add: | ||||||||||||
Depreciation and amortization | 749,775 | 717,336 | 683,751 | |||||||||
Noncontrolling interests in property partnerships’ share of depreciation and amortization | (70,208 | ) | (67,825 | ) | (71,850 | ) | ||||||
BXP’s share of depreciation and amortization from unconsolidated joint ventures | 89,275 | 71,966 | 80,925 | |||||||||
Corporate-related depreciation and amortization | (1,679 | ) | (1,753 | ) | (1,840 | ) | ||||||
Impairment loss on investment in unconsolidated joint venture (1) | 50,705 | — | 60,524 | |||||||||
Less: | ||||||||||||
Gain on sale of real estate included within (loss) income from unconsolidated joint ventures(2) | — | 10,257 | 5,958 | |||||||||
Gains on sales of real estate | 437,019 | 123,660 | 618,982 | |||||||||
Gain on sales-type lease | 10,058 | — | — | |||||||||
Unrealized loss on non-real estate investment | (150 | ) | — | — | ||||||||
Noncontrolling interests in property partnerships | 74,857 | 70,806 | 48,260 | |||||||||
Preferred dividends | — | 2,560 | 10,500 | |||||||||
Preferred stock redemption charge | — | 6,412 | — | |||||||||
Funds from Operations (FFO) attributable to the Operating Partnership common unitholders (including Boston Properties, Inc.) | 1,316,668 | 1,137,961 | 1,086,501 | |||||||||
Less: | ||||||||||||
Noncontrolling interest—common units of the Operating Partnership’s share of funds from operations | 133,115 | 111,975 | 108,310 | |||||||||
Funds from Operations attributable to Boston Properties, Inc. common shareholders | $ | 1,183,553 | $ | 1,025,986 | $ | 978,191 | ||||||
| | |
| For the year ended December 31, | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| (unaudited and in thousands, except per share amounts) | ||||||||||||
Boston Properties, Inc.’s percentage share of Funds from Operations—basic | 89.89 | % | 90.16 | % | 90.03 | % | ||||||
Weighted average shares outstanding—basic | 156,726 | 156,116 | 155,432 | |||||||||
FFO per share basic | $ | 7.55 | $ | 6.57 | $ | 6.29 | ||||||
Weighted average shares outstanding—diluted | 157,137 | 156,376 | 155,517 | |||||||||
FFO per share diluted | $ | 7.53 | $ | 6.56 | $ | 6.29 | ||||||
| (1) |
|
| (2) | ||
Consists of the portion of income from unconsolidated joint ventures related to the gain on sale of real estate associated with the sale of our ownership interest in the joint venture that owned Annapolis Junction Buildings Six and Seven for the year ended December 31, 2021 and Annapolis Junction Building Eight and two land parcels for the year ended December 31, 2020. |
› PROXY ACCESS DIRECTOR NOMINATIONS FOR INCLUSION IN OUR PROXY STATEMENT
In order for an eligible stockholder or group of stockholders to nominate a director nominee for election at Boston Properties’ 2021 annual meeting pursuant to the proxy access provision of our By-laws, notice of such nomination and other required information must be received by Boston Properties on or before December 4, 2020 unless our 2021 annual meeting of stockholders is scheduled to take place before April 20, 2021 or after July 19, 2021. Our By-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 180th day prior to the scheduled date of such annual meeting or (2) the 15th day following the day on which public announcement of the date of such annual meeting is first made.
In addition, our By-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 NOMINATIONS
Stockholder proposals and nominations of directors to be presented at Boston Properties’ 2021 annual meeting, other than stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for inclusion in Boston Properties’ proxy statement and form of proxy for our 2021 annual meeting or submitted pursuant to the proxy access provision of our By-laws, must be received in writing at our principal executive office not earlier than January 20, 2021, nor later than March 6, 2021, unless our 2021 annual meeting of stockholders is scheduled to take place before April 20, 2021 or after July 19, 2021. Our By-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) days nor more than one hundred twenty (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) days before the annual meeting anniversary date or more than sixty (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) day prior to the scheduled date of such annual meeting or (2) the fifteenth (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.
| | | |
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, | For the year ended December 31, | |||||||||||||||
| 2019 | 2018 | 2022 | 2021 | |||||||||||||
| (unaudited and in thousands) | (unaudited and in thousands) | |||||||||||||||
Net Income Attributable to Boston Properties, Inc. Common Shareholders | $ | 511,034 | $ | 572,347 | ||||||||||||
Net income attributable to Boston Properties, Inc. common shareholders | $ | 848,947 | $ | 496,223 | ||||||||||||
Add: | ||||||||||||||||
Preferred stock redemption charge | — | 6,412 | ||||||||||||||
Preferred dividends | 10,500 | 10,500 | — | 2,560 | ||||||||||||
|
| |||||||||||||||
Net Income Attributable to Boston Properties, Inc. | 521,534 | 582,847 | ||||||||||||||
Net Income Attributable to Noncontrolling Interests: | ||||||||||||||||
Noncontrolling interest — common units of the Operating Partnership | 59,345 | 66,807 | ||||||||||||||
Noncontrolling interest—common units of the Operating Partnership | 96,780 | 55,931 | ||||||||||||||
Noncontrolling interests in property partnerships | 71,120 | 62,909 | 74,857 | 70,806 | ||||||||||||
|
| |||||||||||||||
Net Income | 651,999 | 712,563 | ||||||||||||||
Add: | ||||||||||||||||
Interest expense | 412,717 | 378,168 | 437,139 | 423,346 | ||||||||||||
Losses from early extinguishments of debt | 29,540 | 16,490 | ||||||||||||||
Impairment losses | 24,038 | 11,812 | ||||||||||||||
Depreciation and amortization | 677,764 | 645,649 | ||||||||||||||
Losses from early extinguishment of debt | — | 45,182 | ||||||||||||||
Unrealized loss on non-real estate investment | 150 | — | ||||||||||||||
Loss from unconsolidated joint ventures | 59,840 | 2,570 | ||||||||||||||
Depreciation and amortization expense | 749,775 | 717,336 | ||||||||||||||
Transaction costs | 1,984 | 1,604 | 2,905 | 5,036 | ||||||||||||
Payroll and related costs from management services contracts | 10,386 | 9,590 | 15,450 | 12,487 | ||||||||||||
General and administrative expense | 140,777 | 121,722 | 146,378 | 151,573 | ||||||||||||
Less: | ||||||||||||||||
Gains (losses) from investments in securities | 6,417 | (1,865 | ) | (6,453 | ) | 5,626 | ||||||||||
Interest and other income | 18,939 | 10,823 | ||||||||||||||
Other income—assignment fee | 6,624 | — | ||||||||||||||
Interest and other income (loss) | 11,940 | 5,704 | ||||||||||||||
Gain on sales-type lease | 10,058 | — | ||||||||||||||
Gains on sales of real estate | 709 | 182,356 | 437,019 | 123,660 | ||||||||||||
Income from unconsolidated joint ventures | 46,592 | 2,222 | ||||||||||||||
Direct reimbursements of payroll and related costs from management services contracts | 10,386 | 9,590 | 15,450 | 12,487 | ||||||||||||
Development and management services | 40,039 | 45,158 | ||||||||||||||
|
| |||||||||||||||
Net Operating Income (NOI) | 1,826,123 | 1,649,314 | ||||||||||||||
Development and management services revenue | 28,056 | 27,697 | ||||||||||||||
Net Operating (NOI) | 1,929,527 | 1,814,288 | ||||||||||||||
Less: | ||||||||||||||||
Termination income | 15,203 | 8,205 | 7,704 | 11,482 | ||||||||||||
NOI from non Same Properties (excluding termination income) | 113,538 | 45,591 | 145,944 | 82,605 | ||||||||||||
|
| |||||||||||||||
Same Property NOI (excluding termination income) | 1,697,382 | 1,595,518 | 1,775,879 | 1,720,201 | ||||||||||||
Less: | ||||||||||||||||
Partners’ share of NOI from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders and priority allocations)(1) | 183,880 | 177,278 | ||||||||||||||
Partners’ share of NOI from consolidated joint ventures (excluding termination income and after priority allocations)(1) | 190,687 | 186,307 | ||||||||||||||
BXP’s share of NOI from non Same Properties from unconsolidated joint ventures (excluding termination income) | 33,893 | 19,858 | 41,867 | 12,679 | ||||||||||||
Add: | ||||||||||||||||
Partners’ share of NOI from non Same Properties from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders and priority allocations) | 1,240 | 777 | ||||||||||||||
BXP’s share of NOI from unconsolidated joint ventures (excluding termination income)(2) | 97,630 | 79,588 | ||||||||||||||
|
| |||||||||||||||
BXP’s Share of Same Property NOI (excluding termination income) | $ | 1,578,479 | $ | 1,478,747 | ||||||||||||
|
| |||||||||||||||
| | 2023 Proxy Statement A-3 |
| For the year ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (unaudited and in thousands) | ||||||||
Add: | ||||||||
Partners’ share of NOI from non Same Properties from consolidated joint ventures (excluding termination income and after priority allocations) | 6,859 | 5,441 | ||||||
BXP’s share of NOI from unconsolidated joint ventures (excluding termination income) (2) | 144,173 | 106,975 | ||||||
BXP’s Share of Same Property NOI (excluding termination income) | $ | 1,694,357 | $ | 1,633,631 | ||||
| (1) | See “Consolidated Joint Ventures” in this Appendix for additional details. |
| (2) | See “Unconsolidated Joint Ventures” in this Appendix for additional details. |
| | |
|
Reconciliation of Net Income Attributable to Boston Properties, Inc. Common Shareholders to BXP’s Share of Same Property Net Operating Income (NOI) —NOI – Cash (excluding termination income)
| For the year ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| (unaudited and in thousands) | ||||||||
Net Income Attributable to Boston Properties, Inc. Common Shareholders | $ | 511,034 | $ | 572,347 | ||||
Preferred dividends | 10,500 | 10,500 | ||||||
|
|
|
| |||||
Net Income Attributable to Boston Properties, Inc. | 521,534 | 582,847 | ||||||
Net Income Attributable to Noncontrolling Interests: | ||||||||
Noncontrolling interest — common units of the Operating Partnership | 59,345 | 66,807 | ||||||
Noncontrolling interests in property partnerships | 71,120 | 62,909 | ||||||
|
|
|
| |||||
Net Income | 651,999 | 712,563 | ||||||
Add: | ||||||||
Interest expense | 412,717 | 378,168 | ||||||
Losses from early extinguishments of debt | 29,540 | 16,490 | ||||||
Impairment losses | 24,038 | 11,812 | ||||||
Depreciation and amortization | 677,764 | 645,649 | ||||||
Transaction costs | 1,984 | 1,604 | ||||||
Payroll and related costs from management services contracts | 10,386 | 9,590 | ||||||
General and administrative expense | 140,777 | 121,722 | ||||||
Less: | ||||||||
Gains (losses) from investments in securities | 6,417 | (1,865 | ) | |||||
Interest and other income | 18,939 | 10,823 | ||||||
Gains on sales of real estate | 709 | 182,356 | ||||||
Income from unconsolidated joint ventures | 46,592 | 2,222 | ||||||
Direct reimbursements of payroll and related costs from management services contracts | 10,386 | 9,590 | ||||||
Development and management services | 40,039 | 45,158 | ||||||
|
|
|
| |||||
Net Operating Income (NOI) | 1,826,123 | 1,649,314 | ||||||
Less: | ||||||||
Straight-line rent | 63,157 | 48,054 | ||||||
Straight-line rent from deferred revenue(1) | 36,926 | — | ||||||
Fair value lease revenue | 20,186 | 23,811 | ||||||
Termination income | 15,203 | 8,205 | ||||||
Add: | ||||||||
Straight-line ground rent expense adjustment(2) | 3,384 | 3,559 | ||||||
Lease transaction costs that qualify as rent inducements | 6,627 | 8,692 | ||||||
|
|
|
| |||||
NOI — cash (excluding termination income) | 1,700,662 | 1,581,495 | ||||||
Less: | ||||||||
NOI — cash from non Same Properties (excluding termination income) | 111,998 | 69,123 | ||||||
|
|
|
| |||||
Same Property NOI — cash (excluding termination income) | 1,588,664 | 1,512,372 | ||||||
Less: | ||||||||
Partners’ share of NOI — cash from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders and priority allocations)(3) | 168,791 | 163,854 | ||||||
BXP’s share of NOI — cash from non Same Properties from unconsolidated joint ventures (excluding termination income) | 31,092 | 16,779 | ||||||
Add: | ||||||||
Partners’ share of NOI — cash from non Same Properties from consolidated joint ventures (excluding termination income and after income allocation to private REIT shareholders and priority allocations) | 1,511 | 1,950 | ||||||
BXP’s share of NOI — cash from unconsolidated joint ventures (excluding termination income)(4) | 86,459 | 66,742 | ||||||
|
|
|
| |||||
BXP’s Share of Same Property NOI — cash (excluding termination income) | $ | 1,476,751 | $ | 1,400,431 | ||||
|
|
|
| |||||
| For the year ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (unaudited and in thousands) | ||||||||
Net income attributable to Boston Properties, Inc. common shareholders | $ | 848,947 | $ | 496,223 | ||||
Add: | ||||||||
Preferred stock redemption charge | — | 6,412 | ||||||
Preferred dividends | — | 2,560 | ||||||
Noncontrolling interest—common units of the Operating Partnership | 96,780 | 55,931 | ||||||
Noncontrolling interests in property partnerships | 74,857 | 70,806 | ||||||
Interest expense | 437,139 | 423,346 | ||||||
Losses from early extinguishment of debt | — | 45,182 | ||||||
Unrealized loss on non-real estate investment | 150 | — | ||||||
Loss from unconsolidated joint ventures | 59,840 | 2,570 | ||||||
Depreciation and amortization expense | 749,775 | 717,336 | ||||||
Transaction costs | 2,905 | 5,036 | ||||||
Payroll and related costs from management services contracts | 15,450 | 12,487 | ||||||
General and administrative expense | 146,378 | 151,573 | ||||||
Less: | ||||||||
Gains (losses) from investments in securities | (6,453 | ) | 5,626 | |||||
Other income—assignment fee | 6,624 | — | ||||||
Interest and other income (loss) | 11,940 | 5,704 | ||||||
Gain on sales-type lease | 10,058 | — | ||||||
Gains on sales of real estate | 437,019 | 123,660 | ||||||
Direct reimbursements of payroll and related costs from management services contracts | 15,450 | 12,487 | ||||||
Development and management services revenue | 28,056 | 27,697 | ||||||
Net Operating (NOI) | 1,929,527 | 1,814,288 | ||||||
Less: | ||||||||
Straight-line rent | 107,965 | 106,291 | ||||||
Fair value lease revenue | 9,105 | 4,204 | ||||||
Termination income | 7,704 | 11,482 | ||||||
Add: | ||||||||
Straight-line ground rent expense adjustment(1) | 2,469 | 2,760 | ||||||
Lease transaction costs that qualify as rent inducements(2) | 15,748 | 10,506 | ||||||
NOI—cash (excluding termination income) | 1,822,970 | 1,705,577 | ||||||
Less: | ||||||||
NOI—cash from non Same Properties (excluding termination income) | 110,957 | 90,725 | ||||||
Same Property NOI—cash (excluding termination income) | 1,712,013 | 1,614,852 | ||||||
| | 2023 Proxy Statement A-5 |
| For the year ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (unaudited and in thousands) | ||||||||
Less: | ||||||||
Partners’ share of NOI—cash from consolidated joint ventures (excluding termination income and after priority allocations)(3) | 179,117 | 184,357 | ||||||
BXP’s share of NOI—cash from non Same Properties from unconsolidated joint ventures (excluding termination income) | 27,298 | 11,867 | ||||||
Add: | ||||||||
Partners’ share of NOI—cash from non Same Properties from consolidated joint ventures (excluding termination income and after priority allocations) | 5,185 | 11,778 | ||||||
BXP’s share of NOI—cash from unconsolidated joint ventures (excluding termination income)(4) | 113,308 | 98,870 | ||||||
BXP’s Share of Same Property NOI—cash (excluding termination income) | $ | 1,624,091 | $ | 1,529,276 | ||||
| (1) |
|
In light of the front-ended, uneven rental payments required by the Company’s 99-year ground and air rights lease for the 100 Clarendon Street garage and Back Bay Transit Station in Boston, MA, and to make period-to-period comparisons more meaningful to investors, the adjustment does not include the straight-line impact of approximately |
| (2) | Consist of lease transaction costs that qualify as rent inducements in accordance with GAAP |
| (3) | See “Consolidated Joint Ventures” in this Appendix for additional details. |
| (4) | See “Unconsolidated Joint Ventures” in this Appendix for additional details. |
| | | |
ConsolidatedUnconsolidated Joint Ventures
forFor the year ended December 31, 20192022
(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 | ||||||||||||||||
Lease(1) | $ | 308,338 | $ | 385,628 | $ | 27,572 | $ | 721,538 | ||||||||
Straight-line rent | (25,026 | ) | 10,859 | 176 | (13,991 | ) | ||||||||||
Fair value lease revenue | 14,006 | 621 | — | 14,627 | ||||||||||||
Termination income | 227 | 40 | — | 267 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total lease revenue | 297,545 | 397,148 | 27,748 | 722,441 | ||||||||||||
Parking and other | 8 | 6,109 | 229 | 6,346 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total rental revenue | 297,553 | 403,257 | 27,977 | 728,787 | ||||||||||||
Expenses | ||||||||||||||||
Operating | 120,185 | 139,626 | 12,336 | 272,147 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net Operating Income (NOI) | 177,368 | 263,631 | 15,641 | 456,640 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other income (expense) | ||||||||||||||||
Development and management services revenue | — | 82 | 126 | 208 | ||||||||||||
Interest and other income | 1,848 | 2,417 | 78 | 4,343 | ||||||||||||
Interest expense | (82,377 | ) | (22,115 | ) | — | (104,492 | ) | |||||||||
Depreciation and amortization expense | (83,766 | ) | (83,835 | ) | (7,668 | ) | (175,269 | ) | ||||||||
General and administrative expense | (155 | ) | (547 | ) | (3 | ) | (705 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total other income (expense) | (164,450 | ) | (103,998 | ) | (7,467 | ) | (275,915 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 12,918 | $ | 159,633 | $ | 8,174 | $ | 180,725 | ||||||||
|
|
|
|
|
|
|
| |||||||||
BXP’s nominal ownership percentage | 60.00 | % | 55.00 | % | 95.00 | % | ||||||||||
|
|
|
|
|
| |||||||||||
Reconciliation of Partners’ share of NOI(2) | ||||||||||||||||
Rental revenue | $ | 119,022 | $ | 181,466 | $ | 1,399 | $ | 301,887 | ||||||||
Less: Termination income | 91 | 18 | — | 109 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Rental revenue (excluding termination income) | 118,931 | 181,448 | 1,399 | 301,778 | ||||||||||||
Less: Operating expenses (including partners’ share of management and other fees) | 50,682 | 66,307 | 665 | 117,654 | ||||||||||||
Income allocation to private REIT shareholders and priority allocations | — | (42 | ) | 286 | 244 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
NOI (excluding termination income and after income allocation to private REIT shareholders and priority allocations) | $ | 68,249 | $ | 115,183 | $ | 448 | $ | 183,880 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Rental revenue (excluding termination income) | $ | 118,931 | $ | 181,448 | $ | 1,399 | $ | 301,778 | ||||||||
Less: Straight-line rent | (10,010 | ) | 4,886 | 9 | (5,115 | ) | ||||||||||
Straight-line rent from deferred revenue(3) | 14,770 | — | — | 14,770 | ||||||||||||
Fair value lease revenue | 5,602 | 281 | — | 5,883 | ||||||||||||
Add: Lease transaction costs that qualify as rent inducements | — | 449 | — | 449 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | $ | 108,569 | $ | 176,730 | $ | 1,390 | $ | 286,689 | ||||||||
Less: Operating expenses (including partners’ share of management and other fees) | 50,682 | 66,307 | 665 | 117,654 | ||||||||||||
Income allocation to private REIT shareholders and priority allocations | — | (42 | ) | 286 | 244 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
NOI — cash (excluding termination income and after income allocation to private REIT shareholders and priority allocations) | $ | 57,887 | $ | 110,465 | $ | 439 | $ | 168,791 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Boston | Los Angeles | New York | San Francisco | Seattle | Washington, DC | Total Unconsolidated Joint Ventures | ||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||
Lease(1) | $ | 89,971 | $ | 110,554 | $ | 23,423 | $ | 42,146 | $ | 27,601 | $ | 120,168 | $ | 413,863 | ||||||||||||||
Write-offs associated with accounts receivable, net | — | — | — | — | — | — | — | |||||||||||||||||||||
Straight-line rent | 11,263 | 27,534 | 309 | 2,199 | 2,642 | 16,393 | 60,340 | |||||||||||||||||||||
Reinstatement of straight-line rent | 2,004 | 307 | — | — | — | 207 | 2,518 | |||||||||||||||||||||
Fair value lease revenue | — | 1,094 | 752 | 112 | 4,636 | — | 6,594 | |||||||||||||||||||||
Termination income | 1,134 | 1,008 | 1,673 | — | (5 | ) | — | 3,810 | ||||||||||||||||||||
Total lease revenue | 104,372 | 140,497 | 26,157 | 44,457 | 34,874 | 136,768 | 487,125 | |||||||||||||||||||||
Parking and other | 18 | 11,352 | 170 | 621 | 2,067 | 6,992 | 21,220 | |||||||||||||||||||||
Total rental revenue | 104,390 | 151,849 | 26,327 | 45,078 | 36,941 | 143,760 | 508,345 | |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Operating | 35,923 | 53,429 | 22,287 | (2) | 17,810 | 14,121 | 53,844 | 197,414 | ||||||||||||||||||||
Net operating income/(loss) | 68,467 | 98,420 | 4,040 | 27,268 | 22,820 | 89,916 | 310,931 | |||||||||||||||||||||
Other income/(expense) | ||||||||||||||||||||||||||||
Development and management services revenue | — | — | 2,013 | 201 | 6 | 121 | 2,341 | |||||||||||||||||||||
Interest and other income | 282 | 246 | 177 | 26 | 97 | 563 | 1,391 | |||||||||||||||||||||
Interest expense | (27,048 | ) | (47,568 | ) | (18,716 | ) | (17 | ) | (10,620 | ) | (50,096 | ) | (154,065 | ) | ||||||||||||||
Unrealized gain on derivative instruments | — | — | 1,681 | — | — | — | 1,681 | |||||||||||||||||||||
Transaction costs | (317 | ) | (4 | ) | — | — | (66 | ) | (450 | ) | (837 | ) | ||||||||||||||||
Depreciation and amortization expense | (34,197 | ) | (51,643 | ) | (13,929 | ) | (19,281 | ) | (22,089 | ) | (39,902 | ) | (181,041 | ) | ||||||||||||||
General and administrative expense | (109 | ) | (123 | ) | (726 | ) | (33 | ) | (89 | ) | (138 | ) | (1,218 | ) | ||||||||||||||
Loss from early extinguishment of debt | — | — | — | — | — | (1,327 | ) | (1,327 | ) | |||||||||||||||||||
Total other income/(expense) | (61,389 | ) | (99,092 | ) | (29,500 | ) | (19,104 | ) | (32,761 | ) | (91,229 | ) | (333,075 | ) | ||||||||||||||
Net income/(loss) | $ | 7,078 | $ | (672 | ) | $ | (25,460 | ) | $ | 8,164 | $ | (9,941 | ) | $ | (1,313 | ) | $ | (22,144 | ) | |||||||||
| | 2023 Proxy Statement A-7 |
| Boston | Los Angeles | New York | San Francisco | Seattle | Washington, DC | Total Unconsolidated Joint Ventures | ||||||||||||||||||||||
Reconciliation of BXP’s share of Net Operating Income/(Loss) | ||||||||||||||||||||||||||||
BXP’s share of rental revenue | $ | 52,195 | $ | 81,182 | (4) | $ | 10,863 | $ | 21,690 | (4) | $ | 12,437 | $ | 57,453 | (3) | $ | 235,820 | |||||||||||
BXP’s share of operating expenses | 17,962 | 28,158 | 9,269 | 8,905 | 4,747 | 20,698 | (3) | 89,739 | ||||||||||||||||||||
BXP’s share of net operating income/(loss) | 34,233 | 53,024 | (4) | 1,594 | 12,785 | (4) | 7,690 | 36,755 | (3) | 146,081 | ||||||||||||||||||
Less: | ||||||||||||||||||||||||||||
BXP’s share of termination income | 567 | 504 | 838 | — | (1 | ) | — | 1,908 | ||||||||||||||||||||
BXP’s share of net operating income/(loss) (excluding termination income) | 33,666 | 52,520 | 756 | 12,785 | 7,691 | 36,755 | (3) | 144,173 | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||
BXP’s share of straight-line rent | 6,632 | 14,641 | (4) | 296 | 1,129 | (4) | 888 | 7,486 | (3) | 31,072 | ||||||||||||||||||
BXP’s share of fair value lease revenue | — | 1,805 | (4) | 263 | (819 | )(4) | 1,558 | — | 2,807 | |||||||||||||||||||
Add: | ||||||||||||||||||||||||||||
BXP’s share of straight-line ground rent expense adjustment | — | — | 576 | — | — | — | 576 | |||||||||||||||||||||
BXP’s share of lease transaction costs that qualify as rent inducements | — | 2,737 | — | — | (21 | ) | (278 | )(3) | 2,438 | |||||||||||||||||||
BXP’s share of net operating income/(loss) - cash (excluding termination income) | $ | 27,034 | $ | 38,811 | (4) | $ | 773 | $ | 12,475 | (4) | $ | 5,224 | $ | 28,991 | (3) | $ | 113,308 | |||||||||||
| (1) | Lease revenue includes recoveries from tenants and service income from tenants. |
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|
|
|
|
Consolidated Joint Ventures
for the year ended December 31, 2018
(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 | $ | 220,509 | $ | 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 | ||||||||||||
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|
|
| |||||||||
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 | ||||||||||||
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|
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|
|
|
| |||||||||
Total rental revenue | 296,622 | 381,391 | 42,269 | 720,282 | ||||||||||||
Expenses | ||||||||||||||||
Operating | 116,403 | 134,219 | 20,166 | 270,788 | ||||||||||||
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|
| |||||||||
Net Operating Income (NOI) | 180,219 | 247,172 | 22,103 | 449,494 | ||||||||||||
Other income (expense) | ||||||||||||||||
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 expense | (90,955 | ) | (82,823 | ) | (10,207 | ) | (183,985 | ) | ||||||||
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|
| |||||||||
Total other income (expense) | (169,144 | ) | (103,309 | ) | (8,626 | ) | (281,079 | ) | ||||||||
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| |||||||||
Net income | $ | 11,075 | $ | 143,863 | $ | 13,477 | $ | 168,415 | ||||||||
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| |||||||||
BXP’s nominal ownership percentage | 60.00 | % | 55.00 | % | 95.00 | % | ||||||||||
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| |||||||||||
Reconciliation of Partners’ share of NOI(1) |
| |||||||||||||||
Rental revenue | $ | 118,650 | $ | 171,627 | $ | 2,114 | $ | 292,391 | ||||||||
Less: Termination income | 110 | 7 | — | 117 | ||||||||||||
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| |||||||||
Rental revenue (excluding termination income) | 118,540 | 171,620 | 2,114 | 292,274 | ||||||||||||
Less: Operating expenses (including partners’ share of management and other fees) | 49,282 | 63,615 | 1,091 | 113,988 | ||||||||||||
Income allocation to private REIT shareholders and priority allocations | — | (42 | ) | 1,050 | 1,008 | |||||||||||
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| |||||||||
NOI (excluding termination income and after income allocation to private REIT shareholders and priority allocations) | $ | 69,258 | $ | 108,047 | $ | (27 | ) | $ | 177,278 | |||||||
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| |||||||||
Rental revenue (excluding termination income) | $ | 118,540 | $ | 171,620 | $ | 2,114 | $ | 292,274 | ||||||||
Less: Straight-line rent | 1,837 | 5,442 | (1,068 | ) | 6,211 | |||||||||||
Fair value lease revenue | 7,059 | 431 | — | 7,490 | ||||||||||||
Add: Lease transaction costs that qualify as rent inducements | — | 277 | — | 277 | ||||||||||||
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| |||||||||
Subtotal | 109,644 | 166,024 | 3,182 | 278,850 | ||||||||||||
Less: Operating expenses (including partners’ share of management and other fees) | 49,282 | 63,615 | 1,091 | 113,988 | ||||||||||||
Income allocation to private REIT shareholders and priority allocations | — | (42 | ) | 1,050 | 1,008 | |||||||||||
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| |||||||||
NOI — cash (excluding termination income and after income allocation to private REIT shareholders and priority allocations) | $ | 60,362 | $ | 102,451 | $ | 1,041 | $ | 163,854 | ||||||||
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| |
|
for the year ended December 31, 2019
(unaudited and dollars in thousands)
| Market Square North | Metropolitan Square | 901 New York Avenue | Annapolis Junction (1) | 500 North Capitol Street, N.W. | Colorado Center | Santa Monica Business Park | The Hub on Causeway | Other Joint Ventures (2) | Total Unconsolidated Joint Ventures | |||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||
Lease(3) | $ | 20,522 | $ | 16,460 | $ | 33,041 | $ | 7,445 | $ | 18,109 | $ | 72,114 | $ | 61,241 | $ | 5,411 | $ | 19,161 | $ | 253,504 | ||||||||||||||||||||
Straight-line rent | 2,071 | 11,201 | 239 | 532 | (110 | ) | 3,943 | 4,615 | 6,825 | 3,111 | 32,427 | |||||||||||||||||||||||||||||
Fair value lease revenue | — | — | — | — | — | 189 | 3,785 | — | — | 3,974 | ||||||||||||||||||||||||||||||
Termination income | — | (31 | ) | 50 | — | — | — | 101 | — | 18 | 138 | |||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||
Total lease revenue | 22,593 | 27,630 | 33,330 | 7,977 | 17,999 | 76,246 | 69,742 | 12,236 | 22,290 | 290,043 | ||||||||||||||||||||||||||||||
Parking and other | 851 | 2,501 | 1,533 | 220 | 499 | 11,173 | 7,844 | 215 | 5,081 | 29,917 | ||||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||
Total rental revenue | 23,444 | 30,131 | 34,863 | 8,197 | 18,498 | 87,419 | 77,586 | 12,451 | 27,371 | 319,960 | ||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Operating | 10,208 | 13,844 | 14,335 | 3,077 | 7,295 | 24,803 | 29,934 | 5,411 | 14,032 | (4) | 122,939 | |||||||||||||||||||||||||||||
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|
|
| |||||||||||||||||||||
Net Operating Income | 13,236 | 16,287 | 20,528 | 5,120 | 11,203 | 62,616 | 47,652 | 7,040 | 13,339 | 197,021 | ||||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||
Other income/(expense) | ||||||||||||||||||||||||||||||||||||||||
Development and management services income | 23 | — | 5 | 4 | — | — | — | — | — | 32 | ||||||||||||||||||||||||||||||
Interest and other income | 356 | 1 | 418 | 317 | 99 | 878 | 5 | 269 | 1,026 | 3,369 | ||||||||||||||||||||||||||||||
Interest expense | (5,775 | ) | (7,833 | ) | (8,300 | ) | (2,329 | ) | (4,476 | ) | (19,969 | ) | (28,037 | ) | (3,156 | ) | (4,530 | ) | (84,405 | ) | ||||||||||||||||||||
Transaction costs | — | — | — | — | — | — | — | — | (1,000 | ) | (1,000 | ) | ||||||||||||||||||||||||||||
Depreciation and amortization expense | (4,390 | ) | (11,664 | ) | (6,141 | ) | (2,831 | ) | (3,702 | ) | (20,258 | ) | (38,018 | ) | (3,415 | ) | (11,875 | ) | (102,294 | ) | ||||||||||||||||||||
General and administrative expense | (29 | ) | (77 | ) | (64 | ) | (1 | ) | (6 | ) | (8 | ) | (92 | ) | (260 | ) | (61 | ) | (598 | ) | ||||||||||||||||||||
Gain on sale of real estate | — | — | — | — | — | — | — | — | 33,707 | 33,707 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total other income/(expense) | (9,815 | ) | (19,573 | ) | (14,082 | ) | (4,840 | ) | (8,085 | ) | (39,357 | ) | (66,142 | ) | (6,562 | ) | 17,267 | (151,189 | ) | |||||||||||||||||||||
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| |||||||||||||||||||||
Net income/(loss) | $ | 3,421 | $ | (3,286 | ) | $ | 6,446 | $ | 280 | $ | 3,118 | $ | 23,259 | $ | (18,490 | ) | $ | 478 | $ | 30,606 | $ | 45,832 | ||||||||||||||||||
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| |||||||||||||||||||||
BXP’s nominal ownership percentage | 50 | % | 20 | % | 25 | % | 50 | % | 30 | % | 50 | % | 55 | % | 50 | % | ||||||||||||||||||||||||
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| |||||||||||||||||||||||||
Reconciliation of BXP’s share of Net Operating Income | ||||||||||||||||||||||||||||||||||||||||
BXP’s share of rental revenue | $ | 11,723 | $ | 6,027 | $ | 17,432 | (5) | $ | 4,099 | $ | 5,550 | $ | 47,532 | (6) | $ | 42,672 | $ | 6,227 | $ | 13,792 | $ | 155,054 | ||||||||||||||||||
BXP’s share of operating expenses | 5,105 | 2,768 | 7,168 | (5) | 1,540 | 2,189 | 12,402 | 16,463 | 2,705 | 6,998 | 57,338 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||
BXP’s share of net operating income | 6,618 | 3,259 | 10,264 | (5) | 2,559 | 3,361 | 35,130 | 26,209 | 3,522 | 6,794 | 97,716 | |||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||
BXP’s share of termination income | — | (6 | ) | 25 | (5) | — | — | — | 56 | — | 11 | 86 | ||||||||||||||||||||||||||||
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BXP’s share of net operating income (excluding termination income) | 6,618 | 3,265 | 10,239 | (5) | 2,559 | 3,361 | 35,130 | 26,153 | 3,522 | 6,783 | 97,630 | |||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||
BXP’s share of straight-line rent | 1,037 | 2,240 | 120 | (5) | 268 | (33 | ) | 4,090 | (6) | 2,538 | 3,413 | 1,560 | 15,233 | |||||||||||||||||||||||||||
BXP’s share of fair value lease revenue | — | — | — | (5) | — | — | 1,801 | (6) | 2,082 | — | — | 3,883 | ||||||||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||||||||||
BXP’s share of straight-line ground rent adjustment | — | — | — | (5) | — | — | — | — | — | 40 | 40 | |||||||||||||||||||||||||||||
BXP’s share of lease transaction costs that qualify as rent inducements | 61 | 382 | 106 | (5) | — | 4 | 591 | — | 2,109 | 4,652 | 7,905 | |||||||||||||||||||||||||||||
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BXP’s share of net operating income — cash (excluding termination income) | $ | 5,642 | $ | 1,407 | $ | 10,225 | (5) | $ | 2,291 | $ | 3,398 | $ | 29,830 | (6) | $ | 21,533 | $ | 2,218 | $ | 9,915 | $ | 86,459 | ||||||||||||||||||
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| |||||||||||||||||||||
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| (2) | Includes |
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|
|
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 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Net operating income | 10,984 | 13,561 | 15,656 | 20,720 | 6,582 | 11,352 | 54,217 | 21,045 | 8,027 | 162,144 | ||||||||||||||||||||||||||||||
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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 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total other income/(expense) | (11,308 | ) | (9,739 | ) | (42,853 | ) | (14,058 | ) | 7,721 | (8,190 | ) | (38,244 | ) | (30,166 | ) | (7,416 | ) | (154,253 | ) | |||||||||||||||||||||
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| |||||||||||||||||||||
Net income/(loss) | $ | (324 | ) | $ | 3,822 | $ | (27,197 | ) | $ | 6,662 | $ | 14,303 | $ | 3,162 | $ | 15,973 | $ | (9,121 | ) | $ | 611 | $ | 7,891 | |||||||||||||||||
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| |||||||||||||||||||||
BXP’s nominal ownership percentage | 60 | % | 50 | % | 20 | % | 25 | % | 50 | % | 30 | % | 50 | % | 55 | % | ||||||||||||||||||||||||
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| |||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
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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 | |||||||||||||||||||||||||||||
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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 | |||||||||||||||||||
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| (3) | Reflects the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture |
| (4) | The Company’s purchase price allocation under ASC 805 for certain joint ventures differs from the historical basis of the venture. |
| | 2023 Proxy Statement A-8 |
Unconsolidated Joint Ventures
For the year ended December 31, 2021
(unaudited and dollars in thousands)
| Boston | Los Angeles | New York | San Francisco | Seattle | Washington, DC | Total Unconsolidated Joint Ventures | ||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||
Lease(1) | $ | 54,721 | $ | 123,020 | $ | 11,598 | $ | 45,920 | $ | 8,988 | $ | 101,167 | $ | 345,414 | ||||||||||||||
Write-offs associated with accounts receivable, net | — | (13 | ) | 233 | — | — | — | 220 | ||||||||||||||||||||
Straight-line rent | 969 | 10,918 | 467 | 1,252 | 797 | 2,852 | 17,255 | |||||||||||||||||||||
Write-offs associated with straight-line rent | — | (81 | ) | — | — | — | (186 | ) | (267 | ) | ||||||||||||||||||
Fair value lease revenue | — | 1,307 | — | 168 | 1,526 | — | 3,001 | |||||||||||||||||||||
Termination income | 1,600 | (41 | ) | — | — | — | — | 1,559 | ||||||||||||||||||||
Total lease revenue | 57,290 | 135,110 | 12,298 | 47,340 | 11,311 | 103,833 | 367,182 | |||||||||||||||||||||
Parking and other | 75 | 9,848 | — | 4 | 365 | 4,639 | 14,931 | |||||||||||||||||||||
Total rental revenue | 57,365 | 144,958 | 12,298 | 47,344 | 11,676 | 108,472 | 382,113 | |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Operating | 24,268 | 49,795 | 14,309 | (2) | 18,518 | 4,257 | 46,433 | 157,580 | ||||||||||||||||||||
Net operating income/(loss) | 33,097 | 95,163 | (2,011 | ) | 28,826 | 7,419 | 62,039 | 224,533 | ||||||||||||||||||||
Other income/(expense) | ||||||||||||||||||||||||||||
Development and management services revenue | — | — | 1,260 | 245 | — | 3 | 1,508 | |||||||||||||||||||||
Interest and other income | — | 20 | — | 8 | — | — | 28 | |||||||||||||||||||||
Interest expense | (11,958 | ) | (47,760 | ) | (8,869 | ) | (6 | ) | (2,105 | ) | (38,186 | ) | (108,884 | ) | ||||||||||||||
Transaction costs | — | — | (463 | ) | — | — | (7 | ) | (470 | ) | ||||||||||||||||||
Depreciation and amortization expense | (22,235 | ) | (50,855 | ) | (10,738 | ) | (22,584 | ) | (6,783 | ) | (33,926 | ) | (147,121 | ) | ||||||||||||||
General and administrative expense | (43 | ) | (459 | ) | (75 | ) | (4 | ) | (2 | ) | (335 | ) | (918 | ) | ||||||||||||||
Total other income/(expense) | (34,236 | ) | (99,054 | ) | (18,885 | ) | (22,341 | ) | (8,890 | ) | (72,451 | ) | (255,857 | ) | ||||||||||||||
Net income/(loss) | $ | (1,139 | ) | $ | (3,891 | ) | $ | (20,896 | ) | $ | 6,485 | $ | (1,471 | ) | $ | (10,412 | ) | $ | (31,324 | ) | ||||||||
| | 2023 Proxy Statement A-9 |
| Boston | Los Angeles | New York | San Francisco | Seattle | Washington, DC | Total Unconsolidated Joint Ventures | ||||||||||||||||||||||
Reconciliation of BXP’s share of Net Operating Income/(Loss) | ||||||||||||||||||||||||||||
BXP’s share of rental revenue | $ | 28,685 | $ | 77,957 | (4) | $ | 6,148 | $ | 23,861 | (5) | $ | 3,931 | $ | 41,131 | (3) | $ | 181,713 | |||||||||||
BXP’s share of operating expenses | 12,134 | 26,315 | 6,812 | 9,710 | 1,433 | 17,554 | (3) | 73,958 | ||||||||||||||||||||
BXP’s share of net operating income/(loss) | 16,551 | 51,642 | (4) | (664 | ) | 14,151 | (5) | 2,498 | 23,577 | (3) | 107,755 | |||||||||||||||||
Less: | ||||||||||||||||||||||||||||
BXP’s share of termination income | 801 | (21 | ) | — | — | — | — | 780 | ||||||||||||||||||||
BXP’s share of net operating income/(loss) (excluding termination income) | 15,750 | 51,663 | (664 | ) | 14,151 | 2,498 | 23,577 | (3) | 106,975 | |||||||||||||||||||
Less: | ||||||||||||||||||||||||||||
BXP’s share of straight-line rent | 485 | 6,419 | (4) | 350 | 685 | (5) | 268 | 801 | (3) | 9,008 | ||||||||||||||||||
BXP’s share of fair value lease revenue | — | 1,956 | (4) | — | (829 | )(5) | 514 | — | 1,641 | |||||||||||||||||||
Add: | ||||||||||||||||||||||||||||
BXP’s share of straight-line ground rent expense adjustment | $ | — | $ | — | $ | 821 | $ | — | $ | — | $ | — | $ | 821 | ||||||||||||||
BXP’s share of lease transaction costs that qualify as rent inducements | — | 565 | 1,222 | — | 22 | (86 | )(3) | 1,723 | ||||||||||||||||||||
BXP’s share of net operating income/(loss)—cash (excluding termination income) | $ | 15,265 | $ | 43,853 | (4) | $ | 1,029 | $ | 14,295 | (5) | $ | 1,738 | $ | 22,690 | (3) | $ | 98,870 | |||||||||||
| (1) | Lease revenue includes recoveries from tenants and service income from tenants. |
| (2) | Includes approximately $1,643 of straight-line ground rent expense. |
| (3) | Reflects the allocation percentages pursuant to the achievement of specified investment return thresholds as provided for in the joint venture agreement of 901 New York Avenue. |
| (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 |
| (5) |
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Consolidated Joint Ventures
For the year ended December 31, 2022
(unaudited and dollars in thousands)
| Norges Joint Ventures | ||||||||||||
| Times Square Tower | ||||||||||||
| 601 Lexington Avenue / One Five Nine East 53rd Street | ||||||||||||
| 767 Fifth Avenue (The GM Building) | 100 Federal Street Atlantic Wharf Office | Total Consolidated Joint Ventures | ||||||||||
Revenue | ||||||||||||
Lease(1) | $ | 295,337 | $ | 403,247 | $ | 698,584 | ||||||
Straight-line rent | 9,118 | 11,200 | 20,318 | |||||||||
Fair value lease revenue | 1,189 | 147 | 1,336 | |||||||||
Termination income | 1,796 | 906 | 2,702 | |||||||||
Total lease revenue | 307,440 | 415,500 | 722,940 | |||||||||
Parking and other | — | 5,748 | 5,748 | |||||||||
Total rental revenue | 307,440 | 421,248 | 728,688 | |||||||||
Expenses | ||||||||||||
Operating | 118,160 | 149,998 | 268,158 | |||||||||
Net Operating Income (NOI) | 189,280 | 271,250 | 460,530 | |||||||||
Other income (expense) | ||||||||||||
Development and management services revenue | — | (81 | ) | (81 | ) | |||||||
Interest and other income | 1,153 | 1,616 | 2,769 | |||||||||
Interest expense | (84,287 | ) | (30,702 | ) | (114,989 | ) | ||||||
Depreciation and amortization expense | (65,780 | ) | (91,747 | ) | (157,527 | ) | ||||||
General and administrative expense | (257 | ) | (400 | ) | (657 | ) | ||||||
Total other income (expense) | (149,171 | ) | (121,314 | ) | (270,485 | ) | ||||||
Net income | $ | 40,109 | $ | 149,936 | $ | 190,045 | ||||||
BXP’s nominal ownership percentage | 60.00 | % | 55.00 | % | ||||||||
Partners’ share of NOI (after income allocation to private REIT shareholders)(2) | $ | 73,118 | $ | 118,694 | $ | 191,812 | ||||||
BXP’s share of NOI (after income allocation to private REIT shareholders) | $ | 116,162 | $ | 152,556 | $ | 268,718 | ||||||
Reconciliation of Partners’ share of Net Operating Income (Loss) (NOI)(2) | ||||||||||||
Rental revenue | $ | 122,977 | $ | 189,562 | $ | 312,539 | ||||||
Less: Termination income | 718 | 407 | 1,125 | |||||||||
Rental revenue (excluding termination income) | 122,259 | 189,155 | 311,414 | |||||||||
| | 2023 Proxy Statement A-11 |
| Norges Joint Ventures | ||||||||||||
| Times Square Tower | ||||||||||||
| 601 Lexington Avenue / One Five Nine East 53rd Street | ||||||||||||
| 767 Fifth Avenue (The GM Building) | 100 Federal Street Atlantic Wharf Office | Total Consolidated Joint Ventures | ||||||||||
Less: | ||||||||||||
Operating expenses (including partners’ share of management and other fees) | $ | 49,859 | $ | 70,910 | $ | 120,769 | ||||||
Income allocation to private REIT shareholders | — | (42 | ) | (42 | ) | |||||||
NOI (excluding termination income and after income allocation to private REIT shareholders) | $ | 72,400 | $ | 118,287 | $ | 190,687 | ||||||
Rental revenue (excluding termination income) | $ | 122,259 | $ | 189,155 | $ | 311,414 | ||||||
Less: | ||||||||||||
Straight-line rent | 3,648 | 5,039 | 8,687 | |||||||||
Fair value lease revenue | 476 | 65 | 541 | |||||||||
Add: | ||||||||||||
Lease transaction costs that qualify as rent inducements | — | (2,342 | ) | (2,342 | ) | |||||||
Subtotal | 118,135 | 181,709 | 299,844 | |||||||||
Less: | ||||||||||||
Operating expenses (including partners’ share of management and other fees) | 49,859 | 70,910 | 120,769 | |||||||||
Income allocation to private REIT shareholders | — | (42 | ) | (42 | ) | |||||||
NOI—cash (excluding termination income and after income allocation to private REIT shareholders) | $ | 68,276 | $ | 110,841 | $ | 179,117 | ||||||
| (1) | Lease revenue includes recoveries from tenants and service income from tenants. |
| (2) | Amounts represent the partners’ share based on their respective ownership percentage. |
| | 2023 Proxy Statement A-12 |
For the year ended December 31, 2021
(unaudited and dollars in thousands)
| Norges Joint Ventures | ||||||||||||
| Times Square Tower | ||||||||||||
| 601 Lexington Avenue / One Five Nine East 53rd Street | ||||||||||||
| 767 Fifth Avenue (The GM Building) | 100 Federal Street Atlantic Wharf Office | Total Consolidated Joint Ventures | ||||||||||
Revenue | ||||||||||||
Lease(1) | $ | 290,894 | $ | 393,385 | $ | 684,279 | ||||||
Write-offs associated with accounts receivable, net | — | 3 | 3 | |||||||||
Straight-line rent | 9,887 | 2,327 | 12,214 | |||||||||
Write-offs associated with straight-line rent, net | — | (217 | ) | (217 | ) | |||||||
Fair value lease revenue | (1,405 | ) | 352 | (1,053 | ) | |||||||
Termination income | (5 | ) | — | (5 | ) | |||||||
Total lease revenue | 299,371 | 395,850 | 695,221 | |||||||||
Parking and other | — | 4,255 | 4,255 | |||||||||
Insurance proceeds | — | 5,250 | (2) | 5,250 | ||||||||
Total rental revenue | 299,371 | 405,355 | 704,726 | |||||||||
Expenses | ||||||||||||
Operating | 112,543 | 139,091 | 251,634 | |||||||||
Restoration expenses related to insurance claim | — | 5,335 | (2) | 5,335 | ||||||||
Total expenses | 112,543 | 144,426 | 256,969 | |||||||||
Net Operating Income (NOI) | 186,828 | 260,929 | 447,757 | |||||||||
Other income (expense) | ||||||||||||
Development and management services revenue | — | 9 | 9 | |||||||||
Interest and other income | 1 | 216 | 217 | |||||||||
Loss from early extinguishment of debt | — | (104 | ) | (104 | ) | |||||||
Interest expense | (84,712 | ) | (29,951 | ) | (114,663 | ) | ||||||
Depreciation and amortization expense | (63,589 | ) | (89,903 | ) | (153,492 | ) | ||||||
General and administrative expense | (230 | ) | (394 | ) | (624 | ) | ||||||
Total other income (expense) | (148,530 | ) | (120,127 | ) | (268,657 | ) | ||||||
Net income | $ | 38,298 | $ | 140,802 | $ | 179,100 | ||||||
| | 2023 Proxy Statement A-13 |
| Norges Joint Ventures | ||||||||||||
| Times Square Tower | ||||||||||||
| 601 Lexington Avenue / One Five Nine East 53rd Street | ||||||||||||
| 767 Fifth Avenue (The GM Building) | 100 Federal Street Atlantic Wharf Office | Total Consolidated Joint Ventures | ||||||||||
BXP’s nominal ownership percentage | 60.00 | % | 55.00 | % | ||||||||
Partners’ share of NOI (after income allocation to private REIT shareholders)(3) | $ | 72,213 | $ | 114,091 | $ | 186,304 | ||||||
BXP’s share of NOI (after income allocation to private REIT shareholders) | $ | 114,615 | $ | 146,838 | $ | 261,453 | ||||||
Reconciliation of Partners’ share of Net Operating Income (Loss) (NOI)(3) | ||||||||||||
Rental revenue | $ | 119,749 | $ | 182,410 | $ | 302,159 | ||||||
Less: Termination income | (2 | ) | (1 | ) | (3 | ) | ||||||
Rental revenue (excluding termination income) | 119,751 | 182,411 | 302,162 | |||||||||
Less: | ||||||||||||
Operating expenses (including partners’ share of management and other fees) | 47,536 | 68,361 | 115,897 | |||||||||
Income allocation to private REIT shareholders | — | (42 | ) | (42 | ) | |||||||
NOI (excluding termination income and after income allocation to private REIT shareholders) | $ | 72,215 | $ | 114,092 | $ | 186,307 | ||||||
Rental revenue (excluding termination income) | $ | 119,751 | $ | 182,411 | $ | 302,162 | ||||||
Less: | ||||||||||||
Straight-line rent | 3,955 | 948 | 4,903 | |||||||||
Fair value lease revenue | (562 | ) | 157 | (405 | ) | |||||||
Add: | ||||||||||||
Lease transaction costs that qualify as rent inducements | (118 | ) | 2,666 | 2,548 | ||||||||
Subtotal | 116,240 | 183,972 | 300,212 | |||||||||
Less: | ||||||||||||
Operating expenses (including partners’ share of management and other fees) | 47,536 | 68,361 | 115,897 | |||||||||
Income allocation to private REIT shareholders | — | (42 | ) | (42 | ) | |||||||
NOI - cash (excluding termination income and after income allocation to private REIT shareholders) | $ | 68,704 | $ | 115,653 | $ | 184,357 | ||||||
| (1) | Lease revenue includes recoveries from tenants and service income from tenants. |
| (2) | Amounts relate to damage at one of the Company’s properties in New York City due to a water main break. |
| (3) | Amounts represent the partners’ share based on their respective ownership percentage. |
| | 2023 Proxy Statement A-14 |
800 BOYLSTON STREET, SUITE 1900
BOSTON, MA 02199
ATTN: INVESTOR RELATIONS
VOTE BY INTERNET—INTERNET - www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on May 19, 2020 for shares held directly and by 11:59 P.M. ET on May 17, 2020 for shares held in a Plan.22, 2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain BOSTON PROPERTIES, INC. your records and to create an electronic voting instruction form.800 BOYLSTON STREET, SUITE 1900 BOSTON, MA 02199
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Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on May 19, 2020 for shares held directly and by 11:59 P.M. ET on May 17, 2020 for shares held in a Plan.22, 2023. 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 BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D04987-P38343 KEEP THIS PORTION FOR YOUR RECORDS
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||||
| V06308-P88513 | KEEP THIS PORTION FOR YOUR RECORDS | |||||
| — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | ||||||
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
BOSTON PROPERTIES, INC.
The Board of Directors recommends you vote FOR all of the nominees for director listed.
1. Election of Directors: For Against Abstain Nominees: 1a.Joel I. Klein !!! 1b. Kelly A. Ayotte !!!The Board of Directors recommends you vote FOR For Against Abstainproposals 2 and 3.1c. Bruce W. Duncan !!!2. To approve, bynon-binding, advisory resolution, the !!!Company’s named executive officer compensation.1d. Karen E. Dykstra !!!3. To ratify the Audit Committee’s appointment of !!!PricewaterhouseCoopers LLP as the Company’sindependent registered public accounting firm for the1e. Carol B. Einiger !!!fiscal year ending December 31, 2020.1f. Diane J. Hoskins !!!NOTE: In their discretion, the proxies are authorized to voteupon any other matters that are properly brought by or at thedirection of the Board of Directors before the Annual Meeting1g. Douglas T. Linde !!!and at any adjournments or postponements thereof.1h. Matthew J. Lustig !!!1i. Owen D. Thomas !!!1j. David A. Twardock !!!1k. William H. Walton, III !!!
| Nominees: | For | Against | Abstain | |||
1a. Kelly A. Ayotte | ☐ | ☐ | ☐ | |||
1b. Bruce W. Duncan | ☐ | ☐ | ☐ | |||
1c. Carol B. Einiger | ☐ | ☐ | ☐ | |||
1d. Diane J. Hoskins | ☐ | ☐ | ☐ | |||
1e. Mary E. Kipp | ☐ | ☐ | ☐ | |||
1f. Joel I. Klein | ☐ | ☐ | ☐ | |||
1g. Douglas T. Linde | ☐ | ☐ | ☐ | |||
1h. Matthew J. Lustig | ☐ | ☐ | ☐ | |||
1i. Owen D. Thomas | ☐ | ☐ | ☐ | |||
1j. William H. Walton, III | ☐ | ☐ | ☐ | |||
1k. Derek Anthony West | ☐ | ☐ | ☐ | |||
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] DateSignature (Joint Owners)Date
| The Board of Directors recommends you vote FOR proposal 2. | For | Against | Abstain | |||||||
| 2. | To approve, by non-binding, advisory resolution, the Company’s named executive officer compensation. | ☐ | ☐ | ☐ | ||||||
| The Board of Directors recommends you vote for a frequency of “1 Year” on Proposal 3. | 1 Year | 2 Years | 3 Years | Abstain | ||||||
3. | To approve, by non-binding, advisory vote, the frequency of holding the advisory vote on the Company’s named executive officer compensation. | ☐ | ☐ | ☐ | ☐ | |||||
| The Board of Directors recommends you vote FOR proposal 4. | For | Against | Abstain | |||||||
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, 2023. | ☐ | ☐ | ☐ | ||||||
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. | ||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 23, 2023: The Notice and Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com. | ||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 20, 2020: The Notice and Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.comD04988-P38343BOSTON PROPERTIES, INC.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2020The 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 2020 Annual Meeting of Stockholders of Boston Properties, Inc. (the “Annual Meeting”) to be held at Metropolitan Square, 655 15th St, NW, 2nd Floor, Washington, D.C. 20005 on May 20, 2020 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 AND 3. 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 sideV06309-P88513
BOSTON PROPERTIES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 2023 | ||||||||||||||
The undersigned hereby appoints Douglas T. Linde and Eric G. Kevorkian, and each of them, as proxies for the undersigned, each with the power to appoint his substitute, and hereby authorizes them to attend the Annual Meeting of Stockholders of Boston Properties, Inc. (the "Annual Meeting") to be held at Prudential Tower, 800 Boylston Street, Suite 1900, Boston, MA 02199 on May 23, 2023 at 9:00 AM EDT, 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, "FOR" PROPOSALS 2 AND 4, AND FOR THE "1 YEAR" FREQUENCY ON PROPOSAL 3. 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 | ||||||||||||||