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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
BOSTON PROPERTIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. |
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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| 2) | Aggregate number of securities to which transaction applies: |
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) | Proposed maximum aggregate value of transaction: |
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| ☐ | Fee paid previously with preliminary materials. |
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| 1) | Amount Previously Paid: |
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April 5, 2021
To My Fellow BXP Stockholders,
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On behalf of the entire Board of Directors, I want to thank you for your continued support of Boston Properties and invite you to attend our 2021 Annual Meeting of Stockholders. In view of the continuing health risks related to the COVID-19 pandemic, we have determined that our annual meeting this year will once again be a virtual meeting, conducted solely via audio webcast. You will be able to participate in the virtual meeting online, vote your shares electronically, and submit questions by visiting www.virtualshareholdermeeting.com/BXP2021.
Over the course of our 50-year history, Boston Properties has proven its resilience through a variety of global, national, secular and BXP-specific challenges. These included financial recessions, wars, terrorist attacks on the cities in which we operate, and the sudden passing of |
one of our co-founders. In every instance, although we endured some short-term pain and uncertainty, we adjusted to the conditions and emerged stronger. That said, by any measure, 2020 was a remarkably challenging year, one in which we experienced three mega-events simultaneously: (1) the most serious worldwide health crisis of our generation; (2) a collective reawakening to the sad reality that the road to achieving racial justice in our country remains long and difficult; and (3) a much-heightened awareness of the importance of environmental and sustainability issues.
In view of these remarkable events, I want to change course this year. Instead of using this letter to summarize and highlight financial information that is contained in the accompanying Annual Report and proxy statement, I want to talk about how Boston Properties responded to these challenges and where we stand as we move into the second quarter of 2021. Spoiler alert: under the strong leadership of our CEO, Owen Thomas, and our President, Doug Linde, the Company acted thoughtfully and responsibly, successfully meeting these complex challenges with compassion and in a manner consistent with our recognition by Newsweek as one of America’s Most Responsible Companies.
COVID-19 Pandemic
Needless to say, the COVID-19 pandemic presented unprecedented and outsized challenges for everyone – people died, lives were disrupted, and the economy suffered massive dislocation. In addition, because COVID restrictions kept people out of offices, retail stores, restaurants and hotels for most of the past year, it presented special challenges to our business. That reality, in turn, brought front-and-center one of our Board’s most important responsibilities – risk oversight. Of course, the Board is always aware that, as one of the largest publicly traded owners of Class A office properties in the United States, BXP operates in a challenging environment, and attention to risk is a constant staple of our work. But COVID – and the consequent temporary shift in the locus of work (from office to home) – took that recognition to a new level, as the world and our company navigated uncharted waters with no idea as to how long they would persist.
Right from the outset, therefore, the Board changed its usual way of operating in order to ensure that we remained fully abreast, in real time, of the risks posed by the pandemic and management’s responses to them. In particular, the Board and several of its committees held a significant number of additional meetings in 2020 to analyze and act on these matters, while all of the directors engaged with management even more frequently in informal settings. We wrestled with the unpredictability of the pandemic, the uncertainty of its duration, its effect on our business as well as on the businesses of our tenants, what it would mean for our stockholders and stock price, how we would conduct public reporting in the face of uncertainty, whether work-from-home would be a short-term blip or have longer-term consequences, how we would ensure the safety of our tenants as they began to return to our offices in greater numbers, and perhaps, most importantly, what effect all of this would have on our employees, the lifeblood of our company. When appropriate, we also brought in outside experts to help us address these vexing matters.
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We also took special precautions to protect employees and tenants from exposure to COVID. We worked with our own property management teams and brought in world-renowned health security experts to develop a Health Security Plan for operating our properties. The plan is now widely viewed as a world-class, market-leading safety protocol. Most importantly, as a result of this extraordinary work, we kept our commitment to our tenants by providing them with clean and safe buildings that remained open for business throughout the pandemic. In this regard, the Board wishes to express special thanks to BXP’s property-management teams, who were instrumental in helping us meet our tenants’ needs.
Although there were some inevitably choppy waters, especially at the outset, under the leadership of Owen and Doug, the Company moved forward with confidence and a focus on our long-term objectives, even when doing so may have had short-term negative implications. We refinanced a significant amount of debt, approved several development opportunities, effectively husbanded our assets, and dealt fairly with our tenants, many of whom faced their own serious economic challenges. I am pleased to report that positive results are beginning to show. Our stock has recovered a substantial portion of the early losses experienced throughout our industry, our buildings are now being safely reoccupied, and our employees remain committed and highly motivated.
As I write this letter, a year since the outbreak of COVID, remarkably the U.S. is now providing its citizens with vaccines. Consequently, although the pandemic is not yet over, and we continue to adapt our day-to-day operations to respond to its effects and our tenants’ needs, as we move into the spring of 2021 there is no doubt that renewed hope and optimism are in the air. We expect that in a few months everyone that wants to be vaccinated will have had the opportunity to do so, and that our buildings will return to most of their pre-pandemic operations.
Nevertheless, as a leading company in the office business, we will inevitably face continuing questions and uncertainties over the impact of the “work-from-home” experience of the past year on our business going-forward. For our part, based on extensive internal analysis, external outreach and our directors’ own experience in leading organizations, we continue to believe that there is no better way for a company to support its own success than by fostering the necessary culture, collaboration, mentorship, training and creativity, all of which result from bringing people together to work in teams in a person-to-person collaborative environment. These are the essentials that the modern office provides, and we believe that this core foundational view will soon be reaffirmed by companies throughout the nation.
Social Justice
This past year, Americans also witnessed major social-justice movements that spotlighted the racial injustices and economic inequities that continue to plague our society. In response, and despite the separate challenges of COVID, the Company decided that we needed to expand and accelerate our longstanding commitment to diversity, equity and inclusion. Owen immediately set the tone-at-the-top by signing on to the CEO Action for Diversity and Inclusion campaign, the largest collective business commitment ever made on this issue. The Company also took internal steps to address these issues by establishing the BXP Diversity and Inclusion Committee in early 2020. The mission of this new committee is two-fold: (1) to promote and ingrain diversity, inclusion, equality and transparency as a cornerstone of BXP’s culture, business activities and decision-making practices; and (2) to provide a priority mechanism for developing specific D&I-based programs that will have a positive impact on the Company as well as in the broader community. In addition, the Board expressly committed to engaging with management to identify other ways by which we can drive further change, and, for the first time, our Compensation Committee has included goals and objectives to ensure that our executives are held accountable for progress on these issues. To be fully transparent, we intend to provide periodic updates on the results of these efforts.
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Commitment to ESG
Lastly, responding further to the past year’s challenges, the Company has stepped up its Environmental, Social and Governance (ESG) efforts, which you will be able to see in detail in the accompanying proxy statement. Our investment and operating philosophies are both shaped by our core strategy of long-term ownership and our commitment to making our communities the centers of commerce and civic life that make them thrive. We are increasingly focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas emissions, and climate change. To these ends, we have publicly adopted long-term energy, emissions, water and waste goals containing aggressive reduction targets that are aligned with the United Nations Sustainable Development Goals. Indeed, as you will see more about in our proxy statement, Boston Properties is recognized as an international leader in sustainability and ESG, and our management and Board firmly intend to preserve and enhance those achievements. For transparency, we have committed to provide high-quality ESG data and information for evaluation by independent third parties and, as new ESG assessments, ratings and frameworks emerge, we intend to engage fully with our stakeholders to make sure that we remain nimble and responsive.
The accompanying proxy statement contains a great deal of other important information about Boston Properties, and we hope you will take the time to read it and vote at the annual meeting. Whether or not you are able to participate in the “virtual” annual meeting, we welcome your interest in our affairs and thank you for your continued support.
Sincerely,
Joel I. Klein
Chairman of the Board
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NOTICE OF 2021 ANNUAL
MEETING OF STOCKHOLDERS
| DATE AND TIME |
Thursday, May 20, 2021, at 9:00 a.m., Eastern Time | |||
| LOCATION |
www.virtualshareholdermeeting.com/BXP2021 | |||
| RECORD DATE |
March 24, 2021. Only stockholders of record at the close of business on the record date are entitled to receive notice of, and to vote at, the annual meeting. | |||
ITEMS OF BUSINESS
| 1. | To elect the eleven (11) nominees for director named in the proxy statement, each to serve for a one-year term and until their respective successors are duly elected and qualified. |
| 2. | To hold a non-binding, advisory vote on named executive officer compensation. |
| 3. | To approve the Boston Properties, Inc. 2021 Stock Incentive Plan. |
| 4. | To ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. |
| 5. | To consider and act upon any other matters that are properly brought by or at the direction of the Board of Directors before the annual meeting and at any adjournments or postponements thereof. |
IMPORTANT INFORMATION REGARDING OUR VIRTUAL ANNUAL MEETING
Due to the continuing public health concerns relating to the coronavirus, or COVID-19, Boston Properties’ 2021 annual meeting will be a “virtual” meeting conducted by live audio webcast. Stockholders will not be able to attend the meeting in person, but will be able to listen, vote and submit questions during the virtual annual meeting from any remote location that has internet connectivity. You or your proxyholder may participate and vote by visiting www.virtualshareholdermeeting.com/BXP2021 and using your 16-digit control number on your proxy card, voting instruction form, or the Notice of Internet Availability you previously received. For more information, see “Information about the Annual Meeting — Attending the Virtual Annual Meeting” on page 105 in the proxy statement.
A list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose relevant to the meeting for at least ten days prior to May 20, 2021. The stockholder list will be available in electronic form during the annual meeting online at www.virtualshareholdermeeting.com/BXP2021.
Since becoming a public company in 1997 until 2020, we always held our annual meetings in person. However, due to COVID-19, we held a virtual annual meeting last year for the first time. We intend to hold our future annual meetings in person when it is safe to do so.
PROXY VOTING
Whether or not you plan to attend the meeting and vote your shares of common stock virtually in person, we urge you to vote your shares as instructed in the proxy statement. If you received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the postage-paid envelope provided.
If your shares of common stock are held by a broker, bank or other nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares of common stock voted.
Any proxy may be revoked at any time prior to its exercise at the annual meeting.
By Order of the Board of Directors,
Frank D. Burt, ESQ.
Secretary
April 5, 2021
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be Held on May 20, 2021. The proxy statement and our 2020 annual report to stockholders are available at www.proxyvote.com.
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| › | PROXY SUMMARY |
This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. References to “we,” “us,” “our,” “Boston Properties,” “BXP” and the “Company” in this summary refer to Boston Properties, Inc. and references to “BPLP” in this summary refers to Boston Properties Limited Partnership, our operating partnership.
2021 ANNUAL MEETING INFORMATION
| Date and Time | Location | Record Date | ||
| Thursday, May 20, 2021 9:00 a.m., Eastern Time |
The meeting will be held virtually at www.virtualshareholdermeeting.com/BXP2021 |
March 24, 2021 |
VOTING MATTERS AND RECOMMENDATIONS
| Board voting recommendation |
Where to find more information | |||||
| Proposal 1 |
Election of Eleven (11) Directors | ✓ FOR each nominee | Page 7 | |||
| Proposal 2 |
Non-binding, Advisory Vote on Named Executive Officer Compensation | ✓ FOR | Page 92 | |||
| Proposal 3 |
Approval of the Boston Properties, Inc. 2021 Stock Incentive Plan | ✓ FOR | Page 93 | |||
| Proposal 4 |
Ratification of Appointment of Independent Registered Public Accounting Firm | ✓ FOR | Page 102 | |||
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| › | PROXY SUMMARY |
BOARD NOMINEES
Following the recommendation of the Nominating and Corporate Governance (“NCG”) Committee, our Board of Directors has nominated the following eleven (11) candidates for election as directors at the 2021 annual meeting of stockholders.
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Principal Occupation | Age(1) | Director Since |
Independent | Current Committee Memberships | |||||
| Joel I. Klein Chairman of the Board |
Chief Policy and Strategy Officer of Oscar Health Corporation | 74 | 2013 | Yes | (2) | |||||
| Kelly A. Ayotte |
Former United States Senator for the State of New Hampshire | 52 | 2018 | Yes | Compensation (Chair); NCG | |||||
| Bruce W. Duncan(3) |
President and Chief Executive Officer and a Director of CyrusOne Inc. | 69 | 2016 | Yes | Audit; NCG | |||||
| Karen E. Dykstra(3) |
Former Chief Financial and Administrative Officer of AOL, Inc. | 62 | 2016 | Yes | Audit | |||||
| Carol B. Einiger |
President of Post Rock Advisors, LLC | 71 | 2004 | Yes | Compensation; NCG | |||||
| Diane J. Hoskins |
Chair and Co-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc. | 63 | 2019 | Yes | NCG; Sustainability (Chair) | |||||
| Douglas T. Linde |
President of Boston Properties, Inc. | 57 | 2010 | No | Sustainability | |||||
| Matthew J. Lustig |
Chairman of North America Investment Banking and Head of Real Estate & Lodging at Lazard Frères & Co. | 60 | 2011 | Yes | NCG (Chair); Sustainability | |||||
| Owen D. Thomas |
Chief Executive Officer of Boston Properties, Inc. | 59 | 2013 | No | Sustainability | |||||
| David A. Twardock(3) |
Former President of Prudential Mortgage Capital Company, LLC | 64 | 2003 | Yes | Audit (Chair); Compensation | |||||
| William H. Walton, III |
Co-Founder and Managing Member of Rockpoint Group, LLC | 69 | 2019 | Yes | Compensation | |||||
| (1) | Ages are as of May 20, 2021, the date of the annual meeting. |
| (2) | Mr. Klein serves as our independent, non-executive Chairman of the Board and as an ex officio member of each of the Board’s committees. |
| (3) | Our Board of Directors determined that each of Ms. Dykstra and Messrs. Duncan and Twardock qualifies as an “audit committee financial expert” as that term is defined in the rules of the Securities and Exchange Commission. |
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SNAPSHOT OF 2021 BOARD NOMINEES
Presented below is a snapshot of the expected composition of our Board of Directors immediately following the 2021 annual meeting of stockholders, assuming the election of the eleven (11) nominees named in the proxy statement. Our Board of Directors believes that, collectively, the nominees exhibit an effective mix of qualifications, experience, diversity and tenure. For comparison purposes, we have also presented comparable metrics for the constituents of the S&P 500 Index, of which Boston Properties is a member. Data for the S&P 500 Index is based on the Spencer Stuart Board Index 2020.
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The following summarizes the qualifications and experience of the eleven (11) nominees for election as directors. For additional information, see “Proposal 1: Election of Directors – Nominees for Election” beginning on page 9 of the proxy statement.
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ENVIRONMENTAL, SOCIAL & GOVERNANCE
Environmental, social and governance (“ESG”) considerations continue to evolve and influence how we conduct our business. Our core strategy is long-term ownership of commercial real estate; therefore, sustainable development and responsible growth are fundamental to our investment philosophy. As stakeholder interest in issues like healthy buildings, climate resilience, diversity and inclusion, health and wellness, social equity and community involvement continues to grow, it reinforces just how intertwined our work is with many important aspects of people’s lives. It also means BXP has a unique opportunity to provide leadership in crafting solutions, and we intend to continue making efforts to improve ESG performance and conduct our business in a manner that contributes to positive economic, social and environmental outcomes for our customers, stockholders, employees and the communities we serve.
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ENVIRONMENTAL
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We are focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas emissions and climate change. For additional information, see “Human Capital and Sustainability” beginning on page 35. |
| Sustainability Highlights
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• Corporate member of the U.S. Green Building Council®
• Fitwel Champion through partnership with Fitwel, a leading healthy building certification system, to support healthy building design and operational practices across our portfolio
• In 2017, shortly after the U.S. announced its withdrawal from the Paris Agreement, we proudly signed the We Are Still In declaration
• Between 2018-2021, BPLP issued an aggregate of
$2.7 billion of green bonds in three separate offerings; |
• The Science Based Targets initiative (SBTi) Target Validation Team classified BXP’s emissions reduction target as in line with a 1.5°C trajectory, currently the most ambitious designation available; BXP is one of six North American real estate companies with this distinction and the only office company in that group
• 27.7 million square feet LEED certified, of which 96% is certified at the highest Gold and Platinum levels
• We publish an annual sustainability report, which is available on our website at http://www.bxp.com under the heading “Sustainability,” but it is not incorporated by reference into this proxy statement
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2020 Awards and Recognitions
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• Ranked among the top real estate companies in the Global Real Estate Sustainability Benchmark (“GRESB”) assessment, earning a fifth consecutive 5-Star rating; earned GRESB “Green Star” designation for the ninth consecutive year
• Recognized by the EPA as a 2020 ENERGY STAR Partner of the Year
• 2020 Best in Building Health award winner
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• Named one of America’s Most Responsible Companies by Newsweek magazine; ranked 56th overall out of 400 companies and the highest of any office REIT
• Named a Green Lease Leader at the highest Gold level by the Institute for Market Transformation and the U.S. Department of Energy
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SOCIAL |
Boston Properties’ success depends on human capital and the prosperities of the communities we serve. We therefore focus on social performance and positive externalities, including diversity and inclusion in our workforce, the well-being of our employees, their training and professional development and making positive contributions to our communities. For additional information, see “Human Capital and Sustainability” beginning on page 35.
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| Diversity & Inclusion Initiatives in 2020
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Health, Safety & Wellness
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• Launched the BXP Diversity & Inclusion (“D&I”) Committee with the mission of promoting diversity, inclusion, equality and transparency as part of our culture, business activities and decision-making practices
• Our Chief Executive Officer signed the CEO Action for Diversity & Inclusion pledge, the largest
CEO-driven business commitment to advance diversity and inclusion
• Offered Unconscious/Implicit Bias training as part of our commitment to mitigate unconscious bias in the work environment and foster an inclusive workforce
• The following is a snapshot of the diversity of our workforce as of December 31, 2020:
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• We offer our employees benefits and other programs designed to support physical health, mental health, work-life balance and financial well-being
• In early 2020, we established a Health and Security Task Force to develop the BXP Heath Security Plan, a comprehensive set of building operational measures, including cleaning and disinfection, air and water. | |||
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Total Workforce(1)
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Employee Engagement & Development(2)
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• We invest significant resources in our
employees’
• The success of our efforts is demonstrated by the satisfaction and long tenure of our employees:
• 2020 employee engagement survey with 93% responsiveness and an overall rating of “very favorable”
• average tenure is 9.8 years for employees and
• 32% of our employees worked at BXP for more than
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Managers & Above(1)
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(1) We determine race and gender based on our employees’ self-identification. Ethnic minorities are defined as those included in the EEO Ethnicity and Race Categories: Asian, Black/African American, Hispanic/Latino, Native American or Pacific Islander, or multiracial background. Total workforce includes all of our employees except union employees for which the union controls the hiring process. (2) Data as of December 31, 2020
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| › | PROXY SUMMARY |
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GOVERNANCE |
Boston Properties is committed to strong corporate governance policies and practices that not only reflect regulatory requirements, NYSE listing standards and broadly recognized governance practices, but also foster effective leadership and independent oversight by our Board of Directors. Our governance is intended to help us execute our long-term strategy, and therefore we believe it is aligned with our stockholders’ interests. Notable features of our governance framework include:
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| Board Leadership
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Stockholder Rights
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• Mr. Joel I. Klein serves as our independent, non-executive Chairman of the Board
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• Incorporated in Delaware; the Maryland Unsolicited Takeovers Act does not apply to us
• Proxy Access By-law right
• Annual election of all directors
• Majority voting standard in uncontested
director
• Stockholder right to amend By-laws
• No Stockholder Rights Plan (or “poison pill”)
• Disclosure of Policy on Company Political Spending
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Board Composition and Independence | ||||
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• Eleven (11) directors
• Four directors are women and one director is African-American
• Three of the five (60%) new directors elected since 2016 are women
• 82% independent
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Director Qualifications and Policies | ||||
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• Retirement age: 75-year maximum age limit at time of nomination
• Regular executive sessions of independent directors
• All directors, officers and employees are subject to a Code of Business Conduct and Ethics
• Each director attended more than 75% of the meetings of the Board and committees on which he or she served in 2020; in the aggregate, our directors attended more than 99% of the total number of meetings held in 2020
• Annual self-evaluation for the Board and each committee, and bi-annual interviews of individual directors by our Chairman of the Board; process overseen by our NCG Committee
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Compensation
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| • 89% of votes cast FOR our “Say-on-Pay” proposal at the 2020 annual meeting
• Stock ownership requirements for executives (for CEO, 6x base salary)
• Double-Trigger vesting for time-based equity awards
• Compensation Clawback Policy
• Policy against tax gross-up provisions
• Non-employee directors are compensated under a stockholder-approved plan
• Stock ownership requirements for directors (5x annual retainer)
• Anti-hedging, anti-pledging and anti-short-sale policies
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
PROXY STATEMENT
This proxy statement is being made available to stockholders of Boston Properties, Inc. (“we,” “us,” “our,” “Boston Properties” or the “Company”) on or about April 5, 2021 via the Internet or by delivering printed copies by mail, and is furnished in connection with the solicitation of proxies by the Board of Directors of Boston Properties, Inc. (our “Board” or our “Board of Directors”) for use at our 2021 annual meeting of stockholders to be held virtually by live audio webcast on Thursday, May 20, 2021 at 9:00 a.m., Eastern Time, at www.virtualshareholdermeeting.com/BXP2021, and any adjournments or postponements thereof.
Since becoming a public company in 1997 until 2020, we always held our annual meeting in person. Due to the health and safety concerns related to the COVID-19 pandemic, we held a virtual meeting in 2020 and will do so again this year. We intend to hold future annual meetings in person, provided that it is safe to do so.
ELECTION OF DIRECTORS
Boston Properties is currently governed by an eleven-member Board of Directors. The current members of our Board of Directors are:
| › Kelly A. Ayotte
› Diane J. Hoskins
› Owen D. Thomas |
› Bruce W. Duncan
› Joel I. Klein
› David A. Twardock |
› Karen E. Dykstra
› Douglas T. Linde
› William H. Walton, III |
› Carol B. Einiger
› Matthew J. Lustig |
At the 2021 annual meeting of stockholders, directors will be elected to hold office for a one-year term expiring at the 2022 annual meeting of stockholders. Directors hold office until their successors are duly elected and qualified, or until their earlier resignation or removal. Any director appointed to our Board of Directors to fill a vacancy will hold office for a term expiring at the next annual meeting of stockholders following such appointment.
Following the recommendation of the NCG Committee, our Board of Directors nominated all incumbent directors for re-election. In making its recommendations, the NCG Committee considered a number of factors, including its criteria for Board membership, which include the minimum qualifications that must be possessed by a director candidate in order to be nominated for a position on our Board. Our Board of Directors anticipates that, if elected, the nominees will serve as directors. However, if any person nominated by our Board of Directors is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person as our Board of Directors may recommend.
VOTE REQUIRED AND MAJORITY VOTING STANDARD
Our By-laws provide for a majority voting standard. This means that, in an uncontested election, nominees for director are elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. The majority voting standard would not apply in contested elections, which, generally, will include any situation in which Boston Properties receives a notice that a stockholder has nominated a person for election to our Board of Directors at a meeting of stockholders that is not withdrawn on or before the tenth day before Boston Properties first mails its notice for such meeting to the stockholders.
The majority voting standard will apply to the election of directors at the 2021 annual meeting of stockholders. Accordingly, nominees for director will be elected if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Broker non-votes, if any, and abstentions will not be treated as votes cast.
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
Our Board of Directors also adopted a related resignation policy, included in our Corporate Governance Guidelines, under which a director who fails to receive the required number of votes for re-election will tender his or her resignation to our Board of Directors for its consideration. The NCG Committee will then act on an expedited basis to determine whether it is advisable to accept the director’s resignation and will submit its recommendation for prompt consideration by our Board of Directors. Our Board of Directors will act on the tendered resignation within 90 days following certification of the stockholder vote and will promptly and publicly disclose its decision. Any director whose resignation is under consideration will abstain from participating in any decision regarding his or her resignation. If the resignation is not accepted, the director will continue to serve until the next annual meeting of stockholders and until the director’s successor is duly elected and qualified or until the director’s earlier resignation or removal. The NCG Committee and our Board of Directors may consider any factors they deem relevant in deciding whether to accept a director’s resignation.
| ✔ | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF ITS NOMINEES: KELLY
A.
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
The following biographical descriptions set forth certain information with respect to the nominees for election as directors at the 2021 annual meeting, based on information furnished to Boston Properties by each nominee, as well as the specific experience, qualifications, attributes and skills that led to the conclusion by our Board of Directors that such person should serve as a director of Boston Properties.
| JOEL I. KLEIN
Chief Policy and Strategy Officer of Oscar Health Corporation
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Qualifications:
Mr. Klein has worked for more than 40 years in private industry and government during which time he has gained significant experience in senior policy making and executive roles, as well as a broad range of legal and financial matters.
Professional Background:
• Chief Policy and Strategy Officer of Oscar Health Corporation, a health insurance company
• Director of News Corporation from January 2011 to November 2020
• Executive Vice President, Office of the Chairman of News Corporation from June 2003 to December 2015 and Chief Executive Officer of Amplify, the education division of News Corporation, from January 2011 to December 2015
• Chancellor of the New York City Department of Education from 2002 through 2010, where Mr. Klein oversaw a system of over 1,600 schools with 1.1 million students, 136,000 employees and a $22 billion budget
• U.S. Chairman and Chief Executive Officer of Bertelsmann, Inc. and Chief U.S. Liaison Officer to Bertelsmann AG, a media company, from 2001 to 2002
• Various roles with the Clinton administration, including Assistant U.S. Attorney General in charge of the Antitrust Division of the U.S. Department of Justice from 1997 to 2000 and Deputy White House Counsel to President Clinton from 1993 to 1995. Mr. Klein entered the Clinton administration after 20 years of public and private legal work in Washington, DC |
Other Leadership Experience, Community Involvement and Education:
• Member of the Boards of The Foundation for Excellence in Education (ExcelinEd) and StudentsFirstNY
• Member of the Advisory Boards of the Zuckerman Mind Brain Behavior Institute and Columbia College
• Received a BA magna cum laude from Columbia University and a JD magna cum laude from Harvard Law School
• Received honorary degrees from ten colleges and universities | ||||
|
Director since: January 2013
Age: 74
Independent
Chairman of the Board
Current Board Committees: • ex officio member of all committees
Other Public Company Boards: • Current: None • Former (past 5 years): News Corporation
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| SENATOR KELLY A. AYOTTE
Former United States Senator for the State of New Hampshire
|
Qualifications:
Senator Ayotte has significant leadership and strategic planning skills, as well as legal experience and experience in government and public affairs.
Professional Business Experience:
• Represented New Hampshire in the United States Senate from 2011 to 2016; chaired the Armed Services Subcommittee on Readiness and the Commerce Subcommittee on Aviation Operations; and served on the Budget, Homeland Security and Governmental Affairs, Small Business and Entrepreneurship, and Aging Committees
• New Hampshire’s first female Attorney General from 2004 to 2009 appointed by Republican Governor Craig Benson and reappointed twice by Democratic Governor John Lynch
• Previously Deputy Attorney General, Chief of the Homicide Prosecution Unit and Legal Counsel to Governor Craig Benson
• Former associate at the McLane Middleton law firm and law clerk to the New Hampshire Supreme Court
• Director of The Blackstone Group, Inc., Caterpillar Inc. and News Corporation
• Director of Blink Health LLC and BAE Systems, Inc., each a private company board
• Former director of Bloom Energy Corporation from 2017 to 2019
• Member of advisory boards of Microsoft Corporation, Chubb Insurance and Cirtronics Corporation |
Other Leadership Experience, Community Involvement and Education:
• Senior Advisor for Citizens for Responsible Energy Solutions
• Member of the non-profit boards of the One Campaign, the International Republican Institute, the McCain Institute, Swim with a Mission, Winning for Women and Veterans Count of New Hampshire
• Member of the Aspen Institute’s Economic Strategy
• Member of the Board of Advisors for the Center on Military and Political Power at the Foundation for Defense of Democracies
• Co-chair of the Center for Strategic and International Study’s Commission on Health Security
• Co-chair of the Center for a New American Security’s Digital Freedom Forum
• Graduated with honors from the Pennsylvania State University and received a JD from the Villanova University School of Law | ||||
|
Director since: May 2018
Age: 52
Independent
Current Board Committees: • Compensation (Chair) • NCG
Other Public Company Boards: • Current: The Blackstone Group, Inc., Caterpillar Inc. and News Corporation • Former (past 5 years): Bloom Energy Corporation
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| BRUCE W. DUNCAN
President and Chief Executive Officer and a Director of CyrusOne Inc.
|
Qualifications:
Mr. Duncan has more than 30 years of diverse real estate management and investment experience, including as a chief executive officer and a director of other publicly traded companies.
Professional Business Experience:
• President, Chief Executive Officer and director of CyrusOne Inc., a real estate investment trust (“REIT”) that develops, owns, operates and invests in data centers, since July 2020
• Various positions at First Industrial Realty Trust, Inc., an industrial REIT, including Chairman of the Board from January 2016 and director from January 2009 until retiring from both positions in July 2020; President and Chief Executive Officer from January 2009 until he stepped down as President in September 2016 and retired as Chief Executive Officer in November 2016
• Former Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), a leading worldwide hotel and leisure company, from May 2005 until its acquisition by Marriott International, Inc. in September 2016; director of Starwood from 1999 to September 2016; interim Chief Executive Officer of Starwood from April 2007 to September 2007
• Trustee of Starwood Hotels & Resorts, a REIT and former subsidiary of Starwood, from 1995 to 2006
• Director of the mutual funds sponsored and managed by T. Rowe Price Associates, Inc. since September 2013
• Senior Advisor to Kohlberg Kravis Roberts & Co. (“KKR”), a global investment firm, since 2018; previously senior advisor to KKR from July 2008 to January 2009
• Director of Marriott International, Inc., the world’s largest hotel company, from September 2016 to July 2020
• Various positions at Equity Residential, one of the largest publicly traded apartment REITs in the United States, from March 2002 to December 2005, including Chief Executive Officer and Trustee from May 2005 to December 2005, President, Chief Executive Officer and Trustee from January 2003 to May 2005, and President and Trustee from March 2002 to December 2002
• Chairman, President and Chief Executive Officer of Cadillac Fairview Corporation, one of North America’s largest owners and developers of retail and office properties, from December 1995 to March 2000 |
Other Leadership Experience, Community Involvement and Education:
• Life Trustee of Rush University Medical Center in Chicago
• Member of the Executive Committee of the Board of Governors of the National Association of Real Estate Investment Trusts (“Nareit”) since November 2020
• Former member of the Executive Committees of the Board of the Canadian Institute for Public Real Estate Companies (CIPREC) and the National Multi-Housing Council (NMHC)
• Former trustee of the International Council of Shopping Centers (ICSC)
• Received a BA in Economics from Kenyon College and an MBA in Finance from the University of Chicago | ||||
|
Director since: May 2016
Age: 69
Independent
Current Board Committees: • Audit • NCG
Other Public Company Boards: • Current: CyrusOne Inc. • Former (past 5 years): First Industrial Realty Trust, Inc., Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc.
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| KAREN E. DYKSTRA
Former Chief Financial and Administrative Officer of AOL, Inc.
|
Qualifications:
Ms. Dykstra has extensive strategic, management, financial, accounting and oversight experience, particularly with companies in the technology sector.
Professional Business Experience:
• Chief Financial and Administrative Officer of AOL, Inc., a global media technology company, from November 2013 to July 2015; Chief Financial Officer of AOL, Inc. from September 2012 to November 2013; director of AOL, Inc. from 2009 to 2012
• Partner of Plainfield Asset Management LLC (“Plainfield”) from January 2007 to December 2010
• Chief Operating Officer and Chief Financial Officer of Plainfield Direct Inc., Plainfield’s business development company, from May 2006 to 2010 and a director from 2007 to 2010
• Various positions with Automatic Data Processing, Inc. for more than 25 years, including serving most recently as Chief Financial Officer from January 2003 to May 2006, and previously as Vice President – Finance, Corporate Controller
• Director of Sirius Computer Solutions, a private company
• Director of Gartner, Inc. since 2007 and VMware, Inc. since March 2016
• Former director of Crane Co. from 2004 to 2012 |
Education:
• Received a BA in Accounting from Rider University and an MBA from Fairleigh Dickinson University | ||||
|
Director since: May 2016
Age: 62
Independent
Current Board Committees: • Audit
Other Public Company Boards: • Current: Gartner, Inc. and VMware, Inc. • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| CAROL B. EINIGER
President of Post Rock Advisors, LLC
|
Qualifications:
Ms. Einiger has more than 40 years of experience as an investment banker and investment advisor, during which time she has gained significant expertise in the operation of public and private debt and equity capital markets and the evaluation of investment opportunities.
Professional Background:
• President of Post Rock Advisors, LLC, a private family investment office, since July 2018; founder and President of Post Rock Advisors, LLC, a registered investment advisory firm, from 2005 to 2016
• Senior Advisor of Roundtable Investment Partners LLC, a registered investment advisory firm, from January 2017 to June 2018
• Chief Investment Officer of The Rockefeller University, where she was responsible for the management of the University’s endowment, from 1996 to 2005
• Chief Financial Officer and then Acting President of the Edna McConnell Clark Foundation from 1992 to 1996
• Managing Director at Wasserstein Perella & Co. from 1989 to 1992
• Visiting Professor and Executive-in-Residence at Columbia Business School from 1988 to 1989
• Various positions at The First Boston Corporation from 1973 to 1988, becoming Managing Director and Head of the Capital Markets Department
• Various positions at Goldman, Sachs & Co. from 1971 to 1972 |
Other Leadership Experience, Community Involvement and Education:
• Director, member and former Chair of the Investment Committee of UJA-Federation of New York
• Member of the Investment Committee of the JPB Foundation and the Board of Overseers of Columbia Business School
• Former member of the Boards of Trustees and Investment Committees of the University of Pennsylvania, the Lasker Foundation, the Horace Mann School
• Former member of the Advisory Board of Blackstone Alternative Asset Management
• Former Vice Chair of the Investment Committee of The Museum of Modern Art
• Former Director of Credit Suisse First Boston (USA) and The New York Stem Cell Foundation
• Recipient of numerous awards, including the Alumni Award of Merit of the University of Pennsylvania, the Columbia Business School Distinguished Alumna Award, the AJC National Human Relations Award, the Anti-Defamation League Woman of Achievement Award and the Catalyst Award for Corporate Leadership
• Received a BA from the University of Pennsylvania and an MBA with honors from Columbia Business School | ||||
|
Director since: May 2004
Age: 71
Independent
Current Board Committees: • Compensation • NCG
Other Public Company Boards: • Current: None • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| DIANE J. HOSKINS
Chair and Co-Chief Executive Officer of M. Arthur Gensler Jr. & Associates, Inc.
|
Qualifications:
Ms. Hoskins has more than 30 years of architecture, design, real estate and business experience, including as a chief executive officer of a global brand. During this time, she has gained extensive leadership, strategic planning, financial stewardship and organizational development experience, as well as a deep understanding of markets and clients, including their current and future space needs and insight into how companies envision their workspaces of the future.
Professional Background:
• Co-CEO of M. Arthur Gensler Jr. & Associates, Inc. (“Gensler”), the world’s largest architecture, design, and planning firm since 2005, and Chair of the Gensler Board of Directors since 2018, where Ms. Hoskins has broad responsibility for overseeing the company’s global platform and managing its day-to-day operations, including more than 5,000 employees networked across 48 offices in the Americas, Europe, Asia, and the Middle East
• Various positions at Gensler since 1995, including Southeast Regional Managing Principal and Managing Director of the Washington, DC office
• Founded the Gensler Research Institute to generate new knowledge and develop a deeper understanding of the connection between design, business, and the human experience
• Senior Vice President of Epstein Architecture and Engineering from 1990 to 1994
• Development Analyst at Olympia & York from 1987 to 1990
• Architect Designer at Gensler from 1983 to 1985
• Architect at Skidmore Owings & Merrill from 1980 to 1983 |
Other Leadership Experience, Community Involvement and Education:
• Member of the World Economic Forum’s Global Future Council on Cities & Urbanization and the CEO Initiative by Fortune and Time
• Fellow of the American Institute of Architects, Global Board Member of the Urban Land Institute, Board Member of the Washington Board of Trade and member of several organizations, including the Economic Club of Washington, DC
• Serves on the Visiting Committee of the School of Architecture at the Massachusetts Institute of Technology (MIT) and the Board of Advisors of the University of California, Los Angeles (UCLA) Anderson School of Management
• Ms. Hoskins has been honored by several organizations for her work, including the Spirit of Life Award from City of Hope and the Outstanding Impact Award from the Council of Real Estate Women
• Inducted into the Washington Business Hall of Fame in 2016, and co-ranked on the Business Insider’s 100 “Creators” list, a who’s who of the world’s 100 top creative visionaries
• Ms. Hoskins is sought after by the media to share her expertise in many top tier media outlets, including The Wall Street Journal, The New York Times, Harvard Business Review, Fortune, Business Insider, Financial Times, Bloomberg TV, and global architecture and design trade publications
• Frequent speaker at premier conferences, including the Bloomberg Business/CEO Summit, the Economist Human Potential Conference, and the Wall Street Journal Future of Cities Conference; was a featured panelist at the UN Climate Summit in the fall of 2019
• Graduated from MIT and holds an MBA from the Anderson Graduate School of Management at UCLA | ||||
|
Director since: May 2019
Age: 63
Independent
Current Board Committees: • Sustainability (Chair) • NCG
Other Public Company Boards: • Current: None • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| DOUGLAS T. LINDE
President of Boston Properties, Inc.
|
Qualifications:
Mr. Linde has more than 30 years of experience in the real estate industry, including as our President and former Chief Financial Officer, during which time he gained extensive knowledge of the real estate industry, capital markets and real estate finance, as well as substantial experience in transactional, operational and accounting matters.
Professional Background:
• President of Boston Properties, Inc. since May 2007
• Mr. Linde joined Boston Properties in January 1997 as Vice President of Acquisitions and New Business to help identify and execute acquisitions and to develop new business opportunities; served as Senior Vice President for Financial and Capital Markets from October 1998 to January 2005, Chief Financial Officer and Treasurer from September 2000 to November 2007, and Executive Vice President from January 2005 to May 2007
• President of Capstone Investments, a Boston real estate investment company, from 1993 to 1997
• Project Manager and Assistant to the Chief Financial Officer of Wright Runstad and Company, a private real estate developer in Seattle, WA, from 1989 to 1993
• Began his career in the real estate industry with Salomon Brothers’ Real Estate Finance Group |
Other Leadership Experience, Community Involvement and Education:
• Trustee of the Beth Israel Lahey Health Board of Trustees
• Director Emeritus of the Board of Directors of Beth Israel Deaconess Medical Center (“BIDMC”) and co-chair of the BIDMC capital campaign
• Member of the Real Estate Roundtable
• Director of the Boston Municipal Research Bureau and Jobs for Massachusetts
• Member of the Urban Studies and Planning Visiting Committee at MIT
• Trustee Emeritus of the Wesleyan University Board of Trustees
• Received a BA from Wesleyan University and an MBA from Harvard Business School | ||||
|
Director since: January 2010
Age: 57
Current Board Committees: • Sustainability
Other Public Company Boards: • Current: None • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| MATTHEW J. LUSTIG
Chairman of North America Investment Banking and Head of Real Estate & Lodging at Lazard Frères & Co.
|
Qualifications:
Mr. Lustig has worked for more than 35 years in the real estate industry, during which time he has gained extensive experience providing strategic and financial advice and transaction execution to clients including leading real estate companies, and investing in real estate companies and assets as a principal.
