DEF 14A of National Healthcare Properties, Inc.
Filed Apr 11, 2025 · FY20240001140361-25-013458
Board of Directors and Executive Officers
Board of Directors and Executive Officers The table set forth below lists the names, ages and certain other information about each member of the Board. Michael Anderson (Class I director), Edward G. Rendell (Class II director) and Elizabeth K. Tuppeny (Class II director) have been nominated for reelection at the Annual Meeting. We have also included information regarding each of the continuing members of our Board and for each of our executive officers:
Board of Directors and Executive Officers
| Directors with Terms expiring at the Annual Meeting | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Michael Anderson | I | 36 | Director, Chief Executive Officer and President | 2024 | 2025 | 2027 | | Edward G. Rendell | II | 81 | Independent Director | 2015 | 2025 | 2028 | | Elizabeth K. Tuppeny | II | 64 | Independent Director | 2013 | 2025 | 2028 | | Continuing Directors | | | | | | | | B.J. Penn | I | 87 | Independent Director | 2019 | 2027 | — | | Edward M. Weil, Jr. | III | 58 | Director | 2016 | 2026 | — | | Leslie D. Michelson | III | 74 | Non-Executive Chair; Audit Committee Chair | 2015 | 2026 | — | | Executive Officers | | | | | | | | Michael Anderson | I | 36 | Chief Executive Officer, President and Director | 2024 | 2025 | 2027 | | Scott M. Lappetito | N/A | 38 | Chief Financial Officer and Treasurer | N/A | N/A | N/A |
Nominee for Class I Director
Nominee for Class I Director Michael Anderson Michael Anderson, a Class I director, has served as the Chief Executive Officer and President of the Company since September 2023 and a member of Board since September 2024. Mr. Anderson joined AR Global in 2013 and served in various leadership roles at entities that are or were advised by affiliates of AR Global, including as a principal of AR Global and its controlling entity since 2020, as chief executive officer of American Strategic Investment Co. (NYSE: NYC) (“ASIC”) from September 2023 through March 2025 and as general counsel and secretary of G&P Acquisition Corp. from December 2020 to December 2022. During his professional career, Mr. Anderson has led over $10 billion in real estate, equity and debt, mergers and acquisitions and other corporate transactions and managed multiple public REITs in leadership roles. Mr. Anderson earned a Bachelor of Arts degree from the University of Arizona, where he graduated cum laude, and a Juris Doctor degree from the University of Mississippi School of Law, where he graduated summa cum laude. Our Board believes that Mr. Anderson’s extensive experience as an executive officer of the companies described above and his significant experience in real estate and public company management makes him a valuable and well qualified member of our Board.
Nominees for Class II Directors
Nominees for Class II Directors Governor Edward G. Rendell Gov. Edward G. Rendell, a Class II director, has served as an independent director of the Company since December 2015. Gov. Rendell has also served as: an independent director of Global Net Lease, Inc. (“GNL”) since March 2012; an independent director of The Necessity Retail REIT, Inc. from February 2017 through September 2023; an independent director of Franklin BSP Lending Corp. until January 2024; and an independent director of Franklin BSP Capital Corp since March 2020. Gov. Rendell served as the 45th Governor of the Commonwealth of Pennsylvania from January 2003 through January 2011. As the Governor of the Commonwealth of Pennsylvania, Gov. Rendell served as the chief executive of the nation’s 6th most populous state and oversaw a budget of $28.3 billion. Gov. Rendell also served as the Mayor of Philadelphia from January 1992 through January 2000. As the Mayor of Philadelphia, Gov. Rendell eliminated a $250 million deficit, balanced the city’s budget and generated five consecutive budget surpluses. Gov. Rendell was also the General Chairperson of the National Democratic Committee from November 1999 through February 2001. Gov. Rendell has also worked as an attorney in private practice. An Army veteran, Gov. Rendell holds a B.A. from the University of Pennsylvania and a J.D. from Villanova Law School. Our Board believes that Gov. Rendell’s extensive experience as a director of multiple companies, as well as his experience as the chief executive of Pennsylvania and Philadelphia, make him a valuable and well qualified member of our Board. Elizabeth K. Tuppeny Elizabeth K. Tuppeny, a Class II director, has served as an independent director of the Company since January 2013, including as the chair of its nominating and corporate governance committee since January 2016 and chair of its compensation committee since July 2024. Ms. Tuppeny has also served as an independent director of ASIC since March 2014, including as its lead independent director since December 2014, and an independent director of Franklin BSP Realty Trust, Inc. (NYSE: FBRT) since January 2013, including as its lead independent director since July 2016. As the chief executive officer and founder of Domus, Inc. (“Domus”), a full-service marketing communications agency, Ms. Tuppeny has over 30 years of experience in the branding and advertising industries and has driven business strategies for Fortune 500 companies, focused on maximizing return on investment with internal, external and brand advocacy marketing. Domus provides services to Fortune 500 companies, including Chevron, Citibank, ConAgra, Diageo, DuPont, Epson, Mattel, Merck, Merrill Lynch, Procter & Gamble, Ralph Lauren and Westinghouse. Domus’ real estate clients include Ritz Carlton Residences, S&H Associate’s (Tel Aviv) Parkway 22, and PMC Real Estate. Ms. Tuppeny also founded EKT Development, LLC to pursue entertainment projects in publishing, feature film and education video games. Ms. Tuppeny also Co-Founded BDI LLC, an online content company focusing on the wine industry with her sommelier spouse. Ms. Tuppeny served on the board of directors and executive committee of the Philadelphia Industrial Development Council, a public-private development organization, for three-plus years where she evaluated and approved over 500- industrial and commercial real estate transactions totaling over $1 billion that helped to attract jobs to Philadelphia, including Citizen’s Bank Park and The Navy Yard. Ms. Tuppeny has served on the boards of directors and advisory committees for the Arthur Ashe Foundation, Avenue of the Arts, Drexel Medical School, Philadelphia International Tourism Cabinet, Pennsylvania Commission for Women, Penn Relays and the Police Athletic League. Ms. Tuppeny was the recipient of the prestigious national Stevie Award as the nation’s top woman entrepreneur in 2004, outperforming 13,000 entrants, and was named as a “Top Woman in Philadelphia Business” in 1996, one of the “Top 50 Women in Pennsylvania” in 2004 and as the “Businessperson of the Year” in 2003 by the Greater Philadelphia Chamber of Commerce. Ms. Tuppeny has expertise in world-class governance best practices from her certifications from Harvard Business School’s Executive Leadership program, Making Corporate Boards More Effective; the National Association of Corporate Directors’ Master Class, MIT’s Cybersecurity: Technology, Application and Policy, EY’s Center for Board Matters and is currently completing Leverage Diversity and Inclusion for Organizational Excellence at Stanford’s Graduate School of Business. Ms. Tuppeny has taught at Temple University, taught post-graduate students Strategic Positioning and Branding at New York University, and has guest-lectured on the same topic at the University of Pennsylvania, where she received her undergraduate degree from the University of Pennsylvania’s College of Arts and Sciences and The Annenberg School of Communications. Ms. Tuppeny was inaugurated into the University of Pennsylvania’s Senior Honor Society and is a member of the University of Pennsylvania’s Sports Hall of Fame, where she held five all-time school records. Our Board believes that Ms. Tuppeny’s extensive experience as a director of the companies described above and as chief executive officer and founder of Domus makes her a valuable and well qualified member of our Board.
