UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant | Filed by a Party other than the Registrant |
| Check the appropriate box: | | ||||||
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 under §.240.14a-12 |
Office Properties Income Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment of Filing Fee (Check the appropriate box): | | ||||||
No fee required. | ||||||||
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||||||
| | | | | | | | |
(1) Title of each class of securities to which transaction applies: | ||||||||
| | | | | | | | |
(2) Aggregate number of securities to which transaction applies: | ||||||||
| | | | | | | | |
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined) : | ||||||||
| | | | | | | | |
(4) Proposed maximum aggregate value of transaction: | ||||||||
| | | | | | | | |
(5) Total fee paid: | ||||||||
Fee paid previously with preliminary materials. | ||||||||
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||||||
| | | | | | | | |
(1) Amount Previously Paid: | ||||||||
| | | | | | | | |
(2) Form, Schedule or Registration Statement No.: | ||||||||
| | | | | | | | |
(3) Filing Party: | ||||||||
| | | | | | | | |
(4) Date Filed: |
Notice of 20192021 Annual Meeting
of Shareholders and Proxy Statement
Thursday, May 16, 2019June 17, 2021 at 9:30 a.m., Eastern time
Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458
BusinessLive Webcast Accessible at a Glance
https://www.viewproxy.com/OfficePropertiesIncomeTrust/2021/
LETTER TO OUR SHAREHOLDERS FROM OURYOUR
BOARD OF TRUSTEES
Dear Fellow Shareholders:
Please join us for our annual meeting2021 Annual Meeting of Shareholders, which will be held virtually at 9:30 a.m. on Thursday, May 16, 2019.June 17, 2021. The business to be conducted at the meeting is explained in the attached Notice of Meeting and Proxy Statement. We believe furnishing these materials over the internet expedites shareholders'your receipt of these important materials while loweringreducing the cost and reducing the environmental impact of our annual meeting.
Please be assuredDespite the disruption to the office market resulting from the COVID-19 pandemic, we continued our solid performance throughout 2020. Our monthly rent collections averaged 99%, and we collected the majority of our granted lease rent deferrals. Our leasing activity showed solid performance throughout the year, completing two million square feet of activity with an average lease term of over seven years and a roll-up in rents of 6.9%. In 2020, we received the 2020 ENERGY STAR® Partner of the Year Sustained Excellence Award in recognition of our energy management efforts. This is the third consecutive year that we have achieved Partner of the Year recognition and the first year earning the Sustained Excellence designation in the Energy Management category.
In addition, we have a significant amount of available capital we can deploy strategically to address any challenges or opportunities presented by the COVID-19 pandemic. As of December 31, 2020, we had:
We continue to monitor changing events and circumstances with an eye to managing for the global good, mitigating the negative impact on our business and best positioning us for stability and recovery when the COVID-19 pandemic is behind us. We take seriously our role in the oversight of our Company's long term business strategy, which we believe is the best path to long term value creation for you, our shareholders. With this in mind, we have begun what we expect to be a multiyear process of re-examining our fundamental governance policies as we understand that good governance is critical to building and keeping shareholder confidence and to long term value creation. Shareholder engagement and feedback have been critical components of this re-examination. Our initial steps include: expanding the size of our Board to add two additional members; engaging an executive search consulting firm to help us identify and vet qualified and diverse board candidates so that we can, as needed, refresh our Board and add members with diverse skills and backgrounds; adopting a proxy access bylaw; and amending our Bylaws so we have a plurality vote standard for contested elections of our Trustees. We discuss our plans in more detail in the accompanying Proxy Statement.
We thank you for your investment in Office Properties Income Trustour Company and for the confidence you put in this Board to oversee your interests in our business.
March 28, 2019April 13, 2021
| David M. Blackman | | William A. Lamkin | |
| Donna D. Fraiche | | Elena B. Poptodorova | |
| Barbara D. Gilmore | | Adam D. Portnoy | |
| John L. Harrington | | Jeffrey P. Somers |
NOTICE OF 20192021 ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 16, 2019
9:30 a.m., Eastern time
Two Newton Place, 255 Washington Street, Suite 100Newton, Massachusetts 02458
ITEMS OF BUSINESS
RECORD DATE
You can vote if you were a shareholder of record as of the close of business on February 28, 2019.
PROXY VOTING
Shareholders as of the record date are invited to attend the 2019 Annual Meeting. If you cannot attend in person, please vote in advance of the 2019 Annual Meeting by using one of the methods described in the accompanying Proxy Statement.
March 28, 2019Newton, Massachusetts
By Order of the Board of Trustees,Jennifer B. ClarkSecretaryOFFICE PROPERTIES INCOME TRUST
Please sign and return the proxy card or voting instruction form or use telephone or internet methods to authorize a proxy in advance of the 2019 Annual Meeting. See the "Proxy Materials and Voting Information" section on page 43 for information about how to authorize a proxy by telephone or internet or how to attend the 2019 Annual Meeting and vote your shares in person.
| Location: | | Agenda: | |
| Live Webcast Accessible at Date: Thursday, June 17, 2021 Time: 9:30 a.m., Eastern time | |
Elect the Trustee nominees identified in the accompanying Proxy Statement to our Board of Trustees; • Advisory vote to approve executive compensation; • Ratify the appointment of Deloitte & Touche LLP as our independent auditors to serve for the 2021 fiscal year; and • Transact such other business as may properly come before the meeting and at any postponements or adjournments of the meeting. | |
| | Record Date:You can vote if you were a shareholder of record as of the close of business on March 24, 2021. | ||
| | Attending Our 2021 Annual Meeting:Due to the public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders and other stakeholders, our 2021 Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by webcast. No physical meeting will be held. | ||
| | |||
| | • Record Owners:If you are a shareholder as of the record date who holds shares directly, you may participate in our 2021 Annual Meeting via internet webcast by visiting the following website and following the registration and participation instructions contained therein: https://www.viewproxy.com/OfficePropertiesIncomeTrust/2021/. Please have the control number located on your proxy card or voting information form available. | ||
| | |||
| | • Beneficial Owners:If you are a shareholder as of the record date who holds shares indirectly through a brokerage firm, bank or other nominee, you must register in advance to attend our 2021 Annual Meeting. You will need to present evidence of your beneficial ownership of shares. You will not be able to vote your shares at our 2021 Annual Meeting without a legal proxy. Beneficial owners should complete the registration process at least three days in advance of our 2021 Annual Meeting to ensure that all documentation and verifications are in order. | ||
| | Please see the accompanying Proxy Statement for additional information. By Order of our Board of Trustees,
Jennifer B. Clark April 13, 2021 |
TABLE OF CONTENTS
PLEASE VOTE | 1 | |
PROXY | 2
| |
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS | 4
| |
Review of Corporate Governance Policies and Shareholder Engagement | ||
Board Composition | ||
| 5 | |
| 5 | |
Sustainability | 6 | |
| 13 | |
Our Board's Role in Oversight of Risk Management | ||
Trustee Independence | ||
Executive Sessions of Independent Trustees | ||
Board Leadership Structure | ||
Lead Independent Trustee | 16 | |
Code of Business Conduct and Ethics and Committee Governance | ||
| ||
| ||
Nominations for Trustees | ||
Communications with | ||
| ||
Shareholder Nominations and Other Proposals | ||
PROPOSAL 1: ELECTION OF TRUSTEES | 19
| |
Trustee Nominees to be Elected at | ||
Continuing Trustees | ||
Executive Officers | ||
BOARD COMMITTEES | 29
| |
| ||
| ||
| ||
BOARD MEETINGS | 30
| |
TRUSTEE COMPENSATION | 30
| |
Compensation of Trustees | ||
Trustee Share Ownership Guidelines | ||
| ||
OWNERSHIP OF OUR EQUITY SECURITIES | 32
| |
Trustees and Executive Officers | ||
Principal Shareholders | ||
| ||
PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | 34
| |
COMPENSATION DISCUSSION AND ANALYSIS | 35
| |
Compensation Overview | ||
Compensation Philosophy | ||
Overview of | ||
Analysis of | ||
Frequency of Say on Pay | ||
| ||
REPORT OF | 41
| |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | 41
| |
EXECUTIVE COMPENSATION |
| |
| ||
| 42 | |
2020 Grants of Plan Based Awards | ||
| ||
| ||
Potential Payments upon Termination or Change in Control | ||
|
Pay Ratio | 45 | |
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF | 46
| |
Audit Fees and All Other Fees | ||
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors | ||
Other Information | ||
|
| |
| ||
| ||
| ||
| ||
REPORT OF | 49
| |
FREQUENTLY ASKED QUESTIONS | 50
| |
RELATED PERSON TRANSACTIONS | 56
| |
OTHER INFORMATION | 57
| |
ANNEX | A-1
|
PROXY STATEMENT
The Board of Trustees (our "Board") of Office Properties Income Trust (the "Company," "we," "us" or "our") is furnishing this proxy statement and accompanying proxy card (or voting instruction form) to you in connection with the solicitation of proxies by our Board for our 2021 annual meeting of shareholders. Due to the public health impact of the COVID-19 pandemic and to protect the health and well-being of our shareholders and other stakeholders, our annual meeting will be held virtually via live webcast on Thursday, June 17, 2021, at 9:30 a.m., Eastern time, subject to any adjournments or postponements thereof (the "2021 Annual Meeting"). We are first making these proxy materials available to shareholders on or about April 13, 2021.
Only owners of record of our common shares of beneficial interest ("Common Shares") as of the close of business on March 24, 2021, the record date for our 2021 Annual Meeting, are entitled to notice of, and to vote at, the meeting and at any postponements or adjournments of the meeting. Holders of Common Shares are entitled to one vote for each Common Share held on the record date. Our Common Shares are listed on The Nasdaq Stock Market LLC ("Nasdaq"). On March 24, 2021, there were 48,318,366 Common Shares issued and outstanding.
The mailing address of our principal executive office is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR OUR 2021 ANNUAL MEETING TO BE HELD ON THURSDAY, JUNE 17, 2021.
The Notice of 2021 Annual Meeting, Proxy Statement and Annual Report to Shareholders for the fiscal year ended December 31, 2020 are available at www.proxyvote.com.
It is very important that youPlease vote to play a part in the future of our Company. Thefuture. Nasdaq Stock Market LLC (the "Nasdaq") rules do not allow a broker, bank or other nominee who holds shares on your behalf to vote on nondiscretionary matters without your instructions.
PROPOSALS THAT REQUIRE YOUR VOTE
PROPOSAL | MORE INFORMATION | BOARD RECOMMENDATION | VOTES REQUIRED FOR APPROVAL | |||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
1 | Election of Trustees | Page | ✓FOR | Plurality of all votes cast* | ||||
2 | Advisory vote to approve executive compensation** | Page | ✓FOR | Majority of all votes cast | ||||
3 | Ratification of independent auditors** | Page | ✓FOR | |||||
Majority of all votes cast | ||||||||
| | | | | | | | |
You can vote in advance in one of three ways:
via the internet | Visitwww.proxyvote.com and enter your 16 digit control number provided in your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form before 11:59 p.m., Eastern time, on | |
by phone | Call 1-800-690-6903 if you are a shareholder of record and 1-800-454-8683 if you are a beneficial owner before 11:59 p.m., Eastern time, on | |
by mail | Sign, date and return your proxy card if you are a shareholder of record or voting instruction form if you are a beneficial owner to authorize a proxyBY MAIL. |
If the meeting is postponed or adjourned, these times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting.
PLEASE VISIT:www.proxyvote.com
20192021 Proxy Statement 1
March 28, 2019
The Board of Trustees (the "Board") of Office Properties Income Trust (the "Company," "we," "us" or "our") is furnishingThis proxy summary highlights information which may be provided elsewhere in this proxy statement and accompanying proxy card (or voting instruction form) to you in connection with the solicitation of proxies by the Board for the 2019 annual meeting of shareholdersProxy Statement. This summary does not contain all of the Company. The meeting will be held at Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458 on Thursday, May 16, 2019, at 9:30 a.m., Eastern time,information that you should consider, and any adjournments or postponements thereof (the "2019 Annual Meeting"). Weyou should read the entire Proxy Statement carefully before voting. Page references are first making these proxy materials availablesupplied to shareholders on or about March 28, 2019.help you find further information in this Proxy Statement.
Only ownersELIGIBILITY TO VOTE
You can vote if you were a shareholder of record of common shares of beneficial interest of the Company ("Common Shares") as ofat the close of business on February 28, 2019,March 24, 2021, the record date for our 2021 Annual Meeting.
HOW TO CAST YOUR VOTE (Page 50)
You can vote by any of the meeting, are entitled to noticefollowing methods:
The mailing address of the Company's principal executive offices is Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE2019 ANNUAL MEETING TO BE HELD ON THURSDAY, MAY 16, 2019.
The Notice of 2019our 2021 Annual Meeting Proxy Statementif they have a legal proxy.
CORPORATE GOVERNANCE PRINCIPLES (Page 4)
We pride ourselves on continuing to observe and Annual Reportimplement best practices in our corporate governance.
SUSTAINABILITY (Page 6)
We have a long-standing commitment to Shareholders forour shareholders and stakeholders to conduct our business in an environmentally and socially responsible manner.
VOTING (Pages 1, 19, 34 and 46)
PROPOSAL | BOARD RECOMMENDATION | VOTES REQUIRED FOR APPROVAL | ||||
---|---|---|---|---|---|---|
| | | | | | |
1 | Election of Trustees | ✓ FOR | Plurality of all votes cast* | |||
2 | Advisory vote to approve executive compensation** | ✓ FOR | Majority of all votes cast | |||
3 | Ratification of independent auditors** | ✓ FOR | Majority of all votes cast | |||
| | | | | | |
2 20192021 Proxy Statement
PROPOSAL 1: ELECTION OF TRUSTEES (Page 19)
Upon the recommendation of our Nominating and Governance Committee, our Board has nominated William A. Lamkin and Elena B. Poptodorova as Independent Trustees. Presented below is the expected composition of our Board, assuming the election of William A. Lamkin and Elena B. Poptodorova at our 2021 Annual Meeting.
NAME OF TRUSTEES | INDEPENDENT | COMMITTEE MEMBERSHIP | ||
---|---|---|---|---|
| | | | |
David M. Blackman | | None | ||
Donna D. Fraiche | ✓ | Compensation (Chair) Nominating and Governance | ||
Barbara D. Gilmore | ✓ | Compensation Nominating and Governance | ||
John L. Harrington | ✓ | Audit Nominating and Governance | ||
William A. Lamkin | ✓ | Audit (Chair) Compensation | ||
Elena B. Poptodorova | ✓ | Audit Nominating and Governance | ||
Adam D. Portnoy | | None | ||
Jeffrey P. Somers | ✓ | Audit Compensation Nominating and Governance (Chair) | ||
| | | | |
PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (Page 34)
COMPENSATION DISCUSSION AND ANALYSIS (Page 35)
Our compensation structure is unique because of our relationship with our manager, The RMR Group LLC ("RMR LLC"). Our business management agreement with RMR LLC is designed to incentivize RMR LLC to provide the highest quality services to us. Our Compensation Committee believes that our executive compensation program is appropriately designed to incentivize strong performance over the long term.
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS (Page 46)
2021 Proxy Statement 3
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Review of Corporate Governance Policies and Shareholder Engagement |
Our Board is committed to upholding the values of good corporate governance. In recognition of the relationship between corporate governance and long term performance, and as a result of our ongoing engagement with and feedback from our shareholders, theour Board has embarked on a review of the Company'scontinues to proactively evaluate our corporate governance principles. The Board expects that corporate governance reform will be a multi-year process and, as it weighs various alternatives, the Board is prioritizing its consideration based on a review of best practices and input from our shareholders. Based on these principles, the Board has established the following priorities and taken the following steps:last year our Board:
This year, our Bylaws so that, in a contested election, our Trustees are elected by a pluralityBoard continued to engage with Korn Ferry regarding board refreshment and expansion and conducted another shareholder outreach to all of the votes cast by our shareholders (see page 9).
The Board has also instituted a numberwho hold 1% or more of complementary mechanisms to allow shareholders to communicate their points of view, including:
As theour Board continues on the path to enhanced good governance practices, we appreciate your support of theour Board and these initiatives.
Board Composition |
We are currently governed by an eight member Board of Trustees. Trustees, including six Independent Trustees and two Managing Trustees, and our Board is currently divided into three classes. In 2020, with the support of more than 71% of our shareholders, our Board amended our Declaration of Trust to declassify our Board. Beginning with our 2021 Annual Meeting, the Trustees whose terms expire at an annual meeting will stand for election at the meeting for one-year terms and all Trustees will stand for election at the 2023 annual meeting of shareholders and, thereafter, for one-year terms. Pursuant to his retirement agreement, David M. Blackman will resign as one of our Managing Trustees following our 2021 Annual Meeting or earlier if requested by RMR LLC or our Board.
Ensuring theour Board is comprised of Trustees who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds and effectively represent the long-term interests of shareholders is a top priority of theour Board and theour Nominating and Governance Committee. Following our merger with Select Income REIT ("SIR"), we increased the size of the Board from six to eight members. TheOur Board continues to actively evaluate its composition, including to ensure the propercomposition. Our Board's refreshment activities have created more skill mix of skills and diversity among Board members, ensureand ensured a smooth transition ifas Trustees retire from our Board. Our Nominating and when a Trustee decides to retire or otherwise leaves theGovernance Committee and our Board and ensure that the Board is comprised of individualshave an ongoing engagement with a diverse set of backgrounds, perspectives and skills. The Board believes that continuity is important to the effective conduct of our business and expects that any refreshment will take place over several years. To facilitate these efforts, the Board has retained Korn Ferry, a leading executive search and consulting firm, to act as an advisor and to assist theour Nominating and Governance Committee in:
2019 Proxy Statement 3
THE BOARD BELIEVES THAT ITS MEMBERS SHOULD:
|
|
In addition, the Board has determined that the Board, as a whole, should strive to have the right mix of characteristics and skills necessary to effectively perform its oversight responsibilities. The Board believes that Trustees with one or more of the following professional skills or experiences can assist in meeting this goal:
|
|
The Nominating and Governance Committee and the Board consider the qualifications, characteristics and skills of Trustees and Trustee candidates individually and in the broader context of the Board's overall composition when evaluating potential nominees for election as Trustee. The Nominating and Governance Committee and the Board also expect to ask Korn Ferry to assist in considering the qualifications of, and evaluating, potential nominees.
4 20192021 Proxy Statement
|
Our Nominating and Governance Committee screens and recommends candidates for nomination by our full Board. Our Bylaws provide that the size of our Board shall be eight members until increased or decreased by our Board. Our Nominating and Governance Committee is assisted with its recruitment efforts by its ongoing engagement with Korn Ferry, which recommends candidates that satisfy our Board's criteria. They also provide research and pertinent information regarding candidates, as requested.
ISG Corporate Governance Framework |
We follow the Investor Stewardship Group's ("ISG") Corporate Governance Framework for U.S. Listed Companies, as summarized below:
ISG Principle | ||||||||||||||||||||||||||||||||||||
| | | ||||||||||||||||||||||||||||||||||
Principle 1: Boards are accountable to shareholders. | • We amended our Declaration of • We adopted a proxy access bylaw. • We have a resignation policy pursuant to which an incumbent Trustee who fails to receive a majority of votes cast in an uncontested election will offer to resign from our Board and, | in such circumstance, our Board will decide whether to accept or reject the resignation offer. | ||||||||||||||||||||||||||||||||||
| | | ||||||||||||||||||||||||||||||||||
Principle 2: Shareholders should be entitled to voting rights in proportion to their economic interest. | ||||||||||||||||||||||||||||||||||||
• We do not have a dual class structure; each shareholder gets one vote per share. | ||||||||||||||||||||||||||||||||||||
| | | ||||||||||||||||||||||||||||||||||
20192021 Proxy Statement 5
ISG Principle | Our Practice | |
| | |
Principle 3: Boards should be responsive to shareholders and be proactive in order to understand their perspectives. | • In 2020, our proactive shareholder outreach extended to all of our shareholders who hold 1% or more of our common shares. • Our engagement topics included the impact of the COVID-19 pandemic on our business, governance reform priorities, sustainability and social strategy, Board composition, leadership and refreshment, succession planning and executive compensation program disclosure. | |
| | |
Principle 4: Boards should have a strong, independent leadership structure. | • We have a Lead Independent Trustee with clearly defined duties and responsibilities that are disclosed to shareholders. • Our Board considers the appropriateness of its leadership structure at least annually. • We have strong Independent Committee Chairs. | |
| | |
Principle 5: Boards should adopt structures and practices that enhance their effectiveness. | • 75% of Board members are independent. • Our Board is comprised of almost 40% women. • We have an active Board refreshment plan, including an ongoing engagement with an executive search and consulting firm to identify and evaluate candidates to refresh our Board; four new Board members have joined our Board in the last four years. • Our Trustees attended at least 75% of all Board and applicable committee meetings in 2020, and all Trustees attended the 2020 annual meeting of shareholders. | |
| | |
Principle 6: Boards should develop management incentive structures that are aligned with the long-term strategy of the company. | • Our Compensation Committee annually reviews and approves incentive compensation program design, goals and objectives for alignment with compensation and business strategies. • Although we do not pay any cash compensation directly to our officers and have no employees, we have adopted the Office Properties Income Trust 2009 Incentive Share Award Plan (the "Share Award Plan") to reward our named executive officers and other employees of RMR LLC who provide services to us and to align their interests with those of our shareholders. |
Sustainability |
Overview. Our business strategy incorporates a focus on sustainable approaches to operating our properties in a manner that benefits our shareholders, tenants and the communities in which we are located. We seek to operate our properties in ways that improve the economic performance of their operations, while simultaneously ensuring tenant comfort and safety, managing energy and water consumption, as well as greenhouse gas emissions.