Professional Background:
• Chairman of North America Investment Banking at Lazard Frères & Co. (“Lazard”), the investment bank, since 2019 (previously Head of North America Investment Banking, from 2012 to 2019), with responsibility for the management of a range of Financial Advisory/Investment Banking businesses
• Head of Real Estate & Lodging at Lazard, a position he has held for more than 20 years, serving clients and running its Real Estate and Lodging industry group. In recent years, Mr. Lustig has played an active role in more than $300 billion of advisory assignments and transactions involving leading real estate and lodging companies in the public and private markets
• Former Chief Executive Officer of the real estate investment business of Lazard and its successors, where he oversaw multiple funds with over $2.5 billion of equity capital invested in REITs and real estate operating companies
• Director of Ventas, Inc., a REIT with a portfolio of senior housing, research and innovation, and healthcare properties, since May 2011
• Former Chairman of Atria Senior Living Group, Inc., which was acquired by Ventas in May 2011
• Former director of several other public and private fund portfolio REITs and companies |
Other Leadership Experience, Community Involvement and Education:
• Member of the Real Estate Roundtable, the Urban Land Institute, the Pension Real Estate Association (former Board and Executive Committee member) and the Council on Foreign Relations
• Member of the Real Estate centers at the business schools of Wharton/UPenn (Chairman of the Advisory Board) and Columbia University
• Member of the Board of Advisors at the School of Foreign Service at Georgetown University
• Received a BSFS from Georgetown University | ||||
|
Director since: January 2011
Age: 60
Independent
Current Board Committees: • NCG (Chair) • Sustainability
Other Public Company Boards: • Current: Ventas, Inc. • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| OWEN D. THOMAS
Chief Executive Officer of Boston Properties, Inc.
|
Qualifications:
Mr. Thomas is a recognized leader in the real estate industry with more than 33 years of executive leadership, strategic planning and management experience, as well as substantial experience in financial and capital markets.
Our Board agreed to nominate Mr. Thomas for re-election to the Board of Directors for so long as he remains CEO, and he has agreed to resign from the Board upon termination of employment.
Professional Background:
• Chief Executive Officer of Boston Properties, Inc. since April 2013
• Chairman of the Board of Directors of Lehman Brothers Holdings Inc. (“LBHI”) from March 2012 until March 2013 and continues to serve as a member of the Board of Directors of LBHI
• Various positions at Morgan Stanley from 1987 to 2011, including Chief Executive Officer of Morgan Stanley Asia Ltd., President of Morgan Stanley Investment Management, Head of Morgan Stanley Real Estate and Managing Director
• Member of Morgan Stanley’s Management Committee from 2005 to 2011
• Director of Grosvenor Group Limited from 2011 to 2013 |
Other Leadership Experience, Community Involvement and Education:
• Global Chairman of the Urban Land Institute
• Director of the Real Estate Roundtable
• Member of the Executive Board of Nareit
• Member and former Chairman of the Pension Real Estate Association
• Former Director of the University of Virginia Investment Management Company
• Received a BS in Mechanical Engineering from the University of Virginia and an MBA from Harvard Business School | ||||
|
Director since: April 2013
Age: 59
Current Board Committees: • Sustainability
Other Public Company Boards: • Current: None • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| DAVID A. TWARDOCK
Former President of Prudential Mortgage Capital Company, LLC
|
Qualifications:
Mr. Twardock has more than 35 years of experience in the real estate finance industry, during which time he has overseen the lending and asset management of billions of dollars of commercial mortgages and other real estate debt financing and the management and disposition of billions of dollars of real estate equity.
Professional Background:
• Former President of Prudential Mortgage Capital Company, LLC, the real estate finance affiliate of Prudential Financial, Inc., from December 1998 to March 2013, which had more than $70 billion in assets under management and administration as of December 31, 2012 and annually lent billions of dollars in real estate debt financing
• Various positions with Prudential relating to real estate equity and debt from 1982 to December 1998, including as Senior Managing Director of Prudential Realty Group from 1996 to November 1998
• Member of the advisory board of LBA Realty
• Private investor in multiple real estate partnerships
• Director of Morgan Stanley Bank, N.A. from 2015 through 2018
• Member of the advisory board of Blue Vista Capital Management from 2015 to 2020 |
Other Leadership Experience, Community Involvement and Education:
• Member of the Urban Land Institute and the Economics Club of Chicago
• Former director of the Real Estate Roundtable and former Chairman of the Real Estate Roundtable Capital Markets Committee
• Received a BS in Civil Engineering from the University of Illinois and an MBA in Finance and Behavioral Science from the University of Chicago | ||||
|
Director since: May 2003
Age: 64
Independent
Current Board Committees: • Audit (Chair) • Compensation
Other Public Company Boards: • Current: None • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
| WILLIAM H. WALTON, III
Co-Founder and Managing Member of Rockpoint Group, LLC
|
Qualifications:
Mr. Walton has 40 years of real estate investment, development and management experience, as well as executive leadership experience having served in various roles and as a director of several public and private companies.
Professional Background:
• Co-Founder and Managing Member of Rockpoint Group, LLC (“Rockpoint”), a global real estate investment management firm, where Mr. Walton is responsible for the overall operations and management of Rockpoint, as well as overseeing the origination, structuring and asset management of all of Rockpoint’s investment activities; since 1994, the Rockpoint founding managing members have invested in approximately $65 billion of real estate
• Co-founder of Westbrook Real Estate Partners, LLC (“Westbrook”), a real estate investment management firm
• Managing director in the real estate group of Morgan Stanley & Co., Inc. prior to co-founding Westbrook
• Director of Dream Finders Homes, Inc., a publicly-traded residential building company, and FRP Holdings, Inc., a publicly-traded real estate investment and development company
• Director of Crow Holdings, a privately owned real estate and investment firm
• Former trustee of Corporate Office Properties Trust and former director of Florida Rock Industries and The St. Joe Company |
Other Leadership Experience, Community Involvement and Education:
• Involved with several real estate industry organizations
• Director or trustee of several non-profit organizations, with a particular interest in educational and policy entities, including the American Enterprise Institute, the Jacksonville University Public Policy Institute and the University of Florida Investment Corporation
• Former member of the boards of Communities in Schools, the Episcopal School of Jacksonville, KIPP Jacksonville Schools, Mpala Wildlife Foundation, Princeton University and Princeton University Investment Company
• Received an AB from Princeton University and an MBA from Harvard Business School | ||||
|
Director since: May 2019
Age: 69
Independent
Current Board Committees: • Compensation
Other Public Company Boards: • Current: Dream Finders Homes, Inc., FRP Holdings, Inc. • Former (past 5 years): None
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
› SUMMARY OF BOARD NOMINEE QUALIFICATIONS, EXPERIENCE AND DIVERSITY
In addition to the minimum qualifications that our Board of Directors believes are necessary for all directors, the following chart highlights some of the key qualifications, and experience that our Board believes are relevant to the effective oversight of Boston Properties and the execution of its long-term strategy . A mark for an attribute indicates that the nominee gained the attribute through a current or prior position other than his or her service on the Boston Properties Board of Directors. Our Board did not assign specific weights to any of these attributes or otherwise formally rate the level of a nominee’s attribute relative to the rating for any other potential nominee or any other person. The absence of a mark for an attribute does not necessarily mean that the nominee does not possess that attribute; it means only that when the Board considered that nominee in the overall context of the composition of our Board of Directors, that attribute was not a key factor in the determination to nominate that individual. Further information on each nominee’s qualifications and relevant experience is provided in the individual biographical descriptions above.
| NOMINEE QUALIFICATIONS AND EXPERIENCE | ||||||||||||||||||||||
| Qualification/Experience | Ayotte | Duncan | Dykstra | Einiger | Hoskins | Klein | Linde | Lustig | Thomas | Twardock | Walton | |||||||||||
| Strategic Planning and Leadership |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||
| CEO/Executive Management |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||
| Risk Oversight |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||
| REIT and/or Real Estate |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||||||
| Asset Management |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||||
| Capital Markets and Investment Banking |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||||
| Other Public Company Board Experience |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||||
| Government and Public Policy |
🌑 | 🌑 | 🌑 | |||||||||||||||||||
| International |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||
| Financial Literacy |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||
| Audit Committee Financial Expert |
🌑 | 🌑 | 🌑 | |||||||||||||||||||
| Technology Industry |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||||||||
| Corporate Governance |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||
| Sustainability |
🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||||||||
| Talent Management |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||
| DIVERSITY OF NOMINEES | ||||||||
| 9 of 11 | 8.2 years | 64.2 years | 4 | 1 | ||||
| Independent Directors |
Average Tenure of all Nominees |
Average Age of all Nominees |
Women |
Ethnic Minority | ||||
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| 1› | PROPOSAL 1: ELECTION OF DIRECTORS |
Under the rules of the New York Stock Exchange (the “NYSE”), a majority of the Board of Directors must qualify as “independent directors.” To qualify as an “independent director,” the Board of Directors must affirmatively determine that the director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). Our Board of Directors established categorical standards to assist it in making the required independence determinations.
Under these categorical standards, any relationship with us shall be deemed not material if:
| 1. | The relationship does not preclude a finding of independence under Sections 303A.02(b) of the NYSE Listed Company Manual (the “NYSE Disqualifying Rules”); and |
| 2. | The relationship does not involve any of the following, whether currently existing or occurring since the end of the last fiscal year or during the past three fiscal years: |
| (a) | a director being an executive officer of, or owning, or having owned, of record or beneficially in excess of ten percent (10%) equity interest in, any business or professional entity that has made during any of such fiscal years, or proposes to make during the Company’s current fiscal year, payments to the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company for property or services in excess of five percent (5%) of: (i) the Company’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year), or (ii) the other entity’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year); |
| (b) | a director being an executive officer of, or owning, or having owned, of record or beneficially in excess of ten percent (10%) equity interest in, any business or professional entity to which the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company has made during any of such fiscal years, or proposes to make during the Company’s current fiscal year, payments for property or services in excess of five percent (5%) of: (i) the Company’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year), or (ii) the other entity’s consolidated gross revenues for such fiscal year (or, in the case of proposed payments, its last fiscal year); |
| (c) | a director or an immediate family member of the director being an officer, director or trustee of a charitable organization where the annual discretionary charitable contributions of the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company in any single year to the charitable organization exceeded the greater of $1 million or two percent (2%) of that organization’s consolidated gross revenues for the fiscal year; |
| (d) | a director or an immediate family member of a director being indebted to the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company in an amount in excess of $120,000; |
| (e) | a director being an executive officer, partner or greater than 10% equity owner of an entity, or being a trustee or a substantial beneficiary of a trust or estate, indebted to the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company in an amount in excess of the greater of $120,000 or 5% of such entity’s total consolidated assets, or to whom the Company or an entity controlled by an executive officer of the Company is indebted (other than with respect to (i) any publicly traded debt securities of the Company or such entity or (ii) non-recourse loans secured by real estate where both the lender and the Company or such entity intend for the lender to transfer all right to, and control over, the loan within 12 months and the documentation includes customary provisions for loans targeted at the commercial mortgage backed securities (CMBS) or collateralized debt obligation (CDO) markets) in an amount in excess of 5% of the Company’s or such entity’s total consolidated assets; |
| (f) | a transaction or currently proposed transaction (other than relating to the ownership of securities), which involved or involves the direct or indirect payment in a single year of in excess of $120,000 from the Company, an executive officer of the Company or an entity controlled by an executive officer of the Company to a director or an immediate family member of a director; |
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| (g) | a director or an immediate family member of a director being an executive officer, general or managing partner or owner of more than 10% of the outstanding equity securities of an entity that has a co-investment or is a joint venture partner with the Company where the amount of the entity’s equity investment in any single year exceeds the greater of $1 million or 2% of the total consolidated assets of the entity; or |
| (h) | a director or an immediate family member of a director being an executive officer, general or managing partner or owner of more than 10% of the outstanding equity securities of an entity (other than the Company) in which an executive officer of the Company or an entity controlled by an executive officer of the Company is an executive officer, general or managing partner or owner of more than 10% of the outstanding equity securities of the entity. |
For purposes of these standards, “immediate family” member has the same meaning as in the NYSE Disqualifying Rules.
Relationships not specifically deemed not material by the above categorical standards may, in the Board’s judgment, be deemed not to be material.
› 2021 INDEPENDENCE DETERMINATIONS
The Board of Directors concluded that the following directors qualify as independent directors under NYSE rules because none of them (1) has any relationships that would disqualify him or her from being considered independent under the minimum objective standards contained in the NYSE rules or (2) has any relationships other than those deemed to be immaterial under the categorical standards adopted by the Board of Directors.
| › Kelly A. Ayotte
› Carol B. Einiger
› Matthew J. Lustig |
› Bruce W. Duncan
› Diane J. Hoskins
› David A. Twardock |
› Karen E. Dykstra
› Joel I. Klein
› William H. Walton, III |
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In determining that each of Ms. Ayotte and Mr. Twardock qualified as an independent director for purposes of his or her service on the Compensation Committee, our Board considered that (1) each serves or previously served as a non-employee director (or advisory board member) for a company with which Boston Properties has engaged in commercial transactions in the ordinary course of business, (2) each transaction was on arms’-length terms and the director had no direct or indirect involvement in the transaction, and (3) the director had no pecuniary interest in the transaction.
CONSIDERATION OF DIRECTOR NOMINEES
› SECURITYHOLDER RECOMMENDATIONS
The NCG Committee’s current policy is to review and consider any director candidates who have been recommended by securityholders in compliance with the procedures established from time to time by the NCG Committee. All securityholder recommendations for director candidates must be submitted to our Secretary at Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103, who will forward all recommendations to the NCG Committee. We did not receive any securityholder recommendations for director candidates for election at the 2021 annual meeting in compliance with the procedures set forth below. All securityholder recommendations for director candidates for election at the 2022 annual meeting of stockholders must be submitted to our Secretary on or before December 6, 2021 and must include the following information:
| • | the name and address of record of the securityholder; |
| • | a representation that the securityholder is a record holder of our securities, or if the securityholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) under the Securities Exchange Act of 1934; |
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| • | the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five (5) full fiscal years of the proposed director candidate; |
| • | a description of the qualifications and background of the proposed director candidate which addresses the minimum qualifications and other criteria for Board membership as approved by the Board from time to time; |
| • | a description of all arrangements or understandings between the securityholder and the proposed director candidate; |
| • | the consent of the proposed director candidate (1) to be named in the proxy statement relating to our annual meeting of stockholders and (2) to serve as a director if elected at such annual meeting; and |
| • | any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission (“SEC”). |
› BOARD MEMBERSHIP CRITERIA
The NCG Committee has established criteria for NCG Committee-recommended director nominees. These criteria include the following specific, minimum qualifications that the NCG Committee believes must be met by an NCG Committee-recommended nominee for a position on the Board:
| • | the candidate must have experience at a strategic or policymaking level in a business, government, non-profit or academic organization of high standing; |
| • | the candidate must be highly accomplished in his or her respective field, with superior credentials and recognition; |
| • | the candidate must be well regarded in the community and must have a long-term reputation for high ethical and moral standards; |
| • | the candidate must have sufficient time and availability to devote to our affairs, particularly in light of the number of boards on which the candidate may serve; |
| • | the candidate’s principal business or occupation must not be such as to place the candidate in competition with us or conflict with the discharge of a director’s responsibilities to us and our stockholders; and |
| • | to the extent the candidate serves or has previously served on other boards, the candidate must have a history of actively contributing at board meetings. |
In addition to the minimum qualifications for each nominee set forth above, the NCG Committee will recommend director candidates to the full Board for nomination, or present director candidates to the full Board for consideration, to help ensure that:
| • | a majority of the Board of Directors will be “independent” as defined by the NYSE rules; |
| • | each of its Audit, Compensation and NCG Committees will be comprised entirely of independent directors; and |
| • | at least one member of the Audit Committee will have such experience, education and other qualifications necessary to qualify as an “audit committee financial expert” as defined by the rules of the SEC. |
Finally, in addition to any other standards the NCG Committee may deem appropriate from time to time for the overall structure and composition of the Board, the NCG Committee may consider the following factors when recommending director candidates to the full Board for nomination, or presenting director candidates to the full Board for consideration:
| • | whether the candidate has direct experience in the real estate industry or in the markets in which we operate; and |
| • | whether the candidate, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience. |
› IDENTIFYING AND EVALUATING NOMINEES
The NCG Committee may solicit recommendations for director nominees from any or all of the following sources: non-management directors, the Chief Executive Officer, other executive officers, third-party search firms or any other source it deems appropriate.
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The NCG Committee will review and evaluate the qualifications of any proposed director candidate that it is considering or has been recommended to it by a securityholder in compliance with the NCG Committee’s procedures for that purpose, and conduct inquiries it deems appropriate into the background of these proposed director candidates. In identifying and evaluating proposed director candidates, the NCG Committee may consider, in addition to the minimum qualifications for NCG Committee-recommended director nominees, all facts and circumstances that it deems appropriate or advisable, including, among other things, the skills of the proposed director candidate, his or her depth and breadth of business experience, his or her independence, the needs of our Board, and whether a candidate, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience. Other than circumstances in which we may be legally required by contract or otherwise to provide third parties with the ability to nominate directors, the NCG Committee will evaluate all proposed director candidates that it considers or who have been properly recommended to it by a securityholder based on the same criteria and in substantially the same manner, with no regard to the source of the initial recommendation of the proposed director candidate.
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| 2› | CORPORATE GOVERNANCE |
Boston Properties is committed to strong corporate governance policies and practices designed to foster effective leadership and independent oversight of management. Our Board of Directors oversees management performance on behalf of our stockholders to ensure that our stockholders’ long-term interests are being served, to monitor adherence to Boston Properties’ standards and policies, and to promote the exercise of responsible corporate citizenship.
Our Corporate Governance Guidelines provide that our Board of Directors does not have a policy with respect to whether or not the role of Chairman of the Board and CEO should be separate or combined. However, our Board has determined that its leadership structure should include either an independent, non-executive Chairman of the Board or a lead independent director who satisfies our standards for independence. Accordingly, our Corporate Governance Guidelines provide that it is the Board’s policy that if (1) the positions of Chairman of the Board and CEO are held by the same person, (2) the position of Chairman of the Board is held by a non-independent director or (3) none of the directors has been elected to serve as Chairman of the Board, then the independent directors shall select an independent director to serve as lead independent director.
When our Board of Directors amended our Corporate Governance Guidelines in 2014 to create the position of lead independent director, the Board contemplated that in the future it might determine that it is advisable to appoint an independent, non-executive Chairman of the Board. As a result, our Corporate Governance Guidelines provide that an independent director selected to serve as lead independent director will serve in that role until (1) he or she ceases to be an independent director or resigns from the position, (2) a successor is selected by a majority of the independent directors or (3) an independent director is serving as the Chairman of the Board. In addition, if the Chairman of the Board is an independent director, then the Chairman of the Board shall assume the responsibilities of the lead independent director referenced above and there will not be a separate lead independent director.
The independent directors selected Mr. Klein to serve as lead independent director in May 2016, a position he held until May 2019. Our Board of Directors appointed Mr. Klein as independent, non-executive Chairman of the Board, effective immediately following the 2019 annual meeting of stockholders, and he continues to serve in that role. In addition to responsibilities that may be assigned from time to time by the full Board, Mr. Klein’s responsibilities as Chairman include:
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• Approving information sent to the Board
• Approving Board meeting agendas and schedules to ensure sufficient time for all agenda items
• Coordinating the work of each committee with the activities of the full Board
• Calling meetings of the independent directors
• Presiding at all meetings of the Board, including executive sessions of independent directors
• Attending meetings of Board committees regularly
• Working with the CEO and the Chair of the NCG Committee to provide strategic direction on all Board and governance matters
• Serving as liaison between the CEO and the independent directors
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• Working with the CEO on matters of strategic importance to the Board and the Company
• Ensuring that he is available, if requested by major stockholders, for direct consultation and communication
• Working with the Compensation Committee to establish and review annual and long-term goals for assessing performance and to evaluate the performance of the CEO
• Conducting bi-annual interviews with individual directors regarding individual contributions and overall Board composition and planning
• Independently reviewing with the CEO the Company’s succession plan for executive officers |
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Our Board believes that Mr. Klein’s appointment as Chairman enhances our independent directors’ oversight of our business and affairs. Our Board of Directors encourages strong communication among all of its independent directors and the CEO, and the Board believes that it has been able to effectively provide independent oversight of our business and affairs, including risks facing the Company, through our Chairman of the Board, the independent committees of our Board of Directors, the overall composition of our Board of Directors and contributions from all of our independent directors and other corporate governance processes in place.
Number of Meetings and Attendance. Our Board of Directors met fourteen (14) times during 2020. Each incumbent director attended at least 75% of the aggregate of (x) the total number of meetings of our Board of Directors in 2020 held during the period for which he or she was a director and (y) the total number of meetings in 2020 of all committees of our Board of Directors on which the director served during the periods that he or she served. In the aggregate, during 2020, our directors attended more than 99% of the total number of Board meetings and meetings of committees on which they served.
Annual Meeting Attendance. Directors are expected to attend annual meetings of our stockholders in person unless doing so is impracticable due to unavoidable conflicts. All directors then serving attended the 2020 annual meeting of stockholders.
Meetings of Non-Management Directors. Directors who qualify as “non-management” within the meaning of the rules of the NYSE meet on a regular basis in executive sessions without management participation. The executive sessions occur after each regularly scheduled meeting of our entire Board and at such other times that the non-management directors deem appropriate, and they are chaired by our independent, non-executive Chairman of the Board. Each director has the right to call an executive session. Currently, all of our non-management directors are independent.
BOARD REFRESHMENT AND EVALUATIONS
› DIRECTOR SUCCESSION PLANNING
Led by our Chairman of the Board and our NCG Committee, our Board of Directors remains focused on ensuring a smooth transition if and when directors decide to retire or otherwise leave our Board and that the composition of our Board is systematically refreshed so that, taken as a whole, our Board has the desired mix of skills, experience, reputation and diversity relevant to our strategic direction and operating environment, as well as the knowledge, ability and independence to continue to deliver a high standard of governance expected by investors. Among other aspects of the process, our Board of Directors:
| • | identifies the collective mix of desired skills, experience, knowledge, diversity and independence for our Board of Directors, taken as a whole, and identifies potential opportunities for enhancement in one or more of those areas; |
| • | considers each current director’s experience, skills, principal occupation, reputation, independence, age, tenure, committee membership and diversity (including geography, gender and ethnicity); and |
| • | considers the results of our Board and committee self-evaluations, as well as feedback received from the bi-annual interviews of each director by our Chairman of the Board (see “– Board and Committee Evaluations” below). |
| • | Since 2016, our Board nominated, and our stockholders elected, five new directors, three of whom are women. |
› BOARD COMMITTEE ROTATION
The NCG Committee also considers the periodic rotation of committee members and committee chairs to introduce fresh perspectives and to broaden and diversify the views and experience represented on committees.
› DIRECTOR TENURE AND MANDATORY RETIREMENT AGE
To ensure that our Board has an appropriate balance of experience, continuity and fresh perspective, our Board considers the length of tenure and age when nominating candidates for election. Our Board does not have formal limits on director tenure, but has a policy that provides no person shall be nominated by the Board for election as a non-employee director following his or her 75th birthday.
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› BOARD AND COMMITTEE EVALUATIONS
The feedback received from each member of our Board during the Board and committee evaluation process plays a critical role in ensuring that our Board and its committees function effectively. To this end, the NCG Committee is responsible for establishing the process used and the criteria for the evaluations.
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Topics considered during the Board and committee evaluations include:
Board and Committee Operations
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• Board and committee membership, including independence, director skills, background, expertise and diversity
• Board rotation and succession
• Committee structure
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| • Process for director nominations
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| • Number and conduct of meetings, including time allocated for, and encouragement of, candid dialogue and executive sessions
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| • Materials and information, including quality, quantity and timeliness of information received from management, and suggestions for educational sessions
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| • Culture
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Board Performance
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• Strategic oversight
• Risk oversight
› Financial › Cyber Attacks and Intrusions › ESG
• Identification of topics that should receive more attention and discussion
• Management succession
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Committee Performance
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• Performance of committee duties under its charter
• Effectiveness of outside advisors
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| 2› | CORPORATE GOVERNANCE |
Our Board of Directors has an (1) Audit, (2) Compensation and (3) NCG Committee. Each of these committees operates pursuant to a charter that was approved by our Board of Directors and that is reviewed and reassessed at least annually. As required by the rules of the NYSE, a copy of each of these charters is available on our website at http://www.bxp.com under the heading “Corporate Governance.” In addition, on March 18, 2021, our Board of Directors established a Sustainability Committee. Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of Boston Properties or to discharge specific duties delegated by the full Board of Directors.
The membership and the function of each of these committees, and the number of meetings each held during 2020, are described below.
› AUDIT COMMITTEE
| Members: David A. Twardock (Chair) Bruce W. Duncan* Karen E. Dykstra
Number of Meetings in 2020: 9
Financial Expertise: Our Board of Directors determined that each of Ms. Dykstra and Messrs. Duncan and Twardock qualifies as an “audit committee financial expert” as that term is defined in the rules of the SEC.
* Mr. Duncan was appointed to the Audit Committee on July 9, 2020. Mr. Walton served on the Audit Committee until July 9, 2020.
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The Audit Committee’s responsibilities include:
• sole authority to appoint, retain, terminate and determine the compensation of our independent registered public accounting firm;
• reviewing with our independent registered public accounting firm the scope and results of the audit engagement;
• approving professional services provided by our independent registered public accounting firm;
• reviewing the independence of our independent registered public accounting firm;
• overseeing the planning and conduct of our annual risk assessment;
• overseeing our cyber risk management;
• evaluating the Company’s internal audit function and reviewing the internal audit plan; and
• performing such other oversight functions as may be requested by our Board of Directors from time to time.
Each member of the Audit Committee is “independent” as that term is defined in the rules of the SEC and the NYSE.
For additional disclosures regarding the Audit Committee, including the Audit Committee Report, see “Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm” beginning on page 102.
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› COMPENSATION COMMITTEE
| Members: Kelly A. Ayotte (Chair) Carol B. Einiger David A. Twardock William H. Walton, III*
Number of Meetings in 2020: 11
*Mr. Walton was appointed to the Compensation Committee on July 9, 2020. Mr. Duncan served as the Chair of the Compensation Committee until July 9, 2020. |
The Compensation Committee’s responsibilities include:
• reviewing and approving the corporate goals and objectives relevant to the compensation of the CEO and certain designated senior executive officers;
• evaluating the performance of the CEO and designated senior executive officers in light of such goals and objectives and determining and approving compensation of these officers based on such evaluation;
• reviewing and approving the compensation of other executive officers;
• reviewing and approving grants and awards under all incentive-based compensation plans and equity-based plans;
• reviewing and making recommendations to the full Board of Directors regarding the compensation of non-employee directors; and
• performing other functions and duties deemed appropriate by our Board of Directors.
None of the members of the Compensation Committee is an employee of Boston Properties and each of them is an independent director under the NYSE rules.
The Compensation Committee makes all compensation decisions for all executive officers. The Compensation Committee reviews and approves all equity awards for all employees and delegated limited authority to the CEO to make equity grants to employees who are not executive officers.
In 2020, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) to serve as its independent, third-party advisor with respect to our overall executive compensation program and to advise on the reasonableness of executive compensation levels in comparison with those of other similarly situated companies and consult on the structure of our executive compensation program to optimally support our business objectives. FW Cook also advised on executive compensation trends among REITs and the broader market. Information concerning the nature and scope of FW Cook’s assignments and related disclosures is included under “Compensation Discussion and Analysis” beginning on page 51.
The Compensation Committee Report is included in this proxy statement on page 91.
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› NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
| Members: Matthew J. Lustig (Chair) Kelly A. Ayotte Bruce W. Duncan Carol B. Einiger* Diane J. Hoskins
Number of Meetings in 2020: 3
*Ms. Einiger was appointed to the NCG Committee on March 18, 2021. |
The NCG Committee’s responsibilities include:
• identifying individuals qualified to become Board members, consistent with criteria established by the NCG Committee, and recommending to the Board director nominees for election at each annual meeting of stockholders;
• recommending to the Board the directors for appointment to is committees;
• establishing a policy with regard to the consideration by the NCG Committee of director candidates recommended by securityholders;
• establishing procedures to be followed by securityholders submitting such recommendations and establishing a process for identifying and evaluating nominees for our Board of Directors, including nominees recommended by securityholders; and
• performing such other functions as may be requested by our Board of Directors from time to time.
The NCG Committee is also responsible for annually reviewing our Corporate Governance Guidelines and recommending any changes to our Board of Directors. These Corporate Governance Guidelines provide that the NCG Committee, together with our CEO, is responsible for coordinating succession planning by our Board of Directors. A copy of the Corporate Governance Guidelines is available on our website at http://investors.bxp.com/governance-guidelines.
Each member of the NCG Committee is an independent director under the NYSE rules.
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› SUSTAINABILITY COMMITTEE
| Members: Diane J. Hoskins (Chair) Douglas T. Linde Matthew J. Lustig Owen D. Thomas |
The Board of Directors established the Sustainability Committee on March 18, 2021. Under its charter, the Sustainability Committee’s responsibilities include:
• reviewing and sharing real estate industry sustainability best practices;
• working with our Board and management to establish environmental performance goals (energy, emissions, water and waste), and initiatives related to climate action and resilience;
• monitoring and evaluating the Company’s progress in achieving its sustainability goals and commitments, as well as relevant independent environmental, sustainability and governance ratings and rankings;
• reporting to and advising our Board as appropriate on the Company’s sustainability objectives and its strategy;
• periodically reviewing legal, regulatory and compliance matters that may have a material impact on the implementation of the Company’s sustainability objectives, and making recommendations to our Board and management, as appropriate, with respect to the Company’s response to such matters;
• assisting our Board in fulfilling its oversight responsibility by identifying, evaluating and monitoring the environmental and climate trends, issues, risks and concerns that affect or could affect the Company’s business activities and performance;
• advising our Board on significant stakeholder concerns related to sustainability; and
• performing such other functions as may be requested by our Board of Directors from time to time.
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BOARD’S ROLE IN RISK OVERSIGHT
Our Board of Directors has overall responsibility for our risk oversight. The Board discharges this responsibility either directly with respect to significant matters or indirectly through its committees. While the full Board of Directors is primarily responsible for risk oversight, its committees monitor and address risks that are within the scope of a particular committee’s expertise, the committee’s charter or the resolution(s) appointing the committee. Our Board and its committees exercise their oversight responsibilities in a variety of ways, but in all cases our directors are informed by regular reports from management that are intended to identify key risks and our strategies to mitigate them.
| BOARD OF DIRECTORS
Our Board of Directors administers its risk oversight function through:
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• Regular periodic reports from management on material risks that Boston Properties faces, including, among others: | ||||
| › market conditions
› tenant concentrations, credit worthiness and possible tenant bankruptcies
› leasing activity and expected expirations
› the status of development projects
› compliance with debt covenants and credit ratings
› management of debt maturities and interest-rate risk |
› access to debt and equity capital markets
› existing and potential legal claims against Boston Properties
› environmental, social and governance risks
› potential cyber-attacks and intrusions
› public health crises, pandemics and epidemics
› succession planning | |||
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• Required approval by our Board of Directors (or a committee thereof) of significant transactions and other decisions, including, among others: | ||||
| › acquisitions and dispositions of properties
› development and redevelopment projects
› new borrowings, refinancings and guarantees of debt, and the use of hedging instruments to manage interest-rate risk
› the appointment of all officers of Boston Properties
› the compensation of Boston Properties’ executive officers
› transactions with related persons and conflicts of interest | ||||
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• Reports from the Audit, Compensation, NCG and Sustainability Committees, and other committees that may be established from time to time, on matters delegated to them | ||||
| • Reports from outside consultants, including legal, accounting and tax professionals, regarding various areas of potential risk
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| BOARD COMMITTEES
Our Board of Directors uses its committees to assist in risk oversight as follows:
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| Audit Committee | Compensation Committee |
Nominating and Corporate Governance Committee |
Sustainability Committee | |||||||||
| The Audit Committee oversees risks related to:
• the integrity of our financial statements and internal control over financial reporting;
• compliance with GAAP and the use of estimates and judgments;
• our use of non-GAAP financial measures;
• pending and threatened litigation, and legal and regulatory requirements;
• the performance of our internal audit function;
• the independence and performance of our independent auditors;
• REIT compliance;
• cyber-security and insurance; and
• our anti-fraud program.
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The Compensation Committee oversees risks related to:
• our ability to attract, retain and motivate our executive officers;
• the use of compensation practices and plans to align the interests of our executives with our stockholders; and
• the influence of incentive compensation on excessive risk-taking.
For more information, see “Compensation Discussion and Analysis — IV. Other Compensation Policies — Assessment of Compensation-Related Risks” on page 76. |
The NCG Committee oversees risks related to:
• the composition, leadership and independence of the Board and its committees;
• the general operations of the Board;
• the process of conducting the annual Board and committee evaluations;
• our compliance with our Corporate Governance Guidelines and applicable laws and regulations, including applicable rules of the NYSE; and
• policies with respect to the consideration of director candidates recommended by stockholders. |
The Sustainability Committee oversees risks related to:
• environmental and climate action and resilience trends and issues;
• our progress in achieving our sustainability goals and initiatives; and
• regulatory compliance matters that may impact our sustainability objectives. | |||||||||
Audit Committee Role in Risk Assessment. The Audit Committee oversees an annual risk assessment designed to identify and analyze risks to achieving Boston Properties’ business objectives. The results of the risk assessment are used to develop Boston Properties’ annual internal audit plan.
Because of the role of our Board of Directors in the risk oversight of Boston Properties, our Board believes that any leadership structure that it adopts must allow it to effectively oversee the management of the risks relating to our operations. Our Board of Directors recognizes that there are different leadership structures that could allow it to effectively oversee the management of these risks, and while our Board believes its current leadership structure enables it to effectively manage such risks, it was not the primary reason our Board of Directors selected its current leadership structure over other potential alternatives. See the discussion under the heading “– Board Leadership Structure” beginning on page 25 for a discussion of why our Board of Directors has determined that its current leadership structure is appropriate.
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› CODE OF BUSINESS CONDUCT AND ETHICS AND OTHER POLICIES
Our Board of Directors adopted the following policies, copies of which are available on our website:
| • | Code of Business Conduct and Ethics (the “Code of Ethics”) available on our website at http://investors.bxp.com/code-conduct-and-ethics |
The Code of Ethics governs business decisions made and actions taken by our directors, officers and employees. We intend to disclose on this website any amendment to, or waiver of, any provision of this Code of Ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE rules.
| • | Corporate Governance Guidelines available on our website at http://investors.bxp.com/governance-guidelines |
| • | Policy on Company Political Spending available on our website at http://investors.bxp.com/policy-political-spend |
› COMMUNICATIONS WITH THE BOARD
Stockholders and other interested parties who wish to communicate with any of our directors or the Board of Directors as a group, may do so by writing to them at Name(s) of Director(s)/Board of Directors of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.
Stockholders and other interested parties who wish to contact the Audit Committee to report complaints or concerns regarding accounting, internal accounting controls or auditing matters, may do so by:
| • | following any of the “Procedures for Submission of Complaints under the Audit Committee Complaint Procedures” that are attached as Exhibit 1 to our Code of Ethics (see “– Code of Business Conduct and Ethics and Other Policies” above), or |
| • | writing to the Chair of the Audit Committee of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103. |
You are welcome to make any such reports anonymously, but we prefer that you identify yourself so that we may contact you for additional information if necessary or appropriate.
Stockholders and other interested parties who wish to communicate with our non-management directors as a group, may do so by writing to Non-Management Directors of Boston Properties, Inc., c/o Compliance Officer, Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103.
We recommend that all correspondence be sent via certified U.S. mail, return receipt requested. All correspondence received by the Compliance Officer will be forwarded by the Compliance Officer promptly to the addressee(s).
› COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mses. Ayotte and Einiger and Messrs. Duncan, Twardock and Walton each served on the Compensation Committee during 2020. None of these persons has served as an officer or employee of Boston Properties. None of these persons had any relationships with Boston Properties requiring disclosure under Item 404 of Regulation S-K. None of Boston Properties’ executive officers served as a director or a member of a compensation committee (or other committee serving a similar function) of any other entity, an executive officer of which served as a director of Boston Properties or a member of the Compensation Committee during 2020.
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› PROXY ACCESS BY-LAW PROVISIONS
Our By-laws include a proxy access right for stockholders, pursuant to which a stockholder, or group of no more than five stockholders, meeting specified eligibility requirements, may include director nominees in our proxy materials for annual meetings of our stockholders. In order to be eligible to utilize these proxy access provisions, a stockholder, or group of stockholders, must:
| • | have owned shares of common stock equal to at least 3% of the aggregate of the issued and outstanding shares of common stock continuously for at least the prior three years; |
| • | represent that such shares were acquired in the ordinary course of business and not with the intent to change or influence control and that such stockholder or group does not presently have such intent; and |
| • | provide a notice requesting the inclusion of director nominees in our proxy materials and provide other required information to us not less than 120 days prior to the anniversary of the date of the proxy statement for the prior year’s annual meeting of stockholders (with adjustments if the date for the upcoming annual meeting of stockholders is more than 30 days before or more than 60 days after the anniversary date of the prior year’s annual meeting). |
For purposes of the foregoing requirements, issued and outstanding common units, other than those owned by us, Boston Properties Limited Partnership (our “Operating Partnership”) or any of their directly or indirectly wholly owned subsidiaries and excluding issued and outstanding long term incentive units, will be treated as issued and outstanding shares of common stock.
Additionally, all director nominees submitted through these provisions must be independent and meet specified additional criteria, and stockholders will not be entitled to utilize this proxy access right at an annual meeting if we receive notice through our traditional advanced notice by-law provisions that a stockholder intends to nominate a director at such meeting. The maximum number of director nominees that may be submitted pursuant to these provisions may not exceed 25% of the number of directors then in office.
The foregoing proxy access right is subject to additional eligibility, procedural and disclosure requirements set forth in our By-laws.
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| 3› | HUMAN CAPITAL AND SUSTAINABILITY |
HUMAN CAPITAL AND SUSTAINABILITY
Boston Properties’ success depends on human capital. We are focused on social performance and positive externalities, including diversity and inclusion in our workforce, the well-being of our employees, their training and professional development, and making positive contributions to the communities we serve.
› DIVERSITY & INCLUSION
Our policy is to recruit, hire, assign, promote and train in all job titles without regard to race, national origin, religion, age, color, sex, sexual orientation, gender identity, disability, or protected veteran status, or any other characteristic protected by applicable law.
In 2020, we formalized and elevated our focus on diversity and equity within our company.
| • | We launched the BXP Diversity & Inclusion (“D&I”) Committee with the mission of promoting diversity, inclusion, equality and transparency as part of our culture, business activities and decision-making practices. Priorities for the D&I Committee include recruiting, retention and professional development, review and assessment of our policies with a focus on business partner diversity and other relationships, and community outreach. |
| • | Our Chief Executive Officer is a signatory to the CEO Action for Diversity & Inclusion campaign, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace. |
The following is a snapshot of the diversity of our workforce as of December 31, 2020:
| TOTAL WORKFORCE(1) | MANAGER & ABOVE(1) | |
|
|
| |
|
(1) We determine race and gender based on our employees’ self-identification. Ethnic minorities are defined as those included in the EEO Ethnicity and Race Categories: Asian, Black/African American, Hispanic/Latino, Native American or Pacific Islander, or multiracial background. Total workforce includes all of our employees except union employees for which the union controls the hiring process. | ||
› CULTURE & EMPLOYEE ENGAGEMENT
The success of our business is tied to the quality of our workforce, and we strive to maintain a corporate environment without losing the entrepreneurial spirit with which we were founded more than 50 years ago.
| • | We conduct employee engagement surveys to monitor satisfaction in all aspects of their employment; employee responsiveness to the surveys has been consistently high (93% responsiveness in 2020 reflected an overall rating of “very favorable”) |
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| • | The success of our efforts in the workplace is demonstrated by the satisfaction and long tenure of our employees: |
| • | 32% worked at BXP for ten or more years |
| • | average tenure is 9.8 years for employees and 18.2 years for our executive leadership. |
› HEALTH, SAFETY & WELLNESS
We are keenly aware of the influence of buildings on human health and its importance to our tenants and employees. In light of the COVID-19 pandemic, our focus on healthy buildings has become even more important.
| • | In early 2020, we established a Health Security Task Force of internal and external subject matter experts |
| • | Task force developed the BXP Health Security Plan, a comprehensive set of building operational measures, including cleaning and disinfection, air and water quality, physical distancing, screening and personal protective equipment, and health security communication |
We also believe the success of our employees depends upon their physical health, mental health, work-life balance and financial well-being. To support this, our employee benefits program includes:
| • | an Employee Wellness Program to encourage employees to improve their health and well-being, and |
| • | an Employee Assistance Program that includes services for childcare, eldercare, personal relationship information, financial planning assistance, stress management, mental illness and general wellness and self-help. |
› CAREER DEVELOPMENT & TRAINING
We invest significant resources in our employees’ personal and professional growth and development and provide a range of development opportunities that build and strengthen employees’ leadership and professional skills.
In 2020, we offered Unconscious/Implicit Bias training as part of our commitment to recognize that we all have a role to play to mitigate unconscious bias in the work environment and support an inclusive workforce.
We actively work to promote our growth and operations in a sustainable and responsible manner across our five regions. The BXP sustainability strategy is to conduct our business, the development and operation of new and existing buildings, in a manner that contributes to positive economic, social and environmental outcomes for our investors, customers, employees and the communities we serve. Our investment philosophy is shaped by our core strategy of long-term ownership and our commitment to our communities and the centers of commerce and civic life that make them thrive. We are focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas emissions and climate change. To that end, we have publicly adopted long-term energy, emissions, water and waste goals that establish aggressive reduction targets and have been aligned with the United Nations Sustainable Development Goals. BXP is a corporate member of the U.S. Green Building Council® (“USGBC”) and has a long history of owning, developing and operating properties that are certified under USGBC’s Leadership in Energy and Environmental Design™ (LEED®) rating system. In 2018, we announced a partnership with a leading healthy building certification system, Fitwel, to support healthy building design and operational practices across our portfolio, becoming a Fitwel Champion.
In addition, since 2018 we have been an active participant in the green bond market, which provides access to sustainability-focused investors interested in the positive environmental externalities of our business activities. BXP and its employees also make a social impact through charitable giving, volunteerism, public realm investments and diversity and inclusion. Through these efforts, we demonstrate that operating and developing commercial real estate can be conducted with a conscious regard for the environment and wider society while mutually benefiting our stakeholders.
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› INDUSTRY LEADERSHIP
We continue to be recognized as an industry leader in sustainability. In 2020, BXP ranked among the top real estate companies in the Global Real Estate Sustainability Benchmark (“GRESB”) assessment, earning a fifth consecutive 5 Star rating, the highest rating and recognition for being an industry leader. It was the ninth consecutive year that BXP earned the GRESB “Green Star” designation, achieving the highest scores in several categories, including: Data Monitoring & Review, Targets, Policies, Reporting and Leadership. BXP was also named one of America’s Most Responsible Companies by Newsweek magazine in 2020. BXP ranked 56th overall out of 400 companies included. It was the second highest ranking of all property companies and the highest ranking of any office REIT. In 2014, 2015, 2017, 2018 and 2019, BXP was selected by Nareit as a Leader in the Light Award winner. Nareit’s annual Leader in the Light Awards honor Nareit member companies that have demonstrated superior and sustained sustainability practices.
BXP has adopted sustainable development and operational practices across its portfolio. In 2017, shortly after the U.S. withdrawal from the Paris Agreement, BXP became a proud signatory of the We Are Still In declaration, and aligned emissions reduction targets with climate science. The SBTi Target Validation Team has classified BXP’s emissions reduction target ambition and has determined that it is in line with a 1.5°C trajectory, currently the most ambitious designation available. As of the end of 2020, BXP is one of six North American Real Estate companies with this distinction and the only North American office company in that group. We have LEED certified 27.7 million square feet of our portfolio, of which 96% is certified at the highest Gold and Platinum levels. BXP’s master lease form includes green lease clauses that support a more sustainable tenant-landlord relationship. In 2020, BXP was named a Green Lease Leader at the highest Gold level by the Institute for Market Transformation and the U.S. Department of Energy for exhibiting a strong commitment to high performance and sustainability in buildings and best practices in leasing. Through active asset management and tenant engagement, BXP has been a leader in energy efficiency and healthy building practices. In 2020 BXP was recognized by the Environmental Performance Agency a 2020 ENERGY STAR Partner of the Year. BXP was named a 2020 Best in Building Health award winner. We completed the first Fitwel Design Certified project in the world in 2019 and executed more Fitwel certifications by count and building area than any other company in 2019. BXP has 11 Fitwel Ambassadors among our Sustainability, Development and Property Management teams.
› GREEN FINANCE
From 2018 to 2021, BPLP issued an aggregate of $2.7 billion of green bonds in three separate offerings. The terms of the green bonds have restrictions that limit our allocation of the net proceeds to “eligible green projects.” We published our first Green Bond Allocation Report in June 2019, disclosing the full allocation of approximately $988 million in net proceeds from BPLP’s inaugural green bond offering to the eligible green project at our Salesforce Tower property in San Francisco, California. We recently published our September 30, 2020 Green Bond Allocation Report disclosing the full allocation of approximately $841 million in net proceeds from BPLP’s green bond offering in June 2019. The Green Bond Allocation Reports are available on our website at http://www.bxp.com under the heading “Sustainability,” but they are not incorporated by reference into this proxy statement, our Annual Report on Form 10-K, or any other document we file with the SEC.
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› CLIMATE RESILIENCE
As a long-term owner and active manager of real estate assets in operation and under development, we take a long-term view of potential risks, including climate change. We are in the process of evaluating physical and transition risks associated with climate change and we view this as an opportunity to protect asset value by proactively assessing climate risk, implementing measures, planning and decision-making processes to protect our investments by improving resilience. We are preparing for long-term climate risk by considering climate change scenarios and will continue to assess climate change vulnerabilities resulting from potential future climate scenarios and sea level rise. In 2020, we began using Four Twenty Seven climate risk scoring to evaluate the forward-looking physical climate risk exposure of our entire portfolio. Event-driven (acute) and longer-term (chronic) physical risks that may result from climate change could have a material adverse effect on our properties, operations and business. Management’s role in assessing and managing these climate-related risks and initiatives is spread across multiple teams across our organization, including our executive leadership and our Sustainability, Risk Management, Development, Construction and Property Management departments. Climate resilience measures include training and implementation of emergency response plans and the engagement of our executives and BXP’s Board of Directors on climate change and other ESG aspects.
› PUBLIC SUSTAINABILITY GOALS AND PROGRESS
Our sustainability goals establish reduction targets for energy, greenhouse gas emissions, water consumption and waste. In 2016, we achieved our first round of energy, emissions and water targets three years early. By resetting company-wide goals, we raise stakeholder awareness and make best efforts to drive continuous year-over-year, like-for-like key performance indicator improvement. We have adopted goals with the following specific time frames, metrics and targets below a 2008 baseline:(1)
| (1) | Full 2020 calendar year energy and water data assured by a third party is not yet available. 2019 is the most recent year for which complete energy and water data is available and assured by a third party. |
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› ESG REPORTING
A notable part of our commitment to sustainable development and operations is our commitment to transparent reporting of ESG performance indicators, as we recognize the importance of this information to investors, lenders and others in understanding how BXP assesses sustainability information and evaluates risks and opportunities. We publish an annual sustainability report that is aligned with the Global Reporting Initiative reporting framework, United Nations Sustainable Development Goals and the SASB framework that includes our strategy, key performance indicators, annual like-for-like comparisons, achievements and historical sustainability reports. This report is available on our website at http://www.bxp.com under the heading “Sustainability,” but it is not incorporated by reference in this proxy statement. In addition, we continue to work to further align our reporting with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures to disclose climate-related financial risks and opportunities.
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| 4› | EXECUTIVE OFFICERS |
Biographies of our executive officers, other than Messrs. Thomas and Linde, are presented below, based on information furnished to Boston Properties by each executive officer. Each executive officer holds office until the regular meeting of the Board of Directors following the next annual meeting of stockholders and until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal. Information for Messrs. Thomas and Linde is included above under “Proposal I: Election of Directors – Nominees for Election” beginning on page 9.
| Name |
Age | Position | Joined BXP | |||
| Raymond A. Ritchey |
70 | Senior Executive Vice President | 1980 | |||
| Michael E. LaBelle |
57 | Executive Vice President, Chief Financial Officer and Treasurer | 2000 | |||
| Peter D. Johnston |
62 | Executive Vice President, Washington, DC Region | 1987 | |||
| Bryan J. Koop |
62 | Executive Vice President, Boston Region | 1999 | |||
| Robert E. Pester |
64 | Executive Vice President, San Francisco, Region | 1998 | |||
| John F. Powers |
74 | Executive Vice President, New York Region | 2014 | |||
| Frank D. Burt |
62 | Senior Vice President, Chief Legal Officer and Secretary | 1986 | |||
| Michael R. Walsh |
54 | Senior Vice President, Chief Accounting Officer | 1986 | |||
| Raymond A. Ritchey
|
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| 4› | EXECUTIVE OFFICERS |
Michael E. LaBelle
| Peter D. Johnston
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| Bryan J. Koop
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| 4› | EXECUTIVE OFFICERS |
| Robert E. Pester
|
| John F. Powers
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| Frank D. Burt
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| 4› | EXECUTIVE OFFICERS |
| Michael R. Walsh
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| 5› | PRINCIPAL AND MANAGEMENT STOCKHOLDERS |
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The table below shows the amount of common stock of Boston Properties, Inc. and units of partnership interest in our Operating Partnership beneficially owned as of February 5, 2021 by:
| • | each director; |
| • | each of our named executive officers (“NEOs”); |
| • | all directors and executive officers of Boston Properties Inc. as a group; and |
| • | each person known by Boston Properties to be the beneficial owner of more than 5% of our outstanding common stock. |
On February 5, 2021, there were:
| • | 155,805,445 shares of our common stock outstanding; |
| • | 16,097,110 common units of partnership interest in our Operating Partnership (“common units”) outstanding (other than the common units held by Boston Properties, Inc.), each of which is redeemable for one share of Boston Properties, Inc.’s common stock (if Boston Properties elects to issue common stock rather than pay cash upon such redemption); |
| • | 1,587,923 long term incentive units of partnership interest in our Operating Partnership (“LTIP units”) outstanding that were issued as part of our long-term incentive (“LTI”) program, excluding LTIP units issued pursuant to 2019 Multi-Year Long-Term Incentive Program (“MYLTIP”) awards, 2020 MYLTIP awards and 2021 MYLTIP awards, each of which, upon the satisfaction of certain performance and service conditions, is convertible into one common unit; and |
| • | 73,744 deferred stock units outstanding. |
All references in this proxy statement to LTIP units exclude LTIP units issued pursuant to 2019 MYLTIP awards, 2020 MYLTIP awards and 2021 MYLTIP awards because the three-year performance periods of these awards had not ended by February 5, 2021. LTIP units issued pursuant to 2019 MYLTIP awards, 2020 MYLTIP awards and 2021 MYLTIP awards are collectively referred to herein as “Unearned Performance Awards.” None of our directors or NEOs beneficially owned any preferred units or shares of our preferred stock.
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| Common Stock | Common Stock and Units |
|||||||||||||||
| Name and Address of Beneficial Owner* | Number of Shares Beneficially Owned(1) |
Percent of Common Stock (2) |
Number of Shares and Units Beneficially Owned (1) |
Percent of Common Stock and Units (3) |
||||||||||||
| Directors and Named Executive Officers |
| |||||||||||||||
| Kelly A. Ayotte(4) |
213 | * | * | 4,109 | * | * | ||||||||||
| Bruce W. Duncan(5) |
21,000 | * | * | 26,959 | * | * | ||||||||||
| Karen E. Dykstra(6) |
7,420 | * | * | 7,945 | * | * | ||||||||||
| Carol B. Einiger(7) |
29,185 | * | * | 38,154 | * | * | ||||||||||
| Diane J. Hoskins(8) |
4,149 | * | * | 4,149 | * | * | ||||||||||
| Joel I. Klein(9) |
9,081 | * | * | 17,140 | * | * | ||||||||||
| Douglas T. Linde(10) |
259,131 | * | * | 554,901 | * | * | ||||||||||
| Matthew J. Lustig(11) |
8,799 | * | * | 19,716 | * | * | ||||||||||
| Owen D. Thomas(12) |
63,624 | * | * | 402,264 | * | * | ||||||||||
| David A. Twardock(13) |
8,060 | * | * | 8,060 | * | * | ||||||||||
| William H. Walton, III(14) |
1,610 | * | * | 4,459 | * | * | ||||||||||
| Raymond A. Ritchey(15) |
— | * | * | 371,015 | * | * | ||||||||||
| Michael E. LaBelle(16) |
11,333 | * | * | 135,195 | * | * | ||||||||||
| Bryan J. Koop(17) |
17,919 | * | * | 87,145 | * | * | ||||||||||
| All directors and executive officers as a group (19 persons)(18) |
499,708 | * | * | 1,912,747 | 1.10 | % | ||||||||||
| 5% Holders |
||||||||||||||||
| The Vanguard Group(19) |
22,350,551 | 14.35 | % | 22,350,551 | 12.88 | % | ||||||||||
| BlackRock, Inc.(20) |
16,207,690 | 10.40 | % | 16,207,690 | 9.34 | % | ||||||||||
| Norges Bank (The Central Bank of Norway)(21) |
13,037,554 | 8.37 | % | 13,037,554 | 7.51 | % | ||||||||||
| State Street Corporation(22) |
8,745,065 | 5.61 | % | 8,745,065 | 5.04 | % | ||||||||||
| TCI Fund Management Limited |
8,362,038 | 5.37 | % | 8,362,038 | 4.82 | % | ||||||||||
| * | Unless otherwise indicated, the address is c/o Boston Properties, Inc., 800 Boylston Street, Suite 1900, Boston, Massachusetts 02199-8103. |
| ** | Less than 1%. |
| (1) | The number of shares of common stock “beneficially owned” by each beneficial owner is determined under rules issued by the SEC regarding the beneficial ownership of securities. This information is not necessarily indicative of beneficial ownership for any other purpose. “Number of Shares Beneficially Owned” includes (a) shares of common stock that may be acquired upon the exercise of options that are exercisable on or within 60 days after February 5, 2021 and (b) the number of shares of common stock issuable to directors upon settlement of deferred stock units on or within 60 days after February 5, 2021. The “Number of Shares and Units Beneficially Owned” includes all shares included in the “Number of Shares Beneficially Owned” column plus the number of shares of common stock for which common units and LTIP units may be redeemed (assuming, in the case of LTIP units, that they have first been converted into common units). Under the limited partnership agreement of the Operating Partnership, the holders of the common units and LTIP units (assuming conversion in full into common units, as applicable) have the right to redeem the units for cash or, at our option, shares of common stock, subject to certain conditions. Except as otherwise noted, each beneficial owner has sole voting and investment power over the shares and units. Holders of common units, LTIP units and deferred stock units are not entitled to vote such units on any of the matters presented at the 2021 annual meeting. |
| (2) | The total number of shares outstanding used in calculating this percentage assumes (a) the exercise of all options to acquire shares of common stock that are exercisable on or within 60 days after February 5, 2021 held by the beneficial owner and that no options held by other beneficial owners are exercised and (b) the conversion into shares of common stock of all deferred stock units held by the beneficial owner and that no deferred stock units held by other beneficial owners are converted. |
| (3) | The total number of shares outstanding used in calculating this percentage assumes (a) that all common units and LTIP units are presented (assuming conversion in full into common units, if applicable) to the Operating Partnership for redemption and are acquired by Boston Properties for shares of common stock, (b) does not separately include outstanding common units held by Boston Properties, as these common units are already reflected in the |
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| denominator by the inclusion of all outstanding shares of common stock, (c) the exercise of all options to acquire shares of common stock that are exercisable on or within 60 days after February 5, 2021 held by the beneficial owner and that no options held by other beneficial owners are exercised and (d) the conversion into shares of common stock of all deferred stock units the receipt of which has not been deferred to a date later than 60 days after February 5, 2021. |
| (4) | Represents 213 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 3,896 LTIP units (of which 1,709 LTIP units are subject to vesting). Excludes 1,921 deferred stock units, the receipt of which has been deferred to a date later than 60 days after February 5, 2021 pursuant to a specific deferral election (see “Compensation of Directors – Deferred Compensation Program” on page 49). |
| (5) | Represents 21,000 shares of common stock held indirectly through a trust. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 5,959 LTIP units (of which 1,709 LTIP units are subject to vesting). Excludes 2,514 deferred stock units, the receipt of which has been deferred to a date later than 60 days after February 5, 2021 pursuant to a specific deferral election (see “Compensation of Directors – Deferred Compensation Program” on page 49). |
| (6) | Includes 6,934 shares of common stock held directly (of which 1,709 shares are subject to vesting) and 486 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 525 LTIP units. |
| (7) | Includes 8,000 shares of common stock held indirectly through a trust and 21,185 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 8,969 LTIP units (of which 1,709 LTIP units are subject to vesting). |
| (8) | Represents 4,149 shares of common stock (of which 1,709 shares are subject to vesting). |
| (9) | Represents 9,081 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 8,059 LTIP units (of which 1,709 LTIP units are subject to vesting). |
| (10) | Includes 180,763 shares of common stock held directly, 700 shares of common stock held by Mr. Linde’s spouse, 2,100 shares of common stock held by Mr. Linde’s children, and 75,568 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 295,770 LTIP units (of which 79,487 LTIP units are subject to vesting). Excludes Unearned Performance Awards. Mr. Linde has shared voting and dispositive power with respect to 700 shares of common stock. |
| (11) | Represents 8,799 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 10,917 LTIP units (of which 1,709 LTIP units are subject to vesting). |
| (12) | Includes 9,342 shares of common stock held directly and 54,282 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficiary Owned” column, 338,640 LTIP units (of which 117,350 LTIP units are subject to vesting). Excludes Unearned Performance Awards. |
| (13) | Includes 7,610 shares of common stock held directly (of which 1,709 shares are subject to vesting) and 450 deferred stock units. Excludes 27,486 deferred stock units, the receipt of which has been deferred to a date later than 60 days after February 5, 2021 pursuant to a specific deferral election (see “Compensation of Directors – Deferred Compensation Program” on page 49). |
| (14) | Includes 1,610 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 2,849 LTIP units (of which 1,709 LTIP units are subject to vesting). |
| (15) | Includes, only under the “Number of Shares and Units Beneficially Owned” column, 88,805 common units held directly, 31,265 common units held by a trust of which Mr. Ritchey is a beneficiary and Mr. Ritchey’s spouse is the sole trustee, 10,500 common units held by a grantor retained annuity trust of which Mr. Ritchey is the beneficiary and trustee and 240,445 LTIP units (of which 13,814 LTIP units are subject to vesting). Excludes Unearned Performance Awards. |
| (16) | Represents 11,333 shares of common stock held directly (of which 1,858 shares are subject to vesting). Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 123,862 LTIP units (of which 27,576 LTIP units are subject to vesting). Excludes Unearned Performance Awards. |
| (17) | Includes 2,585 shares of common stock held directly and 15,334 shares of common stock underlying exercisable stock options. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 69,226 LTIP units (of which 19,364 LTIP units are subject to vesting). Excludes Unearned Performance Awards. |
| (18) | Includes an aggregate of 312,700 shares of common stock, 145,184 shares of common stock underlying exercisable stock options and 41,824 deferred stock units. Also includes, only under the “Number of Shares and Units Beneficially Owned” column, 149,344 common units and 1,263,695 LTIP units. See also Notes (4) – (17) above. Excludes an aggregate of 31,920 deferred stock units, the receipt of which has been deferred by directors to dates later than 60 days after February 5, 2021 pursuant to specific deferral elections (see “Compensation of Directors – Deferred Compensation Program” on page 49). Excludes Unearned Performance Awards. |
| (19) | Information regarding The Vanguard Group (“Vanguard”) is based solely on a Schedule 13G/A filed by Vanguard with the SEC on February 10, 2021. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. The Schedule 13G/A indicates that Vanguard does not have sole voting power with respect to any shares of common stock and has shared voting power with respect to 579,360 shares of common stock, sole dispositive power with respect to 21,371,777 shares of common stock and shared dispositive power with respect to 978,774 shares of common stock. |
| (20) | Information regarding BlackRock, Inc. (“BlackRock”) is based solely on a Schedule 13G/A filed by BlackRock with the SEC on January 27, 2021. BlackRock’s address is 55 East 52nd Street, New York, NY 10055. The Schedule 13G/A indicates that BlackRock has sole voting power with respect to 14,520,631 shares of common stock and sole dispositive power with respect to all of the shares of common stock. |
| (21) | Information regarding Norges Bank (The Central Bank of Norway) (“Norges Bank”) is based solely on a Schedule 13G/A filed by Norges Bank with the SEC on February 1, 2021. Norges Bank’s address is Bankplassen 2, PO Box 1179 Sentrum, NO 0107 Oslo, Norway. The Schedule 13G/A indicates that Norges Bank has sole voting and dispositive power with respect to all of the shares of common stock. |
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| (22) | Information regarding State Street Corporation (“State Street”) is based solely on a Schedule 13G filed by State Street with the SEC on February 5, 2021. State Street’s address is State Street Financial Center, One Lincoln Street, Boston, MA 02111. The Schedule 13G indicates that State Street has shared voting with respect to 7,517,844 shares of common stock and shared dispositive power with respect to 8,736,685 shares of common stock. |
| (23) | Information regarding TCI Fund Management Limited and Christopher Hohn is based solely on a Schedule 13G filed jointly by TCI Fund Management Limited and Christopher Hohn with the SEC on February 16, 2021. The address for each of TCI Fund Management Limited and Christopher Hohn is 7 Clifford Street, London, W1S 2FT, United Kingdom. The Schedule 13G indicates that each of TCI Fund Management Limited and Christopher Hohn have shared voting and dispositive power with respect to all of the shares of common stock. |
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the executive officers and directors of Boston Properties, and persons who own more than ten percent of a registered class of Boston Properties’ equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish Boston Properties with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations from our officers and directors that no other reports were required during the fiscal year ended December 31, 2020, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners were timely satisfied, except Ms. Hoskins, who failed to timely file two Form 4 reports, each reflecting a purchase of common stock, which purchases were subsequently reflected on a Form 5.
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| 6› | COMPENSATION OF DIRECTORS |
At our 2019 annual meeting of stockholders, our stockholders approved the Boston Properties, Inc. Non-Employee Director Compensation Plan (the “Director Compensation Plan”), effective January 1, 2019. The Director Compensation Plan sets forth the cash and equity compensation that is to be paid to our non-employee directors in a specific, formulaic manner. The compensation levels established under the Director Compensation Plan have not changed since 2019.
Directors who are also employees of Boston Properties or any of its subsidiaries receive no additional compensation for their services as directors.
COMPONENTS OF DIRECTOR COMPENSATION
Non-employee directors do not receive meeting attendance fees for any meeting of our Board of Directors or a committee thereof that he or she attends.
› CASH COMPENSATION
During 2020, we paid our non-employee directors the following cash compensation pursuant to the Director Compensation Plan:
| Role | Annual Cash Retainer(1) |
|||
| All Non-Employee Directors for Board Services |
$85,000 | |||
| Chairman of the Board(2) |
$100,000 | |||
| Chair of the Audit Committee(2) |
$20,000 | |||
| Members of the Audit Committee |
$15,000 | |||
| Chairs of other standing committees(2)(3) |
$15,000 | |||
| Members of other standing committees(3) |
$10,000 | |||
| (1) | The sum of all cash retainers are payable in quarterly installments in arrears, subject to proration for periods of service less than a full quarter in length. |
| (2) | The retainer payable to the Chairman is in addition to all other retainers to which the Chairman may be entitled and the retainer to each committee chair is in addition to the retainer payable to all members of the committee. |
| (3) | The term “other standing committees” includes the Compensation and NCG Committees. |
Non-employee directors also are reimbursed for reasonable expenses incurred to attend Board of Directors and committee meetings.
› EQUITY COMPENSATION
The Director Compensation Plan provides for grants of equity to non-employee directors as follows:
| • | Annual Grant. Each continuing non-employee director is entitled to receive, on the fifth business day after the annual meeting of stockholders, an annual equity award with an aggregate value of $150,000. |
| • | Initial Grant. Any new non-employee director that is appointed to our Board of Directors other than at an annual meeting of stockholders would be entitled to receive, on the fifth business day after the appointment, an initial equity award with an aggregate value of $150,000 (prorated based on the number of months from the date the director is first appointed to our Board of Directors to the first anniversary of the Company’s most recently held annual meeting of stockholders). |
| • | Annual and initial equity awards are made in the form of shares of restricted common stock, or, if offered by the Board of Directors and elected by such director, LTIP units (or a combination of both). |
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| • | The actual number of shares of restricted common stock or LTIP units that we grant is determined by dividing the fixed value of the grant by the closing market price of our common stock on the NYSE on the grant date. |
| • | Annual and initial grants of LTIP units and restricted common stock will vest 100% on the earlier of (1) the first anniversary of the grant date and (2) the date of the next annual meeting of stockholders. |
Accordingly, on May 28, 2020, the last reported sale price of a share of our common stock on the NYSE was $87.76, and we granted each of Mses. Ayotte, Einiger, Dykstra and Hoskins and Messrs. Duncan, Klein, Lustig, Twardock and Walton 1,709 LTIP units or shares of restricted common stock.
In accordance with our Amended and Restated Rules and Conditions for Directors’ Deferred Compensation Program (the “Directors’ Deferred Compensation Program”), non-employee directors may elect to defer all cash retainers otherwise payable to them and to receive the deferred cash compensation in the form of our common stock or in cash following their retirement from our Board of Directors. Each electing director is credited with the number of deferred stock units determined by dividing the amount of the cash compensation deferred during each calendar quarter by the closing market price of our common stock on the NYSE on the last trading day of the quarter. Hypothetical dividends on the deferred stock units are “reinvested” in additional deferred stock units based on the closing market price of the common stock on the cash dividend payment date.
Directors may elect to receive payment of amounts in their accounts either in (x) a lump sum of shares of our common stock equal to the number of deferred stock units in a director’s account or (y) ten annual installments following the director’s retirement from our Board of Directors. In addition, non-employee directors who elect a deferred payout following their retirement from the Board may elect to change their notional investment from our common stock to a deemed investment in one or more measurement funds. This election to convert may only be made after the director’s service on the Board ends, the conversion date must be at least 180 days after the latest issuance date of deferred stock units credited to the director’s account, the election is irrevocable and the director must convert 100% of his or her deferred stock account if any is converted. Payment of a director’s account that has been converted to measurement funds will be in cash instead of shares of our common stock. The measurement funds available to directors are the same as those available to our executives under our Nonqualified Deferred Compensation Plan. See “Compensation of Executive Officers – Nonqualified Deferred Compensation in 2020” on page 81.
DIRECTOR STOCK OWNERSHIP GUIDELINES
| 5x |
Annual Cash Retainer for Board Service | |
Our Board believes it is important to align the interests of the directors with those of the stockholders and for directors to hold equity ownership positions in Boston Properties. Accordingly, each non-employee director is expected to retain an aggregate number of shares of our common stock, deferred stock units (and related dividend equivalent rights) in the Company, and LTIP units and common units in the Operating Partnership, whether vested or not, equal to at least five (5) times the value of the then current annual cash retainer paid to non-employee directors for their service on the Board, without respect to service on committees of the Board or as lead independent director or Chairman. Each non-employee director, until such director complies with the ownership guidelines set forth above, is expected to retain all equity awards granted by the Company or the Operating Partnership (less amounts sufficient to fund any taxes owed relating to such equity awards). The deferred stock units (and related dividend equivalent rights) in the Company and LTIP units and common units in the Operating Partnership shall be valued by reference to the market price of the number of shares of our common stock issuable upon the settlement or exchange of such units assuming that all conditions necessary for such settlement or exchange have been met. For shares of our common stock or equity valued by reference to our common stock for purposes of these ownership guidelines, the market price of our common stock used to value such equity shall be the greater of (1) the market price on the date of purchase or grant of such equity or (2) the market price as of the date compliance with these ownership guidelines is measured.
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| 6› | COMPENSATION OF DIRECTORS |
The following table summarizes the compensation earned by our non-employee directors during the year ended December 31, 2020.
| Name | Fees Earned or Paid in Cash(1) |
Stock Awards(2) |
Total | |||||||||
| Kelly A. Ayotte |
$ | 112,174 | $ | 135,000 | $ | 247,174 | ||||||
| Bruce W. Duncan |
$ | 121,535 | $ | 135,000 | $ | 256,535 | ||||||
| Karen E. Dykstra |
$ | 102,500 | $ | 150,000 | $ | 252,500 | ||||||
| Carol B. Einiger |
$ | 95,000 | $ | 135,000 | $ | 230,000 | ||||||
| Diane J. Hoskins |
$ | 95,000 | $ | 150,000 | $ | 245,000 | ||||||
| Joel I. Klein |
$ | 185,000 | $ | 135,000 | $ | 320,000 | ||||||
| Matthew J. Lustig |
$ | 112,500 | $ | 135,000 | $ | 247,500 | ||||||
| David A. Twardock |
$ | 130,000 | $ | 150,000 | $ | 280,000 | ||||||
| William H. Walton, III |
$ | 97,649 | $ | 135,000 | $ | 232,649 | ||||||
| (1) | Mses. Ayotte and Einiger and Messrs. Duncan, Klein, Lustig, Twardock and Walton deferred the cash fees they earned during 2020 and received in lieu thereof deferred stock units. The following table summarizes the deferred stock units credited to the director accounts during 2020. |
| Name | Deferred Stock Units Earned During 2020(#) |
|||
| Kelly A. Ayotte |
1,257.22 | |||
| Bruce W. Duncan |
1,357.17 | |||
| Carol B. Einiger |
1,062.57 | |||
| Joel I. Klein |
2,073.69 | |||
| Matthew J. Lustig |
1,258.19 | |||
| David A. Twardock |
1,460.32 | |||
| William H. Walton, III |
1,091.81 | |||
| (2) | Represents the total fair value of common stock and LTIP unit awards granted to non-employee directors in 2020, determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718 “Compensation—Stock Compensation” (“ASC 718”), disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. A discussion of the assumptions used in calculating these values can be found in Note 16 to our 2020 audited financial statements beginning on page 178 of our Annual Report on Form 10-K for the year ended December 31, 2020 included in the annual report that accompanied this proxy statement. Our non-employee directors had the following unvested equity awards outstanding as of December 31, 2020: Ms. Ayotte—1,709 LTIP units; Mr. Duncan—1,709 LTIP units; Ms. Dykstra—1,709 shares of restricted common stock; Ms. Einiger—1,709 LTIP units; Ms. Hoskins—1,709 shares of restricted common stock; Mr. Klein—1,709 LTIP units; Mr. Lustig—1,709 LTIP units; Mr. Twardock—1,709 shares of restricted common stock; and Mr. Walton—1,709 LTIP units. |
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS | |
| I. EXECUTIVE OVERVIEW |
COMPENSATION DISCUSSION AND ANALYSIS
This “Compensation Discussion and Analysis,” or “CD&A,” sets forth our philosophy and objectives regarding the compensation of our named executive officers (“NEOs”), including how we determine the elements and amounts of executive compensation. When we use the term “Committee” in this CD&A, we mean the Compensation Committee of the Board of Directors of Boston Properties, Inc. Our NEOs for 2020 were:
|
Name
|
Title
| |
| Owen D. Thomas
|
Chief Executive Officer
| |
| Douglas T. Linde
|
President
| |
| Raymond A. Ritchey
|
Senior Executive Vice President
| |
| Michael E. LaBelle
|
Executive Vice President, Chief Financial Officer & Treasurer
| |
| Bryan J. Koop
|
Executive Vice President, Boston Region
| |
Our executive compensation program covering our NEOs is designed to attract and retain critical executive talent, motivate behaviors that align with stockholders’ interests and pay for performance. To ensure that pay is competitive with market ranges, we review a benchmarking analysis each year when establishing base salary, annual incentive target opportunities and long-term incentive (“LTI”) target opportunities. More than 90% of our NEOs’ pay is variable and contingent on performance with approximately two-thirds paid in the form of LTI equity compensation. Although target incentive opportunities are set by reference to market, the terms of our incentive plans provide for actual payouts to be above or below target levels depending upon actual performance against pre-determined goals.
When we established the target compensation levels for each component of our NEOs’ compensation in early 2020, our Committee did not foresee the widespread, negative impact that the COVID-19 pandemic would have on our business and our stockholders. The unprecedented issues Boston Properties faced due to the global health crisis created a remarkably challenging year for our NEOs. In addition to the global pandemic, in 2020, major social-justice movements and demonstrations highlighted the racial injustices and economic inequities plaguing our society and called for companies to act. There was also a heightened focus on the importance of environmental and sustainability issues.
Despite the sudden and significant impacts of the pandemic on our business, the Committee did not modify the components or the target compensation levels of our executive compensation program. The Committee also did not modify the 2020 Annual Incentive Plan, including any of its three categories (FFO, leasing, and business and individual goals) or the specific targets within each category established in early 2020. In deciding not to change the program, the Committee prioritized strong alignment with Boston Properties’ investors and their experiences during the pandemic. As the year progressed and the severity of the pandemic became clearer, the Committee supplemented the business and individual goals with additional goals that guided the NEOs in responding thoughtfully and responsibly to the global health crisis and important social and environmental issues.
Our NEOs showed exceptional leadership in addressing all of the significant challenges and issues presented to them in 2020, but with business conditions dominated by the pandemic, they were unable to achieve their FFO and leasing targets under the 2020 Annual Incentive Plan. Our NEOs did not earn any payout under the FFO per share category and only one NEO earned a portion of the target payout for the leasing category; for the third category of the 2020 Annual Incentive Plan, the business and individual goals, each NEO exceeded his goals. As a result, the Committee awarded final bonus payments to our NEOs that ranged from 50% to 75% of target. While these same challenging business conditions had a severe, negative impact on office REITs generally, leading to negative absolute total stockholder returns (“TSR”) across the sector in 2020, the Committee noted that Boston Properties’ TSR for the one-year and three-year periods ending December 31, 2020 placed it at the 80th percentile, or third, among its most directly comparable office peers for both periods. (For a list of these peers, see “– II. Executive Compensation Program – LTI Equity Compensation – 2021 MYLTIP” below.) Although the Committee did not base its decisions on BXP’s relative TSR rankings, the Committee believes they validated the appropriateness of the final bonus payments to our NEOs.
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS | |
| I. EXECUTIVE OVERVIEW |
The Committee remains proud of the extraordinary leadership demonstrated by our NEOs and their efforts in protecting our tenants’ and employees’ health and safety and preserving our properties, financial condition, culture of excellence and ultimately the Boston Properties’ brand in 2020.
› 2020 COMPENSATION DECISIONS
As described in detail later in this CD&A, below are the key actions that our Compensation Committee took with respect to our NEOs’ 2020 compensation and the impact of those decisions on 2020 compensation.
|
2020 COMPENSATION DECISION HIGHLIGHTS
|
| Ø No change in base salary for any of the NEOs
Ø No change to Annual Incentive Plan categories, weightings or goal targets set in January 2020 resulting in bonus payments ranging from 50% to 75% of target
› Supplemented Business and Individual goals to add pandemic-related goals
Ø No change to any outstanding equity plans or awards, including MYLTIP awards granted in 2020
Ø LTI equity compensation as a percentage of total compensation increased to 81% for our CEO and 74% for all of the NEOs as a group (from 72% and 64%, respectively, in 2019)
Ø Granted LTI equity compensation for 2020 performance below target for CEO
Ø Below - target payout of 29% for CEO under 2018 MYLTIP (covering Feb. 2018 – Feb. 2020); CEO realized 36% of aggregate amount reported and expensed for that award
|
|
% Variable Pay(1)
|
% Paid in Equity(1)
|
Cash Bonus
|
2018 MYLTIP Payout
| ||||
| 93% |
74%
|
50%
|
29%
|
|
% Variable Pay(1)
|
% Paid in Equity(1)
|
Cash Bonus as % of Target
|
2018 MYLTIP Payout
| ||||
| 91% |
66%
|
57%
|
29%
|
| (1) | Percentages based on 2020 target total direct compensation. |
| (2) | On February 5, 2021, the three-year performance period for the Company’s 2018 MYLTIP awards ended and the final payout was 29% of target, representing only 36% of the reported pay for each of the CEO and the NEOs as a group. |
› 2020 SAY-ON-PAY VOTE & STOCKHOLDER OUTREACH
Say-on-Pay Vote
At our 2020 annual meeting of stockholders, approximately 89% of the votes cast supported our “Say-on-Pay” advisory vote. These results reflect continued investor support for our executive compensation program, including the changes our Committee made in 2019 to our executive compensation program based on investor feedback. The 2020 compensation year is the first year in which the changes made in 2019 were effective, and although COVID-19 unpredictably and unprecedentedly impacted our business and financial results, the Committee determined not to modify any of the key changes from 2019 to our executive compensation. In doing so, our Committee opted to remain within the original framework of the 2020 Annual Incentive Plan when determining 2020 compensation. We believe this demonstrates the Committee’s commitment to the changes it made in response to investor feedback.
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| I. EXECUTIVE OVERVIEW |
Investor Outreach & Feedback
We are firmly committed to learning investors’ perspectives and believe that proactive engagement is an effective means to solicit and receive valuable feedback. This feedback has helped shape our policies and practices. We conduct outreach throughout the year to ensure that management and the Board understand the issues of importance to our investors and address them appropriately. The Board regularly reviews shareholder feedback, which informs Board discussions on a wide range of topics, including our approaches to corporate governance, ESG, human capital management, diversity, equity and inclusion and executive compensation.
In 2020, we engaged directly with our investors in various forums and through different media (including in-person meetings prior to the pandemic and virtual meetings during the pandemic) as part of our outreach program. In addition to discussions in the ordinary course of business, we:
| • | hosted three investor outreach series to meet with existing investors, potential investors in Europe and one dedicated to ESG matters; |
| • | held more than 400 one-on-one meetings with investors at various REIT conferences, including Nareit REITWeek and REITWorld conferences, Citi 2020 Global, Evercore ISI and Bank of America Merrill Lynch 2020 Global Real Estate conferences and the NYSE Real Estate Investor Day; |
| • | held one-on-one meetings at four non-REIT conferences: the Morgan Stanley Sustainable Futures conference, the Stifel Cross-Sector conference, BofA Financial Futures conference and the Goldman Sachs Financials conference; and |
| • | held meetings at other ESG-focused engagements, including numerous one-on-one meetings with ESG-dedicated funds and an investor webinar focused on our efforts related to ESG matters. |
In total, we engaged directly with representatives of more than 200 firms, including approximately 50 U.S. and international institutional investors who own, in the aggregate, approximately 45% of the total number of outstanding shares of BXP common stock and approximately 80% of the total number of outstanding shares of BXP common stock held by actively managed funds.
The topics discussed at these meetings varied, but generally focused on the impacts of the pandemic and our responses thereto. Among other things, we heard questions about the long-term impact of the hybrid or partial “work-from-home” trend on demand for office space, the impact of new sublease space on overall supply and rental rates and the financial strength of various industries and sectors (including co-working, retail stores, restaurants, theaters and fitness clubs). We also discussed with them the details of our Health Security Plan for repopulating our buildings. The questions expressed in dialogue with our investors were echoed by REIT analysts and even the media, and they helped guide us in establishing the pandemic-related goals.
In 2020, our Investor Relations team was ranked by Institutional Investor Magazine as #1 among Office REITs and #3 among all REITs in three categories: Best IR program, Best IR Team and Best IR Professional. We believe our Investor Relations team excelled in leading and coordinating these atypical outreach efforts, and the recognition it received is well deserved.
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| I. EXECUTIVE OVERVIEW |
› COMPENSATION GOVERNANCE
The objectives of our executive compensation program are to attract, retain and motivate executives who have the experience and skills to lead the Company and continue our long-term track record of profitability, growth and TSR. The following table highlights key features of our executive compensation program that demonstrate the Company’s ongoing commitment to promoting stockholder interests through sound compensation governance practices.
| WHAT WE DO | WHAT WE DON’T DO | |||||
|
|
Variable pay is 93% of our CEO’s total target compensation. The vast majority of total compensation is variable (i.e., not guaranteed); salaries comprise a small portion of each NEO’s total compensation opportunity. |
|
No tax gross-ups. We do not provide any new executive with tax gross-ups with respect to payments made in connection with a change of control. | |||
|
|
Bonus pay linked to pre-established goals. Annual cash bonuses for our NEOs are linked to performance against goals in three categories, and each NEO has target and maximum bonus opportunities. |
|
No hedging, pledging or short-sales. We do not allow hedging, pledging or short-sales of Company securities. | |||
|
|
Two-thirds of target compensation paid in equity. We align our NEOs with our long-term investors by awarding in 2/3rds of our NEOs’ total target compensation in the form of equity, more than 1/2 of which is in the form of multi-year, performance-based equity awards. |
|
Risk mitigation factors in compensation policies and procedures. We do not encourage unnecessary or excessive risk taking as a result of our compensation policies; incentive compensation is not based on a single performance metric and we do not have guaranteed minimum payouts. | |||
|
|
Capped bonus and LTI awards. We have caps on annual and long-term incentives. |
|
No stock option repricing. We do not allow for repricing of stock options. | |||
|
|
Clawback policy. We have a clawback policy that allows for the recovery of previously paid incentive compensation in the event of a financial restatement. |
|
No full dividends on unearned performance-based LTI awards. Recipients of performance-based LTI equity awards receive only 10% of full dividend unless and until earned. | |||
|
|
Stock ownership guidelines for all executives. We have robust stock ownership guidelines for our executives (for our CEO, 6.0x base salary). | |||||
|
|
Independent compensation consultant. We engage an independent compensation consultant to advise the Committee. | |||||
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| II. EXECUTIVE COMPENSATION PROGRAM |
II. EXECUTIVE COMPENSATION PROGRAM
› COMPONENTS OF EXECUTIVE COMPENSATION
| COMPONENT | WHY WE PAY IT | |
| Base Salary |
Provide a fixed, competitive level of cash compensation that reflects the NEO’s leadership role and the relative market rate for the executive’s experience and responsibilities
| |
| Annual Cash Incentive |
Reward NEOs for achievement of annual financial and strategic goals that drive stockholder value, thereby aligning our NEOs’ interests with those of our stockholders
• Annual cash bonuses for each NEO are linked to performance against goals in three weighted categories and each NEO has target and maximum bonus opportunities
| |
| Performance-Based Equity (MYLTIP) |
Align the interests of our NEOs with those of our stockholders
Motivate, retain and reward NEOs to achieve multi-year strategic business objectives that drive both relative and absolute TSR out-performance
• Create a direct link between executive pay and relative and absolute TSR performance
• Enhance executive officer retention with 100% vesting after completion of three-year performance period (i.e., “cliff vesting”), with one additional year of post-vesting transfer restrictions
| |
| Time-Based Equity |
Align the interests of our NEOs with those of our stockholders
Motivate, retain and reward NEOs to achieve multi-year strategic business objectives that drive absolute TSR out-performance
• Create a direct link between executive pay and absolute TSR performance
• Enhance executive officer retention with time-based, multi-year vesting schedules for equity incentive awards
| |
› 2020 ANNUAL TARGET COMPENSATION
In the first quarter of each year, the Committee establishes annual target total compensation for each NEO by considering competitive benchmarking data, executive position and level of responsibility and, for executives other than our CEO, our CEO’s recommendation. Targets are reviewed annually and adjusted if determined to be appropriate by the Committee. The Committee may also adjust target compensation to reflect changes in or new responsibilities.
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| II. EXECUTIVE COMPENSATION PROGRAM |
Variable pay, consisting of annual cash bonuses and LTI equity awards, constitutes the vast majority of our executive compensation. We believe that having a significant portion of our executives’ compensation at risk more closely aligns their interests with our long-term interests and those of our stockholders. For our CEO and NEOs as a group, variable pay for 2020 was 92.8% and 90.5%, respectively, of target total compensation. This emphasis on variable pay allows the Committee to reward good performance and penalize poor performance. For 2020, the targeted mix of total direct compensation was as follows:
| CEO TARGET PAY MIX | ALL NEOs TARGET PAY MIX | |
|
| |
The total target direct compensation for each NEO was as follows:
| Name | Salary | Target Bonus | Target LTI Equity |
Total Target Compensation |
||||||||||||
| Owen D. Thomas |
$ 900,000 | $ 2,350,000 | $ 9,250,000 | $ 12,500,000 | ||||||||||||
| Douglas T. Linde |
$ 750,000 | $ 1,900,000 | $ 5,850,000 | $ 8,500,000 | ||||||||||||
| Raymond A. Ritchey |
$ 740,000 | $ 1,650,000 | $ 4,410,000 | $ 6,800,000 | ||||||||||||
| Michael E. LaBelle |
$ 510,000 | $ 1,250,000 | $ 1,990,000 | $ 3,750,000 | ||||||||||||
| Bryan J. Koop |
$ 410,000 | $ 1,250,000 | $ 1,490,000 | $ 3,150,000 | ||||||||||||
› CASH COMPENSATION
Base Salary
The base salary for each NEO is determined by the Committee and is intended to provide a fixed level of compensation that reflects the NEO’s leadership role and the relative market rate for similarly situated executives in the NEO’s position. The Committee determines whether to adjust base salaries based on a range of factors, including benchmark versus peers and changes in individual duties and responsibilities. Any increases to base salaries are generally determined in January of the compensation year and become effective in February of the compensation year.
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| II. EXECUTIVE COMPENSATION PROGRAM |
The Committee did not increase the base salary of any NEO for 2021 and has not changed the base salary for any NEO since 2019.
|
Name
|
2020 Salary
|
2019 Salary
|
% Change
|
|||||
| Owen D. Thomas |
$900,000 | $900,000 | — | |||||
| Douglas T. Linde |
$750,000 | $750,000 | — | |||||
| Raymond A. Ritchey |
$740,000 | $740,000 | — | |||||
| Michael E. LaBelle |
$510,000 | $510,000 | — | |||||
| Bryan J. Koop |
$410,000 | $410,000 | — | |||||
| Total |
$3,310,000 | $3,310,000 | — | |||||
2020 Annual Incentive Plan
Program Design and Structure
In January 2020, based largely on feedback received from our investors in 2019, the Committee established the 2020 Annual Incentive Plan under which annual cash bonuses payable to our executive officers are directly linked to the achievement of specific, pre-established goals. Under the plan, each NEO has a target bonus opportunity expressed in a fixed dollar amount. Actual earned amounts may range from zero (0) to 150% of target, depending on performance versus the annual goals in each category, with payout interpolated for performance between levels.
| Performance Level for Each Category | Payout (% of Target) | |
| >= Maximum | 150% | |
| Target | 100% | |
| Threshold | 50% | |
| <Threshold | 0 |
We use a “scorecard” approach for our bonus determinations. This approach is intended to reflect a comprehensive analysis by the Committee of corporate, regional and individual performance based on performance in three categories: (1) FFO per Share, (2) Leasing and (3) Business and Individual goals.
| • | FFO per Share. FFO per share was selected as a key financial metric for the 2020 Annual Incentive Plan because it is the earnings metric most commonly used by investors and analysts to evaluate our performance on an absolute basis and relative to other REITs. As such, the Committee considers this to be the corporate component of the scorecard as it is an objective, company-wide performance metric that drives near-term business strategies. The FFO per share goal is subject to adjustment for acquisitions, dispositions, financings, lease terminations and similar transactions and circumstances. |
| • | Leasing. The Committee established specific leasing goals, starting at the property level, rolling up by region and then aggregating to corporate leasing goals, as the second component. The leasing goals were then categorized as short-term leasing and total leasing goals to encourage the executives to focus on current addressable vacancies and near-term roll-over, and to avoid scenarios in which leasing goals are met solely due to unexpected early renewals. The Committee selected this category because it links objective measures of corporate, regional and individual performance by formula to the amounts paid. |
| • | Business & Individual Goals. Business goals include milestone-oriented objectives related to management of capital expenditures and G&A expense, acquisitions, dispositions, delivering development and construction projects on time and budget and achieving the desired returns on cost, joint ventures, securing entitlements, and/or launching new developments. Business goals are based on regional priorities for the regional EVPs. For the CEO and President, business goals include a relevant subset of those regional goals, as well as goals related to executive management of the Company. For the CFO, business goals relate to balance sheet management, capital raising, and other finance department priorities. |
Individual goals include leadership and professional development goals, diversity initiatives, succession planning and other ESG priorities for each executive. The Compensation Committee considers absolute and/or relative performance outcomes against Company and Business and Individual goals and objectives, as well as the context in which they were achieved (including, e.g., degree of difficulty, importance to BXP, headwinds and tailwinds during the year and other similar factors).
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| 7› | COMPENSATION DISCUSSION AND ANALYSIS | |
| II. EXECUTIVE COMPENSATION PROGRAM |
For the 2020 compensation year, the Committee set the weighting of each category equally for all NEOs except for Mr. LaBelle. The following table summarizes the performance measurement categories and weightings under the Annual Incentive Plan for 2020.
| Weightings | ||||||||||||||||||||
| Annual Incentive Performance Measures | Thomas | Linde | LaBelle(1) | Ritchey | Koop | |||||||||||||||
| FFO per Share | 33.3 | % | 33.3 | % | 33.3 | % | 33.3 | % | 33.3 | % | ||||||||||
| Leasing (Short-Term and Total) | ||||||||||||||||||||
| Overall BXP |
33.3 | % | 33.3 | % | 16.7 | % | ||||||||||||||
| DC Region(2) |
24.8 | % | ||||||||||||||||||
| LA Region(2) |
8.5 | % | ||||||||||||||||||
| Boston Region |
33.3 | % | ||||||||||||||||||
| Business & Individual Goals | ||||||||||||||||||||
| Overall BXP |
33.3 | % | 33.3 | % | ||||||||||||||||
| Finance |
50.0 | % | ||||||||||||||||||
| DC Region + LA Region |
33.3 | % | ||||||||||||||||||
| Boston Region |
33.3 | % | ||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| (1) | For all NEOs except Mr. LaBelle, the weighting of each category is equal (33.3% for each of FFO per Share, Leasing and Business and Individual goals). For Mr. LaBelle, the weightings are 33.3% for FFO per share, 16.7% for leasing and 50% for business & individual goals. In determining Mr. LaBelle’s weightings for each category, the Committee considered, among other things, his reduced role in leasing relative to Messrs. Thomas and Linde and his direct role in and responsibility for the Finance Department of the Company. |
| (2) | Mr. Ritchey’s leasing goal (weighted 33.3% in total) is evenly split between short-term and total leasing (16.7% each) and further bifurcated between the Washington, DC and Los Angeles regions based on the square footage of each region’s portfolio as follows: short-term: 70% Washington, DC / 30% Los Angeles; total: 79% Washington, DC / 21% Los Angeles. |
NEOs’ Response to the World Health Crisis and Important Social and Environmental Issues
At the time we filed our 2020 proxy statement, the COVID-19 pandemic was in its infancy and, in light of the rapidly changing business environment and fluid nature of the potential implications on the Company’s business, the Committee reserved its right to re-evaluate the categories and targets, as appropriate, in light of the pandemic’s actual impact on Boston Properties. Soon thereafter, Americans witnessed the social movements that spotlighted racial and social injustices that plague society that called for action, and we experienced a much-heightened awareness of the importance of environmental and sustainability issues.
Despite the sudden and significant impact of the global pandemic on our business, the Committee prioritized maintaining a strong alignment with our shareholders’ interests and decided not to modify any aspects of the executive compensation program despite the unexpected and unprecedented economic and social conditions. In deciding not to change the 2020 Annual Incentive Plan, the Committee considered (1) the importance of demonstrating its commitment to the more formulaic bonus plan in its first year, (2) whether doing so would disrupt the alignment of interests between our NEOs and investors and (3) whether choosing not to do so would negatively impact retention and incentives. As a result, our NEOs earned no payout under the FFO per share category and only one NEO earned a portion of the potential payout for the leasing category and it was below target.
For the third performance category under the 2020 Annual Incentive Plan, the Committee established Business and Individual goals for each NEO in January 2020. This category represented 33.3% of the potential payout opportunity for each NEO other than Mr. LaBelle (for whom it represented 50%). As it became clear that the pandemic was causing severe strain on the economy, our tenants and our business, the Board shifted its priorities for management and the Committee appended to each NEO’s Business and Individual goals a set of pandemic-related goals intended to assess and reward the NEOs for their success in meeting those priorities.
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| II. EXECUTIVE COMPENSATION PROGRAM |
In determining that our NEOs exceeded their pandemic-related goals, the Committee noted the following achievements:
| • | although physical occupancy was low, all office properties throughout the Boston Properties portfolio remained open for tenants, |
| • | in early April 2020, we formed a Health Security Task Force comprised of Boston Properties’ employees, as well as outside experts in health care, industrial hygiene, cleaning and security, |
| • | in May 2020, the Heath Security Task Force issued a Heath Security Plan for repopulating the workplace, which provided a framework for health security at BXP’s office properties, including enhanced cleaning and disinfection, air and water quality protocols, physical distancing, screening and personal protective equipment (PPE) requirements, |
| • | following the release of the Health Security Plan in early May, our NEOs and management teams conducted town halls and one-on-one sessions with tenants across BXP’s regions to support their office repopulation processes, which slowly began in June in Boston, |
| • | our NEOs demonstrated remarkable discipline and flexibility in maximizing rent collections while concurrently addressing tenants’ needs: |
| › | for the month of April 2020, the first full month of COVID-19 restrictions, we collected approximately 97% of the total rent due April 1 from office tenants, and collections among all tenants were approximately 93% |
| › | by the fourth quarter of 2020, collections from office tenants had improved to a strong 99.7%, and collections from all tenants were 99.1%, |
| • | when appropriate, our NEOs worked with our tenants (primarily in retail businesses) that were in financial distress to modify lease agreements and otherwise provide relief in light of the economic downturn. During 2020, these lease modification agreements covered approximately 4.7 million square feet |
| › | although some of the lease modifications were deferrals under which we expect the tenant will pay us in full primarily in 2021, the majority of the lease modifications involved extending the lease term (in some cases for a year or more) or providing for a period of time where the tenant will only pay percentage rent |
| › | as a result of the lease modification agreements that extended the lease terms, we expect to see an increase in the cash rent we will receive in the future, |
| • | in elevating our focus on diversity and equity, we constituted our Diversity and Inclusion Committee in early 2020. Our NEOs demonstrated strong commitment to fostering its success and supported the D&I Committee in promoting diversity both within BXP and in the communities in which we operate |
| › | the D&I Committee set its focus on (1) recruitment and development, (2) Company policies and (3) community outreach |
| › | the D&I Committee has met and expects to meet regularly with our full Board of Directors, and |
| › | in early May 2020, we issued $1.25 billion of 3.250% senior unsecured notes that mature in 2031, and we used the net proceeds to repay amounts borrowed under our revolving line of credit and to bolster our liquidity. |
Although it was not a factor in assessing our NEOs’ performance against their pandemic-related goals, the Committee noted that Boston Properties and its NEOs were ranked #1 among all office REITs by Institutional Investors Magazine in 2020 in the category “Crisis Management amid COVID-19.” They also ranked #1 in the following categories:
| • | Overall All-American Executive Team, |
| • | Best CEO and |
| • | Best CFO. |
Despite the severe, negative impacts of the pandemic on office REITs generally, which led to negative absolute total stockholder returns across the sector in 2020, the Committee also noted that Boston Properties’ TSR for the one-year and three-year periods ending December 31, 2020 placed it at the 80th percentile, or third, among its most directly comparable office peers for both periods. (For a list of these peers, see “– LTI Equity Compensation – 2021 MYLTIP” below.) Although the Committee did not base its decisions on BXP’s relative TSR rankings, the Committee believes they validated the appropriateness of the final bonus payments to our NEOs.
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Set forth in the following tables is a summary of each NEO’s performance measures and weightings, with specific threshold, targets and maximum goals for each of the FFO per share and leasing performance measures, and the principal business, individual and pandemic-related goals, along with each NEO’s performance results for 2020.
|
Owen D. Thomas | ||||||||||||||||
| Performance Category |
Weighting | Payout (% of target) | Threshold 50% |
Target 100% |
Maximum 150% |
2020 Results |
Category Payout % | |||||||||
| FFO per Share |
|
$7.35 | $7.55 | $7.75 | $6.29(1) | 0% | ||||||||||
| Leasing (in million square feet) |
|
Short-term | 3.2 | 3.6 | 4.4 | 1.7 | 0% | |||||||||
|
|
Total
|
|
5.0
|
5.6
|
6.9
|
3.7
| ||||||||||
| Business & Individual Goals |
|
|
The Committee assessed Mr. Thomas’
performance against his |
150.0% | ||||||||||||
| Business goals included:
• Execute capital raising strategy to fund future investments
• Manage G&A, capital expenditures and credit ratings
• Complete identified transactions
• Deliver identified development projects in-service |
Individual goals included:
• Make contributions to increase workforce diversity
• Increase employee engagement
• Oversee and manage employees, including the execution of succession plans |
Pandemic-related goals included:
• Demonstrate strong leadership during pandemic and demands of remote work
• Ensure health security of BXP employees and customers
• Maximize rent collections
• Optimize leasing outcomes
• Ensure active development projects remain on schedule and on budget
| ||
|
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 50.0%
| ||||
| (1) | For all NEOs, represents Diluted FFO per share. For disclosures required by Regulation G, refer to pages 101 through 104 of our 2020 Annual Report on Form 10-K. |
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|
Douglas T. Linde | ||||||||||||||||
| Performance Category |
Weighting | Payout (% of target) | Threshold 50% |
Target 100% |
Maximum 150% |
2020 Results |
Category Payout % | |||||||||
| FFO per Share |
|
$7.35 | $7.55 | $7.75 | $6.29 | 0% | ||||||||||
| Leasing (in million square feet) |
|
Short-term | 3.2 | 3.6 | 4.4 | 1.7 | 0% | |||||||||
|
|
Total
|
|
5.0
|
5.6
|
6.9
|
3.7
| ||||||||||
| Business & Individual Goals |
|
|
The Committee assessed Mr. Linde’s
performance against his |
150.0% | ||||||||||||
| Business goals included:
• Execute capital raising strategy to fund future investments
• Manage G&A, capital expenditures and credit ratings
• Complete identified transactions
• Deliver identified development projects in-service |
Individual goals included:
• Make contributions to increase workforce diversity
• Manage Information Technology department’s execution of target objectives
• Increase employee engagement |
Pandemic-related goals included:
• Demonstrate strong leadership during the pandemic and demands of remote work
• Ensure health security of BXP employees and customers
• Maximize rent collections
• Optimize leasing outcomes
• Ensure active development projects remain on schedule and on budget
| ||
|
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 50.0%
| ||||
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|
Raymond A. Ritchey | ||||||||||||||||
| Performance Category |
Weighting | Payout (% of target) | Threshold 50% |
Target 100% |
Maximum 150% |
2020 Results |
Category Payout % | |||||||||
| FFO per Share |
|
$7.35 | $7.55 | $7.75 | $6.29 | 0% | ||||||||||
| Leasing (in million square feet) |
|
Short-term | * | |||||||||||||
| DC: | 1.1 | 1.3 | 1.6 | 1.2 | DC: 65.6% | |||||||||||
| LA: | 0.5 | 0.6 | 0.7 | 0.1 | LA: 0% | |||||||||||
| Total | * | |||||||||||||||
| DC: | 1.8 | 2.0 | 2.5 | 1.9 | DC: 70.1% | |||||||||||
| LA: | 0.5 | 0.6 | 0.7 | 0.1 | LA: 0% | |||||||||||
| * For more detail on the weightings for Mr. Ritchey’s leasing goal, see page 58.
|
||||||||||||||||
| Business & Individual Goals |
|
|
The Committee assessed Mr. Ritchey’s
performance against |
150.0% | ||||||||||||
| Business goals included:
• Assess new development and business opportunities in the DC and LA regions
• Complete identified transactions |
Individual goals included:
• Make contributions to increase workforce diversity
• Expand focus on strategy and building and maintaining relationships
• Maintain mentoring and leadership roles |
Pandemic-related goals included:
• Demonstrate strong leadership during the pandemic and demands of remote work
• Ensure health security of BXP employees and customers
• Maximize rent collections
• Optimize leasing outcomes
• Ensure active development projects remain on schedule and on budget
| ||
|
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 66.9%
| ||||
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|
Michael E. LaBelle | ||||||||||||||||
| Performance Category |
Weighting | Payout (% of target) | Threshold 50% |
Target 100% |
Maximum 150% |
2020 Results |
Category Payout % | |||||||||
| FFO per Share |
|
$7.35 | $7.55 | $7.75 | $6.29 | 0% | ||||||||||
| Leasing* (in million square feet) |
|
Short-term | 3.2 | 3.6 | 4.4 | 1.7 | 0% | |||||||||
|
|
Total
|
|
5.0
|
5.6
|
6.9
|
3.7
| ||||||||||
| * Mr. LaBelle’s leasing goal (weighted 16.7% in total) is evenly split between short-term and total leasing (8.35% each). |
||||||||||||||||
| Business & Individual Goals |
|
|
The Committee assessed Mr. LaBelle’s
performance against |
150.0% | ||||||||||||
| Business goals included:
• Execute capital raising strategy to fund future investments
• Manage credit ratings
• Develop strategy for 2021 debt maturities
• Complete identified transactions
• Enhance ESG disclosures in SEC |
Individual goals included:
• Make contributions to increase workforce diversity
• Manage and maintain effectiveness and productivity of Finance Department
• Advance employee succession plans through mentoring |
Pandemic-related goals included:
• Demonstrate strong leadership during the pandemic and demands of remote work
• Ensure health security of BXP employees and customers
• Manage operating expenses tightly
• Support tenant collection and pandemic-related restructuring activities from financial perspective
| ||
|
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 75.0%
| ||||
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|
Bryan J. Koop | ||||||||||||||||
| Performance Category |
Weighting | Payout (% of target) | Threshold 50% |
Target 100% |
Maximum 150% |
2020 Results |
Category Payout % | |||||||||
| FFO per Share |
|
$7.35 | $7.55 | $7.75 | $6.29 | 0% | ||||||||||
| Leasing (in million square feet) |
|
Short-term | 0.5 | 0.6 | 0.8 | 0.08 | 0% | |||||||||
|
|
Total
|
|
1.1
|
1.3
|
1.5
|
0.8
| ||||||||||
| Business & Individual Goals |
|
|
The Committee assessed Mr. Koop’s
performance against his |
150.0% | ||||||||||||
| Business goals included:
• Deliver identified projects in the Boston region
• Maintain schedule and budget for development projects in Boston region |
Individual goals included:
• Make contributions to increase workforce diversity
• Exhibit strong management skills and refine new business initiatives within region
• Provide consultation support to other regions related to retail activities |
Pandemic-related goals included:
• Demonstrate strong leadership during the COVID-19 pandemic and demands of remote work
• Ensure health security of BXP employees and customers
• Maximize rent collections
• Optimize leasing outcomes
• Ensure active development projects remain on schedule and on budget
| ||
|
TOTAL ANNUAL INCENTIVE PAYOUT AS A % OF TARGET = 50.0%
| ||||
Based on the foregoing, the Committee awarded annual cash bonuses to the NEOs for 2020 as follows:
| Name | 2020 Actual Annual Incentive |
2020 Target Annual Incentive |
2020 Actual as % of Target | |||
| Owen D. Thomas |
$1,175,000 | $2,350,000 | 50.0% | |||
| Douglas T. Linde |
$950,000 | $1,900,000 | 50.0% | |||
| Raymond A. Ritchey |
$1,103,850 | $1,650,000 | 66.9% | |||
| Michael E. LaBelle |
$937,500 | $1,250,000 | 75.0% | |||
| Bryan J. Koop |
$625,000 | $1,250,000 | 50.0% |
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Changes for 2021 Annual Incentive Plan
As part of the Committee’s annual executive compensation process, the Committee reviewed and reassessed the annual cash incentive program, including its structure. Based on that review, the Committee concluded that the categories were appropriate, but that market practice among peers was that more weight should be given to the Business and Individual Goals. For 2021, the Committee changed the weighting of the categories under the Annual Incentive Plan for Mr. LaBelle so that it is the same for all five NEOs, and changed the weightings of the categories so they will be FFO per Share – 30%, Leasing – 30% and Business and Individual goals – 40%.
› LTI EQUITY COMPENSATION
The equity component of our NEOs’ compensation is driven to a significant extent by our TSR through LTI equity awards consisting of a mix of time-based and performance-based LTIP unit awards.
Time-Based Equity Awards
The time-based LTI equity awards granted to the NEOs for 2020 performance consisted of LTIP units or restricted shares of our common stock that generally vest ratably over a four-year period (25% per year), subject to acceleration in certain circumstances (e.g., retirement, death or disability, and certain qualifying terminations following a change in control). See “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards.”
Performance-Based Equity Awards – Multi-Year Long-Term Incentive Program (MYLTIP)
The performance-based portion of LTI equity awards are granted under our Multi-Year Long-Term Incentive Program, or “MYLTIP.” MYLTIPs are awarded to provide incentives for long-term performance and focus over a multi-year period. The design of the MYLTIP awards links the ultimate payouts directly by formula to our TSR over a three-year measurement period.
2020 MYLTIP
Under the 2020 MYLTIP:
| • | the Company’s relative TSR performance is measured against a single index – the FTSE Russell Nareit Office Index (the “Nareit Office Index”) (which is adjusted to include Vornado Realty Trust because it is a publicly-traded office REIT that we consider one of our most directly comparable peers despite being categorized as a diversified REIT by FTSE Nareit); |
| • | the awards are denominated in LTIP units; and |
| • | relative TSR is the sole determinant of how many LTIP units are earned and eligible to vest; there are no absolute TSR modifiers that can increase or decrease the final payout. |
For 2020 MYLTIP awards, the number of LTIP units that can be earned, whether in whole, in part or not at all, is based on levels of payout opportunity ranging from zero to 200% of the target number of LTIP units issued, on a straight-line basis depending on relative TSR performance compared to the Nareit Office Index (as adjusted) as follows:
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CEO Reported vs. Realized Pay
The following graph shows for our CEO (1) the reported values of the MYLTIP awards granted between 2015—2020 as of their respective grant dates, (2) the actual realized pay for each of the MYLTIP awards granted between 2015—2018 for which the measurement periods have ended and (3) the interim valuations as of December 31, 2020 for the 2019 and 2020 MYLTIP awards:
| (1) | Interim Valuation amounts and Payout as % of Reported Pay percentages shown for the 2019 and 2020 MYLTIP are estimates as of December 31, 2020 based on interim valuations performed by our independent valuation consultant. Actual results could differ materially from the interim valuations. |
2021 MYLTIP
In 2020, the Committee, with the assistance of FW Cook, undertook a comprehensive review of all facets of the MYLTIP plan design to help ensure that it successfully links executive pay and long-term performance and is therefore effective in motivating, retaining and rewarding our NEOs. In its review, the Committee considered whether the peer group(s) against which the Company’s performance is assessed is comprised of the appropriate peers, particularly in light of the impact of COVID-19 on the office REIT sector, as well as the appropriate metric(s) on which to assess performance.
After consideration, the Committee modified the design of the 2021 MYLTIP so that it now consists of two, equally weighted components, each of which provides a payout opportunity ranging from zero to 200% of a target number of LTIP units based on
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BXP’s relative and absolute TSR performance over a three-year performance period. The objectives of the 2021 MYLTIP program are (1) retention (similar to time-based equity awards), (2) alignment with stockholders and (3) pay-for-performance. The Committee believes that, particularly in light of COVID-19, the performance targets are rigorous, but achievable, and challenge our executive team to achieve strong performance over time, on both an absolute and relative basis. The Committee added the second component, in part, to limit the scenarios in which our investors may suffer losses due to a decline in absolute TSR while our NEOs realize outsized payouts for relative TSR. As a result, BXP performance above the maximum goal under the Relative TSR component does not automatically result in a payout equal to the maximum 200% of target because the total payout would be offset, e.g., if performance is below target under the Absolute TSR component. The Committee concluded that this “offsetting” feature helps align our NEOs’ interests with our stockholders, while also providing incentives to outperform our peers.
| Ø | Relative TSR Component |
The first component of the 2021 MYLTIP, which represents one-half (50%) of the target grant-date value, retains the basic structure of the 2020 MYLTIP awards. The number of LTIP units that can be earned under this component ranges from zero to 200% of the target number of LTIP units, based on BXP’s annualized relative TSR (“rTSR”) performance compared to an index. Under this component, 100% of the target LTIP units will be earned if the Company’s TSR equals the index TSR; the maximum 200% of the target number of LTIP units will be earned if the Company’s rTSR is at least 1,000 basis points greater than the index; and no LTIP units will be earned if the Company’s rTSR is more than 1,000 basis points less than the index. For rTSR performance between -1,000 basis points and +1,000 basis points, the number of LTIP units earned will be determined using linear interpolation.
For purposes of measuring relative performance, the 2021 MYLTIP awards provide that BXP’s TSR shall be compared to the TSR of a custom peer group index (the “Custom Index”) consisting of the following nine (9) office REITs:
| Columbia Property Trust |
Douglas Emmett, Inc. | |
| Empire State Realty Trust |
Hudson Pacific Properties, Inc. | |
| JBG Smith Properties |
Kilroy Realty Corporation | |
| Paramount Group, Inc. |
SL Green Realty Corp. | |
| Vornado Realty Trust |
The purpose of using a peer group is to provide a mechanism for comparing our relative performance against competitors, however, the Company does not have a directly comparable peer in the public market and often competes with larger, privately-capitalized companies for which performance data is not readily available, if at all. The FTSE Nareit Office Index, which has been the comparative index used in recent years, includes more than 20 REITs, more than half of which are not direct competitors due to geographic regions, type of product (Central Business District vs. Suburban), asset quality or size. The Custom Index was selected to include only office REITs that are most similar to the Company in terms of asset type, asset quality, and having full-scale operations in one or more of the U.S. gateway markets in which the Company operates.
For purposes of determining the TSR of the Custom Index, the weighting ascribed to each company in the Custom Index is fixed as of the grant date based on its relative market capitalization at that time; in contrast, the 2020 MYLTIP and prior programs determined the relative weight of each constituent annually and used the average of each constituent’s annual weightings over the performance period. In deciding to change the weighting methodology, the Committee considered that market practice is to fix the weightings at the plan inception.
The Committee back-tested our performance versus the Custom Index. From February 6, 2018 through February 5, 2021, which was the performance period for the 2018 MYLTIP, our annualized TSR was 235 bps above the Custom Index, which would have resulted in payout of 123.5% of the target LTIP units. However, our absolute TSR was negative over that period. To align management with our stockholders and hold them more accountable for our absolute TSR, the 2021 MYLTIP includes an absolute TSR component, as described below. If the absolute TSR component had also been in effect, the resulting payout would have been reduced to approximately 87.7% of target.
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| Ø | Absolute TSR Component |
The second component represents the remaining one-half (50%) of the target grant-date value of the 2021 MYLTIP. The number of LTIP units that can be earned under this component ranges from zero to 200% of the target number of LTIP units, based on BXP’s cumulative absolute TSR (“aTSR”) during the performance period. Under this component, 100% of the target LTIP units will be earned if the Company achieves an aTSR equal to +1,000 basis points; the maximum 200% of target LTIP units will be earned if the Company achieves an aTSR of +6,000 basis points or greater; and the threshold percentage to earn any LTIP units is an aTSR of greater than -4,000 basis points. If the Company’s aTSR is greater than -4,000 basis points but less than +6,000 basis points, then the number of LTIP units earned will be determined using linear interpolation.
| Ø | Other Changes to MYLTIP Design |
Dividends. Consistent with previous MYLTIP programs, during the three-year performance period holders of 2021 MYLTIP Units are not entitled to receive full dividends on the 2021 MYLTIP Units. Instead, to support the units’ characterization as profits interests for tax purposes, the holders of the units are entitled to receive only a partial dividend on each unit equal to 10% of the dividend payable on a share of BXP common stock. Unlike prior MYLTIP programs, however, following the completion of the three-year performance period, BXP will also make a “catch-up” cash payment on the 2021 MYLTIP Units that are ultimately earned in an amount equal to the regular and special distributions, if any, declared during the performance period on BXP common stock, less the distributions actually paid to holders of 2021 MYLTIP Units during the performance period on all of the awarded 2021 MYLTIP Units.
Post-vesting Transfer Restrictions. Subject to the provisions on “Qualified Retirement” and the other terms of the award agreement, after the completion of the three-year performance period all earned MYLTIP Units shall be deemed “vested“, but may not be converted, redeemed, sold or otherwise transferred for one additional year after the end of the performance measurement period. Therefore, 100% of earned awards, if any, shall vest as of February 1, 2024, but may not be monetized until February 1, 2025.
Allocation of LTI Awards
2020 Performance Grants
The Committee approved LTI equity awards to NEOs for 2020 performance as a mix of performance-based MYLTIP awards and time-based, full-value equity awards. The MYLTIP awards were denominated in a fixed number of LTIP units as of February 2, 2021, the date of initial grant. The Committee maintained the same allocation of performance-based equity as a percentage of total LTI equity for our CEO as in 2019 for 2020, so his allocation remained 55% performance-based and 45% time-based. For the other NEOs, the Committee maintained the allocation at 50% performance-based and 50% time-based.
In light of the economic circumstances and challenges the NEOs faced in 2020, including the sudden shift in priorities, the Committee awarded the dollar values set forth below for performance-based and time-based equity awards to the NEOs in 2021 for performance in 2020. The Committee awarded Messrs. Thomas and Linde the same dollar value in LTI equity awards for 2020 as was awarded last year for 2019 performance, the result of which was an award of less than target for each, and awarded Mr. Ritchey his target LTI equity awards in acknowledgment of his continued leadership in the Washington, DC and Los Angeles regions. The Committee assessed Messrs. LaBelle and Koop’s performance in 2020 as strong and awarded each LTI equity that was above target.
| Executive | Total LTI Equity Awards |
Total LTI Equity Awards as % of Target |
Performance- Equity Awards |
% of Total Equity Awards |
Time-Based LTI Equity Awards |
% of Total Equity Awards |
||||||||||||||||
| Owen D. Thomas |
$ 9,050,000 | 98% | $ 4,977,500 | 55% | $ 4,072,500 | 45% | ||||||||||||||||
| Douglas T. Linde |
$ 5,655,000 | 97% | $ 2,827,500 | 50% | $ 2,827,500 | 50% | ||||||||||||||||
| Raymond A. Ritchey |
$ 4,410,000 | 100% | $ 2,205,000 | 50% | $ 2,205,000 | 50% | ||||||||||||||||
| Michael E. LaBelle |
$ 2,189,000 | 110% | $ 1,094,500 | 50% | $ 1,094,500 | 50% | ||||||||||||||||
| Bryan J. Koop |
$ 1,788,000 | 120% | $ 894,000 | 50% | $ 894,000 | 50% | ||||||||||||||||
| Total |
$23,092,000 | 100% | $11,998,500 | 52% | $11,093,500 | 48% | ||||||||||||||||
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| 2021 Proxy Statement |
Table of Contents
| 7› | COMPENSATION DISCUSSION AND ANALYSIS | |
| II. EXECUTIVE COMPENSATION PROGRAM |
The performance-based portion of LTI equity awards for 2020 performance was granted in the form of 2021 MYLTIP awards, which have a three-year performance period (February 2, 2021 to February 1, 2024), and an additional year of post-vesting restrictions on transfer. The dollar values of the awards were converted into a fixed number of MYLTIP units on the initial grant date, and the number of units initially granted equals 200% of the target number of units, and it is the maximum number of units that may be earned. Following completion of the three-year performance period, the Committee will determine the final payout based on computations from our independent valuation consultant for this plan, and if the number of units initially awarded exceeds the number of units ultimately earned, then the excess will be forfeited. The units determined to be earned shall vest 100% as of the final day of the performance period, but shall be subject to an additional one-year, no-sale holding period. Therefore, while the award of 2021 MYLTIP units is partially in recognition for performance in 2020, award recipients must continue to perform over the three-year term of the 2021 MYLTIP program in order to earn and vest in any of the MYLTIP units and must generally remain employed for the three years to earn the full amount. The aggregate target number of units for NEOs is approximately 137,688 LTIP units and an aggregate payout opportunity ranging from zero to a maximum of 275,376 LTIP units. The baseline share price for 2020 MYLTIP awards was $90.73 (the average closing price per share of our common stock on the NYSE for the five trading days prior to and including February 2, 2021).
The 2021 MYLTIP awards are generally amortized into earnings over the three-year plan period under the graded vesting method, unless accelerated in certain circumstances such as a “Qualified Retirement” as defined under “– Potential Payments Upon Termination or Change in Control – Retirement Eligibility Provisions for LTI Equity Awards.” Under the Financial Accounting Standards Board’s Accounting Standards Codification 718 “Compensation – Stock Compensation” (“ASC Topic 718”), we expect that 2021 MYLTIP awards to NEOs will have an aggregate value of approximately $12.0 million.
2019 Performance Grants
The following table sets forth the dollar values of the performance-based and time-based equity awards granted to NEOs in February 2020 for performance in 2019:
| Executive |
Total LTI Equity Awards |
Performance-Based LTI Equity Awards |
% of Total Equity Awards |
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