Continuing Directors
Continuing Directors B.J. Penn The Honorable B.J. Penn, a Class I director, has served as an independent director of the Company since July 2019. Previously, Mr. Penn served as an independent director of American Realty Capital Healthcare Trust III, Inc. from August 2014 until March 2019. Mr. Penn has served as president of Penn Construction Group, Inc., a company that provides design/engineering, construction solutions and project management services, since January 2010, and has served as president and chief executive officer of Genesis IV, LLC, a company that provides consulting services in the areas of cyber procurement and systems acquisition, since October 2010. Mr. Penn is the chairman of the board of directors of Spectra Systems Corporation, is a trustee emeritus at the George Washington University and serves on the boards of the National Trust for the Humanities and the Naval Historic Foundation. Mr. Penn previously served as Acting Secretary of the Navy, where he was responsible for over 900,000 people, all the affairs of the Department of the Navy, including: recruiting, organizing, supplying, equipping, training, mobilizing and demobilizing and an annual budget of over $150 billion, and as Assistant Secretary (Installations and Environment) of the Navy, where he was responsible for managing Navy and Marine Corps real property, housing and other facilities totaling 72,500 buildings and 4,484,000 acres. Mr. Penn had a long and distinguished career as a naval aviator before assuming administrative duties for the Navy. Mr. Penn earned a Master’s of Science from the George Washington University and a Bachelor of Science from Purdue University. Our Board believes that Mr. Penn’s extensive experience as a director or executive officer of the companies described above and his experience in various leadership positions in the Navy make him a valuable and well qualified member of our Board. Leslie D. Michelson Leslie D. Michelson, a Class III director, has served as an independent director of the Company since December 2015, including as its non-executive chair since October 2016. Mr. Michelson has also served as: an independent director of Franklin BSP Lending Corp. until January 2024; an independent director of The Necessity Retail REIT, Inc. from February 2017 to September 2023; an independent director of GNL from September 2023 through the present; an independent director and lead independent director of Franklin BSP Capital Corp. since March 2020; and an independent director and lead independent director of Franklin BSP Private Credit Fund since March 2021. From April 2007 until February 2020, Mr. Michelson has served as the chairman and chief executive officer of Private Health Management, Inc., a company which assists corporate employees, and their dependents, families and individuals obtain the best healthcare. Since March 2020, Mr. Michelson has served as executive chair and a director of Private Health Management, Inc. Mr. Michelson has served as a member of the Board of Advisors for the UCLA Fielding School of Public Health since October 2013. He has served as founder and chief executive officer of Michelson on Medicine, LLC since January 2011. Earlier in his career, Mr. Michelson served as a founder, investor, director and executive officer of multiple public and private companies, including foundations, in the healthcare, technology, finance and real estate industries. Mr. Michelson received his B.A. from The Johns Hopkins University in 1973 and a J.D. from Yale Law School in 1976. Our Board believes that Mr. Michelson’s extensive experience as a director and executive officer of multiple companies make him a valuable and well qualified member of our Board. Edward M. Weil, Jr. Edward M. Weil, Jr., a Class III director, has served as a director of the Company since October 2016. Mr. Weil previously served as Chief Executive Officer and President of the Company, the former Advisor and the former Property Manager from August 2018 to September 2023. Mr. Weil has also owned a non-controlling interest in the parent of AR Global. In addition, Mr. Weil has served a director of GNL since January 2017, its chief executive officer since September 2023 and its president since April 2024. He also served as chair of the board of directors of The Necessity Retail REIT, Inc. (“RTL”) and the chief executive officer and president of RTL and RTL’s advisor and RTL’s property manager from November 2015 until their merger and internalization with GNL in September 2023; as executive chairman of ASIC from November 2015 until September 2023, and for which he continues to serve as a director, and as chief executive officer, president and secretary of ASIC and its advisor and property manager from March 2017 to September 2023. From March 2021 until November 2022, he also served as a director of G&P Acquisition Corp., a special purpose acquisition company that was sponsored by affiliates of AR Global. Mr. Weil previously served in leadership positions at multiple REITs and other entities advised by affiliates of AR Global. Mr. Weil was formerly the senior vice president of sales and leasing for American Financial Realty Trust from, where he was responsible for the disposition and leasing activity for a 33 million square foot portfolio of properties. Mr. Weil also previously served on the board of directors of the Real Estate Investment Securities Association (now known as ADISA) from 2012 to 2014, including as its president in 2013. Mr. Weil attended George Washington University. Our Board believes that Mr. Weil’s extensive experience as a director or executive officer of the companies described above and his significant experience in real estate and public company management make him a valuable and well qualified member of our Board.
Information About the Board of Directors and its Committees
Information About the Board of Directors and its Committees The Board is responsible for overseeing the management and control of our business and operations. The Board held a total of 12 meetings during the year ended December 31, 2024. All directors attended at least 75% of the aggregate meetings of the Board and the Board committees on which such directors served during such period. All directors attended the 2024 Annual Meeting of Stockholders. We encourage all directors to attend our annual meetings of stockholders. The Board has standing audit, compensation and nominating and corporate governance committees.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS We pay to each of our directors the fees described below. If a director is our employee, we do not pay compensation for services rendered as a director. All non-employee directors also receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of our Board and committees.
New Director Compensation Program
New Director Compensation Program Pursuant to a new director compensation program recommended by the compensation committee and approved by the Board in December 2024, effective January 1, 2025, we pay our non-employee directors a yearly retainer of $75,000 and an additional yearly retainer of $90,000 to the non-executive chair. We also pay a retainer of $20,000 per year to the chair of the audit committee and $15,000 per year to the chair of each of the compensation committee and the nominating and corporate governance committee. In addition, subject to the approval of the 2025 Incentive Plan at the Annual Meeting, each non-employee director will receive an annual equity grant with a grant-date value of $100,000. Non-employee directors will also receive additional meeting fees if the number of Board and committee meetings each year exceeds certain thresholds.
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION DISCUSSION AND ANALYSIS Prior to the Internalization, we were an externally-managed REIT and did not have any employees. We did not employ our NEOs, did not have agreements with any of them regarding their compensation and did not otherwise determine the compensation earned by, or paid to, them by the former Advisor. In connection with, and subsequent to, the Internalization, the compensation committee considered and approved certain compensation arrangements with our NEOs, including approving the employment agreements described herein with Michael Anderson and Scott M. Lappetito and recommending certain equity incentive grants for our NEOs, subject to the approval of the 2025 Incentive Plan at the Annual Meeting. Following the Internalization, we became internally managed and our compensation committee established our compensation objectives and philosophy for our NEOs, which resulted in the adoption of a new Annual Bonus Performance Program that is in effect for 2025 performance (with potential payments based on 2025 performance to be made in early 2026) (see “Fiscal 2025 Annual Incentive Program” section below for more details). This Compensation Discussion and Analysis details the compensation paid to our NEOs in 2024 and presents our compensation philosophy and practices for the compensation program for our NEOs that will be in effect for fiscal year 2025. For our 2024 fiscal year, which ended on December 31, 2024, our NEOs and their titles were as follows:
Summary
| • | drive our short- and long-term growth objectives; |
Summary
| • | aligns our goals with our long-term interests as well as our annual operating and strategic plans; |
Summary
| • | provides a balanced mix between cash and equity compensation designed to encourage strategies that are in our long-term best interests. |
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant Ferguson was engaged directly by the compensation committee in August 2024. As part of this engagement, Ferguson made recommendations to the compensation committee and the Board regarding executive and non-employee director compensation and assisted with the preparation of certain portions of this Compensation Discussion and Analysis section. The compensation committee conducted an assessment, as required by the SEC rules, to determine if any conflicts of interest existed with regard to the engagement of Ferguson. In conducting that assessment for 2024, the compensation committee determined that no conflict of interest existed and that Ferguson was independent under the applicable SEC and Nasdaq listing independence criteria.
Peer Group
Peer Group The compensation committee considers external market reference points, including published survey data and the competitive pay levels of an established group of publicly-traded peer companies when determining compensation levels for the NEOs. This peer comparison group consists of companies having similar characteristics to us and with whom we may compete for executive talent. Ferguson reviewed the peer group to confirm the overall reasonableness of the group for compensation and design benchmarking purposes.
Elements of Compensation
Elements of Compensation Beginning in 2025, we will use base salary, annual cash incentives and long-term equity incentives (subject to the approval of the 2025 Incentive Plan at the Annual Meeting) as the primary tools to achieve our compensation objectives. Certain of these elements of compensation were approved by the compensation committee in fiscal year 2024, following the Internalization. Our approach to the mix of compensation among these elements emphasizes variable compensation, including bonuses and long-term incentives in the form of stock-based awards, over fixed compensation. The emphasis on stock-based awards vesting over time is intended to promote a long-term perspective and further align management’s interests with that of the Company.
Elements of Compensation
In making decisions regarding annual bonus compensation, the compensation committee also considered pay practices and performance of our peers and recommendations from our Chief Executive Officer with respect to the performance and contributions of the other NEO, but the committee ultimately acted in its sole and absolute discretion. Accordingly, the compensation committee approved discretionary cash bonuses for 2024 performance totaling $1,890,000 and $743,750 for Messrs. Anderson and Lappetito, respectively. In addition, in connection with the Internalization, as part of a discretionary bonus pool was established for 2024 to provide retention bonuses to certain employees moving from the former Advisor to the Company, Mr. Lappetito received a retention bonus of $120,000, vesting in four equal quarterly installments during 2025. In connection with the signing of his employment agreement as described below, Mr. Anderson also received a signing bonus of $400,000 in September 2024. 2025 Annual Incentive Program In January 2025, the compensation committee recommended and the Board adopted a new “Annual Incentive Program” (the “AIP”) for NEOs effective January 1, 2025 for 2025. The AIP is a formulaic program designed to motivate our NEOs to deliver strong financial performance and to provide a clear link between pay and performance. The compensation committee approved threshold, target and maximum bonus opportunities for each eligible NEO as follows:
Elements of Compensation
The AIP provides the NEOs with the opportunity to earn an annual cash bonus award subject to achieving pre-established performance goals. The performance goals under the AIP for 2025 are based on (i) improvement in leverage metrics for the Company, (ii) same store cash net operating income growth for the Company’s portfolio and (iii) individual and role specific performance. Further information regarding the AIP and performance under the AIP for 2025 will be provided in our proxy statement to be filed in connection with our 2026 Annual Meeting. Long-Term Incentive Plan Awards Subject to the approval of the 2025 Incentive Plan at the Annual Meeting, the compensation committee will be responsible for evaluating and approving an annual long-term incentive compensation program (the “LTIP Grants”) to our NEOs under the plan. The LTIP Grants are intended to reflect a pay-for-performance compensation philosophy. The compensation committee expects that the future LTIP Grants would, on an annual basis, provide for grants of awards that vest over a three-year period and are weighted towards performance-based awards, to be approved annually by the compensation committee. This structure is intended to create a greater connection between our multi-year performance and the actual payouts realized by our NEOs and other eligible employees. In accordance with the compensation committee’s charter, the structure of the LTIP Grants and our executive compensation philosophy more broadly will continue to be subject to the compensation committee’s ongoing evaluation and review. Subject to the approval of the 2025 Incentive Plan at the Annual Meeting, the LTIP Grants are designed to reward key managers for high performance and to drive stockholder value. Awards for our NEOs are expected to be granted 50% in the form of time-based equity awards that vest in equal annual installments over a three-year period and 50% in the form of performance-based equity awards that are earned after a three-year performance period based on the achievement of specific performance goals established at the beginning of a three-year cycle at the discretion of the compensation committee. Other Compensation and Benefits Except for limited perquisites set forth in individual employment agreements (including maintenance of professional licenses and compliance with continuing education requirements for Messrs. Anderson and Lappetito) as described below, our NEOs are provided with benefits (such as a 401(k) plan) that are generally consistent with those provided to our other employees. We do not maintain any defined benefit pension plans.
Employment Agreements
Employment Agreements We have from time to time entered into employment agreements with our NEOs, the material terms of which are described below. See “Potential Payments Upon Termination or Change-in-Control” below for additional details on the payments and benefits upon termination or change of control, as applicable, provided under the employment agreements and/or outstanding equity or equity-based incentive awards. Employment Agreement with Michael Anderson On September 25, 2024, we entered into an employment agreement with Michael Anderson (the “Anderson Employment Agreement”), which sets forth the terms and conditions of his employment, with an effective date of September 27, 2024. The initial term of the Anderson Employment Agreement expires on September 27, 2027 and may be extended, by written agreement between the Company and Mr. Anderson, for additional renewal terms mutually agreed between the parties. Pursuant to the Anderson Employment Agreement, Mr. Anderson serves as our Chief Executive Officer and President and is entitled to an annual base salary of $800,000 and is eligible to participate in the AIP with a target annual bonus opportunity of 135% of his annual base salary (the “Anderson Target Annual Bonus”). Depending on results, Mr. Anderson’s actual annual bonus may be higher or lower than the Anderson Target Annual Bonus, as determined by the compensation committee, but for calendar years 2024 and 2025, Mr. Anderson’s annual bonus shall be not less than the Anderson Target Annual Bonus. In addition, pursuant to the Anderson Employment Agreement, Mr. Anderson was entitled to a cash signing bonus of $400,000. Subject to the other applicable requirements under the Anderson Employment Agreement, Mr. Anderson is permitted to continue his existing relationships and business interests, such as his role with AR Global and its affiliates, to the extent such activities do not materially interfere with the performance of his duties and responsibilities to the Company. Subject to Mr. Anderson’s continued employment through the grant date, Mr. Anderson shall be eligible to receive long-term equity incentive awards on an annual basis at the compensation committee’s discretion. For fiscal year 2025, Mr. Anderson’s long-term incentive awards shall have a target grant date fair value of no less than $1.8 million and shall be made as soon as practicable following the approval of 2025 Incentive Plan at the Annual Meeting. Pursuant to the Anderson Employment Agreement, the fiscal year 2025 long-term equity incentive awards are expected to be granted as an award of time-based restricted common stock and an award of performance-based restricted stock units relating to Common Stock (such time-based and performance-based awards, together, the “Anderson 2025 Awards”) at the discretion of the compensation committee. No less than 50% of the Anderson 2025 Awards shall be a time-based award. The 2025 time-based award will vest ratably on an annual basis over a three-year period, subject to Mr. Anderson’s continuous employment through the applicable vesting dates. If the Company’s stockholders do not approve the 2025 Incentive Plan at the Annual Meeting, then the Anderson 2025 Awards will be deemed granted and automatically convert into a deferred cash-based award equal to at least $1.8 million with one third vesting and payable on the last day of each of 2025, 2026 and 2027, respectively, subject to Mr. Anderson’s continued employment through the applicable vesting date. In addition, as soon as practicable following stockholder approval of the 2025 Incentive Plan, Mr. Anderson shall be granted an award of time-based restricted common stock with a grant date fair value of $2.0 million based on the Company’s most recent net asset value (the “Anderson Internalization Award”). Subject to Mr. Anderson’s continuous employment through the applicable vesting date, the Anderson Internalization Award will vest in ratable annual installments over a three-year period. Notwithstanding the foregoing, if the 2025 Incentive Plan is not approved by the Company’s stockholders at the Annual Meeting, the Anderson Internalization Award will be deemed granted and will, automatically convert into a deferred cash based award equal to $2.0 million with one third vesting and payable each year, subject to Mr. Anderson’s continued employment through the applicable vesting date. The Anderson Employment Agreement may be terminated by the Company without Cause (as defined in the Anderson Employment Agreement) or by Mr. Anderson pursuant to a Voluntary Resignation (as defined in the Anderson Employment Agreement), provided that the applicable party gives 30 days prior written notice to Mr. Anderson or the Company, as the case may be. In the event Mr. Anderson resigns for Good Reason or the Company terminates his employment without Cause (each as defined in the Anderson Employment Agreement) in either case outside of the Change in Control Period (as defined in the Anderson Employment Agreement), he is entitled to receive the following payments and benefits: (i) any accrued but unpaid annual bonus for the year prior to the year of termination, (ii) a pro rata annual bonus for the year in which the date of termination occurs, (iii) the accelerated vesting of all unvested time-based equity awards as of the termination date (clauses (i), (ii) and (iii), collectively, the “Anderson Base Benefits”), (iv) an amount of cash (the “Anderson Severance Payment”) equal to 2.0 times the sum of (a) Mr. Anderson’s then current base salary and (b) the Anderson Target Annual Bonus of his then-current calendar year, and (v) reimbursement for his healthcare insurance premiums for a period of up to 18 months. In the event Mr. Anderson resigns for Good Reason or the Company terminates his employment without Cause in either case during the Change in Control Period, Mr. Anderson shall be entitled to the foregoing benefits, except that that the Anderson Severance Payment shall equal 3.0 times the sum of (a) Mr. Anderson’s then current base salary and (b) the Anderson Target Annual Bonus of his then-current calendar year. In the event of Mr. Anderson’s termination due to his death or Disability (as defined in the Anderson Employment Agreement), in addition to accrued obligations, he or his estate, as applicable, shall be entitled to receive the Anderson Base Benefits. The Anderson Employment Agreement also contains a non-disclosure covenant, a mutual non disparagement covenant and non-competition, customer non-solicitation and employee non-solicitation covenants. Employment Agreement with Scott Lappetito On September 25, 2024, we entered into an employment agreement with Scott Lappetito (the “Lappetito Employment Agreement”), which sets forth the terms and conditions of his employment, with an effective date of January 1, 2025. The initial term of the Lappetito Employment Agreement expires on January 1, 2028 and may be extended, by written agreement between the Company and Mr. Lappetito, for additional renewal terms mutually agreed between the parties. Pursuant to the Lappetito Employment Agreement, Mr. Lappetito serves as our Chief Financial Officer and Treasurer and is entitled to an annual base salary of $425,000 and is eligible to participate in the AIP with a target annual bonus opportunity of 100% of his annual base salary (the “Lappetito Target Annual Bonus”). Depending on results, Mr. Lappetito’s actual annual bonus may be higher or lower than the Lappetito Target Annual Bonus, as determined by the compensation committee, but for calendar year 2025, Mr. Lappetito’s annual bonus shall be not less than the Lappetito Target Annual Bonus.
Employment Agreements
Subject to Mr. Lappetito’s continued employment through the grant date, Mr. Lappetito shall be eligible to receive long-term equity incentive awards on an annual basis at the compensation committee’s discretion. For 2025, Mr. Lappetito’s long-term incentive awards shall have a target grant date fair value of no less than $800,000 and shall be made as soon as practicable following stockholder approval of the 2025 Incentive Plan and the listing of the Common Stock on a public stock exchange. Pursuant to the Lappetito Employment Agreement, the fiscal year 2025 long-term equity incentive awards are expected to be granted as time-based award and performance-based award at the discretion of the compensation committee (such time-based and performance-based awards, together, the “Lappetito 2025 Awards”). No less than 50% of the 2025 Lappetito Awards shall be time-based awards. The 2025 time-based award will vest ratably on an annual basis over a three-year period, subject to Mr. Lappetito’s continuous employment through the applicable vesting dates. If the Company’s stockholders do not approve the 2025 Incentive Plan at the Annual Meeting and the Common Stock does not become listed on a public stock exchange in 2025, then the Lappetito 2025 Awards will be deemed granted and automatically convert into a deferred cash based award equal to at least $800,000 with one third vesting each year, subject to Mr. Lappetito’s continued employment through the applicable vesting date. If the Company receives the approval of the 2025 Incentive Plan from its stockholders at the Annual Meeting but the Common Stock does not become listed on a public stock exchange in 2025, then the 2025 Awards will be granted with a target grant date fair value of no less than $800,000 based on the Company’s then most recent net asset value, vesting ratably over a three-year period, subject to Mr. Lappetito’s continued employment through the applicable vesting date. In addition, as soon as practicable following stockholder approval of the 2025 Incentive Plan, Mr. Lappetito shall be granted an award with a grant date fair value of $1.0 million based on the Company’s most recent net asset value (the “Lappetito One-Time Award”). Subject to Mr. Lappetito’s continuous employment through the applicable vesting date, the Lappetito One-Time Award will vest in ratable annual installments over a three-year period. Notwithstanding the foregoing, if the 2025 Incentive Plan is not approved by the Company’s stockholders at the Annual Meeting, the Lappetito One-Time Award will be deemed granted and will, automatically convert into a deferred cash based award equal to $1.0 million with one third vesting each year, subject to Mr. Lappetito’s continued employment through the applicable vesting date. The Lappetito Employment Agreement may be terminated by the Company without Cause (as defined in the Lappetito Employment Agreement) or by Mr. Lappetito pursuant to a Voluntary Resignation (as defined in the Lappetito Employment Agreement), provided that the applicable party gives 30 days prior written notice to Mr. Lappetito or the Company, as the case may be. In the event Mr. Lappetito resigns for Good Reason or the Company terminates his employment without Cause (each as defined in the Lappetito Employment Agreement) in either case outside of the Change in Control Period (as defined in the Lappetito Employment Agreement), he is entitled to receive the following payments and benefits: (i) any accrued but unpaid annual bonus for the year prior to the year of termination, (ii) a pro rata annual bonus for the year in which the date of termination occurs (except that, if such termination occurs in fiscal year 2025 prior to payment of the full annual bonus as described above, Mr. Lappetito is entitled to his full annual base salary for fiscal year 2025), (iii) the accelerated vesting of all unvested time-based equity awards as of the termination date (clauses (i), (ii) and (iii), collectively, the “Lappetito Base Benefits”), (iv) an amount of cash (the “Lappetito Severance Payment”) equal to 1.0 times the sum of (a) Mr. Lappetito’s then current base salary and (b) the Lappetito Target Annual Bonus of his then-current calendar year, and (v) reimbursement for his healthcare insurance premiums for a period of up to 18 months. In the event Mr. Lappetito resigns for Good Reason or the Company terminates his employment without Cause in either case during the Change in Control Period, Mr. Lappetito shall be entitled to the foregoing benefits, except that that the Lappetito Severance Payment shall equal 2.0 times the sum of (a) Mr. Lappetito’s then current base salary and (b) the Lappetito Target Annual Bonus of his then-current calendar year. In the event of Mr. Lappetito’s termination due to his death or Disability (as defined in the Lappetito Employment Agreement), in addition to accrued obligations, he or his estate, as applicable, shall be entitled to receive the Lappetito Base Benefits. The Lappetito Employment Agreement also contains a non-disclosure covenant, a mutual non disparagement covenant and non-competition, customer non-solicitation and employee non-solicitation covenants. Tax and Accounting Considerations As a general matter, our Board and the compensation committee review and consider the various tax and accounting implications of our existing and proposed compensation programs. The Board and the compensation committee consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our long-term incentive program. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our share-based compensation awards with our overall executive compensation philosophy and objectives. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) generally disallows publicly-listed companies a tax deduction for compensation in excess of $1 million paid to certain current and former executive officers (the “covered employees”). Generally, compensation in excess of $1 million paid to each of the covered employees will not be deductible by us. We believe that we qualify as a REIT under the Code and generally are not subject to federal income taxes, provided we distribute to our stockholders at least 90% of our taxable income each year. As a result of the Company’s tax status as a REIT, the loss of a deduction under Section 162(m) of the Code may not affect the amount of federal income tax payable by the Company. In approving the amount and form of compensation for our NEOs in the future, our compensation committee will consider all elements of the cost to the Company of providing the compensation, including the potential impact of Section 162(m) of the Code, if any. Our compensation committee may, in its judgment, authorize compensation payments that are subject to deduction limitations under Section 162(m) of the Code when it believes that doing so is appropriate to attract and retain executive talent.
Pay Ratio
Pay Ratio As described above, because we only instituted a formal compensation structure applicable to our NEOs and other employees in connection with the Internalization in September 2024, a ratio of the compensation of our Chief Executive Officer to our median employee would not be meaningful and has not been included in this Proxy Statement in reliance on Item 402(u) of Regulation S-K, Instruction 7(2) which permits a registrant to omit any employees that became its employees as a result of a business combination for the fiscal year in which the transaction becomes effective. For the proxy statement for our 2026 Annual Meeting, we will include pay ratio disclosure as required pursuant to Item 402(u) of Regulation S-K.
2024 Summary Compensation Table
2024 Summary Compensation Table The following table summarizes the compensation of our NEOs for each of the years ended December 31, 2024, 2023 and 2022, respectively, as applicable. For purposes of this table, our NEOs for 2024 were Michael Anderson, our Chief Executive Officer and President, and Scott M. Lappetito, our Chief Financial Officer and Treasurer. As discussed in greater detail under the heading “Introductory Note” above, prior to 2024, we were an externally managed REIT, did not employ our NEOs and our NEOs’ compensation was paid by the former Advisor. During 2024, we internalized our advisory and management functions such that, as of December 31, 2024, we directly employed our NEOs and other employees. The summary of compensation for fiscal year 2024 in the below table reflects compensation following the Internalization. In accordance with rules promulgated by the SEC, certain columns relating to information that is not applicable have been omitted from the following tables.
2024 Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | All Other Compensation(4) | Total | | Michael Anderson Chief Executive Officer and President | 2024 | $172,307(1) | $2,290,000(2) | — | — | $2,462,307 | | | 2023(3) | $104,999 | $33,636 | — | $15,750 | $154,385 | | | 2022 | — | — | — | — | — | | Scott M. Lappetito Chief Financial Officer and Treasurer | 2024 | $71,087(1) | $863,750(2) | — | — | $934,837 | | | 2023(3) | $312,768 | $72,177 | — | $35,287 | $420,232 | | | 2022(3) | $321,521 | $47,666 | — | $29,023 | $398,210 |
2024 Summary Compensation Table
| (1) Represents salary paid following the Internalization. Prior to the Internalization, Messrs. Anderson and Lappetito were paid in respect of Company services by the former Advisor. The annualized 2024 salaries for Messrs. Anderson and Lappetito are $800,000 and $425,000, respectively. |
2024 Summary Compensation Table
| (2) Represents 2024 discretionary cash bonuses following the Internalization, which were paid in February 2025 for performance in 2024, equal to $1,890,000 and $743,750 for each of Messrs. Anderson and Lappetito, respectively. For Mr. Anderson, also includes signing bonus of $400,000 discussed above in connection with signing of his employment agreement in September 2024. For Mr. Lappetito, also includes retention bonus of $120,000 discussed above in connection with the Internalization. |
2024 Summary Compensation Table
| (3) Represents the allocable share of salary and bonus paid by the former Advisor or its affiliates to Messrs. Anderson and Lappetito, respectively, during the applicable year that was reimbursed by us pursuant to its advisory agreement prior to the Internalization. |
2024 Summary Compensation Table
| (4) Represents the allocable share of certain expenses incurred by the former Advisor or its affiliates and reimbursed by us pursuant to the advisory agreement prior to the Internalization with respect to (A) Mr. Anderson as follows: for 2023: (a) $5,281 for payroll taxes and (b) $10,469 for matching contributions to Mr. Anderson’s 401(k) and (B) Mr. Lappetito as follows: for (1) 2023: (a) $22,232 for payroll taxes and (b) $13,055 for matching contributions to Mr. Lappetito’s 401(k); and (2) for 2022: (a) $16,954 for payroll taxes and (b) $12,069 for matching contributions to Mr. Lappetito’s 401(k). |
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control Pursuant to their individual employment agreements, each of the NEOs is entitled to cash severance, benefits, and in certain cases acceleration of vesting of equity awards upon termination of their employment with the Company and in certain cases change in control of the Company, as described in greater detail below. The Company does not have any tax gross-up commitment with any of the NEOs in the event that any portion of severance benefits or equity award acceleration, as applicable, results in the NEO becoming liable for payment of a parachute payment excise tax. The following table sets forth the amounts that Michael Anderson would have received upon termination of employment with the Company as of December 31, 2024 for each of the hypothetical reasons detailed below, pursuant to the Anderson Employment Agreement. We entered into the Lappetito Employment Agreement in December 2024 with an effective date of January 1, 2025. The amounts set forth in the table assume that a termination event occurred on December 31, 2024; however, the actual amounts that would be payable in these circumstances can only be determined at the time of the executive’s separation and may differ from the amounts set forth in the table below.
Potential Payments Upon Termination or Change-in-Control
| Name | Reason for Payment | Salary/ Bonus- Related Payments | Cash Severance Payments | Accelerated Vesting of Equity Awards | Other Benefits | Total | | Michael Anderson | Termination by reason of death or disability(1) | $1,080,000 | — | — | — | $1,080,000 | | | Termination by the Company without cause or by Mr. Anderson for good reason(2) | $1,080,000 | $3,760,000 | — | $14,018 | $4,854,018 | | | Termination by the Company without cause or by Mr. Anderson for good reason in connection with a change in control(3) | $1,080,000 | $5,640,000 | — | $14,018 | $6,734,018 |
Potential Payments Upon Termination or Change-in-Control
| (1) Represents (i) accrued but unpaid Anderson Target Annual Bonus for 2024 and (ii) accrued but unpaid installment of base salary, reimbursement for unreimbursed business expenses and accrued but unpaid benefits pursuant to Anderson Employment Agreement. |
Potential Payments Upon Termination or Change-in-Control
| (2) Represents (i) accrued but unpaid Anderson Target Annual Bonus for 2024, (ii) accrued but unpaid installment of base salary, reimbursement for unreimbursed business expenses and accrued but unpaid benefits pursuant to Anderson Employment Agreement, (iii) cash severance equal to 2.0 times the sum of (a) Mr. Anderson’s base salary and (b) his Anderson Target Annual Bonus for 2024, and (iv) 18 months of Company subsidized COBRA coverage. |
Potential Payments Upon Termination or Change-in-Control
| (3) Represents (i) accrued but unpaid Anderson Target Annual Bonus for 2024, (ii) accrued but unpaid installment of base salary, reimbursement for unreimbursed business expenses and accrued but unpaid benefits pursuant to Anderson Employment Agreement, (iii) cash severance equal to 3.0 times the sum of (a) Mr. Anderson’s base salary and (b) his Target Annual Bonus for 2024, and (iv) 18 months of Company subsidized COBRA coverage. |
Potential Payments Upon Termination or Change-in-Control
| Name | Reason for Payment | Salary/ Bonus- Related Payments | Cash Severance Payments | Accelerated Vesting of Equity Awards | Other Benefits | Total | | Scott Lappetito | Termination by reason of death or disability(1) | $425,000 | — | — | — | $425,000 | | | Termination by the Company without cause or by Mr. Lappetito for good reason(2) | $425,000 | $850,000 | — | $14,018 | $1,289,018 | | | Termination by the Company without cause or by Mr. Lappetito for good reason in connection with a change in control(3) | $425,000 | $1,700,000 | — | $14,018 | $2,139,018 |
Potential Payments Upon Termination or Change-in-Control
| (1) Represents (i) accrued but unpaid Lappetito Target Annual Bonus for 2024 and (ii) accrued but unpaid installment of base salary, reimbursement for unreimbursed business expenses and accrued but unpaid benefits pursuant to Lappetito Employment Agreement. |
Potential Payments Upon Termination or Change-in-Control
| (2) Represents (i) 100% of his base salary as the Lappetito Target Annual Bonus for 2024, (ii) accrued but unpaid installment of base salary, reimbursement for unreimbursed business expenses and accrued but unpaid benefits pursuant to Lappetito Employment Agreement, (iii) cash severance equal to 1.0 times the sum of (a) Mr. Lappetito’s base salary and (b) his Target Annual Bonus for 2024, and (iv) 18 months of Company subsidized COBRA coverage. |
Potential Payments Upon Termination or Change-in-Control
| (3) Represents (i) accrued but unpaid Lappetito Target Annual Bonus for 2024, (ii) accrued but unpaid installment of base salary, reimbursement for unreimbursed business expenses and accrued but unpaid benefits pursuant to Lappetito Employment Agreement, (iii) cash severance equal to 2.0 times the sum of (a) Mr. Lappetito’s base salary and (b) his Target Annual Bonus for 2024, and (iv) 18 months of Company subsidized COBRA coverage. |
PAY VERSUS PERFORMANCE DISCLOSURE
PAY VERSUS PERFORMANCE DISCLOSURE As required by Item 402(v) of Regulation S-K, which was mandated by Section 953(a) of the Dodd-Frank Act, we are providing the following information about the relationship between “compensation actually paid” to our principal executive officer (“PEO”) and average “compensation actually paid” to our NEOs and the financial performance of the Company during the years ended December 31, 2024, 2023 and 2022, respectively, in each case calculated in a manner consistent with SEC rules.
PAY VERSUS PERFORMANCE DISCLOSURE
| Name | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(1)(2) | Average Summary Compensation Table Total for Non-PEO NEOs(2)(3) | Average Compensation Actually Paid to Non-PEO NEOs(3) | Net Loss Attributable to Common to Stockholders(4) | | | | | | | (in thousands) | | 2024 | $2,462,307 | $2,462,307 | $934,837 | $934,837 | $(203,495) | | 2023 | $154,385 | $154,385 | $420,232 | $420,232 | $(86,097) | | 2022 | $— | — | $398,210 | $398,210 | $(93,285) | | 2021 | $— | — | $121,024 | $121,024 | $(92,942) | | 2020 | $— | — | $458,841 | $458,841 | $(78,781) |
PAY VERSUS PERFORMANCE DISCLOSURE
| (1) Michael Anderson was the sole PEO reflected in these columns for the fiscal year ended December 31, 2024. Mr. Anderson is our Chief Executive Officer and President. Edward M. Weil, Jr. and Mr. Anderson were the PEOs reflected in these columns for the fiscal year ended December 31, 2023. Mr. Weil was the sole PEO reflected in these columns for the fiscal years ended December 31, 2022, 2021 and 2020. |
PAY VERSUS PERFORMANCE DISCLOSURE
| (2) Compensation actually paid, or “CAP”, to our PEOs and Non-PEO NEOs is calculated based on the “Total Compensation” reported in the Summary Compensation Tables above in our prior definitive proxy statements on Schedule 14A for the for each of the applicable fiscal years, adjusted to exclude and include certain items in accordance with Item 402(v) of Regulation S-K. There are no applicable adjustments to the “Total Compensation” reported in the applicable Summary Compensation Table for the covered years for our PEOs and Non-PEO NEOs, so the CAP for each such person equaled the “Total Compensation” reported in the applicable Summary Compensation Table. |
PAY VERSUS PERFORMANCE DISCLOSURE
| (3) Scott M. Lappetito was the sole non-PEO NEO reflected in these columns for the fiscal years ended December 31, 2024, 2023 and 2022. Mr. Lappetito is our Chief Financial Officer and Treasurer. The non-PEO NEOs for the fiscal year ended December 31, 2021 were Mr. Lappetito, Katie P. Kurtz and Jason F. Doyle. Katie P. Kurtz was the sole non-PEO NEO reflected in these columns for the fiscal years ended December 31, 2020. |
PAY VERSUS PERFORMANCE DISCLOSURE
| (4) Net Loss Attributable to Common to Stockholders as reported in our Annual Reports on Form 10-K. |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
PROPOSAL NO. 1 — ELECTION OF DIRECTORS Our Board is currently comprised of six members, of which four are independent directors as that term is defined in the Nasdaq rules and our Bylaws. Our Bylaws provide that the number of directors may not be less than one, which is the minimum number required by the MGCL, or more than 15. The Board is divided into three classes of directors. At the Annual Meeting, one Class I director will be elected to serve until the 2027 Annual Meeting and until his successor is duly elected and qualifies and two Class I directors will be elected to serve until the 2028 Annual Meeting and until their respective successors are duly elected and qualify. Each director serves until the annual meeting of stockholders held in the third year following the year of his or her election and until his or her successor is duly elected and qualifies. The number of directors in each class may be changed from time to time by the Board to reflect matters such as an increase or decrease in the number of directors so that each class, to the extent possible, will have the same number of directors. The Board has nominated (i) Michael Anderson for election as a Class I director at the Annual Meeting to serve until our 2027 Annual Meeting and until his successor is duly elected and qualifies and (ii) Edward G. Rendell and Elizabeth K. Tuppeny for election as Class II directors at the Annual Meeting to serve until our 2028 Annual Meeting and until their respective successors are duly elected and qualify. Mr. Anderson currently serves as our Class I director and Mr. Rendell and Ms. Tuppeny currently serve as our Class II directors. The proxy holder named on the proxy card intends to vote “FOR” the election of Mr. Anderson as the Class I director and Mr. Rendell and Ms. Tuppeny as the Class II directors. The election of the directors requires the affirmative vote of a plurality of all the votes cast at the Annual Meeting, provided that a quorum is present. Withhold votes and broker non-votes, if any are applicable, will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. We know of no reason why Mr. Anderson, Mr. Rendell or Ms. Tuppeny will be unable to serve if elected. If, at the time of the Annual Meeting, Mr. Anderson, Mr. Rendell or Ms. Tuppeny should become unable to serve, shares represented by proxies will be voted “FOR” any substitute nominee designated by the Board. No proxy will be voted for a greater number of persons than the number of nominees described in this Proxy Statement. THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF (I) MICHAEL ANDERSON AS A CLASS I DIRECTOR, TO SERVE UNTIL OUR 2027 ANNUAL MEETING AND UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIES AND (II) EDWARD G. RENDELL AND ELIZABETH K. TUPPENY AS CLASS II DIRECTORS, TO SERVE UNTIL OUR 2028 ANNUAL MEETING AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFY.