DEF 14A of Franklin Street Properties Corp /Ma/
Filed Apr 3, 2025 · FY20240001104659-25-031699
TABLE OF CONTENTS
| Potential Payments Upon Termination or Change in Control | 45 | | Pay Versus Performance | 46 | | Relationship Between Compensation Actually Paid and Performance Measures | 47 | | Pay Ratio Disclosure | 48 | | Security Ownership of Certain Beneficial Owners and Management | 49 | | Securities Authorized for Issuance Under Equity Compensation Plans | 51 | | Transactions with Related Persons | 52 | | Other Information | 54 | | Matters to be Considered at the Meeting | 54 | | Solicitation of Proxies | 54 | | Stockholder Proposals | 54 | | Important Notice Regarding Delivery of Security Holder Documents | 54 |
Board Nominees (Proposal 1)
Board Nominees (Proposal 1) On November 27, 2024, following shareholder engagement regarding the appointment of a shareholder-recommended candidate to our Board, the size of our Board was increased from seven to eight members and Bruce J. Schanzer was appointed to our Board. Kenneth A. Hoxsie and Brian N. Hansen, members of our Board, have notified us that they will not stand for re-election at the Annual Meeting. Consequently, the terms of Mr. Hoxsie and Mr. Hansen as directors will expire at the Annual Meeting, and the size of our Board will decrease to six members immediately after the conclusion of the Annual Meeting. Our Nominating and Corporate Governance Committee has recommended, and our Board has determined, to nominate all other current members of our Board for re-election at the Annual Meeting. We are asking our stockholders to vote “FOR” our nominees, George J. Carter, Georgia Murray, John N. Burke, Dennis J. McGillicuddy, Bruce J. Schanzer and Milton P. Wilkins, Jr., as directors for a one-year term expiring at our 2026 Annual Meeting of Stockholders. We understand the importance of having a Board comprised of the right people, with the highest integrity and the necessary skills and qualifications to oversee our business. The following table provides summary information about each of the director nominees, who have a diverse and balanced skill set including extensive real estate, financial, investment, corporate, securities, management, and investor relations experience. We encourage you to review the qualifications, skills and experience of our directors on pages 17-22. In addition, the graphs below the table show the composition of our director nominees by tenure, independence, and diversity (gender and ethnicity).
Board Nominees (Proposal 1)
| Name | Age | Director Since | Principal Occupation | Independent | Committee Memberships | | | Other Public Co. Boards | | | | | | | AC | CC | NG | | | George J. Carter (Chairman of the Board) | 76 | 2002 | Chief Executive Officer, Franklin Street Properties Corp. | No | | | | - | | Georgia Murray (Lead Independent Director) | 74 | 2005 | Director (Retired commercial real estate executive) | Yes | x | x | | - | | John N. Burke | 63 | 2004 | Managing Director, BA, Inc. | Yes | | x | x | - | | Dennis J. McGillicuddy | 83 | 2002 | Director (Retired private investor) | Yes | x | | | - | | Bruce J. Schanzer | 56 | 2024 | Chairman and Chief Investment Officer Erez Asset Management | Yes | X | | | - | | Milton P. Wilkins, Jr. | 77 | 2022 | Director (Retired investment advisor) | Yes | x | | | - |
Board Nominees (Proposal 1)
| Chair | AC Audit Committee | | x Member | CC Compensation Committee | | | NG Nominating and Corporate Governance Committee |
Board Nominees (Proposal 1)
| 6 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
Director Nominee Highlights
Director Nominee Highlights
Executive Compensation Highlights (Proposal 3)
| ● | Competitive pay structure, including base salary, the potential for a cash bonus, matching for individual 401(k) plan contributions, and the potential for a payment or payments under our change-in-control program to enable us to attract and retain experienced and capable leaders and motivate those individuals to achieve exceptional results and reward them for being instrumental in reaching our strategic goals. |
Executive Compensation Highlights (Proposal 3)
| ● | Simplicity and transparency, which in 2024 did not include offering stock options, restricted stock awards, deferred compensation, non-equity incentive plan compensation, or perquisites. |
PROPOSAL ONE — ELECTION OF DIRECTORS
PROPOSAL ONE — ELECTION OF DIRECTORS All members of our Board are elected annually by our shareholders. Our Board currently consists of eight directors. On November 27, 2024, following shareholder engagement regarding the appointment of a shareholder-recommended candidate to our Board, the size of our Board was increased from seven to eight members and Bruce J. Schanzer was appointed to our Board. Kenneth A. Hoxsie and Brian N. Hansen, members of our Board, have notified us that they will not stand for re-election at the Annual Meeting. Consequently, the terms of Mr. Hoxsie and Mr. Hansen as directors will expire at the Annual Meeting, and the size of our Board will decrease to six members immediately after the conclusion of the Annual Meeting. At the Annual Meeting, six directors will be elected to serve for a one-year term expiring at our 2026 Annual Meeting and until their respective successors are duly elected and qualified. As such, at the Annual Meeting, our shareholders will have an opportunity to vote for each of the six nominees listed below. Following the recommendation of the Nominating and Corporate Governance Committee, our Board has nominated Mr. George J. Carter, Ms. Georgia Murray, Mr. John N. Burke, Mr. Dennis J. McGillicuddy, Mr. Bruce J. Schanzer and Mr. Milton P. Wilkins, Jr. for election as directors. Each nominee is currently serving as a director of Franklin Street Properties. Our Board anticipates that, if elected, the nominees will serve as directors. However, if any person nominated by our Board is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person(s) as our Board may recommend.
Nominees for Director
Nominees for Director The following table provides certain information about each nominee for director.
Nominees for Director
| Name | Age | Position(s) with the Company | Director Since | | George J. Carter | 76 | Chair of the Board, Chief Executive Officer | 2002 | | Georgia Murray | 74 | Lead Independent Director | 2005 | | John N. Burke | 63 | Chair of the Audit Committee | 2004 | | Dennis J. McGillicuddy | 83 | Member of the Board | 2002 | | Bruce J. Schanzer | 56 | Member of the Board | 2024 | | Milton P. Wilkins, Jr. | 77 | Chair of the Compensation Committee | 2022 |
Nominees for Director
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 15 |
Nominees for Director
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF ITS NOMINEES, GEORGE J. CARTER, GEORGIA MURRAY, JOHN N. BURKE, DENNIS J. MCGILLICUDDY, BRUCE J. SCHANZER AND MILTON P. WILKINS, JR., TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN. PROXIES MAY NOT BE VOTED FOR A GREATER NUMBER OF PERSONS THAN THE NUMBER OF NOMINEES CONTAINED HEREIN.
Nominees for Director
| 16 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
Director Qualifications and Biographical Information
Director Qualifications and Biographical Information Our Board includes individuals with expertise in executive leadership and management, real estate, accounting and finance, private investing, and investment banking. Our directors have a diversity of backgrounds and experiences. We believe that, as a group, they work effectively together in overseeing our business, hold themselves to the highest standards of integrity, and are committed to representing the long-term best interests of Franklin Street Properties and our stockholders. Biographical information for each of the director nominees, including the key qualifications, experience, attributes, and skills that led our Board to the conclusion that each of them should serve as a director, is set forth on the pages below. In addition to the business and professional experiences described below, our directors also serve on the boards of various civic and charitable organizations. Nominees for Directors to be elected to hold office for a term expiring at our 2026 Annual Meeting:
Director Qualifications and Biographical Information
| George J. Carter Director Since 2002 | Qualifications: • We believe Mr. Carter’s qualifications to sit on our Board include his more than 30 years of experience in the commercial real estate and investment banking industries, including as our founder, Chairman and Chief Executive Officer. | | George J. Carter, age 76, has served as Chairman of the Board and Chief Executive Officer of Franklin Street Properties since 2002. Mr. Carter also served as President of Franklin Street Properties from 2002 to May 2016. He is responsible for all aspects of the business of Franklin Street Properties and its affiliates, with special emphasis on the evaluation, acquisition and structuring of real estate investments. Prior to the conversion of Franklin Street Partners Limited Partnership, or the Partnership, into the Company in 2002, Mr. Carter was President of the general partner of the Partnership and was responsible for all aspects of the business of the Partnership and its affiliates. From 1992 through 1996 he was President of Boston Financial Securities, Inc. Prior to joining Boston Financial Securities, Inc., Mr. Carter was owner and developer of Gloucester Dry Dock, a commercial shipyard in Gloucester, Massachusetts. From 1979 to 1988, Mr. Carter served as Managing Director in charge of marketing at First Winthrop Corporation, a national real estate and investment banking firm headquartered in Boston, Massachusetts. Prior to that, Mr. Carter held a number of positions in the brokerage industry, including positions with Merrill Lynch & Co. and Loeb Rhodes & Co. Mr. Carter is a graduate of the University of Miami (B.S.). Mr. Carter’s son, Scott H. Carter, serves as Executive Vice President, General Counsel and Secretary of the Company and Mr. Carter’s other son, Jeffrey B. Carter, serves as President and Chief Investment Officer of the Company. | |
Director Qualifications and Biographical Information
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 17 |
Director Qualifications and Biographical Information
| Georgia Murray Director Since 2005 | Qualifications: • We believe Ms. Murray’s qualifications to serve on our Board include her more than 29 years of experience in the commercial real estate industry, board experience in the banking industry and general expertise in corporate strategy development and organizational acumen. | | Georgia Murray, age 74, has been Lead Independent Director since 2014. Ms. Murray is retired from Lend Lease Real Estate Investments, Inc., where she served as a Principal from November 1999 until May 2000. From 1973 through October 1999, Ms. Murray worked at the Boston Financial Group, Inc., serving as Senior Vice President and a Director at times during her tenure. Boston Financial Securities, Inc. was an affiliate of the Boston Financial Group, Inc. She is a past Trustee of the Urban Land Institute and a past President of the Multifamily Housing Institute. Ms. Murray previously served on the Board of Directors of Capital Crossing Bank. She also serves on the boards of numerous non-profit entities. Ms. Murray is a graduate of Newton College. | |
Director Qualifications and Biographical Information
| 18 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
Director Qualifications and Biographical Information
| John N. Burke Director Since 2004 | Qualifications: • We believe Mr. Burke’s qualifications to serve on our Board include his more than 35 years of experience in the practice of public accounting with extensive experience in the real estate and REIT industry. | | John N. Burke, age 63, has been Chair of the Audit Committee since 2004. Mr. Burke is a certified public accountant with over 35 years of experience in the practice of public accounting working with both private and publicly traded companies and extensive experience serving clients in the real estate and REIT industry. His experience includes analysis and evaluation of financial reporting, accounting systems, internal controls and audit matters. Mr. Burke has been involved as an advisor on several public offerings, private equity and debt financings and merger and acquisition transactions. Mr. Burke’s consulting experience includes a wide range of accounting, tax and business planning matters. Prior to starting his own firm, BA, Inc., in 2003, where he currently practices, Mr. Burke was an Audit Partner in the Boston office of BDO USA, LLP. Mr. Burke is a member of the American Institute of Certified Public Accountants and the Massachusetts Society of CPAs. Mr. Burke earned an M.S. in Taxation and studied undergraduate accounting at Bentley University. | |
Director Qualifications and Biographical Information
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 19 |
Director Qualifications and Biographical Information
| Dennis J. McGillicuddy Director Since 2002 | Qualifications: • We believe Mr. McGillicuddy’s qualifications to serve on our Board include his entrepreneurial and investment acumen and experience. | | Dennis J. McGillicuddy, age 83, graduated from the University of Florida with a B.A. degree and from the University of Florida Law School with a J.D. degree. In 1968, Mr. McGillicuddy co-founded Coaxial Communications, a cable television company. In 1998 and 1999, Coaxial sold its cable systems. Mr. McGillicuddy has served on the boards of various charitable organizations. He is currently President of the Board of Trustees of Florida Studio Theater, a professional non-profit theater organization, and is a Director of All-Star Children’s Foundation, an organization engaged in creating a new paradigm for foster care. | |
Director Qualifications and Biographical Information
| 20 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
Director Qualifications and Biographical Information
| Bruce J. Schanzer Director Since 2024 | Qualifications: • We believe Mr. Schanzer’s qualifications to serve on our Board include his extensive investment banking and real estate investment trust experience. | | Bruce J. Schanzer, age 56, is Chairman and Chief Investment Officer of Erez Asset Management, a fund manager focused on investment opportunities in small market cap REITs. Prior to forming Erez Asset Management in August 2022, Mr. Schanzer was President, Chief Executive Officer and a director of Cedar Realty Trust (NYSE: CDR), a real estate investment trust focused on the ownership, operation and redevelopment of shopping centers in the Washington, D.C. to Boston corridor, from June 2011 to August 2022. Before joining Cedar in 2011, he was a managing director in the real estate investment banking group at Goldman Sachs & Co and prior thereto a vice president at Merrill Lynch. Before working on Wall Street, Mr. Schanzer worked as a real estate attorney in New York. He received an M.B.A. in finance and accounting from the University of Chicago (now known as the Booth School of Business); a J.D. from Benjamin N. Cardozo School of Law, where he served as a member of the Law Review; and a B.A. from Yeshiva College, where he is currently a member of the board of trustees of Sym Schools of Business. He is also presently a member of the board of trustees of SAR Academy in Riverdale, NY and the board of advisors of New York Medical College. Mr. Schanzer previously served as a member of the board of governors of the National Association of Real Estate Investment Trusts. | |
Director Qualifications and Biographical Information
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 21 |
Director Qualifications and Biographical Information
| Milton P. Wilkins, Jr. Director Since 2022 | Qualifications: • We believe Mr. Wilkin’s qualifications to serve on our Board include his extensive investment and corporate strategy development experience. | | Milton P. Wilkins, Jr., age 77, served as an investment advisor with RBF Wealth Advisors in St. Louis, Missouri, from 1997 to 2024. Concurrently, from 2003 to 2015, Mr. Wilkins served with Hammond Associates/Mercer Investment Consulting as a senior investment consultant to institutional clients. From 1976 to 1986 and from 1989 to 1997, Mr. Wilkins served in various positions at Monsanto Corporation, including as Vice President of Corporate Development in the corporate mergers and acquisition group, as Vice President of the Plant Sciences Division and as Regional Director of Latin America. Mr. Wilkins currently serves as Chairman of the St. Louis County Employees Retirement Board (pension plan), a member of the Investment Committee of the Archdiocese of St. Louis, and as a member of the Board of Directors of the Nine PBS public television station in St. Louis. Mr. Wilkins holds a M.B.A. degree from the Harvard Graduate School of Business Administration and a Bachelor of Arts degree from Morehouse College. | |
Director Qualifications and Biographical Information
| 22 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
Director Qualifications and Biographical Information
We operate within a comprehensive corporate governance structure that includes the highest standards of professional and personal conduct. Our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, the charters of our Audit, Compensation, and Nominating and Corporate Governance Committees, and other corporate governance information, are available on our website at http://www.fspreit.com under the heading “Investor Relations” and then under the subheading “Governance Documents” under “Corporate Information.” The information on our website is not a part of this Proxy Statement and is not incorporated into any of our filings made with the SEC.
Introduction
Introduction Our Common Stock trades on NYSE American under the symbol “FSP”. We began trading on the American Stock Exchange in June 2005. The exchange’s name was changed to NYSE Amex after it was acquired by NYSE Euronext on October 1, 2008, was later known as NYSE MKT and is now NYSE American.
Board of Directors
Board of Directors Franklin Street Properties is currently managed by an eight-member Board. The size of our Board will decrease to six members immediately after conclusion of the Annual Meeting. All directors are elected to serve one-year terms (in all cases subject to the election and qualification of their successors or to their earlier death, resignation or removal).
Compensation Committee Interlocks and Insider Participation
| Non-employee Director Compensation | | | Annual Cash Retainer | $30,000 | | Additional Annual Cash Retainer – Lead Independent Director | $7,500 | | Additional Annual Cash Retainer – Chair of the Audit Committee | $7,500 | | Additional Annual Cash Retainer – Chair of the Compensation Committee | $5,000 | | Additional Annual Cash Retainer – Chair of the Nominating and Corporate Governance Committee | $5,000 | | Annual Grant of FSP Common Stock (1) | $45,000 |
2024 Non-Employee Director Compensation
2024 Non-Employee Director Compensation In May 2024, the Compensation Committee recommended, and the Board agreed, that changes to the compensation of our non-employee directors were advisable. The changes (1) decreased the annual cash retainer from $56,250 to $30,000, (2) reduced the additional annual cash retainer for the Lead Independent Director from $15,000 to $7,500, (3) reduced the additional annual cash retainer for the Chair of the Audit Committee from $15,000 to $7,500, (4) reduced the additional annual cash retainer for the Chair of the Compensation Committee from $10,000 to $5,000, (5) established an additional annual cash retainer for the Chair of the Nominating and Corporate Governance Committee in the amount of $5,000, and (6) permanently reduced the amount of the annual grant of FSP Common Stock from $56,250 to $45,000. The Compensation Committee and the Board determined that such changes were appropriate in order to reduce general and administrative expenses and in light of the broad macroeconomic factors that negatively impacted the business operations, operating results and stock performance of Franklin Street Properties.
2024 Non-Employee Director Compensation
| 30 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
2024 Non-Employee Director Compensation
The following table provides information regarding non-employee director compensation during 2024:
2024 Non-Employee Director Compensation
| Name | Fees earned or paid in cash ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | | John N. Burke | $45,938 | $45,000 | N/A | N/A | N/A | N/A | $90,938 | | Brian N. Hansen | $42,813 | $45,000 | N/A | N/A | N/A | N/A | $87,813 | | Kenneth A. Hoxsie | $40,313 | $45,000 | N/A | N/A | N/A | N/A | $85,313 | | Dennis J. McGillicuddy | $36,563 | $45,000 | N/A | N/A | N/A | N/A | $81,563 | | Georgia Murray | $45,938 | $45,000 | N/A | N/A | N/A | N/A | $90,938 | | Kathryn P. O’Neil (2) | $14,063 | N/A | N/A | N/A | N/A | N/A | $14,063 | | Bruce J. Schanzer (3) | $6,522 | N/A | N/A | N/A | N/A | N/A | $6,522 | | Milton P. Wilkins, Jr. | $36,563 | $45,000 | N/A | N/A | N/A | N/A | $81,563 |
2024 Non-Employee Director Compensation
* The above table includes the fees earned or paid in cash for services rendered during 2024. It does not include the fees earned or paid in cash during 2024 for services to be rendered during 2025.
2024 Non-Employee Director Compensation
| (1) Reflects the grant date fair value. Grant date fair value is based upon the closing price of FSP Common Stock on the date of the grant. |
2024 Non-Employee Director Compensation
| (2) Ms. O’Neil’s term as a director expired on May 16, 2024. |
2024 Non-Employee Director Compensation
| (3) Mr. Schanzer was appointed to the Board on November 27, 2024. |
PROPOSAL THREE — ADVISORY VOTE ON EXECUTIVE COMPENSATION
| ● | None of our executive officers has an employment agreement. |
PROPOSAL THREE — ADVISORY VOTE ON EXECUTIVE COMPENSATION
| ● | Except in the case of a change-in-control of Franklin Street Properties, we are not obligated to pay severance or other enhanced benefits to executive officers upon termination of their employment. |
PROPOSAL THREE — ADVISORY VOTE ON EXECUTIVE COMPENSATION
| ● | We do not offer stock options, restricted stock awards, deferred compensation, non-equity incentive plan compensation or perquisites, which we believe keeps our compensation simple and straightforward. |
Overview
Overview It is critical that we be able to attract, motivate and retain highly talented individuals at all levels of the organization. We believe that compensation levels should be competitive enough to attract and retain experienced and capable leaders and motivate those individuals to achieve exceptional results and reward them for being instrumental in reaching our strategic goals. At the same time, we believe in simplicity and maintaining compensation at responsible levels. For 2024, the compensation of executives consisted of the same four components as were provided to all of our employees: (1) base salary; (2) the potential for a cash bonus; (3) matching for individual 401(k) plan contributions; and (4) the potential for a payment or payments under our change-in-control program. Although our executives are eligible to be granted awards of Common Stock under our 2002 stock incentive plan, we have not made any awards to executives under the plan since our initial listing on the American Stock Exchange (now NYSE American) in June 2005. In addition, we do not offer stock options, restricted stock awards, deferred compensation, non-equity incentive plan compensation or perquisites. None of our employees have employment agreements and, except for the Chief Executive Officer, we do not have any policies that require any of our employees to own our Common Stock. Pursuant to our Corporate Governance Guidelines, the Chief Executive Officer is required to own shares of Common Stock valued at six times his base salary. Our executive officers consist of the Chief Executive Officer, the Chief Financial Officer, the President and Chief Investment Officer, the General Counsel, the President of FSP Property Management LLC and the Chief Operating Officer. For the fiscal year ended December 31, 2024, our Named Executive Officers were George J. Carter, our Chief Executive Officer; John G. Demeritt, our Executive Vice President, Chief Financial Officer and Treasurer; Jeffrey B. Carter, our President and Chief Investment Officer; John F. Donahue, Executive Vice President and President of FSP Property Management LLC; and Scott H. Carter, our Executive Vice President, General Counsel and Secretary. We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and programs are not reasonably likely to have a material adverse effect on Franklin Street Properties.
The objectives of our executive compensation programs
| ● | Compensation should reward performance. Our compensation programs should deliver competitive compensation for excellent individual and corporate performance. Similarly, our compensation programs should deliver less compensation, including the possibility of no cash bonus, in the event that individual and/or corporate performance fall short of expectations. |
The objectives of our executive compensation programs
| ● | In 2019, the Compensation Committee retained FPL Associates L.P., an independent compensation consulting firm, to review and evaluate our executive and non-employee director compensation programs. The review and evaluation included defining a peer group of companies, benchmarking our compensation programs against the peer group, and providing market data and advice regarding executive and director compensation plan design. |
Each element of compensation and why we choose to pay each element
| (b) Cash Bonus |
Each element of compensation and why we choose to pay each element
| (d) Change-in-Control Program |
Each element of compensation and why we choose to pay each element
Except in the case of a change-in-control of Franklin Street Properties, we are not obligated to pay severance or other enhanced benefits to Named Executive Officers upon termination of their employment. In February 2006, we adopted a change-in-control program for all our employees, including our executive officers. The program was adopted in response to merger and consolidation activity within the real estate/real estate investment trust industry and is intended to preserve employee morale and productivity and encourage retention in the event of an actual or rumored change-in-control of Franklin Street Properties. The program is also intended to align employee and shareholder interests by enabling employees to consider corporate transactions that are in the best interests of the shareholders and other constituents of Franklin Street Properties without undue concern over whether the transaction or transactions may jeopardize the employee’s own employment. Although there are some differences in payment amounts depending on the employee’s job level, the basic elements of the program are comparable for all employees:
Each element of compensation and why we choose to pay each element
| ● | The triggering event for both components is a change-in-control of Franklin Street Properties. A change-in-control of Franklin Street Properties, as defined in the plan, generally refers to a change in ownership or effective control of Franklin Street Properties or a change in ownership of a substantial portion of the assets of Franklin Street Properties. |
Each element of compensation and why we choose to pay each element
| ● | Under the retention agreement component of the program, employees would receive a payment as soon as practicable following the closing of the change-in-control, but in no event more than thirty days following the closing of the change-in-control. Executive officers would receive payments equal to three years of their base salaries plus a bonus opportunity payment equal to three years of their base salaries. For purposes of the retention agreement component of the program, base salary refers to the base salary of the employee in effect at the time of the closing of the change-in-control. Payments under the retention agreements are subject to a possible reduction, if any, after the tax consequences of the payment are determined. |
Each element of compensation and why we choose to pay each element
| ● | Under the discretionary plan component of the program, immediately prior to the closing of the change-in-control, our Board of Directors may (but is not obligated to) establish a discretionary pool of funds equal to 1% of the market capitalization of Franklin Street Properties immediately prior to the closing of the change-in-control less the |
Each element of compensation and why we choose to pay each element
| (e) Awards of Common Stock under our 2002 Stock Incentive Plan |
How each element and our decisions regarding that element fit into our overall compensation objectives and affect decisions regarding other elements
| (b) Cash Bonus |
How each element and our decisions regarding that element fit into our overall compensation objectives and affect decisions regarding other elements
| (d) Change-in-Control Program |
How each element and our decisions regarding that element fit into our overall compensation objectives and affect decisions regarding other elements
| (e) Awards of Common Stock under our 2002 Stock Incentive Plan |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| | | | | | | | Change in | | | | | | | | | | | Pension Value | | | | | | | | | | | and | | | | | | | | | | Non-Equity | Nonqualified | | | | | | | | Stock | Option | Incentive Plan | Deferred | All Other | | | Name and Principal | | | | Awards | Awards | Compensation | Compensation | Compensation | | | Position | Year | Salary ($) | Bonus ($) | ($) | ($) | ($) | Earnings | ($) (1) | Total ($) | | George J. Carter, | 2024 | $300,000 | $0 | N/A | N/A | N/A | N/A | $6,000 | $306,000 | | Chief Executive Officer | 2023 | $300,000 | $0 | N/A | N/A | N/A | N/A | $6,000 | $306,000 | | (PEO) | 2022 | $300,000 | $0 | N/A | N/A | N/A | N/A | $6,000 | $306,000 | | John G. Demeritt, | 2024 | $313,355 | $323,520 | N/A | N/A | N/A | N/A | $6,000 | $642,875 | | Executive Vice President, | 2023 | $304,074 | $404,400 | N/A | N/A | N/A | N/A | $6,000 | $714,474 | | Chief Financial Officer and | 2022 | $292,442 | $409,427 | N/A | N/A | N/A | N/A | $6,000 | $707,869 | | Treasurer (PFO) | | | | | | | | | | | Jeffrey B. Carter, | 2024 | $313,866 | $321,520 | N/A | N/A | N/A | N/A | $6,000 | $641,386 | | President and Chief | 2023 | $304,569 | $401,900 | N/A | N/A | N/A | N/A | $6,000 | $712,469 | | Investment Officer | 2022 | $292,918 | $406,941 | N/A | N/A | N/A | N/A | $6,000 | $705,859 | | Scott H. Carter, | 2024 | $272,558 | $319,600 | N/A | N/A | N/A | N/A | $6,000 | $598,158 | | Executive Vice President, | 2023 | $264,486 | $399,500 | N/A | N/A | N/A | N/A | $6,000 | $669,986 | | General Counsel and | 2022 | $254,368 | $404,454 | N/A | N/A | N/A | N/A | $6,000 | $664,822 | | Secretary | | | | | | | | | | | John F. Donahue, | 2024 | $264,723 | $318,240 | N/A | N/A | N/A | N/A | $6,000 | $588,963 | | Executive Vice President | 2023 | $256,882 | $397,800 | N/A | N/A | N/A | N/A | $6,000 | $660,682 | | and President of FSP | 2022 | $247,056 | $402,797 | N/A | N/A | N/A | N/A | $6,000 | $655,853 | | Property Management LLC | | | | | | | | | |
SUMMARY COMPENSATION TABLE
NOTE
SUMMARY COMPENSATION TABLE
| (1) Consists of a 401(k) match from Franklin Street Properties. For additional information, please refer to the discussion included above under the heading – “Compensation Discussion and Analysis – Each element of compensation and why we choose to pay each element – (c) 401(k) Matching.” |
SUMMARY COMPENSATION TABLE
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 43 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL In February 2006, we adopted a change-in-control program for all our employees, including our executive officers. We adopted the program in response to merger and consolidation activity within the real estate/real estate investment trust industry, to preserve employee morale and productivity and to encourage retention in the event of an actual or rumored change-in-control of the Company. The program is also intended to align employee and shareholder interests by enabling employees to consider corporate transactions that are in the best interests of the shareholders and other constituents of the Company without undue concern over whether the transaction or transactions may jeopardize the employee’s own employment. For an overview of our change-in-control program, please refer to the discussion included under the heading “Compensation Discussion and Analysis – Each element of compensation and why we choose to pay each element – (d) Change-in-Control Program.” Assuming that the closing of a change-in-control occurred on December 31, 2024, our Named Executive Officers would be entitled to payment of the following amounts under the retention agreement component of our change-in-control program:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | Potential Payment due under | | Name and Principal Position | the Retention Agreement | | George J. Carter, Chief Executive Officer (PEO) | N/A (1) | | John G. Demeritt, Executive Vice President, Chief Financial Officer and Treasurer (PFO) | $1,880,130 (2) | | Jeffrey B. Carter, President and Chief Investment Officer | $1,883,196 (2) | | Scott H. Carter, Executive Vice President, General Counsel and Secretary | $1,635,348 (2) | | John F. Donahue, Executive Vice President and President of FSP Property Management LLC | $1,588,338 (2) | | TOTAL | $6,987,012 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
NOTES
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) George J. Carter has voluntarily elected not to participate in the retention agreement component of our change-in-control program. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) These are lump-sum payments equal to three years of base salaries plus a bonus opportunity payment equal to three years of base salaries. The payment amounts are subject to a possible reduction, if any, after the tax consequences are determined. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Under the discretionary plan component of our change-in-control program, our Board of Directors has the right, but not the obligation, to establish a discretionary pool of funds equal to 1% of our market capitalization immediately prior to the closing of the change-in-control. On December 31, 2024, there were 103,566,715 shares of our Common Stock outstanding and the closing price per share of our Common Stock was $1.83. Accordingly, on December 31, 2024, our market capitalization was $189,527,088, and 1% of our market capitalization equaled $1,895,271. Because the total amount of payments due and payable to all of our employees (including our Named Executive Officers) under the retention agreement component of our change-in-control program at December 31, 2024 exceeded 1% of our market capitalization at December 31, 2024, no funds would have been available for our Board of Directors to award under the discretionary plan component of our change-in-control program at December 31, 2024. As is the case with the retention agreement component of our change-in-control program, any payments under the discretionary plan component are subject to a possible reduction, if any, after the tax consequences are determined.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 45 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table reports the compensation of our Principal Executive Officer (PEO) and the average compensation of the other Named Executive Officers (Other NEOs) as reported in the Summary Compensation Table for the past five fiscal years, as well as their “compensation actually paid” as calculated pursuant to the SEC’s pay versus performance rules and certain performance measures required by such rules.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year (1) | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | FSP's Total Stockholder Return | Peer Group Total Stockholder Return (2) | Net Income | Net Debt (3) | | 2024 | $306,000 | $306,000 | $617,846 | $617,846 | $28.18 | $76.95 | ($52,723,000) | $207,649,000 | | 2023 | $306,000 | $306,000 | $689,403 | $689,403 | $38.59 | $63.34 | ($48,110,000) | $277,120,000 | | 2022 | $306,000 | $306,000 | $683,601 | $683,601 | $40.20 | $62.07 | $1,094,000 | $406,368,000 | | 2021 | $806,000 | $806,000 | $759,488 | $759,488 | $84.25 | $99.51 | $92,717,000 | $434,249,000 | | 2020 | $306,000 | $306,000 | $730,884 | $730,884 | $54.63 | $81.56 | $32,615,000 | $919,350,000 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) For all years, Mr. George J. Carter served as our PEO and Mr. John G. Demeritt, Mr. Jeffrey B. Carter, Mr. Scott H. Carter and Mr. John F. Donahue served as the Other NEOs. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) For all years, the peer group is the FTSE NAREIT Equity Office Index. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (3) While our Compensation Committee employs a subjective approach to the consideration of various measures of corporate performance, for 2024, the Company identified net debt as the most important financial performance measure used to link the compensation actually paid to the PEO and the Other NEOs for 2024 to the Company’s performance. Net debt is a non-GAAP financial measure. See Appendix A for additional information regarding net debt and a reconciliation of net debt to its most directly comparable GAAP financial measure. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table lists the seven most important financial performance measures used by the Company to link compensation actually paid to the PEO and the Other NEOs in 2024 to the Company’s performance:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Net debt | | Debt repaid | | Gross proceeds from property dispositions | | Amount (and terms) of space leased | | Funds from operations (FFO) | | Total stockholder return | | Estimated net asset value |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
In the “Compensation Discussion and Analysis” section of this Proxy Statement, we provide greater detail on the elements of our executive compensation program and our compensation philosophy. We believe the Company’s executive compensation program and the executive compensation decisions included in the 2024 Summary Compensation Table and related disclosures appropriately reward our PEO and the Other NEOs for Company and individual performance and assist the Company in retaining our senior leadership team.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| 46 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
Relationship Between Compensation Actually Paid and Performance Measures
Relationship Between Compensation Actually Paid and Performance Measures The following charts demonstrate the relationship between compensation actually paid to our PEO and average compensation paid to the Other NEOs as compared to our cumulative total stockholder return (“TSR”), net income and net debt, as well as the relationship between TSR and peer group TSR, for the fiscal years ended December 31, 2024, 2023, 2022, 2021 and 2020.
Relationship Between Compensation Actually Paid and Performance Measures
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 47 |
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE Pursuant to applicable SEC rules, presented below is a reasonable estimate of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees. We determined our median employee based on annual total compensation, consisting of salary, bonus and 401(k) match, actually paid for 2024 performance(1) to each of our 27 employees (excluding the Chief Executive Officer) as of December 31, 2024. The annual total compensation of our median employee (excluding the Chief Executive Officer) for 2024(1) was $225,587. As disclosed in the Summary Compensation Table appearing on page 43, our Chief Executive Officer’s annual total compensation for 2024 was $306,000. Based on the foregoing, our estimate of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all other employees was approximately 1.36 to 1. NOTE
PAY RATIO DISCLOSURE
| (1) For certain employees, bonuses for 2024 performance were paid in January or February 2025. |
PAY RATIO DISCLOSURE
| 48 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |
PAY RATIO DISCLOSURE
The following table sets forth the beneficial ownership of Common Stock of Franklin Street Properties as of March 4, 2025 by each director or nominee for director, by each of the Named Executive Officers named in the Summary Compensation Table herein, by each person or entity known by us to own beneficially more than 5% of Common Stock, and by all current directors and executive officers as a group.
PAY RATIO DISCLOSURE
| | | Percentage of | | | Number of Shares | Outstanding | | | Beneficially Owned (1) | Common Stock (2) | | Named Executive Officers and Directors | | | | Dennis J. McGillicuddy (3) | 3,558,964 | 3.44% | | Bruce J. Schanzer (4) | 3,489,374 | 3.40% | | Brian N. Hansen | 1,321,447 | 1.28% | | George J. Carter (5) | 1,008,531 | * | | Kenneth A. Hoxsie | 172,691 | * | | Georgia Murray (6) | 130,916 | * | | John N. Burke | 122,600 | * | | Milton P. Wilkins, Jr. | 62,523 | * | | John G. Demeritt | 42,000 | * | | Jeffrey B. Carter (7) | 39,705 | * | | Scott H. Carter (8) | 3,550 | * | | John F. Donahue | 1,000 | * | | All current directors and executive officers as a group (13 persons) | 9,959,601 | 9.62% | | 5% Beneficial Owners | | | | Jonathan B. Odle (9) | 10,135,000 | 9.79% | | Private Management Group, Inc. (10) | 9,228,820 | 8.91% | | Newtyn Management, LLC (11) | 7,150,000 | 6.90% | | BlackRock, Inc. (12) | 6,846,300 | 6.61% | | Bank of America Corporation (13) | 5,181,112 | 5.00% |
PAY RATIO DISCLOSURE
| * Less than 1%. |
PAY RATIO DISCLOSURE
| (1) We do not have any outstanding stock options or other securities exercisable or convertible into common stock. Each person has sole investment and voting power with respect to the shares indicated as beneficially owned, except as otherwise noted. The inclusion herein of shares as beneficially owned does not constitute an admission of beneficial ownership. All share amounts reported have been rounded to the nearest whole share. |
PAY RATIO DISCLOSURE
| (2) Based upon 103,566,715 shares outstanding as of March 4, 2025. |
PAY RATIO DISCLOSURE
| (3) Consists of (i) 3,446,136 shares held by McGillicuddy Investments Limited Partnership III, or MILP III, (ii) 8,946 shares held by various trusts for Mr. McGillicuddy’s grandchildren, of which Mr. McGillicuddy’s spouse is a trustee, (iii) 14,091 shares held by Mr. McGillicuddy’s spouse, and (iv) 89,791 shares held by Mr. McGillicuddy. Mr. McGillicuddy disclaims beneficial ownership of those shares held for the benefit of his spouse, those held by trusts for his grandchildren, and those held by MILP III. Mr. McGillicuddy and his wife own all of the limited partnership interest in MILP III. Mr. McGillicuddy has shared dispositive power and no voting power over the shares held by MILP III. Excludes 404,499 shares held by the McGillicuddy FLP Irrevocable Trust of 2003, of which Mr. McGillicuddy’s son is trustee and has sole investment and voting power over the shares. Mr. McGillicuddy has placed 2,860,227 shares of his common stock in a broker’s margin/line of credit account. |
PAY RATIO DISCLOSURE
| FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT | 49 |
PAY RATIO DISCLOSURE
| (4) Shares held by Erez REIT Opportunities LP (“Erez Opportunities”). Erez Asset Management LLC (“Erez Asset Management”) is the investment manager of Erez Opportunities. Mr. Schanzer serves as Chairman, Chief Investment Officer and sole member of Erez Asset Management. |
PAY RATIO DISCLOSURE
| (5) Includes 945,531 shares held by Mr. Carter and his spouse, Judith I. Carter, with whom Mr. Carter shares investment and voting power. |
PAY RATIO DISCLOSURE
| (6) Includes 68,393 shares held by Ms. Murray and her spouse, Mark Maloney, with whom Ms. Murray shares investment and voting power. |
PAY RATIO DISCLOSURE
| (7) Includes 4,580 shares held by Mr. Carter and his spouse, Brette Carter, with whom Mr. Carter shares investment and voting power. |
PAY RATIO DISCLOSURE
| (8) Includes 550 shares held by Mr. Carter and his spouse, Cristie Carter, with whom Mr. Carter shares investment and voting power. |
PAY RATIO DISCLOSURE
| (9) Based solely on information set forth in a Schedule 13G/A filed with the SEC on May 31, 2023 by Jonathan B. Odle, reporting shared power to vote or direct the vote over 10,135,000 shares and shared power to dispose or direct the disposition of 10,135,000 shares. The address of Jonathan B. Odle is 3662 Endeavor Avenue, Suite 101, Columbia, Missouri 65201. |
PAY RATIO DISCLOSURE
| (10) Based solely on information set forth in a Schedule 13G/A filed with the SEC on November 5, 2024 by Private Management Group, Inc., reporting sole power to vote or direct the vote over 9,228,820 shares and sole power to dispose or direct the disposition of 9,228,820 shares. The address of Private Management Group, Inc. is 15635 Alton Parkway, Suite 400, Irvine, CA 92618. |
PAY RATIO DISCLOSURE
| (11) Based solely on information set forth in a Schedule 13G filed with the SEC on November 14, 2024 by Newtyn Management, LLC. Newtyn Management, LLC is the investment manager to Newtyn TE Partners, LP, a Delaware limited partnership (“NTE”) and Newtyn Partners, LP, a Delaware limited partnership (“NP”). As of September 30, 2024, NTE held 4,390,100 shares of Common Stock and NP held 2,759,900 shares of Common Stock. Newtyn Management, LLC, as the investment manager to NTE and NP, may be deemed to beneficially own these securities. The address of Newtyn Management, LLC is 60 East 42nd Street, 9th Floor, New York, NY 10165. |
PAY RATIO DISCLOSURE
| (12) Based solely on information set forth in a Schedule 13G filed with the SEC on November 8, 2024 by BlackRock, Inc., reporting sole power to vote or direct the vote over 6,766,394 shares and sole power to dispose or direct the disposition of 6,846,300 shares. The address of BlackRock, Inc. 50 Hudson Yards, New York, NY 10001. |
PAY RATIO DISCLOSURE
| (13) Based solely on information set forth in Schedule 13G/A filed with the SEC on November 14, 2024 by Bank of America Corporation, reporting shared power to vote or direct the vote over 5,182,112 shares and shared power to dispose or direct the disposition of 5,182,112 shares. The address of Bank of America Corporation is 100 N Tryon Street, Charlotte, North Carolina 28255. |
PAY RATIO DISCLOSURE
| 50 | FRANKLIN STREET PROPERTIES CORP. | 2025 PROXY STATEMENT |