6 2021 Proxy Statement
Our environmental, social and governance initiatives are primarily implemented by our manager, RMR LLC, and focus on a complementary set of objectives, including the following:
In 2020, RMR LLC was recognized by The Boston Globe as a "Top Place to Work", by Fortune magazine as one of the "100 Fastest Growing Companies", by the EPA as an "ENERGY STAR Partner of the Year", by the Boston Business Journal as the "Fastest Growing Middle Market Company in Massachusetts," and it ranked 9th on Commercial Property Executive's Top Commercial Property Management Companies. Last year, RMR LLC also received the Real Estate Management Excellence Award for Employee & Leadership Development from the Institute of Real Estate Management.
RMR LLC's recruiting programs, on-boarding, retention programs and its development and training programs currently include the following:
2021 Proxy Statement 7
the next generation of qualified building engineers. Over the last year, it launched a program to standardize the recruitment and development of engineering candidates to prepare them for open positions and to plan for future engineering needs. RMR LLC recruited from various trade schools and job fairs to identify candidates for the two-year program. The curriculum includes specific training in electrical, HVAC, or plumbing trades and covers a range of essential engineering staff development topics.
RMR LLC has made diversity and inclusion an important part of its hiring, retention and development programs. In 2020, RMR LLC has enhanced its hiring policies to support increasing diversity within its workforce. For every open position not filled by internal candidates, hiring managers are required to have at least one qualified woman or member of underrepresented community candidate in the final round interviews before an offer is extended to fill the position. An RMR LLC manager who is a woman and/or member of an underrepresented community is required to be part of the final round interview team. In addition, RMR LLC works with strategic industry partners like Commercial Real Estate Women (CREW) and The Partnership Inc. for posting new positions and supporting multi-cultural professionals.
To learn more about RMR LLC's and our sustainability initiatives, visit www.rmrgroup.com/corporate-sustainability.
Sustainability Accounting Metrics. The following disclosures are informed by the guidance of the Sustainability Accounting Standards Board ("SASB") Standards for Real Estate. To the extent an accounting metric, as defined by the SASB Standard, is not applicable to our portfolio or data to report on the applicable accounting metric is not available to us, we have not made any disclosure.
For the following disclosures, the assets are considered a single subsector property type ("office"), consistent with how these assets are presented in our other Securities and Exchange Commission ("SEC") filings. The information presented is as of December 31, 2020, unless otherwise noted. Additionally, "Same Property" information includes properties that we have owned continuously since January 1, 2019.
In 2020, the COVID-19 pandemic, along with local, state and Federal social distancing recommendations, created an environment of reduced building utilization. This lower property utilization is evident in the presented sustainability metrics below. It is our expectation that, in a post-pandemic environment as businesses return to normal and our property utilization improves, the energy and water consumption of our buildings will increase above 2020 levels.
8 2021 Proxy Statement
For all sustainability accounting metrics, Same Property includes three properties with a total of 444,066 square feet owned by two joint ventures in which we own equity interests and which we report on an unconsolidated basis.
RMR LLC deploys on our behalf energy management best practices, which include:
As a result of these energy management efforts, we have reduced energy and water usage helping to generate both economic and environmental benefits.
Sections II, III and IV below provide SASB-aligned energy-related metrics.
The following illustrates Same Property energy data available as compared to the total population of Same Property assets.
2021 Proxy Statement 9
78.4% of our Same Property assets are eligible to earn an ENERGY STAR® certification based on size, use profile and occupancy profile requirements established by the EPA. Energy ratings and certifications are performed using the EPA's Portfolio Manager online benchmarking tool.
RMR LLC supports on our behalf water management practices that reduce operating costs as well as our impact on the consumption of natural resources. Water usage is managed by benchmarking water performance to establish a baseline and to measure performance improvements resulting from conservation measures. Benchmarking is performed through the EPA's ENERGY STAR® Portfolio Manager online platform.
10 2021 Proxy Statement
Some cities and states in which we own properties require annual whole-building energy and water use disclosure. In these jurisdictions, RMR LLC engages with tenants to collect and report any direct tenant-paid energy and water consumption.
RMR LLC also routinely implements water efficiency and water use reduction projects, which include upgrades for indoor plumbing fixtures, low-flow water closets and urinals, low-flow flush valves, low-flow automatic faucet controls, low-flow faucet aerators and shower heads, water-efficient landscaping and cooling tower water management.
Sections VI and VII below provide SASB-aligned water-related metrics.
Baseline Water Stress measures total annual water withdrawals (municipal, industrial, and agricultural) expressed as a percent of the total annual available flow. Higher values indicate more users are competing for available resources.
2021 Proxy Statement 11
On our behalf, RMR LLC seeks to provide best-in-class property operations and healthy, efficient environments for our tenants and encourage continual engagement that promotes long-lasting relationships and sustainable behaviors.
RMR LLC has internal policies that govern environmentally responsible property operations. We also utilize green lease language, where possible, to promote mutual commitment to environmentally friendly practices and operational efficiencies with our tenants. These efforts earned us Green Lease Leader recognitions in 2019 through 2021.
RMR LLC prioritizes LEED certification and recertification projects by reviewing a variety of sustainability and leasing criteria such as high ENERGY STAR® scores and access to public transportation and near-by amenities. We believe that taking the initiative to submit for and attain LEED certification adds value to our properties and enhances tenant satisfaction, which reflects our commitment to environmental sustainability and healthy buildings.
Approximately 1,450,638 square feet of Same Property assets are located in FEMA Special Flood Hazard Areas (SFHA).
We define climate change resilience as our ability to anticipate, prepare for and recover from adverse physical climate activity including increased severity of acute weather events and chronic changes to weather patterns as well as identify and plan for climate-related transitional activities such as changes in policy and market-driven expectations.
In preparation for and in response to property-level natural hazards, our manager, RMR LLC, utilizes dynamic geographic mapping tools which allows them to quickly assess the risk to our properties from the rapidly changing natural hazards related to coastal and river flooding.
12 2021 Proxy Statement
In advance of a natural hazard event, resources are directed to properties identified as potentially impacted through these mapping tools. The resources made available include access to senior management and mobilization of equipment and personnel. Rapid response personnel may also be directed to properties after a weather event has occurred.
Properties susceptible to inundation from flood waters are evaluated routinely. The evaluation may include implementing tenant and local agency coordination protocols, property incident response plan reviews, insurance provider assessments and the implementation of physical protection elements, such as flood protection barriers.
We routinely utilize technology to evaluate our properties for energy and water performance. Such activities support lower operating expenses, improve comfort for our tenants and reduce our exposure to impacts from policies targeting greenhouse gas emissions.
Our portfolio strategy includes the development of hazard and vulnerability assessments of our existing properties and scenario planning and economic risk reviews of property development opportunities over long-term ownership periods.
Key Responsibilities of |
Oversight of Strategy | Oversight of Risk | Succession Planning | ||||||||||||
| | | | | | | | | | | | | ||
✓
✓ Business strategy is a key focus ✓ Company management is charged with executing business strategy and provides regular performance updates to | ✓
✓ Board committees, which meet regularly and report back to ✓ Company management is charged with managing risk, through robust internal processes and effective internal controls. | ✓
✓
✓ In the event of a succession, | ||||||||||||
| | | | | | | | | | | | |
|
TheOur Board is elected by our shareholders to oversee the Company'sour business and long term strategy. As part of fulfilling its responsibilities, theour Board oversees the safeguarding of the Company'sour assets, the maintenance of appropriate financial and other internal controls and the Company'sour compliance with applicable laws and regulations. Inherent in these responsibilities is theour Board's understanding and oversight of the various risks the Company faces. Thewe face. Our Board considers that risks should not be viewed in isolation and should be considered in virtually every business decision and as part of the Company'sour business strategy.
TheOur Board oversees risk as part of its general oversight of theour Company. Oversight of risk is addressed as part of various Board and Board committee activities and through regular and special Board and Board committee meetings. TheOur day to day business of the Company is conducted by our manager, The RMR Group LLC, ("RMR LLC"), and RMR LLC and the Company'sour officers and Director of Internal Audit are responsible for incorporating risk management in their
2021 Proxy Statement 13
activities. The Company'sOur Director of Internal Audit reports to theour Audit Committee and provides the Companyus with advice and assistance with the Company'sour risk management function.
In discharging their oversight responsibilities, theour Board and Board committees review regularly a wide range of reports provided by RMR LLC and other service providers, provide, including:
6 2019 Proxy Statement
TheOur Board and Board committees discuss these matters among themselves and with representatives of RMR LLC, our officers, of the Company, theour Director of Internal Audit, legal counsel, the Company'sour independent auditors and other professionals, as appropriate.
TheOur Audit Committee takes a leading role in helping theour Board fulfill its responsibilities for oversight of the Company'sour financial reporting, internal audit function, risk management, including cybersecurity, and the Company'sour compliance with legal and regulatory requirements. TheOur Board and Audit Committee review periodic reports from the Company'sour independent auditors regarding potential risks, including risks related to the Company'sour internal control over financial reporting. TheOur Audit Committee also reviews, approves and oversees an internal audit plan developed by the Company'sour Director of Internal Audit with the goal of helping the Companyus systematically evaluate the effectiveness of itsour risk management, control and governance processes on an annual basis. The Audit Committee considers risks relating to cybersecurity, receiving regular reports from management regarding cybersecurity risks and countermeasures being undertaken or considered by the Company, including updates on the internal and external cybersecurity landscape and relevant technical developments. TheOur Audit Committee meets at least quarterly and reports its findings to theour Board. TheOur Audit Committee also meets periodically with the Company'sour Director of Internal Audit to review the results of the Company'sour internal audits, and directs or recommends to theour Board actions or changes it determines appropriate to enhance or improve the effectiveness of the Company'sour risk management.
TheOur Audit Committee considers risks related to cybersecurity and receives regular reports from our management regarding cybersecurity risks and countermeasures being undertaken or considered by us, including updates on the internal and external cybersecurity landscape and relevant technical developments.
Our Compensation Committee whose duties are detailed in its charter, among other duties, evaluates the performance of the Company'sour Director of Internal Audit and RMR LLC's performance under the Company'sour business and property management agreements, including any perceived risks created by compensation arrangements. Also, theour Compensation Committee and theour Board consider that the Company haswe have a share award program that requires share awards to executive officers to vest over a period of years. The Company believesWe believe that the use of share awards vesting over time rather than stock options mitigates the incentives for the Company'sour management to undertake undue risks and encourages management to make longerlong term and appropriately risk balanced decisions.
It is not possible to identify all of the risks that may affect the Companyus or to develop processes and controls to eliminate all risks and their possible effects, and processes and controls employed to address risks may be limited in their effectiveness. Moreover, it is necessary for the Companyus to bear certain risks to achieve itsour objectives. As a result of the foregoing and other factors, the Company'sour ability to manage risk is subject to substantial limitations.
14 2021 Proxy Statement
To learn more about the risks facing the Company,we face, you can review the matters discussed in Part I, "Item 1A. Risk Factors" and "Warning Concerning Forward LookingForward-Looking Statements" in our Annual Report to Shareholders for the fiscal year ended December 31, 2018 ("Annual2020 (the "Annual Report"). The risks described in the Annual Report are not the only risks facing the Company.we face. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company'sour business, financial condition or results of operations in future periods.
Trustee Independence |
Under the corporate governance listing standards of the Nasdaq theand our governing documents, our Board must consist of a majority of Independent Trustees. Our governing documents also require that a majority of the Board be Independent Trustees. Under our governing documents, Independent Trustees are Trustees who are not employees of RMR LLC, are not involved in the Company'sour day to day activities and who meet the qualifications for independence under the applicable rules of the Nasdaq and the SEC.
TheOur Board affirmatively determines whether Trustees have a direct or indirect material relationship with the Company,us, including the Company'sour subsidiaries, other than serving as the Company'sour Trustees or trustees or directors of the Company'sour subsidiaries. In making independence determinations, theour Board observes the Nasdaq and SEC criteria, as well as the criteria set forth in our governing documents. When assessing a Trustee's relationship with the Company, theus, our Board considers all relevant facts and
2019 Proxy Statement 7
circumstances, not merely from the Trustee's standpoint, but also from that of the persons or organizations with which the Trustee has an affiliation. Based on this review, theour Board has determined that Donna D. Fraiche, Barbara D. Gilmore, John L. Harrington, William A. Lamkin, Elena B. Poptodorova and Jeffrey P. Somers currently qualify as independent trustees under applicable Nasdaq and SEC criteria and as Independent Trustees under our governing documents. In making these independence determinations, theour Board reviewed and discussed additional information provided by the Trusteesus and the CompanyTrustees with regard to each of the Trustees' relationships with the Company, us, RMR LLC or The RMR Group Inc. ("RMR Inc. or"), the managing member of RMR LLC, and the other companies to which RMR LLC or its subsidiaries provide management services. TheOur Board has concluded that none of these six Trustees possessed or currently possesses any relationship that could impair his, her or hertheir judgment in connection with his, her or hertheir duties and responsibilities as a Trustee or that could otherwise be a direct or indirect material relationship under applicable Nasdaq and SEC standards.
Executive Sessions of Independent Trustees |
Pursuant to the Company'sour Governance Guidelines, our Independent Trustees are expected to meet at least twice per year in regularly scheduled meetings at which only Independent Trustees are present. Our Independent Trustees also meet separately with the Company'sour officers, with the Company'sour Director of Internal Audit and with the Company'sour independent auditors. The presiding Trustee for purposes of leading Independent Trustee sessions will be the Chair of the Audit Committee,Lead Independent Trustee, unless the Independent Trustees determine otherwise.
Board Leadership Structure |
In accordance with our governing documents, the Board is comprised of eight Trustees, including six Independent Trustees and two Managing Trustees, and our Board is divided into three classes, with each Trustee of each class elected at an annual meeting of shareholders serving for a term that continues until the third annual meeting of shareholders following his or her election and until his or her successor is elected and qualifies. All Trustees play an active role in overseeing the Company'sour business both at theour Board and committee levels. As set forth in the Company'sour Governance Guidelines, the core responsibility of our Trustees is to exercise sound, informed and independent business judgment in overseeing theour Company and itsour strategic direction. Our Trustees are skilled and experienced leaders and currently serve or have served as members of senior management in public and private for profit and nonprofit organizations and law firms, and have also served as government officials and in academia. Our Trustees may be called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of the Company'sour officers and advisers. TheOur Board is small, which facilitates informal discussions and communication from management to theour Board and among Trustees. We do not have a Chairman
Adam D. Portnoy serves as Chair of theour Board. Our Board or a lead Independent Trustee.
Our Chief Financial Officerbelieves that Mr. Portnoy's leadership of RMR LLC and Treasurer andextensive familiarity with our Directorday to day business provide valuable insight for our Board.
2021 Proxy Statement 15
Six of our Trustees, including our two of ourTrustee nominees for election at the 2019our 2021 Annual Meeting, are independent under the applicable Nasdaq and SEC criteria and our Bylaws.governing documents. All of the members of theour Audit Committee, Nominating and Governance Committee and Compensation Committee are independent under the applicable listing requirements and rules of the Nasdaq and other applicable laws, rules and regulations, including those of the SEC. As set forth in our governing documents, two of our Trustees are Managing Trustees, persons who have been employees, officers or directors of RMR LLC or who have been involved in the Company'sour day to day activities for at least one year prior to his, her or hertheir election as Trustees.
8 2019 Proxy Statement
Lead Independent Trustee |
We have a Lead Independent Trustee who is selected annually by the vote of a majority of our Independent Trustees. Currently, Ms. Poptodorova serves as our Lead Independent Trustee. Our Lead Independent Trustee has well-defined, substantive responsibilities that include:
Code of Business Conduct and Ethics and Committee Governance |
TheOur Board is committed to corporate governance that promotes the long term interests of our shareholders. TheOur Board has established Governance Guidelines that provide a framework for effective governance. TheOur Board regularly reviews developments in corporate governance and updates our Governance Guidelines and other governance materials as it deems necessary and appropriate.
The Company hasWe have also adopted a Code of Business Conduct and Ethics (the "Code") to, among other things, provide guidance to our Trustees and RMR LLC's (and its subsidiaries') board members, officers and in the case of RMR LLC, its officers and employees, and its parent's and subsidiaries' directors, officers and employees to ensure compliance with applicable laws and regulations.
TheOur Board has an Audit Committee, Compensation Committee and Nominating and Governance Committee. TheOur Audit Committee, Compensation Committee and Nominating and Governance Committee each have adopted a written charter, and each Board committee reviews its written charter on an annual basis to consider whether any changes are required.
16 2021 Proxy Statement
Our corporate governance materials are available for review in the governance section of our website, including our Governance Guidelines, the charter for each Board committee, the Code, and information about how to report concerns or complaints about accounting, internal accounting controls or auditing matters and any violations or possible violations of the Code, and how to communicate with our Trustees, individually or as a group.Trustees. To access these documents on the Company'sour website visitwww.opireit.com.
|
In March 2019, the Board adopted an amendment to our Bylaws to provide that, in contested elections, our Trustees will be elected by a plurality of the votes cast by our shareholders. This amendment was adopted to ensure that, in contested elections, those Trustee nominees who receive the largest number of votes are elected by shareholders to the Board. This amendment aligns our voting practices for contested elections with the guidelines of many institutional shareholders and proxy advisory firms and is consistent with best practices.
Our governing documentsGovernance Guidelines provide that if an incumbent Trustee does not receive a majority of the votes cast in an uncontested election, the Trustee will submit an offer to resign from theour Board. In such circumstance, theour Nominating and Governance Committee will make a recommendation to theour Board on whether to accept or reject the resignation offer, or whether other action should be taken. TheOur Board will act on the resignation offer taking into account the recommendation of theour Nominating and Governance Committee and make its decision within 90 days following the certification of the election results.
|
In March 2019, after extensive analysisOur Insider Trading Policies and shareholder engagement, the NominatingProcedures expressly prohibit members of our Board and Governance Committee recommended,our officers from engaging in hedging transactions involving our securities and the Board adopted, a proxy access bylaw pursuantthose of RMR Inc. or any other public company to which a shareholder,RMR LLC or a group of up to 20 shareholders, owning at least three percent of the outstanding Common Shares continuously for at least three years, may nominate and include in the Company's proxy materials for an annual meeting Trustee nominees constituting up to the greater of two nominees or 20% of the number of Trustees on the Board that holders of our Common Shares are entitled to elect, provided that for so long as the Company has a classified Board of less than nine Trustees, such number of Trustee nominees will be reduced so that for any annual meeting it does not exceed one-half of the number of Trustees to be elected at the meeting as noticed by the Company rounded down to the nearest whole number (but not rounded down as a result of this proviso to less than one). Shareholders making such a nomination and their nominees must also satisfy the informational, documentation and other requirements specified by Section 2.18 of our Bylaws.
2019 Proxy Statement 9
Table of Contentsits affiliates provide management services.
Nominations for Trustees |
The Nominating and Governance Committee is responsible for identifying and evaluating nominees for Trustee and for recommending to the Board nominees for election at each annual meeting of shareholders. The Nominating and Governance Committee may consider candidates suggested by the Company's Trustees, officers or shareholders or by others. Shareholders who would like to recommend a Trustee nominee for the position of Trustee should submit their recommendations in writing by mail to the Chair of theour Nominating and Governance Committee, c/oin care of our Secretary, Office Properties Income Trust, Secretary, at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@opireit.com. Any such recommendation shallshould include a description of the candidate's qualifications for Board service, the candidate's written consent to be considered for nomination and to serve if nominated and elected, as well as the addresses and telephone numbers for contacting the shareholder and the candidate for more information. TheOur Nominating and Governance Committee may request additional information about the shareholder recommended nominee or about the shareholder recommending the nominee. Recommendations by shareholders will be considered by theour Nominating and Governance Committee in its discretion using the same criteria as other candidates it considers.
As noted above, aA shareholder, or a group of up to 20 shareholders, owning at least three percent of the outstanding Common Shares continuously for at least three years may utilize our proxy access bylaw to nominate and include in the Company'sour proxy materials Trustee candidate(s) for election at an annual meeting of shareholders provided that the shareholder(s) and the nominee(s) satisfy the informational, documentation and other requirements specified by Section 2.18 of our Bylaws.
Shareholders seeking to nominate one or more individuals as a Trustee candidate without relying on our proxy access bylaw shallmust comply with the advance notice requirements for shareholder nominations set forth in Section 2.14 of our Bylaws, which include, among other things, requirements as to the proposing shareholder's timely delivery of advance notice, continuous requisite ownership of Common Shares and submission of specified documentation and information.
Communications with |
TheOur Board has established a process to facilitate communication by shareholders and other interested partiesstakeholders with our Trustees. Communications should be addressed to Trustees in care of theour Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or by email to secretary@opireit.com.
|
Our business strategy incorporates and values environmental sustainability principles. We seek to operate our properties in a manner that improves the environmental efficiency of their operations. We regularly consider ways to improve our internal culture and the communities in which we operate. Our environmental sustainability and community engagement strategies are primarily implemented by our manager, RMR LLC, and focus on a complementary set of objectives, including the following:
10 20192021 Proxy Statement 17
doing so may reduce operating costs and improve the properties' competitive positions. As a result of these ongoing efforts, our portfolio wide achievements include:
To learn more about the Company's and RMR LLC's sustainability initiatives, visitwww.rmrgroup.com/corporate-sustainability.
Shareholder Nominations and Other Proposals |
Deadline to Submit Proposals pursuant to Rule 14a-8 for the 20202022 Annual Meeting of Shareholders: Shareholder proposals pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") must be received at our principal executive officesoffice on or before November 29, 2019December 14, 2021 in order to be eligible to be included in the proxy statement for the 20202022 annual meeting of shareholders; provided, that, if the date of the 20202022 annual meeting of shareholders is more than 30 days before or after May 16, 2020,June 17, 2022, such a proposal must be submitted within a reasonable time before we begin to print itsour proxy materials. Under Rule 14a-8, the Company iswe are not required to include shareholder proposals in itsour proxy materials in certain circumstances or if conditions specified in the rule are not met.
Deadline to Submit Trustee Proxy Access Nominations for the 20202022 Annual Meeting of Shareholders: Under our proxy access bylaw, a shareholder or a group of up to 20 shareholders owning at least three percent of the Company'sour outstanding Common Shares continuously for at least three years may nominate and include in the Company'sour proxy materials for the 20202022 annual meeting of shareholders Trustee nominees constituting up to the greater of two nominees or 20% of the number of Trustees on theour Board that holders of the Company'sour Common Shares are entitled to elect,elect; provided that, ifas we have a classifieddeclassify our Board, of less than nine Trustees, such number of Trustee nominees will be reduced so that for the 20202022 annual meeting of shareholders it does not exceed one-half of the number of Trustees to be elected at the 20202022 annual meeting of shareholders as noticed by the Companyus (so long as our Board consists of less than nine Trustees) rounded down to the nearest whole number (but not rounded down as a result of this proviso to less than one); provided further that. In addition, the shareholder(s) and nominee(s) must satisfy the informational, documentation and other requirements specified by Section 2.18 of our Bylaws. Notice of a proxy access nomination for consideration at our 20202022 annual meeting of shareholders must be received at the Company'sour principal executive officesoffice not later than 5:00 p.m., Eastern time, on November 29, 2019December 14, 2021 and not earlier than October 30, 2019.November 14, 2021.
Deadline to Submit Other Nominations and Proposals for the 20202022 Annual Meeting of Shareholders under our Bylaws: To be timely, shareholder nominations and proposals intended to be made outside of Rule 14a-8 under the Exchange Act and outside of the proxy access bylaw at the 20202022 annual meeting of shareholders must be received by our Secretary at our principal executive offices,office, in accordance with the requirements of our Declaration of Trust and Bylaws, not later than 5:00 p.m., Eastern time, on November 29, 2019December 14, 2021 and not earlier than October 30, 2019;November 14, 2021; provided, that, if the date of the 20202022 annual meeting of shareholders is more than 30 days earlier or later than May 16, 2020,June 17, 2022, then a shareholder's notice must be so delivered not later than 5:00 p.m., Eastern time, on the tenth day following the earlier of the day on which (i) notice of the
2019 Proxy Statement 11
date of the 20202022 annual meeting of shareholders is mailed or otherwise made available or (ii) public announcement of the date of the 20202022 annual meeting of shareholders is first made by the Company.us. Shareholders making such a nomination or proposal must comply with the advance notice and other requirements set forth in our Declaration of Trust and Bylaws, which include, among other things, requirements as to the shareholder's timely delivery of advance notice, continuous requisite ownership of Common Shares, holding of a share certificate for such shares at the time of the advance notice and submission of specified information.
The foregoing description of the deadlines and other requirements for a shareholdershareholders to submit a proxy access or other nomination for election to theour Board or a proposal of other business for consideration at an annual meeting of shareholders is only a summary and is not a complete listing of all requirements. Copies of our Declaration of Trust and Bylaws, including the requirements for proxy access or other shareholder nominations and other shareholder proposals, may be obtained by writing to the Company'sour Secretary at Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, or from the SEC's website,www.sec.gov. Any shareholder considering making a proxy access or other nomination or other shareholder proposal should carefully review and comply with those provisions.
1218 20192021 Proxy Statement
PROPOSAL 1: ELECTION OF TRUSTEES
Upon the recommendation of theour Nominating and Governance Committee, theour Board has nominated Barbara D. GilmoreWilliam A. Lamkin and John L. Harrington for electionElena B. Poptodorova as Independent Trustees in Class ITrustees. Mr. Lamkin and Adam D. Portnoy for election as a Managing Trustee in Class I. Ms. Gilmore and Messrs. Harrington and PortnoyPoptodorova currently serve on theour Board. If elected, each of Mr. Lamkin and Ms. Gilmore and Messrs. Harrington and PortnoyPoptodorova would serve until the Company'sour 2022 annual meeting of shareholders and until his, her or hertheir successor is duly elected and qualifies, subject to the individual's earlier death, resignation, retirement, disqualification or removal.
We expect that each nominee for election as a Trustee will be able to serve if elected. However, if a nominee should become unable or unwilling to serve, proxies may be voted for the election of a substitute nominee designated by theour Board.
AssumingBoard of Trustees' Qualifications and Experience
Our Trustees have a quorumgreat diversity of experience and bring to our Board a wide variety of skills, qualifications, viewpoints and backgrounds that strengthen their ability to carry out their oversight role on behalf of our shareholders.
2021 Proxy Statement 19
Snapshot of 2021 Board Nominees
Presented below is presenta snapshot of the expected composition of our Board, assuming the election of William A. Lamkin and Elena B. Poptodorova at the meeting, aour 2021 Annual Meeting. Our Board of Trustees believes that, collectively, our Trustees exhibit an effective mix of qualifications, experience and diversity.
A plurality of all the votes cast is required to elect a Trustee at the 2019our 2021 Annual Meeting.
The names, principal occupations and certain other information andregarding the Trustee nominees for Trustees, as well as a summary of the key experiences, qualifications, attributes and skills that led theour Nominating and Governance Committee and theour Board to conclude that such persons are currently qualified to serve as Trustees are set forth on the following pages.
TheOur Board of Trustees recommends a vote "FOR" the election of allboth Trustee nominees.
20 20192021 Proxy Statement
Trustee Nominees to be Elected at |
| | | | William A. Lamkin Age: 61 Independent Trustee since 2019 Expected Term: Annual term expiring at the 2022 annual meeting of shareholders | | | Board Committees: • Audit (Chair) • Compensation | | | Other RMR Managed Public Company Boards(1): • Service Properties Trust (since 2007) • Tremont Mortgage Trust (since 2020) Other Non-RMR Managed Public Company Boards: • Ackrell SPAC Partners I Co. (since 2020) | | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Mr. Lamkin was a partner in Ackrell Capital LLC, a San Francisco based investment bank, from 2003 to 2019. Mr. Lamkin was an independent trustee of Select Income REIT from 2012 until it merged with a wholly owned subsidiary of our Company in December 2018. Prior to being a partner in Ackrell Capital LLC, he was employed as a financial consultant and as an investment banker, including as a senior vice president in the investment banking division of ABN AMRO. Prior to working as a financial consultant and as an investment banker, Mr. Lamkin was a practicing attorney. | | | Specific Qualifications, Attributes, Skills and Experience: • Experience in, and knowledge of, the commercial real estate and investment banking industries • Demonstrated management ability • Experience in capital raising and strategic business transactions • Professional training, skills and expertise in, among other things, legal and finance matters • Work on public company boards and board committees • Institutional knowledge earned through prior service on our Board • Identifies as Caucasian and as male • Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents | |
2021 Proxy Statement 21
| | | | Elena B. Poptodorova Age: 69 Independent Trustee since
Expected Term:
| | | Board Committees:
Audit • Nominating and | | | Other RMR Managed Public Company Boards(1): • TravelCenters of America Inc. (since 2020) Other Non-RMR Managed Public Company Boards: | | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Ms. Poptodorova has served as vice president and director for Euro-Atlantic affairs of the Atlantic Club of Bulgaria since April 2017, as vice president of the Atlantic Treaty Association since December 2017 and as a board member of the U.S. – Bulgarian Chamber in America since February 2020. Ms. Poptodorova served as director of the Shapiro-Silverberg AJC Central Europe Office from October 2016 until February 2017. Ms. Poptodorova was the ambassador extraordinary and plenipotentiary of the Republic of Bulgaria to the United States from 2010 to 2016 and from 2002 to 2008. During this time, she facilitated foreign investments in Bulgaria's information technology sector and assisted the development of transatlantic business association to support investment ventures. From 2009 to 2010, Ms. Poptodorova was the director of the Security Policy Directorate at the Ministry of Foreign Affairs and from 2008 to 2009 she served as the ambassador-at-large for the Black Sea Region. From 2001 to 2002, Ms. Poptodorova served as a spokesperson of the Ministry of Foreign Affairs and director of the Human Rights and International Humanitarian Organizations Directorate. Ms. Poptodorova was a member of the Bulgarian Parliament from 1990-2001, where she served on a variety of committees, including the national security, human rights, media and agriculture committees. During her service as a member of the Bulgarian Parliament, Ms. Poptodorova worked extensively on communal property and industrial property matters with the local government of her electoral district. In addition to her extensive government service, Ms. Poptodorova is a current member of the board of directors of the American Foundation for Bulgaria and the Institute for Cultural Diplomacy in Germany, and she was previously a member of the board of directors of the European Institute, the Executive Council on Diplomacy, the Women's Foreign Policy Group and American University in Bulgaria. | | | Specific Qualifications, Attributes, Skills and Experience: • Executive experience and demonstrated leadership ability as a former diplomat • Insights gained and understanding of government practices through government service • Experience in communal property and industrial property matters • Experience in public policy matters • Service on the boards of several private and charitable organizations • Identifies as Caucasian and as female • Bulgarian national • Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents | |
22 2021 Proxy Statement
Continuing Trustees |
| | | David M. Blackman Age: 58 Managing Trustee since 2019 Term: Resigning as our Managing Trustee following our 2021 Annual Meeting or earlier if requested by RMR LLC or our Board | | | Board Committees: None | | | Other RMR Managed Public Company Boards(1): None Other Non-RMR Managed Public Company Boards: None | | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Mr. Blackman served as our president and chief executive officer from May 2018 to December 2020, and was previously our president and chief operating officer from 2011 until May 2018, and before then our chief financial officer and treasurer from 2009 through 2011. Mr. Blackman was also a managing trustee and president and chief executive officer of Select Income REIT from 2018 until it merged with a wholly owned subsidiary of our Company in December 2018, and he was its president and chief operating officer from 2011 through April 2018. Mr. Blackman also served as a managing trustee and president of Tremont Mortgage Trust from 2018 to 2020 and its chief executive officer since shortly after its formation in 2017 until 2020. Mr. Blackman joined RMR LLC in 2009 as senior vice president, and he served as an executive vice president of RMR LLC from 2013 to 2020. Mr. Blackman served as a director, president and chief executive officer of Tremont Realty Advisors LLC ("TRA") from January 2018 to 2020, and an executive vice president of TRA from its formation in 2016 through December 2017. Prior to joining RMR LLC, Mr. Blackman was employed as a banker at Wachovia Corporation and its predecessors for 23 years, where he focused on real estate finance matters, including serving as a managing director in the real estate section of Wachovia Capital Markets, LLC from 2005 through 2009. | | | Specific Qualifications, Attributes, Skills and Experience: • Prior leadership position with our Company and RMR LLC and demonstrated management ability • Extensive experience in, and knowledge of, the CRE industry and REITs • Institutional knowledge earned through prior service as an officer of our Company and in leadership positions with RMR LLC • Professional skills and expertise in accounting and finance and experience as a chief executive officer, president, chief operating officer and chief financial officer of one or more public companies • Identifies as Caucasian and as male • Qualifying as a Managing Trustee in accordance with the requirements of our governing documents | |
| | | Donna D. Fraiche Age: 69 Independent Trustee since 2019 Term: Term expiring at the 2023 annual meeting of shareholders | | | Board Committees: • Compensation (Chair) • Nominating and | | | Other RMR Managed Public Company Boards(1): • Five Star Senior Living Inc. (since 2010) • Service Properties Trust (since 2015) Other Non-RMR Managed Public Company Boards: None | | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Ms. Fraiche is a member and the founder of Fraiche Strategies, LLC since 2020. Ms. Fraiche was senior counsel in the law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC and practiced law in that firm from 2004 to February 2020. Previously, Ms. Fraiche practiced law with the firm now known as Locke Lord LLP in New Orleans. Ms. Fraiche served as an independent trustee of Select Income REIT from 2012 until it merged with a wholly owned subsidiary of our Company in December 2018. Ms. Fraiche is currently president of the Louisiana Chapter of the International Women's Forum and is the president of the Louisiana State Supreme Court Historical Society. She also serves on the American Hospital Association Leadership Development Committee of the Committee on Governance and is a past president and a fellow of the American Health Law Association. She is a former chair of the Louisiana Health Care Commission and has previously served as chair of the Long Term Community Planning Task Force and Health Care Committee of the Louisiana Recovery Authority, delegate of the Louisiana Recovery Authority to the Louisiana Health Care Redesign Collaborative, and past chair of the board of trustees of Loyola University, among numerous other business and civic responsibilities. She serves on the executive board and on the investments committee of the Baton Rouge Area Foundation and served as chair of the board, on the executive committee, finance committee and real estate committee of Women's Hospital. Ms. Fraiche also serves as Honorary Consul for Japan in New Orleans. | | | Specific Qualifications, Attributes, Skills and Experience: • Professional legal skills • Many leadership roles and experiences, including her service in numerous public policy and civic leadership roles • Work on public company boards and board committees • Institutional knowledge earned through prior service on our Board • Identifies as Caucasian and as female • Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing documents | |
2021 Proxy Statement 23
| | | Barbara D. Gilmore Age: 70 Independent Trustee since 2009 Term: Term expiring at the 2022 annual meeting of shareholders | | | Board Committees: • Compensation • Nominating and | | | Other RMR Managed Public Company Boards(1): • Five Star Senior Living Inc. (since 2004) • TravelCenters of America Inc. (since 2007) • RMR Mortgage Trust (formerly known as RMR Real Estate Income Fund, since 2020) Other Non-RMR Managed Public Company Boards: None | | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Ms. Gilmore served as a professional law clerk at the United States Bankruptcy Court, Eastern Division of the District of Massachusetts, from 2015 until her retirement in 2018, and prior to that, at the United States Bankruptcy Court, Central Division of the District of Massachusetts, from 2001 to 2015. Ms. Gilmore was a partner of the law firm of Sullivan & Worcester LLP from 1993 to 2000, during which time she was appointed and served as trustee or examiner in various cases involving business finance matters. | | | Specific Qualifications, Attributes, Skills and Experience: •
•
•
•
•
•
•
•
| |
24 2021 Proxy Statement
|
| | | John L. Harrington Age: 84 Independent Trustee since 2009 Term: Term expiring at the 2022 annual meeting of shareholders | | | Board Committees: • Audit • Nominating and | | | Other RMR Managed Public Company Boards(1): • Service Properties Trust (since 1995) • Diversified Healthcare Trust (since 1999) • RMR Mortgage Trust, including its predecessor funds (formerly known as RMR Real Estate Income Fund, since 2003) • Tremont Mortgage Trust (since 2017) Other Non-RMR Managed Public Company Boards: None | | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | ||||||||
| ||||||||||||||||
| | | | |||||||||||||
| | | | |||||||||||||
| Mr. Harrington has been | | | Specific Qualifications, Attributes, Skills and Experience: •
•
•
•
•
•
•
• Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing | |
14 20192021 Proxy Statement 25
| | | Adam D. Portnoy Age: 50 Managing Trustee since 2009 Chair of our Board since 2019 Term: Term expiring at the 2022 annual meeting of shareholders | | | Board Committees: None | | | Other RMR Managed Public Company Boards(1): • Service Properties Trust (since 2007) • Diversified Healthcare Trust (since 2007) • RMR Mortgage Trust, including its predecessor funds (formerly known as RMR Real Estate Income Fund, since 2009) • The RMR Group Inc. (since 2015) • Industrial Logistics Properties Trust (since 2017) • Tremont Mortgage Trust (since 2017) • Five Star Senior Living Inc. (since 2018) • TravelCenters of America Inc. (since 2018) Other Non-RMR Managed Public Company Boards: None | | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | ||||||||
| ||||||||||||||||
| | | | |||||||||||||
| | | | |||||||||||||
| Mr. Portnoy has been president and chief executive officer of | | | Specific Qualifications, Attributes, Skills and Experience: •
•
•
•
•
•
•
•
• Qualifying as a Managing Trustee in accordance with the requirements of our governing | ||||||||||||
Our Nominating and Governance Committee and | |
26 2021 Proxy Statement
|
| | | Jeffrey P. Somers Age: 78 Independent Trustee since 2009 Term: Term expiring at the 2023 annual meeting of shareholders | | | Board Committees: • Audit • Compensation • Nominating and Governance (Chair) | | | Other RMR Managed Public Company Boards(1): • RMR Mortgage Trust, including its predecessor funds (formerly known as RMR Real Estate Income Fund, since 2009) • Diversified Healthcare Trust (since 2009) Other Non-RMR Managed Public Company Boards: None | | |||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | ||||||||
| ||||||||||||||||
| | | | | | | | |||||||||
| | | | | | | | | ||||||||
|
2019 Proxy Statement 15
|
| ||||||||
| | | | |||||
| ||||||||
|
| ||||||||
| ||||||||
|
16 2019 Proxy Statement
|
| ||||||||
| ||||||||
|
| ||||||||||||||||
| ||||||||||||||||
| | | | |||||||||||||
| Mr. Somers has been, since 2010, of counsel to, and from 1995 to 2009, was a member, and for six of those years the managing member, of the law firm of Morse, Barnes-Brown & Pendleton, PC. Prior to that time, he was a partner for more than 20 years at the law firm of Gadsby Hannah LLP (now McCarter & English, LLP) and for eight of those years was managing partner of the firm. Mr. Somers served as an independent trustee of Tremont Mortgage Trust from 2017 to 2020 and of Select Income REIT from 2012 until it merged with a wholly owned subsidiary of | | | Specific Qualifications, Attributes, Skills and Experience: •
•
•
•
•
•
•
•
• Qualifying as an Independent Trustee in accordance with the requirements of the Nasdaq, the SEC and our governing | |
20192021 Proxy Statement 1727
Executive Officers |
The Company'sOur executive officers serve at the discretion of theour Board. Other than as disclosed below, thereThere are no family relationships among any of the Company'sour Trustees or executive officers.
| | | | Christopher Bilotto Age: 43 | | | President since 2021 Chief Operating Officer since 2020 | | ||||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Mr. Bilotto was a Vice President of our Company from May 2019 to December 2020. He has been a senior vice president of RMR LLC since October 2020 and a vice president of RMR LLC from 2016 to September 2020 and has served in various finance leadership roles with RMR LLC and its subsidiaries since 2011, including currently being responsible for asset management oversight for all office and industrial properties managed by RMR LLC and development and redevelopment across the United States. Mr. Bilotto identifies as Caucasian and as male. | |
| | |
Age: | | | Chief Financial Officer and Treasurer since 2019 | | |||||
| | | | | | | | | | | | |
| | | | | | | | | ||||
| | | | |||||||||
|
| ||||||||||||
| ||||||||||||
| | | | | | | | | ||||
| | | | |||||||||
| Mr. | |
1828 20192021 Proxy Statement
|
Members William A. Lamkin (Chair) John L. Harrington
Elena B. Poptodorova Jeffrey P. Somers
|
|
|
Members Donna D. Fraiche (Chair) Barbara D. Gilmore
William A. Lamkin
Jeffrey P. Somers
| |
|
Members Jeffrey P. Somers (Chair) Donna D. Fraiche Barbara D. Gilmore John L. Harrington
Elena B. Poptodorova
| |
20192021 Proxy Statement 1929
In 2018, the2020, our Board held 12five meetings. In 2018,2020, each then Trustee attended 75% or more of the aggregate of all meetings of theour Board and the committees on which he, she or she served or that were held during the period in which the Trustee served as a Trustee or committee member.they served. All of the then Trustees attended last year's annual meeting of shareholders. The Company'sOur policy with respect to Board members' attendance at meetings of theour Board and annual meetings of shareholders can be found in the Company'sour Governance Guidelines, the full text of which appears at the Company'sour website,www.opireit.com.
Compensation of Trustees |
TheOur Board of Trustees believes that competitive compensation arrangements are necessary to attract and retain qualified Independent Trustees. On May 24, 2018, after conducting a market review with respect to leading companies of similar size to
Under the Company as well as an industry peer group and other companies managed by RMR LLC or its subsidiaries, upon the recommendation of the Compensation Committee, the Board approved the Company'scurrently effective Trustee compensation arrangements, for Independent Trustees of the Company.
The Company will continue to compensate its Independent Trustees through the use of annual retainers plus fees for meetings attended. Effective May 24, 2018, each Independent Trustee receives an annual fee of $50,000$75,000 for services as a Trustee. The annual fee for any new Independent Trustee plus a fee of $1,250is prorated for each Board or Board committee meeting attended. Up to two $1,250 fees are paid if a Board meeting and one or more Board committee meetings, or two or more Board committee meetings, are held on the same date.initial year. Each Independent Trustee who serves as a committee chair of the Board'sour Audit Committee, Compensation Committee or Nominating and Governance CommitteesCommittee also receives an additional annual fee of $17,500, $12,500 and $12,500, respectively, and our Lead Independent Trustee also receives an additional annual cash retainer fee of $15,000 $10,000 and $10,000, respectively.for serving in this role. Trustees are reimbursed for travel expenses they incur in connection with their duties as Trustees and for out of pocket costs they incur in connection with their attending certain continuing education programs.
Each Independent Trustee and Managing Trustee also receives an award of Common Shares annually, which was 3,0003,500 Common Shares in 2018.2020. Managing Trustees do not receive cash compensation for their services as Trustees.
Trustee Share Ownership Guidelines |
TheOur Board believes it is important to align the interests of our Trustees with those of our shareholders, and for our Trustees to hold equity ownership positions in theour Company. Accordingly, each Trustee is expected to holdretain at least 20,000 Common Shares by the later of: (i) the 2019 annual meeting of shareholders of the Company and (ii)within five years fromfollowing: (i) if elected by shareholders, the annual meeting of shareholders of theour Company at which thesuch Trustee was initially elected, or (ii) if earlier,appointed by our Board, the first annual meeting of shareholders of theour Company following the initial appointment of thesuch Trustee to theour Board. Compliance with these ownership guidelines is measured as of the end of each fiscal year. Forannually. Solely for purposes of determining compliance with these ownership guidelines, Common Shares of our Company owned as of immediately prior to the Company'sour one-for-four reverse share split which was effectiveeffected on December 31, 2018, (the "Reverse Share Split"), by Trustees who were serving as our Trustees of the Company or trustees of SIRSelect Income REIT ("SIR") as of immediately prior to SIR's merger with and into a subsidiary of theour Company on December 31, 2018, (the "SIR Merger"), and which Common Sharesshares are owned continuously thereafter through the end of the applicable compliance measurement period, arewill not be adjusted to give effect to the Reverse Share Split.that reverse share split. Any Trustee who is prohibited by law or by applicable regulation of his, her or hertheir employer from owning equity in theour Company is exempt from this requirement. TheOur Nominating and Governance Committee may consider whether exceptions should be made for any Trustee on whom this requirement could impose a financial hardship.
As of February 28, 2019,March 24, 2021, all Trustees have met or, within the applicable period, are expected to meet, these share ownership guidelines.
2030 20192021 Proxy Statement
|
The following table details the total compensation of the Trustees for the fiscal year ended December 31, 20182020 for services as a Trustee.
Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | All Other Compensation ($) | | Total ($) | | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |||||||
David M. Blackman(3) | | — | | 93,135 | | — | | 93,135 | |||||||||||||||||||||
Donna D. Fraiche | 87,500 | 93,135 | — | 180,635 | |||||||||||||||||||||||||
Barbara D. Gilmore | | | 90,000 | | | 42,300 | | | — | | 132,300 | | | 75,000 | | 93,135 | | — | | 168,135 | |||||||||
John L. Harrington | | | 93,750 | | | 42,300 | | | — | | 136,050 | | 75,000 | 93,135 | — | 168,135 | |||||||||||||
Mark L. Kleifges(3)(4)(5) | | | — | | | 83,070 | | | — | | 83,070 | | |||||||||||||||||
William A. Lamkin | | 92,500 | | 93,135 | | — | | 185,635 | |||||||||||||||||||||
Elena B. Poptodorova | | | 78,750 | | | 42,300 | | | — | | 121,050 | | 90,000 | 93,135 | — | 183,135 | |||||||||||||
Adam D. Portnoy(3) | | | — | | | 42,300 | | | — | | 42,300 | | | — | | 93,135 | | — | | 93,135 | |||||||||
Barry M. Portnoy(4) | | | — | | | — | | | — | | — | | |||||||||||||||||
Jeffrey P. Somers | | | 88,750 | | | 42,300 | | | — | | 131,050 | | 87,500 | 93,135 | — | 180,635 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
20192021 Proxy Statement 2131
OWNERSHIP OF OUR EQUITY SECURITIES OF THE COMPANY
Trustees and Executive Officers |
The following table sets forth information regarding the beneficial ownership of the outstanding Common Shares by each Trustee nominee, each Trustee, each of our named executive officers and our Trustees, Trustee nominees, named executive officers and other executive officers as a group, all as of February 28, 2019.March 24, 2021. Unless otherwise noted, to the Company'sour knowledge, voting power and investment power in the Common Shares are exercisable solely by the named person and the principal business address of the named person is c/o Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
Name and Address | | Aggregate Number of Shares Beneficially Owned | | Percent of Outstanding Shares* | | Additional Information | | Aggregate Number of Shares Beneficially Owned* | | Percent of Outstanding Shares** | | Additional Information | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | ||||||||
Adam D. Portnoy | | | 708,708 | | | 1.47% | | Includes 576,258 Common Shares owned by ABP Trust. Voting and investment power with respect to Common Shares owned by ABP Trust may be deemed to be shared by Adam D. Portnoy as ABP Trust's sole trustee. | | | 715,208 | | | 1.48% | | Includes 576,258 Common Shares owned by ABP Trust. Voting and investment power with respect to Common Shares owned by ABP Trust may be deemed to be shared by Adam D. Portnoy as ABP Trust's sole trustee. | ||||
David M. Blackman | | | 26,472 | | | Less than 1% | | | | 58,327 | | | Less than 1% | | ||||||
Mark L. Kleifges | | | 17,430 | | | Less than 1% | | | ||||||||||||
Jeffrey P. Somers | | | 10,112 | | | Less than 1% | | | | 16,612 | | | Less than 1% | | | |||||
Donna D. Fraiche | | | 7,550 | | | Less than 1% | | | | | 14,050 | | | Less than 1% | | |||||
William A. Lamkin | | | 7,550 | | | Less than 1% | | | | 14,050 | | | Less than 1% | | Includes 14,050 Common Shares owned by Janet W. Lamkin and William A. Lamkin as trustees of a trust, Trustees U/T/D 9-28-18. Mr. Lamkin may be deemed to hold voting and investment power as a trustee and beneficiary of the trust. | |||||
Barbara D. Gilmore | | | 6,312 | | | Less than 1% | | Includes 750 Common Shares owned jointly with Ms. Gilmore's husband. | | | 12,812 | | | Less than 1% | | Includes 750 Common Shares owned jointly with Ms. Gilmore's husband. | ||||
John L. Harrington | | | 5,562 | | | Less than 1% | | Includes 5,562 Common Shares owned by the John L. Harrington Revocable Trust. Mr. Harrington may be deemed to hold voting and investment power as a trustee and beneficiary of the John L. Harrington Revocable Trust. | | | 12,062 | | | Less than 1% | | Includes 12,062 Common Shares owned by the John L. Harrington Revocable Trust. Mr. Harrington may be deemed to hold voting and investment power as a trustee and beneficiary of the John L. Harrington Revocable Trust. | ||||
Elena B. Poptodorova | | | 1,275 | | | Less than 1% | | | | | 6,800 | | | Less than 1% | | |||||
Matthew C. Brown | | | 7,856 | | | Less than 1% | | | ||||||||||||
Christopher J. Bilotto | | | 7,711 | | | Less than 1% | | |||||||||||||
| | | | | | | | | | | | | ||||||||
All Trustees, named executive officers and other executive officers as a group (ten persons) | | | 791,477 | | | 1.65% | | |||||||||||||
All Trustees, the Trustee nominees, named executive officers and other executive officers as a group (ten persons) | | | 865,488 | | | 1.79% | | | ||||||||||||
| | | | | | | | | | | | |
2232 20192021 Proxy Statement
Principal Shareholders |
Set forth in the table below is information about the number of Common Shares held by persons the Company knowswe know to be the beneficial owners of more than 5.0% of the outstanding Common Shares.
Name and Address | | Aggregate Number of Shares Beneficially Owned | | Percent of Outstanding Shares* | | Additional Information | ||||
---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | ||||
The Vanguard Group, Inc. ("Vanguard") 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | 6,482,441 | | | 13.5% | | Vanguard filed a Schedule 13G/A with the SEC on January 10, 2019, reporting that, at December 31, 2018, Vanguard beneficially owned 12,574,143 Common Shares and had sole voting power over 282,377 Common Shares, shared voting power over 129,041 Common Shares, sole dispositive power over 12,356,865 Common Shares and shared dispositive power over 217,278 Common Shares. Vanguard also filed a Schedule 13G/A with the SEC on February 13, 2019 reporting that, at December 31, 2018, Vanguard beneficially owned 12,841,946 SIR common shares and had sole voting power over 77,685 SIR common shares, shared voting power over 118,388 SIR common shares, sole dispositive power over 12,645,873 SIR common shares and shared dispositive power over 196,073 SIR common shares. These filings appear not to give effect to the issuance of Common Shares in the SIR Merger or the Reverse Share Split. Amounts disclosed are based solely on these Schedules 13G/A, as adjusted by the Company to give effect to the SIR Merger and the Reverse Share Split. | ||
BlackRock, Inc. ("BlackRock") 55 East 52nd Street New York, New York 10055 | | | 6,066,451 | | | 12.6% | | BlackRock filed a Schedule 13G/A with the SEC on January 28, 2019, reporting that, at December 31, 2018, BlackRock beneficially owned and had sole dispositive power over 15,652,107 Common Shares and sole voting power over 15,448,278 Common Shares. BlackRock also filed a Schedule 13G/A with the SEC on February 6, 2019 reporting that, at December 31, 2018, BlackRock beneficially owned and had sole dispositive power over 8,282,401 SIR common shares and sole voting power over 8,029,080 SIR common shares. These filings appear not to give effect to the issuance of Common Shares in the SIR Merger or the Reverse Share Split. Amounts disclosed are based solely on these Schedules 13G/A, as adjusted by the Company to give effect to the SIR Merger and the Reverse Share Split. |
2019 Proxy Statement 23
Name and Address | | Aggregate Number of Shares Beneficially Owned | | Percent of Outstanding Shares* | | Additional Information | | Aggregate Number of Shares Beneficially Owned* | | Percent of Outstanding Shares** | | Additional Information | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | ||||||||
Vanguard Specialized Funds—Vanguard REIT Index Fund ("Vanguard REIT") 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | 2,291,066 | | | 4.8% | | Vanguard REIT filed a Schedule 13G/A with the SEC on January 31, 2019, reporting that, at December 31, 2018, Vanguard REIT beneficially owned and had sole voting power over 4,719,002 Common Shares and no dispositive power over such Common Shares. Vanguard REIT also filed a Schedule 13G/A with the SEC on January 31, 2019 reporting that, at December 31, 2018, Vanguard REIT beneficially owned and had sole voting power over 4,274,292 SIR common shares. These filings appear not to give effect to the issuance of Common Shares in the SIR Merger or the Reverse Share Split. Amounts disclosed are based solely on these Schedules 13G/A, as adjusted by the Company to give effect to the SIR Merger and Reverse Share Split. The Company understands that the Common Shares and SIR common shares reported as beneficially owned by Vanguard REIT on these Schedules 13G/A are also reported as beneficially owned by Vanguard. | ||||||||||||
BlackRock, Inc. ("BlackRock") 55 East 52nd Street New York, New York 10055 | | | 8,779,768 | | | 18.17% | | BlackRock filed a Schedule 13G with the SEC on January 25, 2021, reporting that, at December 31, 2020, BlackRock beneficially owned and had sole dispositive power over 8,779,768 Common Shares and sole voting power over 8,670,202 Common Shares. | ||||||||||||
The Vanguard Group, Inc. ("Vanguard") 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | 7,519,276 | | | 15.56% | | Vanguard filed a Schedule 13G/A with the SEC on February 10, 2021, reporting that, at December 31, 2020, Vanguard beneficially owned 7,519,276 Common Shares and had shared voting power over 150,761 Common Shares, sole dispositive power over 7,331,190 Common Shares and shared dispositive power over 188,086 Common Shares. | ||||||||||||
State Street Corporation ("State Street") One Lincoln Street Boston, Massachusetts 02111 | | | 2,463,010 | | | 5.10% | | State Street filed a Schedule 13G with the SEC on February 9, 2021, reporting that, at December 31, 2020, State Street beneficially owned and had shared dispositive power over 2,463,010 Common Shares and shared voting power over 2,166,570 Common Shares. | ||||||||||||
| | | | | | | | | | | | |
TheseThe percentages assume that each of the principal shareholders continued to own the number ofindicated are based on 48,318,366 Common Shares reflected in the table on February 28, 2019.
|
Section 16(a)outstanding as of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our Trustees, executive officers and beneficial owners of more than 10% of our Common Shares to file reports of ownership and changes of ownership with the SEC and the Nasdaq. Based on our records and other information, we believe that during the year ended December 31, 2018 all applicable Section 16(a) filing requirements were met.March 24, 2021.
24 20192021 Proxy Statement 33
PROPOSAL 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, the Company seekswe are seeking a non-binding advisory vote from itsour shareholders to approve the compensation of itsour named executive officers as described in the "Compensation Discussion and Analysis" section beginning on page 2635 and the "Executive Compensation" section beginning on page 32.42.
TheOur Board recommends that shareholders vote FOR"FOR" the following resolution:
RESOLVED: That the shareholders of the Company approve, on a non-binding, advisory basis, the compensation paid by the Company to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the "Compensation Discussion and Analysis" in this Proxy Statement.
Because your vote is advisory, it will not be binding upon theour Board or the Compensation Committee. However, theour Board values shareholders' opinions and theour Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.
Assuming a quorum is present at the meeting, approvalApproval of the advisory vote to approve executive compensation requires the affirmative vote of a majority of all the votes cast, in person or by proxy, at the 2019our 2021 Annual Meeting.
TheOur Board of Trustees recommends a vote "FOR" the advisory vote to approve executive compensation.
34 20192021 Proxy Statement 25
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Overview |
The Company'sOur compensation structure is unique because of itsour relationship with our manager, RMR LLC. The Company'sOur business management agreement with RMR LLC is designed to incentivize RMR LLC to provide the highest quality services to the Company.us. RMR LLC's base business management fee is paid based on the lower of the historical cost of the Company'sour properties and the Company'sour market capitalization. RMR LLC may earn an incentive management fee based on the three year total return of theour Common Shares relative to an index of the Company'sour peers. Because they are employees of RMR LLC and not theour Company, RMR LLC, and not theour Company, determines the cash compensation payable to the Company'sour named executive officers. The Company doesWe do not reimburse RMR LLC for compensation RMR LLC paid or pays to the Company'sour executive officers and the Company'sour management agreements with RMR LLC do not require RMR LLC to allocate or pay a specific amount or percentage of RMR LLC's management fees to the named executive officers or require those officers to dedicate a specified amount of their time to Companyour business. As part of the Company'sLast year, in response to feedback in connection with our shareholder engagement to address prior Say on Pay votes, the Companyprogram, we endeavored to better explain to our shareholders theseour arrangements with RMR LLC and to help them understand that disclosure ofhow cash compensation to the Company'sour named executive officers would not reflect actions or considerations byrelates to the aggregate fees paid to RMR LLC. Based on our shareholder engagement and the fact that more than 93% of the votes cast approved our 2020 Say on Pay proposal, our Compensation Committee.Committee believes these disclosure changes addressed past concerns regarding shareholder approval of Say on Pay.
Pursuant to its management agreement with RMR LLC and RMR Inc. Compensation Practices. In order to enable our shareholders to make an informed Say on Pay decision, RMR LLC provideshas provided the following information about the compensation it paid in 2020 to our named executive officers for services that otherwise would be provided by employeesthose officers to RMR LLC, our Company and as a result,other companies managed by RMR LLC or its subsidiaries:
Our named executive officers are officers and employees of RMR LLC.LLC and, as officers and employees of RMR LLC, conducts the Company's day to day operations on the Company's behalf and compensates or compensated the Company's named executive officers directly and in its sole discretion in connection with theiralso provide services rendered to the Company and to RMR LLC and the other companies managed by RMR LLC or its subsidiaries. The Compensation Committee is satisfied with this arrangement because of the imbedded compensation incentives for RMR LLC inhas informed us that the Company's business management agreement. The Company does not pay itscash compensation paid by RMR LLC to our named executive officers salariesis for services provided by the officers to RMR LLC, our Company and other companies managed by RMR LLC or bonusesits subsidiaries. RMR LLC has also informed us that it is not able to allocate with reasonable certainty or provide other compensatory benefits except fora reasonable estimate of the awards of Common Shares under the Office Properties Income Trust 2009 Incentive Share Award Plan, as amended (the "Share Award Plan"), discussed below.compensation paid by RMR LLC not the Company, determines the cash compensation payable to the Company's named executive officers. The Company does not reimburse RMR LLC for compensation RMR LLC paid or pays to the Company's executive officers. None of the Company'sour named executive officers has an employment agreement with the Company or with RMR LLC. Except for the share award agreements and the retirement agreement RMR LLC entered into with Mark L. Kleifges, who resigned as the Company's Chief Financial Officer and Treasurer effective December 31, 2018, discussed below under "Potential Payments upon Termination or Change in Control," nonetheir services to us for a number of the Company's named executive officers has an agreement that provides for payments or benefits upon or in connection with his termination or a change in control of the Company. Although the Compensation Committee reviews and approves the Company's business management and propertyreasons, including that:
2021 Proxy Statement 35
Summary of 2020 Named Executive Officer Compensation.
Named Executive Officer Compensation Philosophy and Process.
The key principle of RMR LLC's compensation philosophy for all employees, including our named executive officers, is to pay for performance. RMR LLC maintains a rigorous and thorough talent and compensation review process to ensure that its employees are in appropriate roles that maximize their full potential. This process also ensures that there is strong leadership guiding employees and that there is a succession and development plan for each role. RMR LLC's goal is to make employee and leadership development an integral part of its culture, supporting each employee and the continued success of RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries. RMR LLC's named executive officer compensation planning process incorporates key areas of evaluation, including: • external market data; • internal benchmarking; and • quantitative and qualitative assessments of Company, group and individual performance. |
Named Executive Officer Compensation Practices. RMR LLC's pay for performance compensation philosophy is reflected in its compensation practices:
36 2021 Proxy Statement
Components of the Named Executive Officers' Compensation. RMR LLC's compensation program includes both a base salary and a cash bonus. The cash bonuses RMR LLC pays to our named executive officers are describeddiscretionary in "Certain Related Person Transactions" beginningamount and are based on page 48a performance evaluation. The evaluation involves an analysis of both (i) the overall performance of RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries, and (ii) the performance of the individual officer and his, her or their contributions, and services provided, to RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries. RMR LLC believes this evaluation process allows RMR LLC to link pay with performance in the closest way possible and provide RMR LLC with the flexibility necessary to take all relevant factors into account in determining the bonus amounts, including the named executive officer's ability to react to changing circumstances that impact the businesses of RMR LLC, our Company and other companies managed by RMR LLC or its subsidiaries, including this year, the impact of the COVID-19 pandemic on RMR LLC's business.
RMR Inc. also awards shares of Class A common stock of RMR Inc. to our named executive officers. One fifth of the shares awarded vests on the award date and an additional one fifth vests on each of the next four anniversaries of the award date, subject to the applicable named executive officer continuing to render significant services, whether as an employee or otherwise, to RMR LLC or a public client company managed by RMR LLC or their respective affiliates and to accelerated vesting under certain circumstances.
The table below describes the objectives supported by each of RMR LLC's and RMR Inc.'s primary compensation elements, along with an overview of the key design features of each element.
Compensation Element | What It Does | Key Measures | ||
---|---|---|---|---|
| | | | |
Base Salary | • Provides a level of fixed pay appropriate to an executive's role and responsibilities • Evaluated on an annual basis; may be adjusted up to a cap of $350,000 or down | • Experience, duties and scope of responsibility • Internal and external market factors, including the COVID-19 pandemic | ||
Discretionary Cash Bonus | • Provides a competitive annual cash incentive opportunity • Links executives' interests with shareholders' interests • Incentivizes and rewards superior group, individual and Company performance | • Based on holistic performance evaluation • Impact of the COVID-19 pandemic | ||
Equity Compensation | • Links executives' interests with long-term interests of shareholders • Incentivizes and rewards superior group, individual and Company performance | • Based on holistic performance evaluation by the compensation committee of RMR Inc. |
2021 Proxy Statement. Statement 37
Named Executive Officer Pay Mix. As discussed above, RMR LLC's compensation program is designed so that the majority of compensation is performance based to promote alignment of our named executive officers' interests with those of shareholders. During 2020, Messrs. Blackman, Brown and Bilotto received aggregate performance based discretionary cash bonuses of $2,575,000 from RMR LLC.
The base salary payments for our named executive officers (which represent the fixed portion of their compensation packages) are reviewed annually and may be increased, subject to RMR LLC's salary cap, or decreased as RMR LLC deems appropriate. RMR LLC adjusts salary payments on October 1, the first day of its fiscal year. During 2020, Messrs. Blackman, Brown and Bilotto received aggregate base salary payments of $930,962 from RMR LLC. On an aggregated basis, in 2020, Messrs. Blackman, Brown and Bilotto received 27% of their total cash compensation in the form of base salary payments and the remaining 73% in the form of performance-based discretionary bonuses.
For information regarding the compensation paid by RMR LLC and RMR Inc. to the named executive officers of RMR Inc., please see the below "RMR LLC and RMR Inc. Compensation Practices" section and the documents filed by RMR Inc. with the SEC, including its Annual Report on Form 10-K for the fiscal year ended September 30, 20182020 and its Proxy Statement on Schedule 14A for its 20192021 Annual Meeting of Shareholders. RMR Inc.'s filings with the SEC are not incorporated by reference into this Proxy Statement.
26 2019 Proxy Statement
Compensation Philosophy |
The Company'sOur compensation program for itsour executive officers consists of Common Share awards of shares under the Share Award Plan. TheOur Compensation Committee believes that these share awards recognize the Company'sour executive officers' scope of responsibilities, reward demonstrated performance and leadership, motivate future performance and further align the interests of the executive officers with those of our shareholders.
Overview of |
In September 2018,2020, the Chair of theour Compensation Committee met with one of the Company'sour Managing Trustees, Adam D. Portnoy, and the chairs of the compensation committees of RMR Inc. and of the then other public companies to which RMR LLC providesor its subsidiaries provide management services, which included: the Company; Hospitality PropertiesDiversified Healthcare Trust ("HPT"DHC"); Industrial Logistics Properties Trust ("ILPT"); SIR; Senior HousingService Properties Trust ("SNH"SVC"); Tremont Mortgage Trust ("TRMT" and, together with HPT,DHC, ILPT SIR and SNH,SVC, the "Other RMR Managed REITs"); RMR Mortgage Trust ("RMRM"); Five Star Senior Living Inc. ("FVE"); and TravelCenters of America LLCInc. ("TA"). The purposes of this meeting were, among other things, to discuss compensation philosophy and factors that may affect compensation decisions, to consider the compensation payable to the Company'sour Director of Internal Audit (who provides services to the Companyus and to other companies to which RMR LLC providesor its subsidiaries provide management services), to consider the allocation of internal audit and related services costs among RMR Inc., theour Company and other companies to which RMR LLC providesor its subsidiaries provide such services, to provide a comparative understanding of potential share awards by the Companyus and the other companies to which RMR LLC providesor its subsidiaries provide management services and to hear and consider recommendations from RMR LLC concerning potential share awards and the vesting of those shares.shares, which were in part based on the results of RMR LLC's review of current market practices with respect to executive compensation, and specifically of the companies' peer groups, and shareholder feedback received during shareholder outreach with respect to the percentage of executive officer compensation received in share awards. The share awards made by the other companies managed by RMR LLC or its subsidiaries are considered to be appropriate comparisons because of the similarities between certain services the Company requireswe require from the Company'sour share awardees and the services provided by awardees providing similar services to these other companies. Subsequent to this meeting, the members of theour Compensation Committee held a meeting at which theour Compensation Committee Chair provided a report of the information discussed with Mr. Adam D. Portnoy and others, and made recommendations for share awards to the Company'sour named executive officers. TheOur Compensation Committee then discussed these recommendations and other factors, including the following factors for the 20182020 share awards: (i) the value of the proposed share awards; (ii) the historical
38 2021 Proxy Statement
awards previously awarded to these named executive officers and the corresponding values at the time of the awards; (iii) the recommendations of RMR LLC as presented by Mr. Adam D. Portnoy, president and chief executive officer of RMR LLC; (iv) the value of share awards to executive officers providing comparable services at the applicable Other RMR Managed REITs and companies to which RMR LLC providesor its subsidiaries provide management services; (v) the scope of, and any changes to, the responsibilities assigned to, or assumed by, these named executive officers during the past year and on a going forward basis; (vi) the length of historical services by these named executive officers; (vii) theour Compensation Committee's perception regarding the quality of the services provided by these named executive officers in carrying out those responsibilities; and (viii) the Company'sour financial and operating performance in the past year and the Company'sour perceived future prospects. TheOur Compensation Committee considered these multiple factors in determining whether to increase or decrease the amounts of the prior year's awards. There was no formulaic approach in the use of these various factors in determining the number of shares to award to each named executive officer. The share amounts were determined on a subjective basis, using the various factors in theour Compensation Committee's sole discretion. These named executive officers did not participate in these meetings and were not involved in determining or recommending the amount or form of named executive officer compensation they received from the Company.
2019 Proxy Statement 27
Analysis of |
Although the Company doeswe do not pay any cash compensation directly to itsour officers and hashave no employees, the Company haswe adopted the Share Award Plan to reward the Company'sour named executive officers and other RMR LLC employees who provide services to the Companyus and to foster a continuing identityalign their interests with those of interest between them and our shareholders. The Company awardsWe award shares under the Share Award Plan to recognize theour named executive officers' scope of responsibilities, reward demonstrated performance and leadership, motivate future performance, align the interests of the Company'sour executives with those of the Company'sour other shareholders and motivate the executives to remain employees of the Company's managerRMR LLC and to continue to provide services to the Companyus through the term of the awards.
Under its charter, theour Compensation Committee evaluates, approves and administers the Company'sour equity compensation plans, which currently consist solely of the Share Award Plan. TheOur Compensation Committee has historically determined to use awards of Common Shares under the Share Award Plan rather than seek to issue stock options as equity compensation. Because the value of the Common Shares may be determined in part by reference to its dividend yield relative to market interest rates rather than by its potential for capital appreciation, the Company believeswe believe a conventional stock option plan might not provide appropriate incentives for management for a business like that of the Company,ours, but a share award plan may create a better identity of interests between management and other shareholders. Also, because the Company believeswe believe a stock option plan could have the potential to encourage excessive short term risk taking, the Company haswe have historically granted share awards rather than issue stock options.
TheOur Compensation Committee uses comparative information about the applicable Other RMR Managed REITs as additional data to help it determine whether it is awarding share amounts that are reasonable based on the characteristics of those REITs and their respective officers. TheOur Compensation Committee also considers the size and structure of the applicable Other RMR Managed REITs and other companies managed by RMR LLC managed businesses,or its subsidiaries, and the experience, length of service and scope of duties and responsibilities of the officers at these other companies to assess the appropriateness of the value of the share awards proposed for the Company'sour officers in light of the proposed awards for officers with comparable roles at the other companies. TheOur Compensation Committee reviewed the compensation data regarding the applicable Other RMR Managed REITs and their officers, together with the other factors discussed above in "Overview of 2020 Compensation Actions," but theour Compensation Committee did not undertake a detailed comparison of the named executive officers across the applicable Other RMR Managed REITs or other companies managed by RMR LLC or assign weight to any particular characteristic of these other companies or their officers because theour Compensation Committee determines the share amounts in its sole discretion on a non-formulaic basis. In 2018, the2020, our Compensation Committee considered the foregoing factors and decided to award the same number of sharesCommon Shares to Messrs.Mr. Blackman and Kleifges asthat was awarded in 2017,2019 and a greater number of Common Shares to Messrs. Brown and Bilotto, each in accordance with the recommendation of RMR LLC and the Chair of theour Compensation Committee. TheOur Compensation
2021 Proxy Statement 39
Committee also determined that it would be appropriate to provide that such share awards would vest upon the occurrence of certain corporate "change in control" or termination events. Mr. Kleifges resigned as the Company's Chief Financial Officer and Treasurer effective December 31, 2018. In connection with Mr. Kleifges's retirement, the Compensation Committee approved the accelerated vesting of Mr. Kleifges's unvested Common Shares as of June 30, 2019.
The Company determinesWe determine the fair market value of the shares awarded based on the closing price of the Common Shares on the date of the award. TheOur Compensation Committee has imposed, and may impose, vesting and other conditions on the awarded Common Shares because it believes that time based vesting encourages the recipients of the share awards to remain employed by RMR LLC and to continue to provide services to the Company. Theus. Our Compensation Committee currently uses a vesting schedule under which one fifth of the shares vest immediately and the remaining shares vest in four equal, consecutive annual installments commencing on the first anniversary of the date of the award. TheOur Compensation Committee utilizes a four year time based vesting schedule to provide an incentive to provide services for a long term and in consideration of the tax treatment of the share awards to the Companyus and to the recipients. In the event a recipient who has been awardedreceived a share award ceases to perform duties for the Companyus or ceases to be an officer or an employee of RMR LLC or any company that RMR LLC or its
28 2019 Proxy Statement
subsidiaries manage during the vesting period, the Companywe may cause the forfeiture of or the Company may repurchase for nominal consideration, the Common Shares that have not yet vested. As with other issued Common Shares, vested and unvested shares awarded under the Share Award Plan are entitled to receive distributions that the Company makes,we make, if any, on the Common Shares. As described above, the Compensation Committee approved the accelerated vesting of Mr. Kleifges's unvested Common Shares as of June 30, 2019.
Because the consideration of share awards by theour Compensation Committee and theour Board is determined on a regular schedule (i.e., in September for the Company'sour officers and employees of RMR LLC and at the first meeting of theour Board after the annual meeting of shareholders for the Trustees), theany proximity of any awards to earnings announcements or other market events if any, is coincidental.
TheOur Compensation Committee believes that its compensation philosophy and programs are designed to foster a business culture that aligns the interests of its named executive officers with those of its shareholders. TheOur Compensation Committee believes that the equity compensation of its named executive officers is appropriate to the goal of providing shareholders dependable, long term returns.
Frequency of Say on Pay |
The Company'sOur current policy, consistent with the prior vote of our shareholders, is to provide shareholders with an opportunity to approve, on an advisory basis, the Company'sour compensation of the Company'sour named executive officers each year at the annual meeting of shareholders. Accordingly, the Company iswe are providing shareholders with an opportunity to approve this compensation. As noted above, the Company'sour only compensation to the Company'sour named executive officers is Common Share awards. None of the Company'sour named executive officers are employed by the Company. The Company'sus. Our manager, RMR LLC, provides services that otherwise would be provided by employees and employs and compensates the Company'sour named executive officers directly and in RMR LLC's sole discretion in connection with their services rendered to the Companyus and to RMR LLC and the other companies managed by RMR LLC or its subsidiaries.subsidiaries as discussed above.
In evaluating the Company'sour compensation process for 2018, the2020, our Compensation Committee generally considered the results of the most recent advisory vote of our shareholders on the compensation of the executive officers named in the proxy statement for the Company's 2018our 2020 annual meeting of shareholders.
|
RMR LLC has advised the Company that in 2018 RMR LLC paid each of the Company's named executive officers cash compensation comprised of a fixed salary and a cash bonus. RMR LLC did not provide guaranteed cash bonuses to these named executive officers during 2018 and did not set specific performance targets on which bonuses would be payable to them. Instead, the annual cash bonuses paid by RMR LLC to these named executive officers in 2018 were discretionary in amount and were based on a performance evaluation conducted by the compensation committee of RMR Inc.
As explained above, the Company's manager, RMR LLC, provides services that otherwise would be provided by employees, conducts the Company's day to day operations on the Company's behalf and compensates or compensated the Company's named executive officers directly and in its sole discretion in connection with their services rendered to the Company and to RMR LLC and the other companies managed by RMR LLC or its subsidiaries. The Company does not pay its named executive officers salaries or bonuses or provide other compensatory benefits except for awards of Common Shares under the Share Award Plan. The Company does not reimburse RMR LLC for compensation RMR LLC or RMR Inc. pays or paid to the Company's named executive officers.
RMR Inc., the parent of RMR LLC, awarded 4,000 shares of Class A common stock of RMR Inc., with an award date fair value of $380,000, each to Mr. Blackman and Mr. Kleifges. One fifth of the shares awarded vested on the award date and an additional one fifth vests on each of the next four anniversaries
40 20192021 Proxy Statement 29
REPORT OF OUR COMPENSATION COMMITTEE
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, our Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2020.
Donna D. Fraiche, Chair Barbara D. Gilmore William A. Lamkin Jeffrey P. Somers |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee is comprised entirely of the award date, subject to the applicable named executivefour Independent Trustees listed above. No member of our Compensation Committee is a current, or during 2020 was a former officer continuing to render significant services, whether as anor employee or otherwise, to RMR LLC or a public client company managed by RMR LLC or their respective affiliates and to accelerated vesting under certain circumstances.
The Company's namedof ours. In 2020, none of our executive officers areserved (i) on the compensation committee of any entity that had one or were alsomore of its executive officers serving on our Board or our Compensation Committee or (ii) on the board of directors or board of trustees of any entity that had one or more of its executive officers serving on our Compensation Committee. Members of our Compensation Committee serve as independent trustees or independent directors and employeescompensation committee members of RMR LLC and, as officers and employees of RMR LLC, also provide or provided servicesother public companies to RMR LLC, RMR Inc. and other companies managed bywhich RMR LLC or its subsidiaries. RMR LLC has informedsubsidiaries provide management services. Ms. Fraiche serves as an independent trustee of SVC and an independent director of FVE. Ms. Gilmore serves as an independent director of FVE and TA and as an independent trustee of RMRM. Mr. Harrington serves as an independent trustee of DHC, SVC, TRMT and RMRM. Mr. Lamkin serves as an independent trustee of SVC and TRMT. Mr. Somers serves as an independent trustee of DHC and RMRM and served as an independent trustee of TRMT until May 2020. The disclosures regarding our relationships with these foregoing entities and certain transactions with or involving them under the Company thatsection entitled "Certain Related Person Transactions" are incorporated by reference herein.
2021 Proxy Statement 41
The following tables and footnotes summarize the cashtotal compensation we paid by RMR LLC to the Company'sour Chief Financial Officer and Treasurer, our former President and Chief Executive Officer and our former Vice President who were serving as such officers as of December 31, 2020. As of December 31, 2020, our "named executive officers" were our Chief Financial Officer and Treasurer, our former President and Chief Executive Officer and our current President and Chief Operating Officer who was then serving as our Vice President and Chief Operating Officer. Our named executive officers iswere our only executive officers during 2020. Please see "Compensation Discussion and Analysis—Compensation Overview" above for services provided by thean explanation of why we pay our named executive officers to RMR LLC, RMR Inc., the Company and other companies managed by RMR LLC or its subsidiaries. RMR LLC has also informed the Company that it is not able to allocate with reasonable certainty or provide a reasonable estimate ofno cash compensation. For information regarding the compensation paid by RMR LLC and RMR Inc. to our named executive officers, for their services toplease see the Company for a number of reasons:
Compensation Practices" section. For information regarding the compensation paid by RMR LLC and RMR Inc. to the named executive officers of RMR Inc., please see the documents filed by RMR Inc. with the SEC, including its Annual Report on Form 10-K for the fiscal year ended September 30, 20182020 and its Proxy Statement on Schedule 14A for its 2019 Annual Meeting of Shareholders. RMR Inc.'s filings with the SEC are not incorporated by reference into this Proxy Statement.
30 2019 Proxy Statement
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2018.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of the six Independent Trustees listed above. No member of the Compensation Committee is a current, or during 2018 was a former, officer or employee of the Company. In 2018, none of the Company's executive officers served (i) on the compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company or (ii) on the board of directors or board of trustees of any entity that had one or more of its executive officers serving on the Compensation Committee of the Company. Members of the Compensation Committee serve as independent trustees or independent directors and compensation committee members of other public companies to which RMR LLC or its subsidiaries provide management services. Ms. Gilmore serves as an independent director of FVE and TA. Ms. Fraiche serves as an independent trustee of HPT and an independent director of FVE. Mr. Harrington serves as an independent trustee of HPT, SNH, TRMT and RIF. Mr. Lamkin serves as an independent trustee of HPT. Mr. Somers serves as an independent trustee of SNH, TRMT and RIF. Ms. Fraiche and Messrs. Lamkin and Somers also served as independent trustees of SIR during 2018, prior to the SIR Merger. In addition, each of our Independent Trustees serves as a director of Affiliates Insurance Company ("AIC"). The disclosures regarding our relationships with these foregoing entities and certain transactions with or involving them under the section entitled "Certain Related Person Transactions" are incorporated by reference herein.
2019 Proxy Statement 31
The following tables and footnotes summarize the total compensation paid by the Company to our President and Chief Executive Officer and our Chief Financial Officer and Treasurer who were serving as such officers as of December 31, 2018, or the Company's "named executive officers". Please see "Say on Pay" above for an explanation of why the Company pays our named executive officers no cash compensation. For information regarding the compensation paid by RMR LLC and RMR Inc. to the named executive officers of RMR Inc., please see the above "RMR LLC and RMR Inc. Compensation Practices" section and the documents filed by RMR Inc. with the SEC, including its Annual Report on Form 10-K for the fiscal year ended September 30, 2018 and its Proxy Statement on Schedule 14A for its 20192021 Annual Meeting of Shareholders. RMR Inc.'s filings with the SEC are not incorporated by reference into this Proxy Statement.
Summary Compensation Table |
| | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Name and Principal Position | | Year | | Stock Awards ($)(1) | | All Other Compensation ($)(2) | | Total ($) | | | Year | | Salary | | Bonus | | Stock Awards ($)(1) | | All Other Compensation ($)(2) | | Total ($) | | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
David M. Blackman | | 2018 | | | 118,650 | | | 24,080 | | | 142,730 | | | |||||||||||||||||||||||||||
Christopher J. Bilotto(3)(4)(5) | | 2020 | | | — | | | — | | | 115,200 | | 6,056 | | 121,256 | | ||||||||||||||||||||||||
| | 2019 | | | — | | | — | | | 59,740 | | 1,777 | | 61,517 | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||||||
Matthew C. Brown(5) | | 2020 | | | — | | | — | | | 115,200 | | 7,508 | | 122,708 | | ||||||||||||||||||||||||
| 2019 | | | — | | | — | | | 89,610 | | 1,926 | | 91,536 | | |||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||||||
David M. Blackman(4)(5) | | 2020 | | | — | | | — | | | 438,735 | | 39,597 | | 478,332 | | ||||||||||||||||||||||||
| | 2017 | | | 130,270 | | | 23,822 | | | 154,092 | | | | 2019 | | | — | | | — | | | 609,810 | | 20,737 | | 630,547 | | |||||||||||
| | 2016 | | | 155,120 | | | 23,220 | | | 178,340 | | | | 2018 | | | — | | | — | | | 118,650 | | 24,080 | | 142,730 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Mark L. Kleifges(3) | | 2018 | | | 201,720 | | | 24,080 | | | 225,800 | | | |||||||||||||||||||||||||||
| 2017 | | | 130,270 | | | 23,822 | | | 154,092 | | | ||||||||||||||||||||||||||||
| 2016 | | | 155,120 | | | 23,220 | | | 178,340 | | | ||||||||||||||||||||||||||||
| | | | | | | | | |
3242 20192021 Proxy Statement
|
Share awards grantedThe following table shows the total Common Shares awarded by the Companyus to theour named executive officers in 2018their capacity as our officers in 2020.
| | | | | | | ||||||
Name | | Grant Date | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | Grant Date Fair Value of Stock and Option Awards ($)(1) | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Christopher J. Bilotto | | | 9/17/2020 | | | 5,000 | | | 115,200 | |||
Matthew C. Brown | | | 9/17/2020 | | | 5,000 | | | 115,200 | |||
David M. Blackman | | | 9/17/2020 | | | 15,000 | | | 345,600 | |||
| | | | | | |
2020 Outstanding Equity Awards at Fiscal Year End |
The agreements governing the Common Shares we awarded to our named executive officers in 2020 in their capacity as our officers of the Company provideprovided that one fifth of each award vested on the date of the award grant and an additional one fifth vests on each of the next four anniversaries of the award date, subject to the applicable named executive officer continuing to render significant services, whether as an employee or otherwise, to the Company,us, RMR LLC or any company to which RMR LLC provides management services or their respective affiliates and to accelerated vesting under certain circumstances. Holders of vested and unvested Common Shares awarded under the Share Award Plan receive distributions that the Company makes,we make, if any, on itsour shares on the same terms as other holders of the Common Shares.
2021 Proxy Statement 43
The following table shows the total Common Shares awarded by the Company to its named executive officersus in their capacity as officers of the Company in 2018.
| | | | | | | ||||||
Name | | Grant Date | | All Other Stock Awards: Number of Shares of Stock or Units (#)(1)(2) | | Grant Date Fair Value of Stock and Option Awards ($)(1)(3) | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
David M. Blackman | | | 9/13/2018 | | | 1,750 | | | 118,650 | |||
Mark L. Kleifges | | | 9/13/2018 | | | 1,750 | | | 118,650 | |||
| | | | | | |
|
The following table shows the total Common Shares awarded by the Company in 20182020 and prior years to the Company'sour named executive officers that were unvested as of December 31, 2018.2020.
| | | | | | | | | | | | | |||||||||||
| | | | Stock Awards(1) | | | | Stock Awards(1) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Year Granted | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Year Granted | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | |||||||||||
David M. Blackman | | | 2018 | | | 1,400 | | | 38,472 | ||||||||||||||
Christopher J. Bilotto(3) | | | 2020 | | | 4,000 | | 90,880 | |||||||||||||||
| | | 2017 | | | 1,050 | | | 28,854 | | | 2019 | | | 1,200 | | 27,264 | ||||||
| | | 2016 | | | 700 | | | 19,236 | | | 2018 | | | 102 | | 2,317 | ||||||
| | | 2015 | | | 350 | | | 9,618 | | | 2017 | | | 51 | | 1,159 | ||||||
| | | | | | | | | | | | | |||||||||||
Mark L. Kleifges(4) | | | 2018 | | | 1,400 | | | 38,472 | ||||||||||||||
Matthew C. Brown(4) | | | 2020 | | | 4,000 | | 90,880 | |||||||||||||||
| | 2017 | | | 1,050 | | | 28,854 | | | 2019 | | | 1,800 | | 40,896 | |||||||
| | 2016 | | | 700 | | | 19,236 | | | 2018 | | | 62 | | 1,409 | |||||||
| | 2015 | | | 350 | | | 9,618 | | | 2017 | | | 31 | | 704 | |||||||
| | | | | | | | | | | | | |||||||||||
David M. Blackman(5) | | | 2020 | | | 12,000 | | 272,640 | |||||||||||||||
| | | 2019 | | | 9,000 | | 204,480 | |||||||||||||||
| | | 2018 | | | 1,428 | | 32,444 | |||||||||||||||
| | | 2017 | | | 714 | | 16,222 | |||||||||||||||
| | | | | | |
2019 Proxy Statement 33
|
The following table shows Common Share awards made in 20182020 and prior years to the Company'sour named executive officers that vested in 2018.2020.
| | | | | | | | | |||||
| | Stock Awards(1) | | Stock Awards | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Number of Shares Acquired on Vesting (#)(2) | | Value Realized on Vesting ($)(3) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($)(1) | |||||
David M. Blackman | | 1,750 | | | 118,272 | ||||||||
Mark L. Kleifges(4)(5) | | 1,750 | | | 118,272 | ||||||||
Christopher J. Bilotto(2) | | 1,533 | | 35,133 | |||||||||
Matthew C. Brown(3) | | 1,693 | | 38,755 | |||||||||
David M. Blackman(4) | | 8,142 | | 186,022 | |||||||||
| | | | | | | | |
44 2021 Proxy Statement
Potential Payments upon Termination or Change in Control |
The Share Award Plan and the form of share award agreement for awards made to our named executive officers providesprovide for acceleration of vesting of all share awards upon the occurrence of certain change in control or termination events (each, a "Termination Event").
The following table describes the potential payments to our named executive officers upon a Termination Event, if such event had occurred, as of December 31, 2018.2020.
| | | | | | | | | |||||
Name | | Number of Shares Vested Upon Termination Event (#)(1)(2) | | Value Realized on Termination Event as of December 31, 2018 ($)(1)(3) | | Number of Shares Vested Upon Termination Event (#) | | Value Realized on Termination Event as of December 31, 2020 ($)(1) | |||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
David M. Blackman | | 3,500 | | | 96,180 | ||||||||
Mark L. Kleifges(4) | | 3,500 | | | 96,180 | ||||||||
Christopher J. Bilotto(2) | | 5,353 | | 121,620 | |||||||||
Matthew C. Brown(3) | | 5,893 | | 133,889 | |||||||||
David M. Blackman(4) | | 23,142 | | 525,786 | |||||||||
| | | | | | | | |
From time to time we have approved, and may in the future approve, the acceleration of vesting of Common Shares previously awarded under the Share Award Plan to former employees of RMR LLC, which may include individuals who are our executive officers, when their employment with RMR LLC is terminated.
For a discussion of the consequences of a Termination Event under the Company'sour business and property management agreements with RMR LLC, see the below "Related Person Transactions" section.
Pay Ratio |
Pay ratio disclosure under Item 402(u) has not been provided because the Company doeswe do not have any employees.
34 20192021 Proxy Statement 45
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF ERNSTDELOITTE & YOUNGTOUCHE LLP AS INDEPENDENT AUDITORS
TheOur Audit Committee has the sole authority and responsibility to hire, evaluate and, when appropriate, replace our independent auditors and is directly responsible for the appointment, compensation and general oversight of the work of theour independent auditors. TheOur Audit Committee is responsible for approving the audit and permissible non-audit services provided by theour independent auditors and the associated fees.
TheOur Audit Committee evaluates the performance of our independent auditors annually and determines whether to re-engage the current independent auditors or consider other audit firms. In doing so, theour Audit Committee considers the quality and efficiency of the services provided by the auditors, the auditors' technical expertise and knowledge of our operations and industry, the auditors' independence, legal proceedings involving the auditors, the results of PCAOB inspections by the Public Company Accounting Oversight Board ("PCAOB") and peer quality reviews of the auditors and the auditors' reputation in the marketplace. In connection with the mandated rotation of theour independent auditors' lead engagement partner, theour Audit Committee and its chairChair consider the selection of the new lead engagement partner identified by theour independent auditors.
Based on this evaluation, theour Audit Committee has appointed ErnstDeloitte & YoungTouche LLP ("Deloitte") to serve as the Company'sour independent auditors for the fiscal year ending December 31, 2019. Ernst & Young LLP has served as the Company's independent auditors since2021. On June 12, 2020, our formation in 2009 and is considered by management and the Audit Committee to be well qualified. Further,approved the Audit Committee and the Board believe that the continued retentionengagement of Ernst & Young LLP to serveDeloitte as theour independent registered public accounting firm, iseffective as of such date. During the fiscal years ended December 31, 2018 and December 31, 2019, and the subsequent interim period through June 12, 2020, we did not, nor did anyone on our behalf, consult with Deloitte with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and no written report or oral advice was provided to us that Deloitte concluded was an important factor that we consider in reaching a decision as to any accounting, auditing or financial reporting issue or (b) any matter that was either the best interestssubject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K). Contemporaneous with our Audit Committee's determination to engage Deloitte, our Audit Committee dismissed Ernst & Young LLP ("Ernst & Young") as our independent registered public accounting firm, effective as of such date.
The reports of Ernst & Young on our financial statements for each of the Companytwo fiscal years ended December 31, 2018 and its shareholders.December 31, 2019, did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audits of our financial statements for the fiscal years ended December 31, 2018 and December 31, 2019, and during the subsequent interim period through June 12, 2020, there were no "disagreements" (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) between us and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of Ernst & Young would have caused Ernst & Young to make reference to the subject matter of the disagreement in their report. During the fiscal years ended December 31, 2018 and December 31, 2019 and the subsequent interim period through June 12, 2020, there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
TheWe provided Ernst & Young with a copy of this disclosure and requested that Ernst & Young furnish us with a letter addressed to the SEC stating whether it agrees with the statements contained herein. A copy of Ernst & Young's letter, dated June 15, 2020, is filed as Exhibit 16.1 to our Current Report on Form 8-K filed on June 15, 2020.
46 2021 Proxy Statement
Our Audit Committee has determined to submit its selection of theour independent auditors to our shareholders for ratification. This vote will ratify prior action by theour Audit Committee and will not be binding upon theour Audit Committee. However, theour Audit Committee may reconsider its prior appointment of theour independent auditors or consider the results of this vote when it determines who to appoint as our independent auditors in the future.
Audit Fees and All Other Fees |
The following table shows the fees for audit and other services provided to us by Deloitte for the Companyfiscal year ended December 31, 2020.
| | | | |
| 2020 Fees ($) | | ||
---|---|---|---|---|
| | | | |
Audit Fees | | 724,552 | | |
Audit Related Fees | | — | | |
Tax Fees | | — | | |
All Other Fees | | 948 | | |
| | | |
The following table shows the fees for audit and other services provided to us by Ernst & Young LLP for the fiscal years ended December 31, 20182020 and 2017.2019, in each case, at such times they served as our independent auditors.
| | | | | | | | | | | ||||||
| | 2018 Fees ($)(1) | | 2017 Fees ($) | | | 2020 Fees ($) | | 2019 Fees ($) | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | |||||||||||
Audit Fees | | | 1,834,987 | | | 1,483,747 | | | 140,500 | | 984,573 | | ||||
Audit Related Fees | | | — | | | — | | | — | | — | | ||||
Tax Fees | | | 47,500 | | | 271,500 | | | 7,000 | | 58,600 | | ||||
All Other Fees | | | 720 | | | 456 | | | 992 | | 787 | | ||||
| | | | | | | | | | |
2019 Proxy Statement 35
Audit Fees. This category includes fees associated with the annual financial statements audit and related audit procedures, the audit of internal control over financial reporting, work performed in connection with any registration statements and any applicable Current Reports on Form 8-K and the review of any of the Company'sour Quarterly Reports on Form 10-Q. The increase in audit fees from 2017 to 2018 was due primarily to audit fees related to the registration statement filed in connection with the SIR Merger.
Audit Related Fees. This category consists of services that are reasonably related to the performance of the audit or review of financial statements and are not included in "Audit Fees." These services principally include due diligence in connection with acquisitions, consultation on accounting and internal control matters, audits in connection with proposed or consummated acquisitions, information systems audits and other attest services.
Tax Fees. This category consists of fees for tax services, including tax compliance, tax advice and tax planning. The decrease in tax fees in 2018 compared to 2017 was due primarily to tax fees for tax services in connection with our acquisition of First Potomac Realty Trust in 2017.
All Other Fees. This category consists of services that are not included in the above categories. The amounts for 20182019 and 20172020 relating to fees for audit and other services provided to us by Ernst & Young and Deloitte, in each case, at such times they served as our independent auditors, reflect annual subscription fees for Ernst & Young LLP'seach independent auditor's online accounting research application.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors |
TheOur Audit Committee has established policies and procedures that are intended to control the services provided by our independent auditors and to monitor their continuing independence. Under these policies, our independent auditors may not undertake any services unless the engagement is specifically approved
2021 Proxy Statement 47
by theour Audit Committee or the services are included within a category that has been approved by theour Audit Committee. The maximum charge for services is established by theour Audit Committee when the specific engagement or the category of services is approved. In certain circumstances, our management is required to notify theour Audit Committee when approved services are undertaken and theour Audit Committee or its Chair may approve amendments or modifications to the engagement or the maximum fees. Our Director of Internal Audit is responsible for reporting to theour Audit Committee regarding compliance with these policies and procedures.
TheOur Audit Committee will not approve engagements of theour independent auditors to perform non-audit services for the Companyus if doing so will cause theour independent auditors to cease to be independent within the meaning of applicable SEC or Nasdaq rules. In other circumstances, theour Audit Committee considers, among other things, whether our independent auditors are able to provide the required services in a more or less effective and efficient manner than other available service providers and whether the services are consistent with the Public Company Accounting Oversight Board Rules.PCAOB's rules.
All services for which the Companywe engaged its independent auditorsDeloitte in fiscal 20182020 and 2017Ernst & Young in fiscal 2020 and 2019, in each case, at such times they served as our independent auditors, were approved by theour Audit Committee. The total fees for audit and non-audit services provided by Deloitte in fiscal 2020 and Ernst & Young LLP in fiscal 20182020 and fiscal 20172019, in each case, at such times they served as our independent auditors, are set forth above. TheOur Audit Committee approved the engagement of Deloitte in fiscal 2020 and Ernst & Young LLPin fiscal 2020 and 2019 to provide the non-audit services described above because it determined that Deloitte in fiscal 2020 and Ernst & Young LLPin fiscal 2020 and 2019 providing these services would not compromise Ernst & Young LLP'seach independent auditor's independence and that theeach firm's familiarity with our record keeping and accounting systems would permit the firm to provide these services with equal or higher quality, more efficientlyquickly and at a lower cost than the Companywe could obtain these services from other providers.
36 2019 Proxy Statement
Other Information |
The Company hasWe have been advised by Ernst & Young LLPDeloitte that neither the firm, nor any member of the firm, has any material interest, direct or indirect, in any capacity in the Companyus or itsour subsidiaries.
One or more representatives of Ernst & Young LLPDeloitte will be present at the 2019our 2021 Annual Meeting. The representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Assuming a quorum is present at the meeting, ratificationRatification of the appointment of theour independent auditors requires the affirmative vote of a majority of all the votes cast, in person or by proxy, at the 2019our 2021 Annual Meeting.
TheOur Board of Trustees recommends a vote "FOR" the ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors.
48 20192021 Proxy Statement 37
PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE OFFICE PROPERTIES INCOME TRUST 2009 INCENTIVE SHARE AWARD PLAN, AS AMENDED
The Share Award Plan became effective on June 11, 2009, and is scheduled to expire on June 11, 2019. We are asking shareholders to approve an amendment to the Share Award Plan to extend the term of the plan by three years to June 11, 2022. No increase to the number of Common Shares available for award under the Share Award Plan is being proposed.
The Share Award Plan currently provides that an aggregate of 500,000 Common Shares are available for award under the plan pursuant to grants of Common Shares or Common Shares subject to restrictions ("Restricted Shares"). As of December 31, 2018, 330,372 Common Shares were available for grants of future awards pursuant to the Share Award Plan, and there were 55,321 unvested Restricted Shares outstanding, which remain subject to possible forfeiture to, or repurchase for nominal consideration by, us as provided in applicable share award agreements. We anticipate that the number of Common Shares available for issuance under the Share Award Plan will be sufficient to allow us to satisfy the Company's anticipated share award plans through the extended term of the plan.
The Board believes that equity and equity-based compensation assists in recognizing executive's and other service provider's scope of responsibilities, rewarding demonstrated performance and leadership, motivating future performance, aligning the interests of the Company's executives and other service providers with those of the Company's other shareholders and motivating executives and other service providers to remain in the service of the Company and RMR LLC and to continue to provide services to the Company through the term of the awards. The Share Award Plan is the only plan the Company has to provide equity and equity-based incentive compensation to eligible individuals. The term of the Share Award Plan will expire on June 11, 2019, following which, absent approval of the amendment to the Share Award Plan, we will no longer have an equity compensation plan to assist us in accomplishing our compensation objectives. Shareholder approval of the amendment to the Share Award Plan will permit us to use the plan to satisfy our equity compensation needs through June 11, 2022.
For purposes of evaluating our equity compensation program, shareholders may wish to consider two key metrics: "historical burn rate" and "dilution."
|
A copy of the Share Award Plan, which reflects Amendment No. 1 to the Share Award Plan adopted on August 25, 2015, and the proposed amendment to the Share Award Plan ("Amendment No. 2"), is set forth as Annex A to this Proxy Statement. All references to the Share Award Plan hereafter are to the Share Award Plan as it would be amended by Amendment No. 2, unless otherwise indicated. The material features of the Share Award Plan are described below. The following description is intended to
38 2019 Proxy Statement
be a summary, and does not purport to be a complete statement of the terms of the Share Award Plan. Accordingly, this summary is qualified in its entirety by reference to Annex A.
Administration. The Share Award Plan will continue to be administered by the Board or, in the discretion of the Board, a committee designated by the Board and composed of at least two members of the Board. As of the effective date of the Share Award Plan, the Board has delegated its authority to administer the Share Award Plan to the Compensation Committee; however, the Board may revoke or rescind this delegation of authority in whole or in part at any time. Each member of any committee administering the Share Award Plan is required to be a "non-employee director" (within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act). The Board or a committee thereof has the authority to administer the Share Award Plan, including the authority to interpret the plan, to make awards thereunder (and determine the terms of such awards) and to adopt and approve from time to time the forms of share award agreements under the Share Award Plan.
Awards. The Share Award Plan permits discretionary awards of Common Shares, which will be subject to such terms and conditions as the Board or a committee may determine, which may include, without limitation, terms with respect to vesting, forfeiture, repurchase and transfer restrictions, typically based on continued employment or service. If it determines to do so, the Board or the designated committee may award shares under the Share Award Plan that are not subject to vesting, forfeiture, repurchase and transfer restrictions.
Participants. The Share Award Plan permits awards to be made to our Trustees and officers, employees of our manager, consultants, advisors or other persons or entities providing management, administrative or other services to us or to our subsidiaries. Actual participants are determined by the Board or a committee thereof in its discretion.
Change in Control. The form of share award agreement for awards made to the Company's named executive officers provides for acceleration of vesting of all share awards upon the occurrence of certain change in control or termination events. If shareholders approve extending the term of the Share Award Plan to June 11, 2022, the Share Award Plan will also provide that if the Company is subject to a "Change in Control," or a "Termination Event" unvested awards will vest upon the occurrence of the Change in Control or Termination Event. For purposes of the Share Award Plan, a Change in Control will generally be defined as occurring only upon (1) the acquisition by a third party of 50% or more of the Company's shares or voting power, (2) an unapproved change in a majority of the members of the Board, (3) the consummation of a merger or similar transaction involving the Company in which our shares do not represent more than 50% of the shares of the resulting entity or (4) a sale of all or substantially all of the Company's assets to an unaffiliated third party or the liquidation of the Company. For purposes of the Share Award Plan, a Termination Event will occur if RMR LLC (or any entity controlled by, under common control with or controlling RMR LLC) ceases to be the manager or shared services provider to the Company.
Amendment and Termination. The Share Award Plan may be amended or terminated by our Board, subject to shareholder approval where required by law or applicable listing requirements. The Share Award Plan will, unless terminated earlier by the Board, terminate on June 11, 2022. However, awards made before the termination of the Share Award Plan may extend beyond that date in accordance with their terms.
Common Shares Available. The total number of Common Shares that may be granted under the Share Award Plan is 500,000, subject to adjustment for certain transactions as set forth in the plan. If any Common Shares subject to an award are forfeited, the shares with respect to such award will, to the extent of any such forfeiture, again be available for awards under the plan. The number of Common Shares reserved for issuance under the Share Award Plan and the awards made under the plan are generally subject to adjustment by the Board upon the occurrence of a merger, sale of assets, reorganization, recapitalization, exchange of shares, stock split, combination of shares or dividend payable in shares or other securities or any similar corporate transaction.
2019 Proxy Statement 39
On March 27, 2019, the last reported sale price of the Common Shares on The Nasdaq Stock Market LLC ("Nasdaq") was $27.78 per share.
Persons eligible to receive awards of shares under the Share Award Plan will be those key persons selected by the Board or committee in its discretion from among our Trustees and officers, employees of our manager, consultants, advisors or other persons or entities providing management, administrative or other services to us or to our subsidiaries. As of March 27, 2019, the Company had two executive officers and eight Trustees (one of whom is also an executive officer of the Company) and RMR LLC and its subsidiaries had approximately 600 employees who were not either executive officers or Trustees of the Company; all of those persons and other qualifying service providers of the Company would be eligible for awards under the Share Award Plan. During 2018, 70 eligible Trustees, executive officers and RMR LLC employees (and those of its subsidiaries) received awards under the Share Award Plan.
Awards under the Share Award Plan will generally be made in the discretion of the Board or designated committee and are therefore not determinable at this time. Please refer to the2018 Grants of Plan Based Awards in this Proxy Statement to review equity awards made to our named executive officers in 2018.
Other Vesting Events. Awards currently outstanding under the Share Award Plan provide for full vesting of outstanding awards upon the death of the holder.
Share Award Plan Benefits. The future benefits or amounts that would be received under the Share Award Plan are discretionary and are therefore not determinable at this time.
|
The following is a summary of certain United States federal income tax consequences with respect to awards under the Share Award Plan. Participants should consult with their own tax advisors and should not rely upon this summary.
Share Awards. A participant in the Share Award Plan receiving an unrestricted Common Share award (or the unrestricted portion of a Restricted Share award) will be taxed as ordinary compensation income in an amount equal to the fair market value of the Common Shares at the time of the award.
Restricted Shares. The term "restricted shares" refers to an award of Common Shares under the Share Award Plan that are subject to forfeiture restrictions. A participant generally will not be taxed upon the receipt of a Restricted Share award, but rather will recognize ordinary compensation income in an amount equal to the fair market value of the Common Shares at the time the Common Shares are no longer subject to a substantial risk of forfeiture, as defined in the Internal Revenue Code. A participant may, however, elect under Internal Revenue Code Section 83(b) and not later than 30 days after the transfer of such Common Shares to the participant to recognize ordinary compensation income at the time the Restricted Shares are awarded in an amount equal to the fair market value at that time, notwithstanding the fact that such Common Shares are subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional income will be recognized by such participant at the time the restrictions lapse. However, if Common Shares subject to a Section 83(b) election are later forfeited, no tax deduction is allowable with respect to the previously recognized ordinary compensation income to the participant for the forfeited Common Shares.
The full amount of dividends or other distributions of property made with respect to Restricted Shares before the lapse of any applicable restrictions will constitute ordinary compensation income, unless a Section 83(b) election has been made.
The Company, as the recipient of the services rendered by the participant, will be entitled to a deduction at the same time as and in the same amount that the participant recognizes ordinary compensation income. If the participant makes a Section 83(b) election and later forfeits the Common Shares, the
40 2019 Proxy Statement
Company will be deemed to recognize ordinary income equal to the amount of the deduction previously allowed.
Company Deductions. The Company deductions referred to in this summary may be limited by Internal Revenue Code Section 162(m) for certain employees.
|
The following table provides information about Common Shares that may be issued under all of our existing equity compensation plans as of December 31, 2018.
| ||||||||||||
| ||||||||||||
| ||||||||||||
|
The Board believes that shareholder approval of the proposed amendment to the Share Award Plan will continue to enable the Company to encourage its Trustees, officers and other individuals (whether or not employees) who render services to the Company or a subsidiary to continue their association with the Company by providing opportunities for them to participate in the ownership and future growth of the Company through the award of Common Shares, including Restricted Shares. If the amendment to the Share Award Plan is not approved by shareholders, the Compensation Committee may continue to make awards under the Share Award Plan in its current form until the earlier of such time as there are no longer any Common Shares that may be subject to awards or June 11, 2019, unless the Share Award Plan is earlier terminated by the Board.
Assuming a quorum is present at the meeting, approval of the proposed amendment to the Share Award Plan requires the affirmative vote of a majority of all the votes cast, in person or by proxy, at the 2019 Annual Meeting.
The Board of Trustees recommends a vote "FOR" the approval of the amendment to the Office Properties Income Trust 2009 Incentive Share Award Plan.
2019 Proxy Statement 41
REPORT OF THEOUR AUDIT COMMITTEE
In the course of theour Audit Committee's oversight of the Company'sour financial reporting process, theour Audit Committee has: (i) reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2018;2020; (ii) discussed with ErnstDeloitte & YoungTouche LLP, the Company'sour independent auditors, the matters required to be discussed under PCAOB Auditing Standard No. 1301; (iii) received the written disclosures and the letter from theour auditors required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding theour independent auditors' communications with theour Audit Committee concerning independence; (iv) discussed with theour independent auditors their independence; and (v) considered whether the provision of non-audit services by theour independent auditors is compatible with maintaining their independence and concluded that it is compatible at this time.
Based on the foregoing review and discussions, theour Audit Committee recommended to theour Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2020, for filing with the SEC.
William A. Lamkin, Chair John L. Harrington Elena B. Poptodorova Jeffrey P. Somers |
42 20192021 Proxy Statement 49
Proxy Materials and Voting Information
1. What is included in the proxy materials? What is a proxy statement and what is a proxy?
The proxy materials for the 2019our 2021 Annual Meeting include the Notice Regarding the Availability of Proxy Materials, Notice of 20192021 Annual Meeting, this Proxy Statement and theour Annual Report for the fiscal year ended December 31, 2020 (collectively, the "proxy materials"). If you request a paper copy of these materials, the proxy materials will also include a proxy card or voting instruction form.
A proxy statement is a document that the SEC regulations require the Companyus to give you when it askswe ask you to return a proxy designating individuals to vote on your behalf. A proxy is your legal designation of another person to vote the shares you own. That other person is called your proxy. We are asking you to designate the following three persons as your proxies for the 2019 Annual Meeting: Jennifer B. Clark, Secretary; David M. Blackman, Managing Trustee, President and Chief Executive Officer; and Adam D. Portnoy, Managing Trustee.
2. What is the difference between holding shares as a shareholder of record and as a beneficial owner?
If your shares are registered directly in your name with the Company'sour registrar and transfer agent, Equiniti Shareowner Services, you are considered a shareholder of record of those shares. If you are a shareholder of record, you should receive only one notice or proxy card for all the Common Shares you hold, whether in certificate form and inor book entry form.
If your shares are held in an account you own at a bank or brokerage or you hold shares through another nominee, you are considered the "beneficial owner" of those shares. If you are a beneficial owner, you will receive voting instruction information from the bank, broker or other nominee through which you own your Common Shares.
If you hold some shares of record and some shares beneficially, you should receive a notice or proxy card for all the Common Shares you hold of record and a separate voting instruction form for the shares from the bank, broker or other nominee through which you own Common Shares.
3. What different methods can I use to vote?
By Written Proxy. All shareholders of record can submit voting instructions by written proxy card. If you are a shareholder of record and receive a Notice Regarding the Availability of Proxy Materials, you may request a written proxy card by following the instructions included in the notice. If you are a beneficial owner, you may request a written proxy card or a voting instruction form from your bank, broker or other nominee. Proxies submitted by mail must be received by 11:59 p.m., Eastern time, on May 15, 2019 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
By Telephone or Internet. All shareholders of record also can authorize a proxy to vote their shares by touchtone telephone by calling 1-800-690-6903, or through the internet atwww.proxyvote.com, using the procedures and instructions described in your Notice Regarding the Availability of Proxy Materials or proxy card. Beneficial owners may authorize a proxy by telephone or internet if their bank, broker or other
2019 Proxy Statement 43
nominee makes those methods available, in which case the bank, broker or nominee will include the instructions with the proxy voting materials. To authorize a proxy by telephone or internet, you will need the 16 digit control number provided on your Notice Regarding the Availability of Proxy Materials, proxy card or voting instruction form. The telephone and internet proxy authorization procedures are designed to authenticate shareholder identities, to allow shareholders to vote their shares and to confirm that their instructions have been recorded properly. Proxies submitted by telephone or through the internet must be received by 11:59 p.m., Eastern time, on May 15, 2019June 16, 2021 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
50 2021 Proxy Statement
In Person.By Written Proxy. All shareholders of record also can submit voting instructions by written proxy card. If you are a shareholder of record and receive a Notice Regarding the Availability of Proxy Materials, you may request a written proxy card by following the instructions included in the notice. If you are a beneficial owner, you may request a written proxy card or a voting instruction form from your bank, broker or other nominee. Proxies submitted by mail must be received by 11:59 p.m., Eastern time, on June 16, 2021 or, if the meeting is postponed or adjourned to a later date, by 11:59 p.m., Eastern time, on the day immediately preceding the date of the reconvened meeting.
Electronically at our 2021 Annual Meeting.
A shareholder may revoke a proxy at any time before it is voted at our 2021 Annual Meeting, subject to the proxy voting deadlines described above, by authorizing a proxy again on a later date by internet or by telephone, by signing and returning a later dated proxy card, by attending the meeting and voting electronically or by sending an original written statement revoking the prior proxy to our Secretary at our principal executive office (or by hand delivery to the Secretary before the taking of the vote at our 2021 Annual Meeting).
Beneficial owners who wish to change their votes should contact the organization that holds their shares.
If you have any questions or need assistance in voting your shares or authorizing your proxy, please call the firm assisting the Companyus in the solicitation of proxies:
Morrow SodaliAlliance Advisors LLC470 West Avenue200 Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003Stamford, Connecticut 06902Shareholders Call Toll Free: (800) 662-5200Banks and Brokers Call Collect: (203) 658-9400(855) 200-8241
4. Who may vote at the 2019our 2021 Annual Meeting?
Holders of record of Common Shares as of the close of business on February 28, 2019,March 24, 2021, the record date, may vote at the meeting. Holders of Common Shares are entitled to one vote for each Common Share held on the record date.
5. What if I authorize a proxy and do not specify how my shares are to be voted?
If you submit a signed proxy card or authorize a proxy by internet or telephone, but do not indicate how your Common Shares should be voted on one or more proposals, then the proxies will vote your shares as theour Board of Trustees recommends on those proposals. Other than the proposals listed on pages 13, 25, 3519, 34 and 38,46, we do not know of any other matters to be presented at the meeting. If any other matters are properly presented at the meeting, the proxies may vote your shares in accordance with their best judgment.discretion.
2021 Proxy Statement 51
6. What is a quorum? How are abstentions and broker non-votes counted?
A quorum of shareholders is required for shareholders to take action at the 2019our 2021 Annual Meeting. The presence, in person or by proxy, of shareholders entitled to cast a majority of all the votes entitled to be cast at the 2019our 2021 Annual Meeting constitutes a quorum.
Abstentions and broker non-votes (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owner or the persons entitled to vote and (ii) the broker does not have discretionary voting power on a particular matter), if any, are included in determining whether a quorum is present. Abstentions are not votes cast and, therefore, will not be included in vote totals and will have no effect on the outcome of any Proposal to be voted onacted upon at the 2019our 2021 Annual Meeting. Broker non-votes are not votes cast and, therefore, will not be included in vote totals and will have no effect on the outcome of Proposal 1 2 or 4.2. There can be no broker non-votes on Proposal 3 as it is a matter on which, if you hold your shares in street name and do not provide voting instructions to the broker, bank or other nominee that holds your shares, the nominee has discretionary authority to vote on your behalf.
44 2019 Proxy Statement
With respect to Proposal 1, a proxy marked "WITHHOLD" will have the same effect as an abstention and will not be counted for purposes of determining a plurality of votes cast, but will be counted as a vote "AGAINST" for purposes of determining a majority of votes cast under the Company's Trustee resignation policy. Pursuant to the Company's Governance Guidelines, if a Trustee nominee fails to receive a majority of votes cast, he or she will offer to resign from theour Board, and theour Board will decide whether to accept or reject the resignation offer.
7. What if I change my mind after I authorize a proxy to vote my shares?
Shareholders have the right to revoke a proxy at any time before it is voted at the 2019 Annual Meeting, subject to the proxy voting deadlines described above. Shareholders may revoke a proxy by authorizing a proxy again on a later date by internet or by telephone (only the last internet or telephone proxy submitted prior to the meeting will be counted) or by signing and returning a later dated proxy card or by attending the meeting and voting in person. If you are a beneficial owner, see the response toquestion 12.
A shareholder's attendance at the 2019 Annual Meeting will not revoke that shareholder's proxy unless that shareholder votes again at the meeting or sends an original written statement to the Secretary of the Company revoking the prior proxy. An original written notice of revocation or subsequent proxy should be delivered to Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, Attention: Secretary, or hand delivered to the Secretary before the taking of the vote at the 2019 Annual Meeting.
Beneficial owners who wish to change their votes should contact the organization that holds their shares.
8. Can I access the proxy materials on the internet? How can I sign up for the electronic proxy delivery service?
The Notice of 20192021 Annual Meeting, this Proxy Statement and the Annual Report are available atwww.proxyvote.com. You may access these proxy materials on the internet through the conclusion of the 2019our 2021 Annual Meeting.
Instead of receiving future copies of the Company'sour proxy materials by mail, shareholders of record and most beneficial owners may elect to receive these materials electronically. Opting to receive your future proxy materials electronically will reduce the environmental impact of our annual meeting, save us the cost of printing and mailing documents, and also will give you an electronic link to our proxy voting site. Your Notice Regarding the Availability of Proxy Materials instructs you as to how you may request electronic delivery of future proxy materials.
9.8. How are proxies solicited and what is the cost?
The Company bearsWe bear all expenses incurred in connection with the solicitation of proxies. The Company hasWe have engaged Morrow SodaliAlliance Advisors LLC ("Morrow Sodali"Alliance Advisors") to assist with the solicitation of proxies for an estimated fee of $15,000$13,000 plus reimbursement of expenses. The Company hasWe have agreed to indemnify Morrow SodaliAlliance Advisors against certain liabilities arising out of the Company'sour agreement with Morrow Sodali.Alliance Advisors. We will request banks, brokers and other nominees to forward proxy materials to the beneficial owners of Common Shares and to obtain their voting instructions. We will reimburse those firms for their expenses of forwarding proxy materials.
2019 Proxy Statement 45
Proxies may also be solicited, without additional compensation, by the Company'sour Trustees and officers, and by RMR LLC, its officers and employees and its parent's and subsidiaries' directors, trustees, officers and employees, by mail, telephone or other electronic means or in person.
10.52 2021 Proxy Statement
9. What is householding?
As permitted by the Exchange Act, we may deliver only one copy of the Notice Regarding the Availability of Proxy Materials, Notice of 20192021 Annual Meeting, this Proxy Statement and the Annual Report to shareholders residing at the same address, unless the shareholders have notified us of their desire to receive multiple copies of those documents. This practice is known as "householding."
We will deliver a separate copy of any of those documents to you if you write to the Companyus at Investor Relations, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458, or call the Companyus at (617) 219-1410. If you want to receive separate copies of our notices regarding the availability of proxy materials, notices of annual meetings, proxy statements and annual reports in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee, or you may contact us at the above address or telephone number.
20192021 Annual Meeting Information
10. Why is our 2021 Annual Meeting being held virtually?
Because of the COVID-19 pandemic, we believe hosting our 2021 Annual Meeting virtually will help ensure the health and well-being of our shareholders and other stakeholders. Shareholders attending our 2021 Annual Meeting virtually will be afforded the same rights and opportunities to participate as they would have had at an in-person meeting.
11. How do I attend the 2019our virtual 2021 Annual Meeting in person?Meeting?
Attendance at the meeting is limited to the Company'sour Trustees and officers, shareholders as of the record date (February 28, 2019)(March 24, 2021) or their duly authorized representatives or proxies, and other persons permitted by the ChairmanChair of the meeting. All attendees need photo identification for admission.
2021 Proxy Statement 53
owners should complete the registration process noted above at least three days in advance of our 2021 Annual Meeting to ensure that all documentation and verifications are in order.
If you have questions regarding these admission procedures, please call Investor Relations at (617) 219-1410.
12. How can I vote in personelectronically at the meetingour 2021 Annual Meeting if I am a beneficial owner?
If you are a beneficial owner and want to vote your shares at the 2019our 2021 Annual Meeting, you need to first obtain a valid legal proxy from your bank, broker or other nominee. You also neednominee and then register in advance to attend our 2021 Annual Meeting. Please follow the procedures described in the response toquestion 11questions 3 and to bring the legal proxy with you to the meeting and hand it in with a signed ballot that will be provided to you at the meeting. 11.
You will not be able to vote your shares at the meeting without a legal proxy. If you do not have a legal proxy, you can still attend the meeting by following the procedures described in the response toquestion 11. However, you will not be able to vote your shares at the meeting without a legal proxy. The Company encouragesWe encourage you to vote your shares in advance, even if you intend to attend the meeting.
46 13. How can I ask questions at our 2021 Annual Meeting?
Shareholders as of the record date who attend and participate in our 2021 Annual Meeting at 2019 Proxy Statementhttps://www.viewproxy.com/OfficePropertiesIncomeTrust/2021/
Table will have an opportunity to submit questions live via the internet during a designated portion of Contentsthe program. Shareholders must have available their control number provided on their proxy card or voting instruction form.
If you experience any technical difficulties accessing our 2021 Annual Meeting or during the meeting, please call the toll-free number that will be available on our virtual shareholder login site for assistance. We will have technicians ready to assist you with any technical difficulties you may have beginning 15 minutes prior to the start of our 2021 Annual Meeting.
Company Documents, Communications and Shareholder Proposals
13.14. How can I view or request copies of the Company'sour SEC filings and other documents?
You can visit our website to view our Governance Guidelines, Board committee charters and the Code. To view these documents, go towww.opireit.com, click on "Investors" and then click on "Governance." To view the Company'sour SEC filings and Forms 3, 4 and 5 filed by the Company'sour Trustees and executive officers, go towww.opireit.com, click on "Investors," click on "Financial Information" and then click on "SEC Filings."
We will deliver free of charge, upon request, a copy of the Company'sour Governance Guidelines, Board committee charters, Code or Annual Report to any shareholder requesting a copy. Requests should be directed to Investor Relations at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
14.54 2021 Proxy Statement
15. How can I communicate with the Company'sour Trustees?
Any shareholder or other interested person who wants to communicate with the Company'sour Trustees individually or as a group, should write to the party for whom the communication is intended, c/osuch Trustee(s), in care of our Secretary, Office Properties Income Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or email secretary@opireit.com. The communication will then be delivered to the appropriate party or parties.Trustee(s).
15.16. How do I submit a nomination or other proposal for action at the 20202022 annual meeting of shareholders?
A nomination or proposal for action to be presented by any shareholder at the Company's 2020our 2022 annual meeting of shareholders must be submitted as follows:
Proposals should be sent to the Company'sour Secretary at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.
For additional information regarding how to submit a shareholder proposal, see page 1118 of this Proxy Statement.
20192021 Proxy Statement 4755
The descriptions of agreements in this "Related Person Transactions" section do not purport to be complete and are subject to, and qualified in their entirety by, reference to the actual agreements, copies of certain of which are filed as exhibits to the Annual Report.
A "related person transaction" is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which (i) the Company was, iswe were, are or will be a participant, (ii) the amount involved exceeds $120,000 and (iii) any related person had, has or will have a direct or indirect material interest.
A "related person" means any person who is, or at any time since January 1, 20182020 was:
The Company hasWe have adopted written Governance Guidelines that describe the consideration and approval of related person transactions. Under these Governance Guidelines, the Companywe may not enter into a transaction in which any Trustee or executive officer, any member of the immediate family of any Trustee or executive officer or other related person, has or will have a direct or indirect material interest unless that transaction has been disclosed or made known to theour Board and theour Board reviews and approves or ratifies the transaction by the affirmative vote of a majority of the disinterested Trustees, even if the disinterested Trustees constitute less than a quorum. If there are no disinterested Trustees, the transaction must be reviewed, authorized and approved or ratified by both (i) the affirmative vote of a majority of theour Board and (ii) the affirmative vote of a majority of the Independent Trustees. In determining whether to approve or ratify a transaction, theour Board, or disinterested Trustees or Independent Trustees, as the case may be, also act in accordance with any applicable provisions of the Company'sour Declaration of Trust and Bylaws, and consider all of the relevant facts and circumstances and approve only those transactions that they determine are fair and reasonable to the Company.us. All related person transactions described belowin Annex A to this Proxy Statement were reviewed and approved or ratified by a majority of the disinterested Trustees or otherwise in accordance with the Company'sour policies, Declaration of Trust and Bylaws, each as described above. In the case of any transactions with the Companyus by employees of RMR Inc.LLC and its subsidiaries who are subject to the Code but who are not our Trustees or executive officers, of the Company, the employee must seek approval from an executive officer who has no interest in the matter for which approval is being requested. Copies of the Company'sour Governance Guidelines and the Code are available on the Company'sour website,www.opireit.com.
Certain Related Person Transactionsrelated person transactions are set forth in Annex A to this Proxy Statement.
56 2021 Proxy Statement
At this time, we know of no other matters that will be brought before the meeting. If, however, other matters properly come before the meeting or any postponement or adjournment thereof, the persons named in the accompanying proxy card intend to vote the shares for which they have been appointed or authorized as proxy in accordance with their discretion on such matters to the maximum extent that they are permitted to do so by applicable law.
Jennifer B. Clark
Secretary
Newton, Massachusetts
April 13, 2021
2021 Proxy Statement 57
ANNEX A—CERTAIN RELATED PERSON TRANSACTIONS
Relationships with RMR LLC and Others Related to It. The Company hasWe have relationships and historical and continuing transactions with RMR LLC, RMR Inc., and others relatedrelating to them. Onethem, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR Inc. is the Company'smanaging member of RMR LLC. The Chair of our Board and one of our Managing Trustees, Adam Portnoy, asis the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Barry Portnoy was the Company's otherDavid Blackman resigned as our President and Chief Executive Officer, effective December 31, 2020. Pursuant to his retirement agreement, Mr. Blackman will remain in his position as our Managing Trustee until after our 2021 Annual Meeting or earlier if requested by RMR LLC or our Board. In replacement of Mr. Blackman, Christopher J. Bilotto was appointed as our President and a managing directorChief Operating Officer, effective January 1, 2021. Mr. Bilotto previously served as our Vice President and an officer of RMR Inc.Chief Operating Officer, and he is an officer and employee of RMR LLC until his death on
48 2019 Proxy Statement
February 25, 2018. David Blackman, the Company's other Managing Trustee and the Company's President and Chief Executive Officer, andLLC. In addition, each of the Company'sour other officers, including Matthew C. Brown, is also an officer and employee of RMR LLC, including Jeffrey Leer, who succeeded Mark L. Kleifges as the Company's Chief Financial Officer and Treasurer effective January 1, 2019. Mark Kleifges resigned from his positions as the Company's Chief Financial Officer and TreasurerLLC.
Some of the Company and as a Managing Trustee effective December 31, 2018.
The Company'sour Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as chair of the board of trustees or board of directors of several of these companies and until his death, Barry Portnoy served, as a managing director or managing trustee of these companies and otherpublic companies. Other officers of RMR LLC, including certain of our officers, serve as managing directors, managing trustees or managing directorsofficers of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as the Company's officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.
RMR LLC or its subsidiaries provide management services to four other Nasdaq listed REITs: HPT, which owns hotels and travel centers; ILPT, which owns industrial and logistics properties; SNH, which primarily owns healthcare, senior living and medical office buildings; and TRMT, which primarily originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. RMR LLC also provides services to other publicly and privately owned companies, including: FVE, which is listed on the Nasdaq and operates senior living communities; TA, which is listed on the Nasdaq and operates and franchises travel centers and restaurants; and Sonesta International Hotels Corporation ("Sonesta"), which operates, manages and franchises hotels, resorts and cruise ships. A subsidiary of RMR LLC is an investment adviser to RIF, a closed end investment company listed on the NYSE American, which invests in securities of real estate companies that are not managed by RMR LLC.
The Company hasWe have no employees. The personnel and various services the Company requireswe require to operate the Company'sour business are provided to the Companyus by RMR LLC. The Company hasWe have two agreements with RMR LLC to provide management services to the Company:us: (i) a business management agreement, which relates to the Company'sour business generally, and (ii) a property management agreement, which relates to the Company'sour property level operations. Both of these management agreements are described below, see "—Management Agreements with RMR LLC."
Ownership Interest in RMR Inc. and Registration and Lock-up Agreements. The Company currently holds 2,801,061 shares of class A common stock of RMR Inc., which the Company and SIR acquired in June 2015 in a transaction pursuant to which, among other things, the Company, SIR and two other REITs then managed by RMR LLC acquired class A common stock of RMR Inc. and entered into amended and restated business and property management agreements with RMR LLC. The Company is party to a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to the Company in this transaction, pursuant to which the Company has demand and piggyback registration rights, subject to certain limitations.
The Company is also party to a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they (on behalf of themselves and their permitted transferees) agreed not to transfer the 175,000 Common Shares (after giving effect to the Reverse Share Split) that ABP Trust received in this transaction for a 10 year period ending on June 5, 2025 and they have certain demand and piggyback registration rights, subject, in each case, to certain exceptions.
Prior to the SIR Merger, SIR was party to similar registration rights and lock-up agreements with RMR LLC that the Company assumed in the SIR Merger.
2019 Proxy Statement 49
Management Agreements with RMR LLC. The Company'sOur management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:
The average aggregate historical cost of the Company'sour real estate investments includes the Company'sour consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property
2021 Proxy Statement A-1
owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves; provided, however, the Company's ownership of SIR common shares was not included as part of the Company's real estate investments for purposes of calculating the Company's base management fee due to RMR LLC since SIR paid separate business management fees to RMR LLC.reserves.
50 2019 Proxy Statement
A-2 2021 Proxy Statement
of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee the Companywe paid was greater than the amount the Companywe would have paid based on the restated financial statements.
2020.
Prior to the SIR Merger, SIR was party to business and property management agreements with RMR LLC. The terms of those agreements were substantially similar to the terms of the Company's business and property management agreements with RMR LLC, including the determination of the fees payable to RMR LLC. Pursuant to its business management agreement
2019 Proxy Statement 51
with RMR LLC, SIR incurred an incentive management fee of approximately $25.8 million for the year ended December 31, 2018, payable in January 2019. In addition, SIR had incurred, in the ordinary course, but not paid, aggregate business management, property management and construction supervision fees of approximately $2.2 million at December 31, 2018. As successor to SIR as a result of the SIR Merger, the Company assumed the obligations to pay SIR's 2018 incentive management fee and the business management, property management and construction supervision fees it had accrued, but not paid, as of December 31, 2018. The Company paid these fees to RMR LLC in January 2019. In calculating the incentive management fee payable by SIR for the year ended December 31, 2018, SIR's total shareholder return per share and benchmark return per share were adjusted in accordance with its business management agreement to reflect aggregate net increases in the number of SIR common shares outstanding as a result of certain share issuances and repurchases by SIR during the three year measurement period ended December 31, 2018, and compared to the SNL U.S. REIT Equity Index. Upon consummation of the SIR Merger, SIR's separate business and property management agreements with RMR LLC were terminated for convenience and RMR LLC waived its right to receive payment of the termination fees due on account of that termination.
52 2019 Proxy Statement
fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. The Company isWe are not required to pay any termination fee if the Company terminates the Company'swe terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.
2021 Proxy Statement A-3
Share Awards to RMR LLC Employees. The Company awardsWe award Common Shares to the Company'sour officers and other employees of RMR LLC annually. Generally, one fifth of these awards vests on the date of the awards and one fifth vests on each of the next four anniversaries of the dates of the awards. During 2018, the Company2020, we awarded to the Company'sour officers and other employees of RMR LLC annual awards of 14,675108,600 Common Shares, (after giving effect to the Reverse Share Split), valued at approximately $1.0$2.5 million, in aggregate, based upon the closing price of the Common Shares on the Nasdaq on the date the awards were made under the Company'sour equity compensation plan. These share awards to RMR LLC employees are in addition to the share awards made to the Company's current and formerour Managing Trustees, as Trustee compensation, and the fees the Companywe paid to RMR LLC. During 2018, the Company2020, we purchased 4,98419,589 Common Shares, (after giving effect to the Reverse Share Split), at the closing price of the Common Shares on the Nasdaq on the date of purchase, from certain of the Company'sour trustees and officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of the Common Shares.
On occasion, the Company haswe have entered into arrangements with former employees of RMR LLC in connection with the termination of their employment with RMR LLC, providing for the acceleration of vesting of Common Share awards previously awarded to them under the Company'sour equity compensation plans. The aggregate value of the Common Share awards the Companywe so accelerated, measured as of the effective dates of acceleration, was approximately $0.02$0.1 million, in aggregate, for the year ended December 31, 2018. 2020.
Additionally, each of the Company'sour executive officers during 2018 received share awards of RMR Inc. and other companies to which RMR LLC or its subsidiaries provide management services in their capacities as officers or employees of RMR LLC.
Prior to the SIR Merger, SIR historically made share awards to certain RMR LLC employees under its equity compensation plan and during 2018, SIR awarded to its officers and other employees of RMR LLC annual share awards of 58,700 of its common shares, valued at approximately $1.2 million in aggregate. During this period, SIR repurchased 13,063 common shares awarded to certain of its officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of its common shares. During the year ended December 31, 2018, SIR accelerated the vesting of its common shares previously awarded to certain of its officers and employees of RMR LLC in
2019 Proxy Statement 53
connection with their termination of employment from RMR LLC. The aggregate value of the Common Share awards the Company so accelerated, measured as of the effective dates of acceleration, was approximately $0.04 million, in aggregate, for the year ended December 31, 2018. Additionally, each of SIR's executive officers during 20182020 received share awards of RMR Inc. and other companies to which RMR LLC or its subsidiaries provide management services in their capacities as officers or employees of RMR LLC.
Leases with RMR LLC. The Company leasesWe lease office space to RMR LLC in certain of the Company'sour properties for RMR LLC's property management offices. Pursuant to the Company'sour lease agreements with RMR LLC, the Companywe recognized rental income from RMR LLC for leased office space of approximately $1.0$1.1 million for the year ended December 31, 2018. The Company's2020. Our office space leases with RMR LLC are terminable by RMR LLC if the Company'sour management agreements with RMR LLC are terminated.
Other. The Company has in the past held, and likely will in the future hold, business meetings at hotels operated by Sonesta, which is majority owned by one of the Company's Managing Trustees, Adam Portnoy, and the remainder was owned by Barry Portnoy until his death and which manages certain hotels owned by HPT, and the Company's Trustees and officers have in the past stayed, and are likely in the future to stay, overnight at hotels operated by Sonesta when traveling for Company business. The Company pays Sonesta for the use of meeting space and related services and pays Sonesta or reimburses the Company's Trustees and officers for the costs of these hotel stays.
Relationship with SIR. Until October 9, 2018 (as further described below), the Company owned 24,918,421 SIR common shares, or approximately 27.8% of its then outstanding common shares. During 2018, the Company's Managing Trustees also served as managing trustees of SIR, the Company's President and Chief Executive Officer also served as SIR's president and chief executive officer and Jeffrey Leer, the Company's Chief Financial Officer and Treasurer, served as SIR's chief financial officer and treasurer. During 2018, each of SIR's officers was also an officer and employee of RMR LLC. RMR LLC provides management services to the Company and provided management services to SIR until it ceased to exist.
SIR Merger. On September 14, 2018, the Company and the Company's wholly owned subsidiary, GOV MS REIT, a Maryland real estate investment trust ("Merger Sub"), and SIR entered an Agreement and Plan of Merger (the "SIR Merger Agreement"), pursuant to which SIR merged with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger.
The SIR Merger was consummated and became effective at 4:01 p.m., Eastern time, on December 31, 2018. Pursuant to the terms set forth in the SIR Merger Agreement, at the effective time of the SIR Merger, the Company issued to SIR's shareholders 1.04 Common Shares, for each common share of SIR issued and outstanding immediately prior to the effective time of the SIR Merger (other than SIR common shares held by the Company or any of the Company's or SIR's wholly owned subsidiaries), with cash paid in lieu of fractional shares and any outstanding unvested SIR common share awards under SIR's equity compensation plan were converted into awards under the Share Award Plan, subject to substantially similar vesting requirements and other terms and conditions, of a number of the Common Shares determined by multiplying the number of unvested SIR common shares subject to such award by 1.04 (rounded down to the nearest whole number). Later on December 31, 2018, Merger Sub merged with and into the Company, with the Company as the surviving entity and the Company changed the Company's name to "Office Properties Income Trust."
As a condition of the SIR Merger, on October 9, 2018, the Company sold all of the 24,918,421 common shares of SIR the Company then owned (the "Secondary Sale"), in an underwritten public offering at a price of $18.25 per share, raising net proceeds of approximately $435.1 million after deducting underwriting discounts and offering expenses. The Company used the net proceeds from the Secondary Sale to repay amounts outstanding under the Company's revolving credit facility.
54 2019 Proxy Statement
In addition, as a condition of the SIR Merger, on December 27, 2018, SIR paid a pro rata distribution to SIR's shareholders as of the close of business on December 20, 2018 of all 45,000,000 common shares of beneficial interest of ILPT that SIR owned.
Upon consummation of the SIR Merger, the Company assumed all of the principal and interest on all of SIR's outstanding approximately $400 million aggregate principal amount of 3.60% Senior Notes due 2020, approximately $300 million aggregate principal amount of 4.15% Senior Notes due 2022, approximately $350 million aggregate principal amount of 4.250% Senior Notes due 2024 and approximately $400 million aggregate principal amount of 4.50% Senior Notes due 2025.
IPO Related Agreements with ILPT. On January 17, 2018, ILPT, then a wholly owned subsidiary of SIR, completed an initial public offering (the "ILPT IPO") and listing on the Nasdaq of 20,000,000 of its common shares. In connection with the ILPT IPO, SIR and ILPT entered a transaction agreement (the "Transaction Agreement") to govern SIR's relationship with ILPT. The Company is the successor to SIR under the Transaction Agreement. Pursuant to the Transaction Agreement:
Relationship with AIC. The Company,Until its dissolution on February 13, 2020, we, ABP Trust ILPT and fourfive other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company,owned Affiliates Insurance Company ("AIC") in equal amountsamounts. Certain of our Trustees and are parties to a shareholders agreement regarding AIC.
All the Company's Trustees (other than David Blackman) and all the independentcertain directors or trustees and independent directors of the other AIC shareholders currently serveserved on the board of directors of AIC. On December 28, 2018, SIR and ILPT entered intoAIC until its dissolution. We recorded a stock purchase agreement (the "AIC Stock Purchase Agreement") pursuant to which ILPT purchased all of SIR's shares of common stock ofpartial liquidating distribution from AIC effective December 31, 2018, for approximately $8.6 million. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays RMR LLC a service fee equal to 3.0% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC's business.
The Company and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. The Company paid aggregate annual premiums, including taxes and fees, of approximately $1.2$0.3 million in connection with this insurance program for the policy year ending June 30, 2019, which amount may be adjusted from time to time as the Company acquires or disposes of properties that are included in this insurance program. Properties that the Company acquired as a result of the SIR Merger were already previously included in this insurance program because SIR was a participant in the program. SIR paid an annual premium, including taxes and fees, of approximately $1.7 million in connection with this insurance program for the policy year ending June 30, 2019.
Directors' and Officers' Liability Insurance.2020. The Company, RMR Inc. and certain other companies to which RMR LLC or its subsidiaries provide management services participate in a combined directors' and
2019 Proxy Statement 55
officers' liability insurance policy. The current combined policy expires in September 2020. The Company paid an aggregate premium of approximately $0.2 million for this policy in 2018.
The foregoing descriptions of the Company'sour agreements with RMR LLC,Inc., RMR Inc.,LLC, AIC and other related persons are summaries and are qualified in their entirety by the terms of the agreements. A further description of the terms of certain of those agreements is included in the Annual Report. In addition, copies of certain of the agreements evidencing these relationships are filed with the SEC and may be obtained from the SEC's website,www.sec.gov. The CompanyWe may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.
56 2019 Proxy Statement
At this time, the Company knows of no other matters that will be brought before the meeting. If, however, other matters properly come before the meeting or any postponement or adjournment thereof, the persons named in the accompanying proxy card intend to vote the shares for which they have been appointed or authorized as proxy in accordance with their discretion on such matters to the maximum extent that they are permitted to do so by applicable law.
Jennifer B. ClarkSecretary
Newton, MassachusettsMarch 28, 2019
2019 Proxy Statement 57
OFFICE PROPERTIES INCOME TRUST2009 INCENTIVE SHARE AWARD PLAN
Office Properties Income Trust, formerly known as Government Properties Income Trust (the "Company"), hereby adopts the Office Properties Income Trust 2009 Incentive Share Award Plan (as amended from time to time, the "Plan"), effective as of June 11, 2009.
The Plan is intended to advance the interests of the Company and its subsidiaries by providing a means of rewarding selected officers, employees and Trustees of the Company, employees of its manager and others rendering valuable services to the Company or its subsidiaries, through grants of the Company's Shares.
Terms that are capitalized in the text of the Plan have the meanings set forth below:
(a) "Board" means the Board of Trustees of the Company.
(b) "Company" means Office Properties Income Trust, a Maryland real estate investment trust.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(d) "Key Person" means an employee, consultant, manager, Trustee, officer or other person providing services to the Company, to a subsidiary of the Company or to the Manager on behalf of the Company.
(e) "Manager" means the person or entity serving as manager to the Company.
(f) "Participant" means a person to whom Shares have been granted, or any other person who becomes owner of the Shares by reason of such person's death or incapacity.
(g) "Securities Act" means the Securities Act of 1933, as amended.
(h) "Share Agreement" means an agreement between the Company and a Participant regarding Shares issued to the Participant pursuant to the Plan.
(i) "Shares" means the Company's common shares of beneficial interest, par value $.01 per share.
(j) "Trustee" means a member of the Board.
Subject to the provisions of Section VII, the total number of Shares which may be granted under the Plan is 500,000 Shares. A holder of Shares granted under the Plan, whether or not vested, shall have all of the rights of a shareholder of the Company, including the right to vote the Shares and the right to receive any distributions, unless the Board shall otherwise determine. Certificates representing Shares and statements representing Shares issued in book-entry form may be imprinted with a legend to the effect that the Shares represented may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of the Securities Act and the applicable Share Agreement, if any. Shares subject to awards under the Plan which are forfeited shall again be available for grant under the Plan.
2019 Proxy Statement A-1
Grants of Shares to any person shall be made by action of the Board, and shall be made solely in accordance with the instructions of the Board as to the selection of persons to whom Shares are to be granted, the amount and timing of each such grant, and the extent, if any, to which vesting restrictions or other conditions shall apply to the granted Shares. If a person to whom such a grant of Shares has been made fails to execute and deliver to the Company a Share Agreement within ten (10) days after it is submitted to him or her, the grant of Shares related to such Share Agreement may be cancelled by the Company, acting by the Board, at its option without further notice to the Participant. Nothing in this Section IV shall prevent the Board from delegating its authority to make grants to a committee pursuant to Section V.
The Plan shall be administered by the Board or, in the discretion of the Board, a committee designated by the Board and composed of at least two (2) members of the Board. All references in the Plan to the Board shall be understood to refer to such committee or the Board, whoever shall administer the Plan. As of the effective date of the Plan, the Board has delegated its authority to administer the Plan to the Compensation Committee of the Company pursuant to the written charter for such committee; however, the Board may revoke or rescind this delegation of authority in whole or in part at any time. All questions of interpretation and application of the Plan and of grants of Shares shall be determined by the Board or its designated committee in its sole discretion, and its determination shall be final and binding upon all persons, including the Company and all Participants. Without limiting the generality of the foregoing, the Board or the designated committee is authorized to adopt and approve from time to time the forms and, subject to the terms of the Plan, the terms and conditions of any Share Agreement. If it determines to do so, the Board or its designated committee may grant Shares under this Plan which are not subject to a Share Agreement.
For so long as Section 16 of the Exchange Act is applicable to the Company, each member of any committee designated to administer the Plan shall be a "non-employee director" or the equivalent within the meaning of Rule 16b-3 under the Exchange Act and, for so long as Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), is applicable to the Company, an "outside director" within the meaning of Section 162(m) of the Code and the regulations thereunder.
With respect to persons subject to Section 16 of the Exchange Act, grants under the Plan are intended to be exempt from the provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 or its successor under the Exchange Act.
The persons eligible to receive grants of Shares shall be those persons selected by the Board or designated committee from among Key Persons who contribute to the business of the Company and its subsidiaries.
In the event that the outstanding Shares are hereafter changed for a different number or kind of Shares or other securities of the Company, or are otherwise affected by reason of a merger, sale of assets, reorganization, recapitalization, exchange of shares, stock split, combination of shares or dividend payable in shares or other securities or any similar corporate transaction, a corresponding adjustment shall be made in the number and kind of Shares or other securities covered by outstanding grants of Shares, and for which Shares may be granted under the Plan.
Shares may be granted under the Plan from time to time until the close of business on June 11, 2022. Subject to any shareholder approval that may be required under applicable law or the rules of any stock
A-2 2019 Proxy Statement
exchange on which the Shares are listed, the Board hereafter may at any time amend or extend the Plan, including amendments to change the number of shares subject to the Plan. The Plan may be terminated at any time by action of the Board without, however, affecting the rights of a Participant or the Company as to Shares granted prior to such termination.
A.Nonassignability of Shares. Shares subject to a Share Agreement shall not be assignable or transferable by a Participant except in accordance with the terms of the applicable Share Agreement.
B.No Guarantee of Employment. Neither the award of Shares nor a Share Agreement shall give any person the right to continue in the employment of, or to continue to act as an officer or Trustee of, or to serve in any other capacity with, the Company, any subsidiary or the Manager, or give the Company, any subsidiary or the Manager the right to require such person to continue in any such capacity.
C.Tax Withholding; Section 409A. To the extent required by law, the Company shall withhold or cause to be withheld income and other taxes incurred by a Participant by reason of a grant of Shares, and, as a condition to the receipt of any grant of Shares, a Participant agrees that if the amount payable to him by the Company in the ordinary course is insufficient to pay such taxes, he shall, upon request of the Company, pay the Company an amount sufficient to satisfy its tax withholding obligations.
Without limiting the foregoing, the Compensation Committee may in its discretion permit any Participant's withholding obligation to be paid in whole or in part in the form of Shares, by withholding from the Shares to be issued to such Participant or by accepting delivery of Shares already owned by him. The fair market value of the Shares for this purpose shall be the closing price of the Shares on the principal securities exchange on which the Shares are listed on the date such Shares are repurchased by the Company, unless otherwise determined by the Board in its discretion.
If payment of withholding taxes is made in whole or in part in Shares, the Participant shall deliver to the Company share certificates registered in his name or other evidence of legal and beneficial ownership of Shares owned by him, fully vested and free of all liens, claims and encumbrances of every kind, duly endorsed or accompanied by stock powers duly endorsed by the record holder of the Shares represented by such share certificates. If the Participant is subject to Section 16(a) of the Exchange Act, his ability to pay the withholding obligation in the form of Shares shall be subject to such additional restrictions as may be necessary to avoid any transaction that might give rise to liability under Section 16(b) of the Exchange Act.
It is intended that awards granted under the Plan be exempt from the application of Section 409A of the Code, and the Plan and such awards shall be construed in accordance with that intention.
D.Compliance with Law. This Plan, the granting and vesting of Shares hereunder, and the other obligations of the Company under this Plan and any Share Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its reasonable discretion, may postpone the issuance or delivery of Shares until completion of any required action under any state or federal law, rule or regulation as the Company may consider appropriate in order to comply with the applicable laws, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of this Plan shall be interpreted or construed to obligate the Company to register any Shares under federal or state law.
E.Governing Law. The validity, construction and effect of this Plan, any rules and regulations relating to this Plan and any Share Agreement shall be determined in accordance with the laws of the State of Maryland without giving effect to principles of conflict of laws.
2019 Proxy Statement A-3
F.Change in Control. Each unvested Share under the Plan immediately prior to the occurrence of a "Change in Control" or a "Termination Event" shall become fully vested upon the occurrence of the Change in Control or Termination Event, as each term is defined below.
For purposes of the Plan, a "Change in Control" shall be deemed to have occurred if any of the events set forth in any one of the following paragraphs shall have occurred:
(a) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of either the then outstanding Shares or the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in paragraph (c)(i) below;
(b) the following individuals cease for any reason to constitute a majority of the number of Trustees then serving: individuals who, on March 27, 2019, constitute the Board and any new Trustee (other than a Trustee whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Trustees) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the Trustees then in office who either were Trustees on March 27, 2019 or whose appointment, election or nomination for election was previously so approved or recommended;
(c) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other entity, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company's then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
In addition, for purposes of the Plan, a "Termination Event" shall occur if The RMR Group LLC (or any entity controlled by, under common control with or controlling The RMR Group LLC) ceases to be the manager or shared services provider to the Company.
For purposes of this Section IX(F), the following terms shall have the meaning set forth in this paragraph: "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act and "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities and (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.
A-4 20192021 Proxy Statement
THANK YOU
Thank you for being a shareholder of Office Properties Income Trust.
AUTHORIZE YOUR PROXY BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern time, on May 15, 2019.June 16, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to submit your voting instructions. OFFICE PROPERTIES INCOME TRUST C/O BROADRIDGE FINANCIAL SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 AUTHORIZE YOUR PROXY BY TELEPHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern time, on May 15, 2019.June 16, 2021. Have your proxy card in hand when you call and then follow the instructions. If the meeting is postponed or adjourned, the above times will be extended to 11:59 p.m., Eastern time, on the day before the reconvened meeting. AUTHORIZE YOUR PROXY BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Office Properties Income Trust, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE BY VIRTUALLY ATTENDING THE MEETING During the Meeting - Go to https://www.viewproxy.com/OfficePropertiesIncomeTrust/2021/ You may attend the meeting via the Internet and vote during the meeting. Have your proxy card in hand when you access the website and follow the instructions provided on the website. ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Office Properties Income Trust in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically by e-mail or over the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. OFFICE PROPERTIES INCOME TRUST C/O BROADRIDGE FINANCIAL SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E71188-P19061D50170-P54115 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. OFFICE PROPERTIES INCOME TRUST For ! ! ! Withhold ! ! ! 1. Election of Trustees. Nominee (for Independent Trustee in Class I)Trustee): Barbara D. GilmoreWilliam A. Lamkin Nominee (for Independent Trustee in Class I)Trustee): John L. Harrington Nominee (for Managing Trustee in Class I): Adam D. Portnoy Advisory vote to approve executive compensation.Elena B. Poptodorova ! ! ! ! For Against Abstain ! ! ! ! ! ! ! ! ! 2. Advisory vote to approve executive compensation. 3. Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors to serve for the 20192021 fiscal year. 4. Approval of an amendment to the Office Properties Income Trust 2009 Incentive Share Award Plan, as amended. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR ALLBOTH NOMINEES FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 3 AND 4.and 3. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE PROXIES, IN THEIR DISCRETION, ARE AUTHORIZED TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. ! For address changes, please check this box and write them on the back where indicated. (NOTE: Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name, by authorized officer, indicating title. If a partnership, please sign in partnership name by authorized person indicating title.) Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date The Board of Trustees recommends a vote FOR allboth Nominees for Trustee in proposalProposal 1 and FOR Proposals 2 3 and 4.3.
OFFICE PROPERTIES INCOME TRUST ANNUAL MEETING OF SHAREHOLDERS May 16, 2019,June 17, 2021, 9:30 a.m., Eastern time Office Properties Income Trust Two Newton Place, 255 Washington Street, Suite 100 Newton, Massachusetts 02458 Upon arrival, please present photo identificationVirtually via the Internet at the registration desk.https://www.viewproxy.com/OfficePropertiesIncomeTrust/2021/ Please see the Proxy Statement for additional attendance instructions. The 20192021 Annual Meeting of Shareholders of Office Properties Income Trust will address the following items of business: 1. Election of the Trustees named in the Proxy Statement to the Company's Board of Trustees; Advisory vote to approve executive compensation; Ratification of the appointment of ErnstDeloitte & YoungTouche LLP as independent auditors to serve for the 20192021 fiscal year; Approval of an amendment to the Office Properties Income Trust 2009 Incentive Share Award Plan, as amended; and 2. 3. 4. 5. Transaction of such other business as may properly come before the meeting and at any postponements or adjournments of the meeting. 1. 2. 3. 4. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR ALLBOTH NOMINEES FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 3 AND 4. E71189-P190613. D50171-P54115 OFFICE PROPERTIES INCOME TRUST Two Newton Place, 255 Washington Street, Suite 100 Newton, MA 02458ANNUAL MEETING OF SHAREHOLDERS June 17, 2021, 9:30 a.m., Eastern time Proxy Important Notice Regarding the Availability of Proxy Materials: The proxy materials for the 20192021 Annual Meeting of Shareholders of Office Properties Income Trust (the "Company"), including the Company's annual report and proxy statement, are available on the Internet. To view the proxy materials or vote online or by telephone, please follow the instructions on the reverse side hereof. This proxy is solicited on behalf of the Board of Trustees of Office Properties Income Trust. The undersigned shareholder of the Company hereby appoints David M. Blackman, Jennifer B. Clark and Adam D. Portnoy, or eitherany of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the 20192021 Annual Meeting of Shareholders of the Company to be held virtually via the Internet at Two Newton Place, 255 Washington Street, Suite 100, Newton, Massachusetts 02458,https://www.viewproxy.com/OfficePropertiesIncomeTrust/2021/, on May 16, 2019,June 17, 2021, at 9:30 a.m., Eastern time, and any postponement or adjournment thereof, to cast on behalf of the undersigned all the votes that the undersigned is entitled to cast at the meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the annual report and the proxy statement, which includes the Notice of 20192021 Annual Meeting of Shareholders, each of which is incorporated herein by reference, and revokes any proxy heretofore given with respect to the meeting. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS INSTRUCTED ON THE REVERSE SIDE HEREOF. IF THIS PROXY IS EXECUTED, BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR ALLBOTH NOMINEES FOR TRUSTEE IN PROPOSAL 1 AND FOR PROPOSALS 2 3 AND 4.3. ADDITIONALLY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST BY THE PROXIES, IN THEIR DISCRETION, ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF. See reverse for instructions on how to authorize a proxy. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Address Changes/Comments: