LXP Industrial Trust DEF 14A, filed Apr 10, 2023
LXP Industrial Trust (LXP)
About this DEF 14A
LXP Industrial Trust filed this DEF 14A on April 10, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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One Penn Plaza, Suite 4015
New York, New York 10119-4015
(212) 692-7200
NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 23, 2023
To the Shareholders of LXP Industrial Trust:
The 2023 Annual Meeting of Shareholders of LXP Industrial Trust, a Maryland real estate investment trust, will be held on Tuesday, May 23, 2023, at 2:00 p.m., Eastern time, virtually via the internet at www.meetnow.global/MGV4HMU for the following purposes:
| (1) | to elect eight trustees to serve until the 2024 Annual Meeting of Shareholders or their earlier removal or resignation and until their respective successors, if any, are elected and qualify; |
| (2) | to consider and vote upon an advisory, non-binding resolution to approve the compensation of the named executive officers, as disclosed in the accompanying proxy statement; |
| (3) | to consider and vote upon an advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation; |
| (4) | to consider and vote upon the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and |
| (5) | to transact such other business as may properly come before the 2023 Annual Meeting of Shareholders or any adjournment or postponement thereof. |
Only holders of record at the close of business on March 20, 2023 are entitled to notice of and to vote at the 2023 Annual Meeting of Shareholders or any adjournment or postponement thereof.
On behalf of our Board of Trustees, we thank you for your support and participation.
| By Order of the Board of Trustees, | |
|
|
|
Joseph S. Bonventre Secretary New
York, New York |
Whether or not you expect to participate at the 2023 Annual Meeting of Shareholders, we urge you to authorize your proxy electronically via the Internet or by completing and returning the proxy card if you requested paper proxy materials. Voting instructions are provided in the Important Notice Regarding the Availability of Proxy Materials for the LXP Industrial Trust Shareholder Meeting to be Held on May 23, 2023 (the “Notice”), or, if you requested printed materials, the instructions are printed on your proxy card and included in the accompanying proxy statement. Any person giving a proxy has the power to revoke it at any time prior to the meeting and shareholders who participate in the meeting may withdraw their proxies and vote in person.
PROXY
STATEMENT
FOR THE 2023 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 23, 2023
The Board of Trustees of LXP Industrial Trust, a Maryland real estate investment trust, is soliciting proxies to be voted at the 2023 Annual Meeting of Shareholders, which we refer to herein as the Annual Meeting. The Annual Meeting will be held Tuesday, May 23, 2023, at 2:00 p.m., Eastern time, virtually via the internet at www.meetnow.global/MGV4HMU. This proxy statement summarizes the information you need to know to vote by proxy or in person via webcast at the Annual Meeting or any postponements or adjournments thereof. You do not need to attend the Annual Meeting in person via webcast in order to have your shares voted at the Annual Meeting.
All references to the “Trust,” “Company,” “LXP,” “we,” “our” and “us” in this proxy statement mean LXP Industrial Trust. All references to “Shareholder” and “you” refer to a holder of shares of beneficial interest, par value $0.0001 per share, of the Company, classified as “Common Stock,” which we refer to as common shares or shares, as of the close of business on March 20, 2023, which we refer to as the Record Date.
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TABLE OF CONTENTS
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2022 COMPANY PERFORMANCE1
Proactive Asset Management
| ● | Completed 4.0 million square feet of industrial new leases and lease amendments, raising Base and Cash Base Rents by 30.7% and 25.6%, respectively, with 3.3% average annual escalations. |
| ● | Industrial Portfolio 99.5% leased. |
| ● | Industrial Same-Store NOI increased 5.3% in 2022 compared to 2021. |
Industrial Investment Opportunities
| ● | Invested approximately $298 million in development activities, including approximately $204 million in six ongoing development projects. |
| ● | Acquired approximately $131 million of industrial assets. |
| ● | Completed construction of two warehouses/distribution facilities totaling 1.9 million square feet. |
| ● | Entered into a ground lease for approximately 100 acres of land held for industrial development in Phoenix, Arizona for an initial term of 20 years with initial ground rent of $5.2 million. |
Asset Dispositions
| ● | Disposed of approximately $197 million of office assets, non-target market industrial assets and a land parcel at aggregate weighted-average GAAP and Cash capitalization rates of 5.6%. |
Strong Balance Sheet
| ● | No amounts outstanding on $600 million unsecured credit facility. |
| ● | Leverage of 6.4x net debt to Adjusted EBIDTA. |
| ● | Primarily fixed-rate, long-term debt with weighted-average interest rate of 3.2% and a weighted-average term of 6.5 years. |
Capital Markets Strategy
| ● | Issued an aggregate of approximately 3.6 million common shares for $38.5 million of aggregate net proceeds – shares previously sold on a forward basis under ATM program. |
| ● | Repurchased 12.1 million common shares at an average price of $10.78 per share. |
| ● | Issued 16.0 million common shares upon settlement of forward equity transaction, resulting in 3.9 million common shares issued, net of 2022 repurchases, at $13.53 per common share. |
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ESG+R Strategy
| ● | Published 2021 Corporate Responsibility Report, aligned with GRI, TCFD, SASB and the United Nations Sustainable Development Goals. |
| ● | Submitted to GRESB Real Estate Assessment for the second time, increasing our scores and receiving a Public Disclosure Score of “A”. |
| ● | Received 4.11/5 overall satisfaction score in 2022 tenant satisfaction survey for our industrial portfolio. |
| ● | Joined the CREW Network CRE Pledge for Action, reinforcing our commitment to promote women in the real estate industry. |
| ● | Added to the Bloomberg Gender-Equality Index. |
| ● | Named as a 2022 Best Company to work for in New York. |
_____________________
(1) See Appendix A for definitions and reconciliations of Non-GAAP financial measures.
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PROPOSALS
PROPOSAL NO. 1 ELECTION OF TRUSTEES
Our Board of Trustees currently consists of nine trustees and no vacancies. All of our current trustees are nominated for election at the Annual Meeting, with the exception of Richard S. Frary, who, in April 2022, announced he would not stand for reelection at the Annual Meeting. Our Board of Trustees has determined to reduce the size of the Board of Trustees to eight trustees effective at the Annual Meeting. Our Board of Trustees has continually refreshed since 2015 and our Board of Trustees members have a diverse range of relevant backgrounds.
| Trustee Name | Age | Independent | Audit and Cyber Risk | Compensation | Nominating and ESG | |||||
| T. Wilson Eglin | 58 | |||||||||
| Richard S. Frary | 75 | • | • | • | ||||||
| Lawrence L. Gray | 58 | • | C | |||||||
| Arun Gupta | 54 | • | • | |||||||
| Jamie Handwerker | 62 | • | • | • | ||||||
| Derrick Johnson | 53 | • | ||||||||
| Claire A. Koeneman | 53 | • | • | C | ||||||
| Nancy Elizabeth Noe | 58 | • | • | |||||||
| Howard Roth | 66 | • | C | • |
C = Chair
Each nominee currently serves on our Board of Trustees and has consented to being named in this proxy statement and to serve if elected. All trustees serve until our 2024 Annual Meeting of Shareholders or their earlier resignation or removal and until their respective successors, if any, are elected and qualify. Background information relating to our nominees begins on page 8 of this Proxy Statement.
A majority of the votes cast at the Annual Meeting will be sufficient to elect a trustee. The enclosed proxy, if signed, dated and returned, and any proxy properly authorized via the Internet or telephone, unless withheld, a broker non-vote or a contrary vote is indicated, will be voted FOR the election of the eight nominees. In the event any such nominee becomes unavailable for election, votes will be cast, pursuant to authority granted by the proxy, for such substitute nominee as may be nominated by our Board of Trustees. All trustees will serve until our 2024 Annual Meeting of Shareholders or their earlier resignation or removal and until their respective successors, if any, are elected and qualify.
| THE
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE ABOVE NOMINEES. |
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PROPOSAL
NO. 2 ADVISORY RESOLUTION TO APPROVE THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), require that we seek an advisory resolution from our Shareholders to approve the compensation awarded to our named executive officers as disclosed in this proxy statement. Although the advisory resolution is non-binding, the Board of Trustees and the Compensation Committee will review the results of the vote and will consider our Shareholders’ views and take them into account in future determinations concerning our executive compensation programs. Please refer to the section entitled “Compensation Discussion and Analysis” for details about our executive compensation programs.
A proposal in the form of the following resolution will be submitted for a non-binding, advisory vote at the Annual Meeting:
“RESOLVED, that the Shareholders approve, on a non-binding, advisory basis, the compensation of the Trust’s named executive officers set forth in the 2023 Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and accompanying compensation tables and related information).”
The advisory resolution to approve the compensation of our named executive officers requires a majority of the votes cast on the proposal at the Annual Meeting. Although the vote on this Proposal No. 2 is a nonbinding, advisory vote, the Board of Trustees will carefully consider the voting results.
| THE
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 2. |
PROPOSAL
NO. 3 ADVISORY RECOMMENDATION ON THE
FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION
In addition to requesting the non-binding, advisory vote on executive compensation, the Dodd-Frank Act also requires that once every six years we seek shareholder approval of how often we seek non-binding, advisory votes on executive compensation. The Dodd-Frank Act requires that we present every one (1), two (2) or three years (3), or abstain as alternatives for shareholders.
The Board of Trustees has determined that a non-binding, advisory vote on executive compensation every one year is preferable primarily because of the benefits of receiving input from shareholders outweighs the costs of including the vote in a proxy statement.
A proposal in the form of the following resolution will be submitted for a non-binding, advisory vote at the Annual Meeting:
“RESOLVED, that the Shareholders approve, on a non-binding, advisory basis, the presentation of an advisory vote on executive compensation either every one (1) year, two (2) years or three (3) years.”
The alternative that receives a majority of the votes cast at the Annual Meeting will be the option approved and recommended by Shareholders. In the event that no alternative receives a majority, the alternative that receives the most votes will be deemed recommended by the Shareholders. Although the vote on this Proposal No. 3 is a non-binding, advisory vote, the Board of Trustees will carefully consider the voting results.
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| THE
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PRESENTATION OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION EVERY ONE (1) YEAR AS SET FORTH IN PROPOSAL NO. 3. |
PROPOSAL
NO. 4 RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit and Cyber Risk Committee has appointed Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Although Shareholder ratification of the appointment of our independent registered public accounting firm is not required by our bylaws or otherwise, we are submitting the selection of Deloitte for ratification as a matter of good corporate governance practice. Even if the selection is ratified, the Audit and Cyber Risk Committee in its discretion may appoint an alternative independent registered public accounting firm if it deems such action appropriate. If the Audit and Cyber Risk Committee’s selection is not ratified by the Shareholders, the Audit and Cyber Risk Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of an independent registered public accounting firm.
There are no affiliations between us and Deloitte’s partners, associates or employees, other than as pertaining to Deloitte’s engagement as our independent registered public accounting firm. Representatives of Deloitte are expected to be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire and to respond to appropriate questions.
Ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023 requires the affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting.
| THE
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL NO. 4. |
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Board of Trustees and Corporate Governance
The following information relates to the nominees for election as our trustees:
| Name | Business Experience |
T. WILSON EGLIN
|
Mr. Eglin has served as a trustee since May 1994. Mr. Eglin has over 35 years of experience in commercial real estate investment and corporate finance.
Experience:
● Chairman of LXP Industrial Trust since April 2019 ● Chief Executive Officer of LXP Industrial Trust since January 2003 ● President of LXP Industrial Trust since April 1996 ● Executive Vice President of LXP Industrial Trust from October 1993 to April 1996 ● Chief Operating Officer of LXP Industrial Trust from October 1993 to December 31, 2010 ● Previously a Trustee and the Chair of the Finance Committee of Connecticut College
Mr. Eglin, as our Chief Executive Officer, provides our Board of Trustees with extensive experience in net-lease and industrial investing, real estate operations and capital markets having led us through various cycles of growth. Mr. Eglin was the chief architect of our transition to an industrial-focused real estate investment trust (“REIT”).
|
LAWRENCE L. GRAY
Committee Memberships: Compensation, Chair
|
Mr. Gray has served as an independent trustee since December 2015. Mr. Gray has over 30 years of experience in commercial real estate investment and corporate finance.
Experience:
● Chairman and Chief Executive Officer of GrayCo, Inc., a private real estate company that owns and manages apartment communities, master planned community investments and timberlands located throughout the Southeast region of the United States; serving as Chief Executive Officer since 2010 and Chairman since 2016 ● Previously: ○ Managing Director of Wachovia Corporation where he had direct responsibility for the Real Estate Investment Banking, Corporate Banking, Private Equity, Homebuilder Finance and Structured Finance groups ○ Real estate investment banking groups at J.P. Morgan and Morgan Stanley
Mr. Gray provides our Board of Trustees with extensive real estate investment and development and corporate finance experience.
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ARUN GUPTA
Committee memberships: Audit and Cyber Risk |
Mr. Gupta has served as an independent trustee since March 2022. Mr. Gupta has over 25 years of experience in private equity, venture capital and information technology/cybersecurity.
Experience:
● Adjunct Entrepreneurship Professor and Senior Advisor to Provost at Georgetown University and Member of Georgetown Entrepreneurship Advisory Board ● Lecturer, Stanford University and Member of Stanford in Washington Advisory Board and Freeman-Spogli Institute of International Studies Advisory Council ● CEO and Board Member of Noble Reach Foundation – a not-for-profit providing commercialization assistance to government-funded researchers and early-stage startups ● Venture Partner of Columbia Capital, a venture capital firm focused on Enterprise IT, Mobility and Digital Infrastructure, since 2000 ● Tech & Cybersecurity Advisory Committee Member for U.S. Senator Mark Warner ● Board director of: ○ C5 Acquisition Corp. (NYSE:CXAC) ○ Daz 3D ○ LMI (formerly Logistics Management Institute) ● Previously a board director of: ○ Millennial Media (NYSE:MM) ○ Altamira ○ Endgame ○ 1901 Group ○ Verato ○ Webs ● Previously: ○ Carlyle Venture Partners – focused on software investments ○ Arthur D. Little – telecom and technology consulting
Mr. Gupta provides our Board of Trustees with extensive mergers and acquisitions/private equity, venture capital and cybersecurity expertise.
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JAMIE HANDWERKER
Committee memberships: Audit and Cyber Risk Compensation |
Ms. Handwerker has served as an independent trustee since March 2017. Ms. Handwerker has over 40 years of experience in commercial real estate, including through sell-side research, hedge funds and direct investments.
Experience:
● Partner of KSH Capital, providing real estate entrepreneurs with capital and expertise to seed or grow their platform, since May 2016 ● Independent director and compensation committee chair of the Board of Directors of Franklin BSP Realty Trust, Inc. ● Member of the University of Pennsylvania School of Arts & Sciences Board of Overseers ● Founder and Chairperson of Penn Arts & Sciences Professional Women’s Alliance ● Previously: ○ Senior roles at Cramer Rosenthal McGlynn LLC, where she managed the CRM Windridge Partners hedge funds ○ Managing Director and Portfolio Manager with ING Furman Selz Asset Management, a NY based holding company operating as a wholly-owned subsidiary of the Dutch financial conglomerate, ING Group ○ Managing Director and Senior Equity Research Analyst (Sell-Side) at the international corporate and investment bank ING Barings and its predecessor, Furman Selz, LLC, where she focused exclusively on real estate companies, including the REIT industry
In 2019, Ms. Handwerker was named to WomenInc.’s “Most Influential Corporate Directors” list recognizing ESG best practices.
Ms. Handwerker has extensive experience analyzing and investing in real estate investment trusts and provides our Board of Trustees with related insight.
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DERRICK JOHNSON
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Mr. Johnson has served as an independent trustee since July 2022. Mr. Johnson has extensive experience across strategy, marketing, business development, finance and operations, specifically logistical operations, within organizations ranging from startups to Fortune 50 companies.
Experience:
● Senior Vice President of Operations at Agiliti, a medical equipment management and services company, since March 2021 ● Former President of Southeast at United Parcel Service (UPS), holding a variety of strategic and operational roles for over 20 years ● Member of the Georgia Commission on Freight and Logistics ● Previously, Mr. Johnson was an Associate of Fixed Income Sales at Citigroup and an Associate at Oliver Wyman (formerly Mercer Management Consulting)
Mr. Johnson brings operational and logistics expertise, with specific knowledge of the logistics user experience and provides our Board of Trustees with related insight.
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CLAIRE A. KOENEMAN
Committee memberships: Nominating and ESG, Chair Compensation
|
Ms. Koeneman has served as an independent trustee since September 2015. Ms. Koeneman has over 25 years of experience in transaction, corporate, financial and crisis communications.
Experience:
● EVP, Managing Director, Financial Communications at Ketchum, a global public relations and communications firm ● Senior positions at global public relations agencies, including GOLIN and Hill+Knowlton, as well as at Bully Pulpit Interactive, a boutique digital-first communications firm ● Previously president of Financial Relations Board (FRB), an investor relations firm where she established the leading REIT & real estate practice in the U.S.
In 2019, Ms. Koeneman was named to WomenInc.’s “Most Influential Corporate Directors” list recognizing ESG best practices.
Ms. Koeneman has many years of expertise as a corporate governance expert and as a strategic advisor to CEOs and boards of directors on all types of communications, and provides our Board of Trustees with public and investor relations knowhow.
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NANCY ELIZABETH NOE
Committee memberships: Nominating and ESG
|
Ms. Noe has served as an independent trustee since May 2021. Ms. Noe has over 30 years of experience as a practicing attorney focused on capital markets transactions, mergers and acquisitions, corporate governance and securities regulation.
Experience:
● Chair of the Board of Trustees of Agnes Scott College ● Former Partner of Paul Hastings LLP, a global law firm, from February 2001 until February 2021 ○ Chair of the Corporate Department from February 2010 until February 2020
Ms. Noe brings expertise in securities regulation, capital markets transactions and the governance of public companies to our Board of Trustees.
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HOWARD ROTH
Committee memberships: Audit and Cyber Risk, Chair Nominating and ESG |
Mr. Roth has served as an independent trustee since November 2017. Mr. Roth has over 40 years of experience as a certified public accountant focused on taxation of real estate companies and has led the global real estate, hospitality and construction group at a “Big Four” accounting firm.
Experience: ● Principal of HSR Advisors, a consulting firm that provides strategic and financial advice ● Advisory Board Member of Voyager Space Holdings ● Advisory Board Member of Hodes Weill & Associates ● Advisory Board Member of the BlackChamber Group ● Board Member of Space for Humanity ● Previously: ○ Advisor to the CEO of Avison Young ○ Partner and the leader of Ernst & Young LLP’s global Real Estate, Hospitality & Construction (RHC) practice ○ Partner of Kenneth Leventhal & Co.
Mr. Roth provides our Board of Trustees with extensive public accounting experience, including knowledge of tax laws applicable to real estate companies, generally accepted accounting principles and public company reporting requirements.
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Board Skills
The nominees for our Board of Trustees have a diverse skill set:
| Skill | Eglin | Gray | Gupta | Handwerker | Johnson | Koeneman | Noe | Roth | ||||||||
| CEO | ✓ | ✓ | ||||||||||||||
| Other Public Company Director | ✓
|
✓
|
||||||||||||||
| Operations | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| Capital Markets | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
| Corporate Finance | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||
| Financial Analysis | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| Commercial Real Estate | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| Strategic Planning | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||
| Logistics | ✓ | |||||||||||||||
| Legal | ✓ | |||||||||||||||
| Investor Relations | ✓ | ✓ | ||||||||||||||
| Audit | ✓ | |||||||||||||||
| ESG | ✓ | ✓ | ||||||||||||||
| Cybersecurity | ✓ |
The absence of a check mark for a particular skill does not mean that the trustee does not possess that qualification, skill, or experience. We look to each trustee to be knowledgeable in these areas; however, the check mark indicates that the item is a particularly prominent qualification, skill, or experience that the trustee brings to our Board of Trustees.
Our Board of Trustees believes that finance/analysis, commercial real estate and strategic planning are core skills for its members. Our Board of Trustees seeks candidates with a variety of skills and in recent years have added additional corporate governance, logistics and cybersecurity expertise. The following summarizes the skills for each nominee for our Board of Trustees:
| Trustee | Skill Set | |
| Eglin | Mr. Eglin has spent his entire career in commercial real estate. Mr. Eglin was appointed our Chief Operating Officer in October 1993 when we began as a publicly traded company and he was responsible for our operations. Mr. Eglin has experience in all aspects of finance and analysis for commercial real estate and publicly traded real estate investment trusts. Mr. Eglin was the chief architect of our successful transition from a diversified portfolio to an industrial portfolio and has worked with our Board of Trustees to develop our strategy. | |
| Gray | Mr. Gray has been involved in the commercial real estate industry for his entire career; first as an investment banker, then as CEO of GrayCo, Inc., a private real estate company. At GrayCo, Mr. Gray oversees the development and execution of the Company’s strategic plan and business activities, gaining him expertise in operations and strategic planning. As a former investment banker and a Managing Director at Wachovia Corporation with direct responsibility for the Real Estate Investment Banking, Corporate Banking, Private Equity, Homebuilder Finance and Structured Finance Groups, Mr. Gray gained expertise as a manager, a strategic advisor to public and private real estate companies and a provider of commercial real estate asset level financings and investment sales services. | |
| Gupta | Mr. Gupta has spent most of his career as a venture capitalist and more recently has been an educator for business studies at the graduate and post-graduate levels. As a Venture Partner of Columbia Capital, a venture capital firm focused on Enterprise IT, Mobility and Digital Infrastructure, Mr. Gupta gained expertise in operations, finance and analysis and as a director of private and public technology-focused companies. Mr. Gupta is also a recognized cybersecurity expert as a member of the Tech & Cybersecurity Advisory Committee for U.S. Senator Mark Warner. |
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| Trustee | Skill Set | |
| Handwerker | Ms. Handwerker has spent almost her entire career analyzing and investing in real estate and real estate related companies. She is also a director of Franklin BSP Realty Trust, a publicly traded real estate investment trust, where she serves on the audit committee and the nominating and corporate governance committee and as chairperson of the compensation committee. As a partner in KSH Capital, a private equity firm, she has gained experience in operations and strategic planning for portfolio companies. As a sell-side analyst at ING Barings focusing on REITs, Ms. Handwerker gained finance and analysis expertise. | |
| Johnson | Mr. Johnson has spent almost his entire career in the logistics sector. At UPS, where he held various roles including President of the Southeast, and as a member of the Georgia Commission on Freight and Logistics, Mr. Johnson gained strategic, operations and logistics expertise. Mr. Johnson also gained finance and analysis expertise as an Associate of Fixed Income Sales at Citigroup and an associate at Oliver Wyman (formerly Mercer Management Consulting). | |
| Koeneman | Ms. Koeneman has spent her entire career in the public/investor relations and communications sector. As President of the Financial Relations Board, an investor relations firm, she established the leading REIT and real estate practice in the U.S., from which she gained commercial real estate and strategic planning expertise. | |
| Noe | Ms. Noe has been a licensed attorney since October 1989. She gained legal expertise at leading law firms Jones Walker LLP and Paul Hastings LLP, where she spent 20 years as a partner and 10 years as the Chair of the Corporate Department. She has led corporate finance and securities transactions for real estate and other companies. As an advisor to public and private company boards, she developed expertise in corporate governance and strategic matters. | |
| Roth | Mr. Roth is an Audit Committee Financial Expert, having spend his entire career at public accounting firms. As a Partner and Leader of Ernst & Young LLP’s Global Real Estate, Hospitality & Construction Practice, he gained finance and analysis, commercial real estate and strategic planning expertise. Mr. Roth is also an Advisory Board Member of companies focused on capital advisory for real estate investment and data centers. |
Board Demographics
Our Board of Trustees is focused on certain demographics as part of its refreshment process. During 2022, we met with shareholders holding in excess of 58% of our common shares as of December 31, 2022, including shareholders holding 44% of our common shares who met with independent members of our Board of Trustees, to discuss, among other things, the demographics of our Board of Trustees. The following demographic information applies to our nominees.
Diversity:
Gender |
Racial/Ethnic |
| Demographics | Eglin | Gray | Gupta | Handwerker | Johnson | Koeneman | Noe | Roth |
| Race/Ethnicity | ||||||||
| African American | ✓ | |||||||
| Asian/Pacific Islander | ✓ | |||||||
| White Caucasian | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||
| Hispanic/Latino | ||||||||
| Native American | ||||||||
| Gender | ||||||||
| Female | ✓ | ✓ | ✓ | |||||
| Male | ✓ | ✓ | ✓ | ✓ | ✓ |
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Tenure:
| ● | Our Board of Trustees believes that on-going trustee refreshment ensures a diversity of perspectives. |
| ● | We require all trustees attaining the age of 75 to submit a resignation on an annual basis to allow our Board of Trustees to determine whether they should continue as a trustee. In April 2022, we announced that, Mr. Frary would not seek reelection at the Annual Meeting under our trustee retirement policy. |
| ● | Since 2015, we have added seven new trustees, our trustee nominees have an average tenure of less than 7.5 years and our non-employee trustee nominees have an average tenure of less than 4.5 years. |
| Significant Board Refreshment | Age Distribution | |||
| 7 | New
Trustees since 2015 |
58 | Average
Age of Nominees | |
| Two New Board Members Added in 2022 with Following Skills |
Outside Commitments:
| ● | No trustee serves on the board of three or more other public companies. |
Independence:
| ● | Our Corporate Governance Guidelines and the rules and regulations of the New York Stock Exchange (the “NYSE”) each require that a majority of our Board of Trustees are “independent” as that term is defined in the rules and regulations of the NYSE. |
| ● | The Nominating and ESG Committee, on behalf of our Board of Trustees, performed its annual independence review and determined that, except for Mr. Eglin, our trustees are independent. Mr. Eglin is not independent because of his role as an executive officer of us. |
Independence | ||
| 87.5% | of Nominees are independent | |
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CORPORATE RESPONSIBILITY
We seek to create a sustainable environmental, social, governance and resilience (“ESG+R”) platform that enhances both our company and shareholder value. We are committed to supporting our shareholders, employees, tenants, suppliers, creditors, and communities as we execute on our ESG+R objectives and initiatives. The objectives below are integrated throughout our investment process and contribute to our ongoing long-term success on behalf of our shareholders.
Because the properties in our portfolio are primarily subject to net leases where tenants are responsible for maintaining the buildings and are in control of their energy usage and environmental sustainability practices, our ability to implement ESG+R initiatives throughout our portfolio may be limited.
The Nominating and ESG Committee of our Board of Trustees oversees our ESG+R strategy and initiatives.
Environmental, Sustainability and Climate Change
Developing strategies that reduce our environmental impact and operational costs is a critical component of our ESG+R program.
| Actions | Performance |
● Track and monitor all landlord-paid utilities and track tenant utility data wherever possible.
● Strategically implement green building certifications to highlight sustainability initiatives and pursue ENERGY STAR® certification for eligible properties annually.
● Annually evaluate opportunities to improve efficiency, reduce our operating costs and reduce properties’ environmental footprint.
● Evaluate the opportunity to increase renewable energy across the portfolio.
|
● Benchmarked landlord paid energy, water, waste and recycling across the portfolio and working to expand tenant-paid utility coverage.
● Circulated sustainability-focused resources for tenants and property managers, including a Tenant Fit-Out Guide and an Industrial Tenant Sustainability Guide.
● Evaluated sustainability and efficiency initiatives across the portfolio to reduce energy consumption and greenhouse gas emissions.
● Obtained six Green Building Certifications and five ENERGY STAR ratings for 2022.
|
Our 10-Year Environmental Targets1
40% diversion |
25% reduction
in GHG |
25% reduction
in energy |
15% reduction
in water |
| (1) | Landlord controlled items only. GHG emissions are scope 1 and 2 only. |
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Social
We believe that actively engaging with stakeholders is critical to our business and ESG+R efforts, providing valuable insight to inform strategy, attract and retain top talent, and strengthen tenant relationships.
| Actions | Performance |
● Routinely engage with our tenants to understand leasing and operational needs at our assets and provide tools and resources to promote sustainable tenant operations.
● Collaborate with tenants and property managers on health and well-being focused initiatives.
● Assess our tenant and employee satisfaction and feedback through annual surveys.
● Provide our employees with annual training, industry updates and access to tools and resources related to ESG+R.
● Provide our employees with health and well-being resources focused on physical, emotional and financial health.
● Track and highlight the diversity and inclusion metrics of our employees, board and executive management team.
● Support and engage with local communities through philanthropic volunteer events, focusing on food insecurity and diversity, equity and inclusion initiatives.
● Incorporate sustainability clauses into tenant leases, allowing collaboration on our ESG+R initiatives.
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● Conducted a tenant feedback survey through Kingsley Associates (“KA”), achieving a satisfaction score in excess of the KA average.
● Engaged with our employees through regular surveys, including an employee satisfaction survey, and obtained an 86% satisfaction rate.
● Organized employee volunteer opportunities at non-profit organizations on company time and participated in clothing and food drives.
○ LXP arranged local volunteering days for its New York, Texas and Florida employees in 2022.
● Invited our employees to donate to a non-profit organization important to them-supported 20 different organizations focusing on diversity, equity and inclusion.
● Organized step and other health-related challenges for our employees.
○ In 2022, several LXP employees participated in the JP Morgan Corporate Challenge, the largest corporate running challenge in the world.
● Provided an employee assistance program with 24/7 unlimited access to referrals and resources for all work-life needs, including access to face-to-face and telephonic counseling sessions, legal and financial referrals and consultations.
● Formed a women’s mentorship program, in which female employees are paired with female mentors for career-related advice and support.
● Awarded as a 2022 Best Company to Work for in New York.
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We maintain a variety of training programs for our employees, including those for sustainability, accounting, cybersecurity, harassment, anti-corruption/bribery and human rights. These training programs include departmental and employees specific training. We also maintain a professional development policy to provide employees with professional development opportunities to increase their skills and enhance their contributions to us. We believe providing professional development to our employees is an investment in their careers and our future. Under the policy, employees plan with their manager to select courses and other training mediums that are in line with our business to enhance their careers.
We focus on our diversity strategy to ensure appropriate gender representation and appropriate racial and ethnic representation at the executive and workforce levels. As of December 31, 2021, 61% of our full-time employees and 47% of our executive employees were female, and 42% of our full-time employees and 11% of our executive employees were non-white. As of December 31, 2022, 59% of our full-time employees and 18% of our executive employees were female, and 45% of our full-time employees and 9% of our executive employees were non-white. We believe our diversity, equity and inclusion efforts are making a positive impact on our demographics.
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Additional Resources on our Social Priorities
Stakeholder
(www.lxp.com/wp-content/uploads/2021/09/ Lexington_StakeholderEngagementPolicy_Dec15.pdf) |
Human Rights Policy (https://www.lxp.com/wp-content/uploads/2021/09/LXP- Human-Rights-Policy-2022.pdf)
|
Diversity,
Equity and (https://www.lxp.com/wp-content/uploads/2021/09/LXP- Diversity-Equity-and-Inclusion-Policy-12.7.21.pdf) |
Resilience
We believe that our resilience to climate change-related physical and transition risks is critical to our long-term success. long-term success.
| Actions | Performance |
● Align our resilience program with the Task Force on Climate-Related Financial Disclosures (“TCFD”) framework.
● Evaluate physical and transition climate-related risks as part of our acquisition due diligence process.
● Utilize climate analytics metrics to (1) identify physical risk exposure across the portfolio, (2) identify high risk assets and (3) implement mitigation measures and emergency preparedness plans.
● Assess transition risks and opportunities arising from the shift to a low-carbon economy, including market, reputation, policy, legal and technology. |
● Engaged a third-party consultant to conduct ESG+R assessments on all acquisitions.
● Continued to be a supporter of the TCFD reporting framework.
● Engaged a climate analytics firm to evaluate physical risk due to climate change across the portfolio.
|
Key Commitments
Governance
Transparency to our stakeholders is essential. We pride ourselves on providing our stakeholders with regular reports and detailed disclosures on our operational and financial health and ESG+R efforts.
| Actions | Performance |
● Strive to implement best governance practices, mindful of the concerns of our shareholders.
○ This includes Code of Business Conduct and Ethics, enterprise risk assessments, whistleblower policy, and management succession planning.
● Increase our ESG+R transparency and disclosure by providing regular updates to shareholders and other stakeholders and aligning with appropriate reporting to frameworks, including GRESB, SASB, GRI and TCFD.
● Monitor compliance with applicable benchmarking and disclosure legislation, including utility data reporting, audit and retro-commissioning requirements and GHG emission laws.
● Ensure employees operate in accordance with the highest ethical standards and maintain the policies outlined in our Code of Business Conduct and Ethics.
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● Updated and publicly disclosed our Code of Business Conduct and Ethics, Executive Committee Charter and Corporate Governance Guidelines.
● Performed enterprise risk assessments and management succession planning.
○ Participated in the GRESB Real Estate Assessment for the second time in 2022.
○ Placed 3rd in U.S. Industrial Distribution/Warehouse Listed peer group.
○ Achieved overall score of 69, an increase compared to 2021.
● Received Public Disclosure Score of ‘A’, above global average, and placed first in U.S. Industrial Peer Group.
● Published 2021 Corporate Responsibility Report, aligned with GRI, SASB and TCFD.
● Maintained a Stakeholder Engagement Policy to disclose our process when working with our key stakeholders, including investors, property management teams and tenants.
● Conducted annual ESG+R training for asset managers in Q3 2022.
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| Reporting Initiatives | Awards and Recognition |
In addition to the items disclosed elsewhere, we maintain the following corporate governance practices:
| Proxy Access | Our bylaws provide for proxy access. |
| Trustee Refreshment | Our Board of Trustees began a refreshment process in 2015. Since 2015, we have added seven new independent trustees. Each trustee, upon attaining the age of 75 and annually thereafter, is required to tender a letter of resignation, which is accepted at the discretion of the other trustees. Mr. Frary turned 75 in 2022 and tendered his resignation in accordance with our policy. Our Board of Trustees rejected his resignation because Mr. Frary announced he would not stand for re-election at the Annual Meeting. |
| Management Succession Plan | On at least an annual basis, our Chief Executive Officer submits a management succession plan that provides for the ordinary course and emergency succession for our Chief Executive Officer and other key members of management, which is reviewed by the Nominating and ESG Committee and the Board of Trustees. During 2022, at each quarterly meeting of our Board of Trustees, our Board of Trustees either discussed, or was given the opportunity to discuss, the succession plan during its executive sessions. |
| Self-Assessment | Our Board of Trustees and its committees each perform an annual self-assessment under the direction of the Nominating and ESG Committee. During 2022, this assessment was facilitated by Venable LLP, the Trust’s Maryland counsel, and included individual interviews with each trustee and a peer review. |
| Board Independence | Following the Annual Meeting, assuming all of the nominees are elected, our Board of Trustees is expected to be 87.5% independent. |
| Independent Lead Trustee | We have an independent Lead Trustee with robust duties because our Chairman is also our Chief Executive Officer. The duties of the independent Lead Trustee include:
● Preside at all meetings of the Board of Trustees at which the Chairman is not present. ● Preside at all executive sessions of the non-management trustees and independent trustees and set the format and agenda, with input from other independent trustees, at such executive sessions. ● Call additional meetings of the non-management trustees and independent trustees, as deemed necessary. ● Facilitate discussion and open dialogue among the independent trustees during Board of Trustees meetings, executive sessions and outside of Board of Trustees meetings. ● Serve as principal liaison between the independent trustees and the Chairman and management. |
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● Communicate to the Chairman and management, as appropriate, any decisions reached, suggestions, views or concerns expressed by independent trustees in executive sessions or outside of meetings of the Board of Trustees. ● Provide the Chairman with comment to Board of Trustees meeting agendas and meeting schedules. ● Periodically meet with independent trustees, as a group or individually, to discuss Board of Trustees and committee performance, effectiveness and composition. ● If appropriate, and in coordination with executive management, be available for consultation and direct communication with major shareholders.
The Lead Trustee is selected and appointed by the independent members of the Board of Trustees following recommendation by the Nominating and ESG Committee. The Nominating and ESG Committee seeks input from all trustees and outside advisors when making a recommendation on the Lead Trustee. | |
| Anti-Pledging/Hedging | We prohibit margin and/or pledging and/or hedging arrangements by our trustees, executive officers and employees. |
| Insider Trading Policy | We believe it is improper and inappropriate for our employees, officers and trustees to engage in short-term or speculative transactions involving our common shares or other securities. We maintain an insider trading policy that restricts trading in our securities during certain times and requires covered persons, including employees, officers and trustees, to obtain approval prior to trading in our securities. Executive officers and trustees complete annual questionnaires to confirm their compliance with our insider trading policy. |
| Share Ownership | We have the following common share beneficial ownership requirements (after a phase-in period):
● Chief Executive Officer: at least six times annual base salary. ● Three next most highly compensated executive officers: at least three times annual base salary. ● The fifth most highly compensated executive officer: at least two times annual base salary. ● Non-management trustees: at least three times annual retainer. |
| Share Retention | We require our executive officers to maintain beneficial ownership of at least 50% of any common shares acquired by them through our equity award plans from the later of November 2009 and the date of appointment as an executive officer of the Company, including, without limitation, through option awards and vesting of restricted shares, after taxes and transaction costs, until retirement or other termination of employment. |
| Anti-Bribery/Anti-Corruption | We maintain anti-bribery and anti-corruption policies in our employee handbook and Code of Business Conduct and Ethics. Employees annually certify compliance with our policies, including our employee handbook and Code of Business Conduct and Ethics. |
| Trustee Compensation | Our non-management trustees are paid 67% of their base annual retainer in our common shares. |
| Share Options | Our equity plan prohibits cash buyouts of underwater options. |
| Tax Gross-Ups | We have no tax gross-ups or single-trigger change-in-control severance arrangements. |
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| Tenure | The average tenure of our independent trustees is less than five years as of the date of this proxy statement. |
| Declawed Blank Check Preferred | Blank check preferred shares cannot be issued as a “takeover” defense. |
| Shareholder Written Consent | Shareholders can act by written or electronic consent to the same extent shareholders can act at a meeting at which all shares are present and voted. |
| Special Meetings | Shareholders holding at least 25% of our outstanding common shares can call a special meeting of the shareholders. |
| No Exclusive Venue/Forum | There is no exclusive venue or forum for shareholder litigation. |
| No Fee Shifting | There is no fee shifting provision for unsuccessful shareholder litigants. |
| No Poison Pill | We do not have a poison pill. |
| Bylaw Amendment | Shareholders have concurrent power to amend our bylaws. |
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MANAGEMENT AND CORPORATE GOVERNANCE
Our Board of Trustees
Our Board of Trustees held 14 meetings during the fiscal year ended December 31, 2022. Each individual that was a trustee at the time of such meetings attended at least 75% of the aggregate of the total number of meetings of our Board of Trustees and all committees of the Board of Trustees on which he or she served during his or her tenure.
We expect all trustees to attend each annual meeting of shareholders, but from time to time other commitments prevent all trustees from attending each meeting. All of our then trustees attended the 2022 Annual Meeting of Shareholders, which was held on May 24, 2022.
Committees of our Board of Trustees
Our Board of Trustees has three standing committees: the Audit and Cyber Risk Committee, the Compensation Committee and the Nominating and ESG Committee. Each of our committees consists solely of trustees meeting the independence requirements of applicable NYSE rules and our independence standards and are “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act, and our Audit and Cyber Risk Committee consists solely of trustees meeting the independence requirements of Rule 10A-3 under the Exchange Act.
Each committee operates under a written charter, all of which were reviewed by the Nominating and ESG Committee, the respective members of the applicable committee and the Board of Trustees during 2022. The charters of each of our standing committees are available on our web site at www.lxp.com.
Audit and Cyber Risk Committee
Members:
Independence: All
Meetings in 2022: 8
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Summary of Responsibilities:
● Overseeing: ○ the integrity of our financial statements; ○ the qualifications, independence and performance of our independent registered public accounting firm; ○ the performance of the personnel responsible for the Trust’s internal audit function; ○ the assurance of our ESG information; ○ management in connection with key risks and our enterprise risk management; ○ technology and information systems; and ○ compliance with legal and regulatory requirements.
● Appointing, setting compensation for, retaining and overseeing the work of the independent registered public accounting firm.
● Pre-approving all auditing services and, to the extent permitted under applicable law, non-audit services to be provided to the Company by the independent registered public accounting firm engaged by the Company.
● Preparing and approving an Audit and Cyber Risk Committee report.
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| Our Board of Trustees has determined that Messrs. Roth and Frary each qualify as an “Audit Committee Financial Expert” in accordance with Item 407(d)(5) of Regulation S-K and that all members of the Audit and Cyber Risk Committee are financially literate under NYSE rules. | |
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The Audit and Cyber Risk Committee previously adopted an Internal Audit Charter, which formalizes the internal audit function of the Company. For the year ended December 31, 2022, the Audit and Cyber Risk Committee retained Ernst & Young LLP to provide internal audit assistance.
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Compensation Committee
Members:
Independence: All
Meetings in 2022: 5
|
Summary of Responsibilities:
● Reviewing and approving of: ○ corporate goals and objectives relevant to executive officer compensation; ○ evaluating executive officer performance; and ○ determining and approving executive officer compensation.
● Determining and approving the compensation of non-employee members of the Board of Trustees.
● Reviewing and approving incentive-compensation and equity-based plans.
● Overseeing the drafting and reviewing of the Compensation Disclosure & Analysis and related disclosures.
● Preparing and approving an annual report of the Compensation Committee.
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Nominating and ESG Committee
Members:
Independence: All
Meetings in 2022: 6
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Summary of Responsibilities:
● Identifying individuals qualified to become trustees and/or executive officers.
● Assisting the Board of Trustees in fulfilling its oversight responsibilities with regard to, including, but not limited to, environmental, climate change, health and safety, corporate social responsibility, sustainability, philanthropy, corporate governance, reputation, diversity, equity and inclusion, community issues, political contributions and lobbying and other public policy matters (including our Human Rights Policy) relevant to the Trust.
● Leading the annual independence review and self-evaluation of the Board of Trustees and its committees and making recommendations for service on committees.
● Overseeing succession planning for our executive management.
● Monitoring the refreshment and diversification of the membership of the Board of Trustees.
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In an effort led by the Nominating and ESG Committee, each committee annually reviews its charter and makes recommended revisions.
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Each committee has the authority to consult with its own legal or other advisors, all in accordance with the authority granted to such committee under its charter. Each committee may form and delegate authority to subcommittees when and as such committee deems necessary and appropriate.
Board Leadership Structure and Strategy and Risk Oversight
Our board leadership structure currently consists of an independent Lead Trustee and an executive Chairman. Our Board of Trustees believes that it is appropriate to combine the positions of Chairman and Chief Executive at this time due to Mr. Eglin’s critical role in creating and implementing our current strategy. Mr. Eglin has guided us through various market cycles and our transformation from a diversified net-lease REIT into an industrial REIT, and our Board of Trustees believes that he is the appropriate person to continue to serve as our Chairman.
Our Board of Trustees believes that a Lead Trustee, who is independent, is necessary and appropriate to provide additional, independent leadership to the Board. Our Corporate Governance Guidelines provide that the Lead Trustee shall have the authority and specific responsibilities set forth under “Corporate Responsibility—Governance—Independent Lead Trustee,” above.
Mr. Frary has been our independent Lead Trustee since February 6, 2017 and will continue in this role until the Annual Meeting. In accordance with the retirement policy in our Corporate Governance Guidelines, Mr. Frary is not standing for reelection at the Annual Meeting because he turned age 75 in September 2022. Early in 2022, the Nominating and ESG Committee began discussing a replacement Lead Trustee. Ms. Koeneman, as Chair of the Nominating and ESG Committee, consulted each trustee regarding the replacement Lead Trustee. Ms. Koeneman and Mr. Eglin met with outside advisors regarding a replacement Lead Trustee. In September 2022, the Nominating and ESG Committee approved a resolution to recommend Jamie Handwerker as the Lead Trustee following the Annual Meeting. Ms. Handwerker has experience as a sell-side analyst, a hedge fund manager and a direct real estate investor and she is also an independent board member of another publicly traded real estate investment trust, which the Nominating and ESG Committee believes makes her a suitable candidate for Lead Trustee.
Strategy and risk are an integral part of our Board of Trustees and Committee deliberations throughout the year. Management regularly updates, and reports to our Board of Trustees with respect to, our business plan. Management also performs a quarterly fraud risk assessment, which is reported to our Board of Trustees. The quarterly fraud risk assessment assesses the critical risks we face (e.g., strategic, operational, financial, legal/regulatory, and reputational), their relative magnitude and management’s actions to mitigate these risks. In addition, the Audit and Cyber Risk Committee assists our Board of Trustees with the oversight of our risk management program, including its oversight of our internal audit function, enterprise risk management and cybersecurity risks.
Information Security
As a smaller company, we use third-party vendors to assist us with our network and information technology requirements. Since 2019, BDO USA, LLC has provided us with virtual chief technology officer services, including cybersecurity. In 2022, Mr. Gupta, a cyber security expert, joined our Board of Trustees. Mr. Gupta has significant experience in, among other areas, emerging technologies and coordinating national security and technology policy.
On at least a quarterly basis, we and BDO USA, LLC report to our Board of Trustees or the Audit and Cyber Risk Committee on information technology matters. On a regular basis, our Audit and Cyber Risk Committee commissions an internal audit or assessment of our cybersecurity practices and receives a report from our internal auditor on our cybersecurity risks. In addition, our management participates in annual tabletop exercises and simulations as part of our business continuity, incident response and disaster recovery planning.
The net expenses we incurred from information security breaches, penalties and settlements over the last three years have been immaterial and nominal relative to total revenue. We did not experience an information security breach in the last fiscal year.
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Shareholder Nominations
Our Board of Trustees believes that the Nominating and ESG Committee is qualified and in the best position to identify, review, evaluate and select qualified candidates for membership on our Board of Trustees based on the criteria described in the next paragraph. However, the Nominating and ESG Committee intends to consider nominees recommended by shareholders, but only if the submission of a recommendation includes a current resume and curriculum vitae of the candidate, a statement describing the candidate’s qualifications, contact information for personal and professional references, the name and address of the shareholder who is submitting the candidate for nomination, the number of shares which are owned of record or beneficially by the submitting shareholder and a description of all arrangements or understandings between the submitting shareholder and the candidate for nomination. Submissions should be made to: LXP Industrial Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4015, Attention: Secretary. The Nominating and ESG Committee’s consideration process includes completion of a standard questionnaire, a background check and interviews with the Nominating and ESG Committee and other members of the Board of Trustees. The Nominating and ESG Committee has no obligation to recommend such candidates for nomination.
In recommending candidates for membership on our Board of Trustees, the Nominating and ESG Committee’s assessment includes consideration of issues of judgment, diversity, expertise, and experience. The Nominating and ESG Committee believes that a diverse board is one that includes differences of viewpoints, professional experience, education, skill, and other individual qualities and attributes that contribute to board heterogeneity. The Nominating and ESG Committee also considers other relevant factors as it deems appropriate. Generally, qualified candidates for board membership should (i) demonstrate personal integrity and moral character, (ii) be willing to apply sound and independent business judgment for the long-term interests of shareholders, (iii) possess relevant business or professional experience, technical expertise, or specialized skills, (iv) possess personality traits and backgrounds that fit with those of the other trustees to produce a collegial and cooperative environment, (v) be responsive to our needs, and (vi) have the ability to commit sufficient time to effectively carry out the duties of a trustee.
The Nominating and ESG Committee follows legal and regulatory requirements, such as those relating to independence, and gives due consideration to characteristics, such as race, gender, ethnicity and sexual orientation.
Our Board of Trustees believes its effectiveness is enhanced by being comprised of individuals with diverse skills, experience and backgrounds that are relevant to the role of our Board of Trustees and the needs of our business. The objective of our Board of Trustees is to foster a diverse and inclusive culture which solicits multiple perspectives and views and is free of conscious or unconscious bias and discrimination. Accordingly, the Nominating and ESG Committee regularly reviews the changing needs of our business and the skills, experience and backgrounds of its members, with the intention that our Board of Trustees will be periodically “renewed” as certain Trustees rotate off and new Trustees are recruited. Our Board of Trustee’s commitment to diversity and “renewal” will be tempered by the need to balance change with continuity, experience and a collaborative approach with each other and our Chief Executive Officer.
After completing this evaluation and review, the Nominating and ESG Committee makes a recommendation to our Board of Trustees as to the persons who should be nominated by our Board of Trustees, and our Board of Trustees determines the nominees after considering the recommendation and report of the Nominating and ESG Committee.
To the extent there is a vacancy on our Board of Trustees, the Nominating and ESG Committee will either identify individuals qualified to become trustees through relationships with our trustees or executive officers or by engaging a third party. Our Board of Trustees currently consists of nine individuals, but the size of our Board of Trustees is expected to decrease following the Annual Meeting due to Mr. Frary not standing for reelection. However, the size of our Board of Trustees may increase in the future by a limited number to further diversify and refresh the membership of our Board of Trustees.
In addition, our bylaws provide that any shareholder that complies with the “advance notice” or “proxy access” provisions in our bylaws may also nominate individuals for election to our Board of Trustees. See “Q&A—How do I nominate a trustee or submit a proposal for the 2024 Annual Meeting of Shareholders?”
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Shareholder Communications
Parties wishing to communicate directly with our Board of Trustees, an individual trustee, the Lead Trustee or the non-management members of our Board of Trustees as a group should address their inquiries to our General Counsel by mail sent to our principal office located at One Penn Plaza, Suite 4015, New York, New York 10119-4015. The mailing envelope should contain a clear notification indicating that the enclosed letter is an “Interested Party/Shareholder-Board Communication,” “Interested Party/Shareholder-Trustee Communication,” “Interested Party/Shareholder-Lead Trustee Communication” or “Interested Party/ Shareholder-Non-Management Trustee Communication,” as the case may be.
Complaint Procedures for Accounting and Auditing Matters
We have established “whistleblower” procedures set forth in our Code of Business Conduct and Ethics for (1) the receipt, retention and treatment of complaints and allegations regarding accounting, internal accounting controls or auditing matters (“Accounting Matters”) and (2) the confidential, anonymous submission by Covered Persons (as defined therein) of concerns regarding Accounting Matters. Under these procedures, anyone with concerns regarding accounting matters or otherwise, may, as applicable, report their concerns to our compliance hotline by telephone at 844-502-7786 or on the web at http://LXP.ethicspoint.com. Complaints are reviewed by the Chairman of the Audit and Cyber Risk Committee and our General Counsel, as appropriate, and reported to our Board of Trustees on an as needed basis, but not less than quarterly. In the event of a complaint, our internal and external auditors are informed and we work with our outside legal counsel to investigate the complaint.
Periodic Reports, Code of Ethics, Committee Charters and Corporate Governance Guidelines
Our Internet address is www.lxp.com. We make available free of charge through our web site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, other filings with the SEC, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such materials with the SEC. We also have made available on our web site copies of our current Audit and Cyber Risk Committee Charter, Compensation Committee Charter, Nominating and ESG Committee Charter, Code of Business Conduct and Ethics, and Corporate Governance Guidelines. In the event of any changes to these charters or the code or the guidelines, updated copies will also be made available on our web site. The contents of our website are not incorporated into this Proxy Statement.
You may request a copy of any of the documents referred to above, without charge to you, by contacting us at the following address, email or telephone number:
LXP
Industrial Trust
One Penn Plaza, Suite 4015 New York, NY 10119-4015
Attention: Investor Relations ir@lxp.com
(212) 692-7200
Certain Relationships and Related Transactions
Policy. Under our policy regarding the review, approval and ratification of any related party transaction, the Audit and Cyber Risk Committee or the Board of Trustees (consisting of all of the non-conflicted members) reviews the relevant facts and circumstances of each related party transaction, including whether the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related party’s interest in the transaction, taking into account the conflicts of interest and corporate opportunity provisions of our Code of Business Conduct and Ethics, and the Audit and Cyber Risk Committee or the Board of Trustees (consisting of all of the non-conflicted members) either approves or disapproves the related party transaction. Any related amendment to, or waiver of any provision of, our Code of Business Conduct and Ethics for executive officers or trustees must be approved by the Nominating and ESG Committee (consisting of the non-conflicted members) and will be promptly disclosed to our shareholders as required by applicable laws, rules or regulations including, without limitation, the requirements of the NYSE.
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Any related party transaction will be consummated and continue only if the Audit and Cyber Risk Committee or the Board of Trustees (consisting of all of the non-conflicted members) has approved or ratified such transaction in accordance with the guidelines set forth in the policy. For purposes of our policy, a “Related Party” is:
| (1) | any person who is, or at any time since the beginning of our last fiscal year was, one of our trustees or executive officers or a nominee to become one of our trustees; |
| (2) | any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; |
| (3) | any immediate family member of any of the foregoing persons, which means any spouse, child, stepchild, parent, stepparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; and |
| (4) | any firm, corporation, or other entity in which any of the foregoing persons is employed, is a general partner, principal, or in a similar position, or in which such person has a 5% or greater beneficial ownership interest. |
Indemnification Agreements. Our trustees and certain of our executive officers have entered into indemnification agreements with us. Pursuant to these agreements, we agree to indemnify the trustee or executive officer who is a party to such an agreement against any and all judgments, penalties, fines, settlements, and reasonable expenses (including attorneys’ fees) actually incurred by the trustee or executive officer or in a similar capacity for any other entity at our request. These agreements include certain limitations on our obligations in certain circumstances, particularly in situations in which such indemnification is prohibited or limited by applicable law.
Hedging Policy
We have adopted a policy that prohibits our trustees, officers and employees, as well as certain of their immediate family members, from buying or selling Company securities while in possession of material, non-public information. In addition, we have adopted a policy prohibiting trustees, officers, and employees from pledging our securities and from establishing short positions and hedging transactions, including through prepaid variable forwards, equity swaps, collars and exchange funds.
Charitable Contributions
During 2022, we did not make any charitable contribution to any tax-exempt organization in which any independent trustee serves as an executive officer.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee during 2022 is or has been one of our executive officers. Further, none of our executive officers has ever served as a member of the compensation committee or as a director of another entity whose executive officers served on our Compensation Committee or as a member of our Board of Trustees.
Employee Stock Purchase Plan
We maintain an Employee Stock Purchase Plan, which provides an opportunity for employees to elect to purchase common shares at 95% of the fair market value on the date of purchase. Employees participate through payroll deductions.
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EXECUTIVE OFFICERS
The following table sets forth certain information as of the close of business on the Record Date concerning our executive officers:
| Name | Age | Business Experience | ||
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T. Wilson Eglin
Chairman, Chief Executive Officer & President
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58 | Mr. Eglin’s business experience is set forth in this Proxy Statement under “Trustee Nominees” on page 8. | ||
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Beth Boulerice
Executive Vice President, Chief Financial Officer & Treasurer
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58 | Ms. Boulerice is an Executive Vice President and serves as Chief Financial Officer and Treasurer. She previously served as our Chief Accounting Officer. Prior to joining the firm in 2007, Ms. Boulerice was employed by First Winthrop Corporation and was the Chief Accounting Officer of Newkirk Realty Trust. She graduated from the University of Rhode Island and is a Certified Public Accountant. | ||
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Joseph S. Bonventre
Executive Vice President, Chief Operating Officer, General Counsel & Secretary
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47 | Mr. Bonventre is an Executive Vice President and serves as Chief Operating Officer, General Counsel and Secretary. Prior to joining us in September 2004, he was an associate in the corporate department of the law firm now known as Paul Hastings LLP. He received his B.A. from New York University in 1998 and his J.D. from Benjamin N. Cardozo School of Law/Yeshiva University in 2001. Mr. Bonventre is admitted to practice law in the State of New York. | ||
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Brendan Mullinix
Executive Vice President & Chief Investment Officer
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48 | Mr. Mullinix is an Executive Vice President and serves as Chief Investment Officer. He joined us in 1996 and previously served as a Senior Vice President and a Vice President. Mr. Mullinix graduated from Columbia College, Columbia University. |
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|
James Dudley
Executive Vice President & Director of Asset Management
|
42 | Mr. Dudley is an Executive Vice President and Director of Asset Management. He has been with us since 2006 and has held various roles within the Asset Management Department. Prior to joining the firm, Mr. Dudley was employed by ORIX Capital Markets. Mr. Dudley has a B.A. from Angelo State University and an M.S. from The University of Texas at Arlington. | ||
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Nabil Andrawis
Executive Vice President & Director of Taxation
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52 | Mr. Andrawis is an Executive Vice President and serves as Director of Taxation. Prior to joining us in 2002, he was employed by Vornado Realty Trust and Deloitte & Touche LLP. Mr. Andrawis was previously the Co-Chairman of the National Association of Real Estate Investment Trusts State and Local Tax Subcommittee. Mr. Andrawis graduated from The Bernard M. Baruch College and is a Certified Public Accountant.
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Mark Cherone
Senior Vice President & Chief Accounting Officer
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41 | Mr. Cherone is a Senior Vice President and serves as Chief Accounting Officer. Prior to joining us in March 2019, he served as Corporate Controller for Brandywine Realty Trust since 2012. Mr. Cherone graduated from The Pennsylvania State University and is a Certified Public Accountant. |
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COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Introduction.
This Compensation Discussion and Analysis section discusses the compensation policies and programs for our named executive officers.
2022 Company Highlights. During 2022, our management team accomplished the following1:
| (1) | See Appendix A for definitions and reconciliations of non-GAAP measures. |
Named Executive Officers. Our named executive officers are:
| Name | Title | |
| T. Wilson Eglin | Chairman, Chief Executive Officer and President | |
| Beth Boulerice | Executive Vice President, Chief Financial Officer and Treasurer | |
| Joseph S. Bonventre | Executive Vice President, Chief Operating Officer, General Counsel and Secretary | |
| Brendan P. Mullinix | Executive Vice President and Chief Investment Officer | |
| James Dudley | Executive Vice President and Director of Asset Management |
Compensation Committee Responsibility and Philosophy. The Compensation Committee administers the compensation policies and programs for our named executive officers and regularly reviews and approves our compensation strategy and principles to ensure that they are aligned with our business strategy and objectives, encourage high performance, promote accountability and ensure that management’s interests are aligned with the interests of our shareholders. The Compensation Committee believes that the compensation program should further both short-term and long-term business goals and strategies while enhancing shareholder value. In keeping with this philosophy, the compensation program’s objectives are to:
| ● | maintain a transparent compensation program that is easy for all of our shareholders to understand; |
| ● | further align the interests of our named executive officers with those of our shareholders; |
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| ● | strengthen the relationship between executive pay and company performance; and |
| ● | retain key members of management. |
The Compensation Committee believes that the business judgment of its members is necessary to properly evaluate and design an executive compensation program.
2022 “Say on Pay” Advisory Vote
In 2022, approximately 96.3% of our shareholders (excluding broker non-votes) voted “FOR” the compensation of our named executive officers as disclosed in the related proxy statement, which has been consistent with the votes for the previous years.
Based on such approvals, the Compensation Committee has largely maintained the compensation framework approved in 2022 for 2023 with modifications for our 2023 business plan objectives.
Shareholder Engagement
We regularly engage with our shareholders on a variety of matters, including:
| ● | general business updates; |
| ● | our transformation initiatives; |
| ● | board composition, risk oversight and refreshment; |
| ● | corporate governance practices; |
| ● | ESG+R strategy (including diversity, climate change, environmental sustainability and disclosures); and |
| ● | executive compensation. |
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| Shareholder Meetings Offered | Shareholder Meetings Held | Shareholder Meetings with Independents | |||||
| 80% | Contacted and offered to meet with shareholders holding in excess of 80% of our common shares as of December 31, 2022. | 58% | Held meetings with shareholders holding in excess of 58% of our common shares as of December 31, 2022. | 44% | Had one or more independent members of our Board of Trustees meet with shareholders holding 44% of our common shares as of December 31, 2022. | ||
The discussions with our shareholders around executive compensation also supported the Compensation Committee’s decision to largely maintain the compensation framework approved in prior years for 2023.
Executive Compensation Best Practices.
The following is a summary of our executive compensation practices:
| What we do: | What we don’t do: | |
We pay for performance We disclose our compensation programs with transparency We assess compensation risk We use an independent compensation consultant We use competitor and size-based peer groups We require hold periods and have minimum share ownership guidelines We have a robust clawback policy |
We do not provide tax gross-up payments We do not have excessive severance arrangements or single-trigger change in control severance payments We do not encourage unnecessary or excessive risk taking as a result of our compensation policies We do not guarantee compensation or uncapped bonus payments We do not allow for repricing of stock options. We do not allow hedging or pledging of our stock |
Independent Compensation Consultant
During 2022, the Compensation Committee retained Ferguson Partners Consulting, L.P., a nationally known executive compensation and benefits consulting firm, which we refer to as FPC. Other than reviewing and advising the Compensation Committee with respect to executive and trustee compensation, FPC does not provide any non-executive compensation or other services for us. As a result, FPC is an independent compensation consultant. Management does not retain any executive compensation consultant.
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Peer Group Benchmarking Analysis.
We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the Compensation Committee regularly reviews the market data, pay practices and ranges of our “peer” companies and the broader market to ensure that we continue to offer a relevant and competitive executive pay program each year. Throughout this Compensation Discussion and Analysis, we refer to two distinct peer groups, as described below, which were recommended by the Compensation Committee’s independent compensation consultant and approved by the Chair of the Compensation Committee in 2022.
| ● | Competitor Peer Group. For 2022, this group consisted of 11 public REITs, which are either (1) our competitors for industrial property acquisitions and tenants in the single-tenant industrial space or (2) owners of a portfolio of primarily net-leased assets. The companies included in this peer group are as follows: |
| Broadstone Net Lease, Inc. | EastGroup Properties, Inc. | Essential Properties Realty Trust, Inc. |
| First Industrial Realty Trust Inc. | Getty Realty Corp. | National Retail Properties, Inc. |
| Rexford Industrial Realty, Inc. | STAG Industrial, Inc. | Spirit Realty Capital, Inc. |
| Terreno Realty Corporation | W.P. Carey Inc. |
This competitor peer group helped the Compensation Committee understand how each named executive officer’s total compensation compares with the total compensation for reasonably similar positions at our most direct REIT competitors.
| ● | Size Peer Group. For 2022, this group consisted of 20 public REITs, which operate across multiple asset classes and are similar in size to our total capitalization. The total capitalization range for this peer group was $3.3 billion to $5.8 billion as of November 30, 2022. Our total capitalization was at approximately the 55th percentile ($4.8 billion) of this peer group as of November 30, 2022. The companies included in this peer group are as follows: |
| Acadia Realty Trust | American Assets Trust, Inc. | Apple Hospitality REIT, Inc. |
| Broadstone Net Lease, Inc. | Corporate Office Properties Trust | Empire State Realty Trust, Inc. |
| Essential Properties Realty Trust, Inc. | JBG SMITH Properties | National Health Investors, Inc. |
| Physicians Realty Trust | Pebblebrook Hotel Trust | RLJ Lodging Trust |
| Sabra Health Care REIT, Inc. | SITE Centers Corp. | Sunstone Hotel Investors, Inc. |
| Tanger Factory Outlet Centers, Inc. | Terreno Realty Corporation | Urban Edge Properties |
| Veris Residential, Inc. | Xenia Hotels & Resorts, Inc. |
| (1) | As of November 30, 2022. |
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The size-based peer group helped the Compensation Committee compare our overall compensation practices against a broader mix of REITs to ensure that our compensation practices are reasonable in light of the size of our organization. The Compensation Committee generally focuses on the average of the two peer groups, except in cases where such average is determined to be excessive in light of the circumstances.
Although the two peer groups are comprised solely of REITs, we also compete with other public and private companies in the New York metropolitan, Dallas and West Palm Beach marketplaces for talent. Therefore, we also consider other information regarding market trends in compensation in addition to the data derived from these peer group reviews.
FPC prepared a compensation study for the Compensation Committee that contains:
| ● | a summary of market findings; |
| ● | high-level performance information and its impact on compensation trends within the real estate industry; |
| ● | certain background information, including size and performance statistics for our company and the peer group constituents; and |
| ● | the results of a competitive benchmarking analysis for our named executive officers and certain other employees on both an individual and aggregate basis. |
Determining the Amount of Each Element of Compensation.
The Compensation Committee reviews the performance of each of our named executive officers, including our Chief Executive Officer, on an annual basis. The Compensation Committee considers, among other things, (1) the scope of the individual’s responsibilities, including the demands and profile of the positions held by the individual, (2) the individual’s experience and tenure with us, (3) the individual’s performance and contribution to our performance, (4) our performance against annual objectives set forth in management’s business plan, and (5) competitive salaries. The Compensation Committee considers the results of compensation studies prepared for it by FPC and by industry and trade associations.
Our Chief Executive Officer assists in the annual review of our named executive officers and makes recommendations to the Compensation Committee. However, the Compensation Committee makes all determinations with respect to the actual compensation of our named executive officers, including our Chief Executive Officer.
The independent compensation consultant provides the following services to the Compensation Committee:
| ● | Management Data Collection: |
| ○ | reviewing historical pay philosophy and practices; |
| ○ | confirming the existing compensation philosophy; and |
| ○ | reviewing the Chief Executive Officer’s recommendations. |
| ● | Compensation Guidance and Commentary: |
| ○ | providing initial thoughts and reactions to the Chief Executive Officer’s recommendations in light of current market practices and performance; |
| ○ | providing thoughts and perspectives on the broader REIT market, from a compensation perspective, based on ongoing conversations with executives/board members and up-to-date compensation data; and |
| ○ | providing a compensation study described above and recommendations regarding peer group data. |
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Compensation Risk Assessment
The Compensation Committee does not believe our executive compensation programs encourage unnecessary or excessive risk taking for the following reasons:
| ● | There are no guaranteed minimum payouts. |
| ● | The annual cash incentive opportunity does not rely on total shareholder return (“TSR”). |
| ● | The annual cash incentive opportunity is based on multiple operational performance metrics. |
| ● | We use two adjusted/non-GAAP metrics in our compensation opportunities, but we regularly disclose these metrics, including reconciliations, and analysts and investors use these metrics to compare us to our peers. |
| ● | The annual long-term incentive opportunity has a three-year performance period based on TSR relative to a competitor peer group and an index. |
While we are focused on long-term shareholder value, the Compensation Committee believes that three-year vesting for share awards is an appropriate length of time due to the need to retain our executives and reward results. Furthermore, our Compensation Committee believes the overall amount of our long-term incentive awards is appropriate in relation to our executive compensation program.
We also pay dividends currently on the time-based portion of our annual long-term incentive awards and dividends accrue on the performance-based portion of our annual long-term incentive awards and are paid upon, and to the extent of, vesting. Since we are a REIT, dividends are a necessary part of our business. Furthermore, all dividends are declared by our Board of Trustees and none of the dividends on long-term incentive awards are preferential. Accordingly, we do not believe that dividends are a risk in our compensation arrangements.
We maintain a clawback policy that allows for the recoupment of certain compensation if and to the extent:
| ● | the granting, vesting, or payment of such compensation was predicated upon the achievement of certain financial results that were subsequently the subject of a material financial restatement; or |
| ● | the recipient of such compensation engaged in intentional or willful misconduct, or failed to supervise a subordinate employee who engaged in intentional or willful misconduct which the recipient knew, or was reckless in not knowing, was occurring, and such intentional or willful misconduct resulted in a material violation of law or one of our written policies that caused significant financial or reputational harm to us. |
Pay for Performance.
A significant portion of the total target compensation for our named executive officers is in the form of performance-based incentive compensation, with the only “fixed” or “guaranteed” compensation in the form of annual base salaries and time-based long-term incentive awards.
| ● | Annual Cash Incentive Target Opportunity: |
| ○ | 70% based on annual pre-defined objective performance measures. |
| ○ | 30% based on subjective measures |
| ○ | No guaranteed annual cash incentive compensation. |
| ● | Annual Long-Term Incentive Target Opportunity: |
| ○ | 60% based on future TSR relative to peer and index groups. |
| ○ | 40% based on continued service. |
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In setting the pre-defined objective performance measures for the annual cash incentive target opportunity, multiple factors are considered and the plan is balanced across our operations with reference to our business plan.
For 2022, our executive compensation plan resulted in the following pay mix for the total target compensation:
Recap of 2022 Executive Compensation Program.
The 2022 executive compensation program consisted of (1) base salary, (2) annual cash incentive opportunity, and (3) annual long-term incentive opportunity.
Base Salaries and Annual Cash Incentive Awards. Base salaries and annual cash incentives awarded under the 2022 executive compensation program were as follows:
| Officer | 2022 Base Salary |
Target
Cash (as
a % of |
Target Cash Incentive | 2022 Award |
%
of Target |
% Change from 2021 | ||||||||||||||||||
| T. Wilson Eglin | $ | 800,000 | 112.5 | % | $ | 900,000 | $ | 972,000 | 108 | % | -34 | % | ||||||||||||
| Beth Boulerice | $ | 440,000 | 100 | % | $ | 440,000 | $ | 501,600 | 114 | % | -31 | % | ||||||||||||
| Joseph S. Bonventre | $ | 500,000 | 100 | % | $ | 500,000 | $ | 570,000 | 114 | % | -25 | % | ||||||||||||
| Brendan P. Mullinix | $ | 440,000 | 100 | % | $ | 440,000 | $ | 501,600 | 114 | % | -26 | % | ||||||||||||
| James Dudley | $ | 350,000 | 100 | % | $ | 350,000 | $ | 451,500 | 114 | % | 13 | % | ||||||||||||
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The target annual cash incentive opportunity for our named executive officers was a percentage of base salary as follows: 112.5% for Mr. Eglin; and 100% for the others. Seventy percent (70%) of the annual cash incentive opportunity was based on pre-defined objective measures (from January 1, 2022 to December 31, 2022) and 30% was based on subjective measures.
Objective Measures
The following sets forth the pre-defined objective measures, the weighting and the rationale for each measure. In the first quarter of 2023, the Compensation Committee evaluated the Company’s performance on the objective and subjective measures and made the determinations as detailed below.
| Weighting | Target | Actual at 12/31/2022 | Determination | ||||
| Investments | 30% | Below/Threshold | |||||
| Volume | $540 million | $429 million | |||||
| New Development Starts | 4 | 2 |
Rationale: External growth, particularly in our development pipeline, was an important part of our initial 2022 business plan.
Result: As interest rates continued to rise during 2022 and our share price continued to decline, we allocated capital towards repurchasing our common shares over committing to additional development projects or acquiring existing facilities. As a result, our investments volume fell short of the threshold and our development starts fell short of target. We did achieve two new development starts on a two building project in Tampa, Florida. Our development pipeline continues to be robust and as of December 31, 2022, we had 537 acres available for future development.
| Weighting | Target | Actual at 12/31/2022 | Determination | ||||
| Dispositions | 10% | Threshold/Target | |||||
| Volume | $281 million | $268 million |
Rationale: Our 2022 disposition plan contemplated the sale of substantially all of our remaining office/other properties and certain industrial properties outside of our target markets and our proportionate share of non-consolidated sales.
Result: Due to the deterioration of the acquisition market, management remained a prudent seller of other assets and sold limited industrial assets outside of our target markets and used the proceeds to fund the development pipeline. Between threshold and target was achieved, but the effort expended by management was significant.
| Weighting | Target | Actual at 12/31/2022 | Determination | ||||
| Portfolio Management | 40% | Maximum | |||||
| Industrial Same Store NOI Growth | 4% | 5.3% | |||||
| Warehouse/Distribution Leasing Spreads | >15% | 25.6% |
Rationale: We believe successful portfolio management safeguards income and supports internal growth. Our investment strategy is based on our belief that warehouse/distribution rents have better growth potential than suburban office rents. Accordingly, for 2022, we continued to include two important metrics related to leasing. The first was industrial same store NOI growth and the second was warehouse/distribution leasing spreads. The leasing spreads are the difference between the expiring rent per square foot and the renewal or new rent per square foot for leases signed or renewed during 2022.
Result: As we marked our industrial rents to market, we achieved many successful leasing outcomes. During 2022, we completed 4.0 million square feet of industrial new leases and lease extensions, raising Base and Cash Base Rents by 30.7% and 25.6%, respectively, with average annual escalators of 3.3%.
| Weighting | Target | Actual at 12/31/2022 | Determination | ||||
| Balance Sheet | 10% | Target | |||||
| Credit Rating | Maintain current ratings | Maintained |
Rationale: We take pride in our balance sheet and the opportunities it provides. In 2013, we became an investment-grade rated issuer and we continually seek to maintain our ratings.
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Result: During 2022, we continued to manage our balance sheet in favor of flexibility over leveraged returns. We refinanced our credit facility and we settled a forward equity transaction from May 2021 which, net of our 2022 common share repurchases, resulted in 3.9 million common shares issued at $13.53 per share when our share price was significantly lower. Our credit ratings were unchanged over the course of 2022.
| Weighting | Target | Actual at 12/31/2022 | Determination | ||||
| ESG | 10% | Target/Maximum | |||||
| Specified Accomplishments: | 6 | 8 | |||||
| Achieved | |||||||
| Maintain ISS Monthly Governance Score Average of 2 or less | Yes | ||||||
| Obtain an ISS Monthly Environmental Score of 3 or less | No | ||||||
| Obtain an ISS Monthly Social Score of 3 or less | Yes | ||||||
| GRESB Real Estate Assessment Score at or above GRESB Average | No | ||||||
| Obtain Green Lease Language in at least 75% of new leases and amendments | Yes | ||||||
| Obtain tenant satisfaction in excess of Kingsley average | Yes | ||||||
| Install or commit to install LED for at least 3 million square feet | Yes | ||||||
| Respond to Moody's ESG Assessment | Yes | ||||||
| Qualify for the Dow Jones Sustainability Index | No | ||||||
| Align Corporate Responsibility Report with Global Reporting Initiative | Yes | ||||||
| Align Corporate Responsibility Report with UN's Sustainable Development Goals | Yes | ||||||
Rationale: In 2020, our management commenced, in earnest, efforts to establish an ESG platform. We believe that ESG focused investing and operations are an important contributor to our ongoing long-term success. However, due to the properties in our portfolio primarily being subject to net leases where tenants are responsible for maintaining the buildings and are in control of their energy usage and environmental sustainability practices, our ability to implement ESG initiatives throughout our portfolio may be limited. Nonetheless, we hold our management accountable for furthering ESG initiatives by incorporating ESG metrics into our executive compensation plans. For 2022, we selected 11 ESG metrics that we believed are important objective measurements further implementing our ESG platform, including scoring from third-party evaluators, installation of energy saving equipment and framework alignment.
Result: Our ESG program continued to expand in 2022 and the results are beginning to show through our scores from third-party evaluators. We significantly expanded our corporate responsibility report published in 2022; aligning it with additional frameworks.
The determination of the objective measurements resulted in each named executive officer being entitled to 120% of the target objective portion of the 2022 annual incentive opportunity, which is down from 173.3% for 2021. The Compensation Committee retains the ability, in its sole discretion, to clawback any amounts, as appropriate, if audited financial results would provide for lower incentive payouts.
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Subjective Measures
With respect to the subjective portion of the annual cash incentive opportunity, the Compensation Committee made the following determinations:
| Officer | Rationale | % of Target Subjective Portion |
T. Wilson Eglin Chairman, Chief Executive Officer and President
|
While Mr. Eglin did not receive a target or maximum subjective bonus, the Compensation Committee, and the rest of the Board of Trustees, believe that Mr. Eglin exceeded their expectations during a year with significant volatility in interest rates and the broader markets. The below target subjective award reflects the Compensation Committee exercising negative discretion in light of our common share price performance.
Strategic Alternatives Review Process: ● Led the Board of Trustees through a strategic alternatives review process.
Overall Transaction Activity: ● Completed 4.1 million square feet of new leases and lease extensions, raising industrial Base and Cash Base Rents by 30.7% and 25.6%, respectively. ● Approximately $700 million in investment and divestiture activity.
Earnings Results: ● Generated Adjusted Company FFO of $0.67 per diluted share, which was at the high end of its initial range of $0.64 to $0.68 per share. ● Increased industrial same-store NOI by 5.3% in 2022 compared to 2021.
Balance Sheet Strategy: ● Repurchased and retired 12.1 million common shares at an average price of $10.78 per share. ● Issued 3.6 million common shares for aggregate net proceeds of $38.5 million. ● Issued, in December 2022, 16.0 million common shares previously sold on a forward basis. ● The December 2022 equity issuance net of repurchases resulted in the net issuance of 3.9 million common shares at $13.53 per share. ● Refinanced unsecured credit agreement to extend the maturity of the revolving credit facility until July 2026, with two, six-month extension options. ● Ended the year with net debt to Adjusted EBITDA of 6.4x.
Investor Outreach: ● Capitalized on the expansion of our shareholder outreach during 2021 and held 91 meetings during 2022, including attending five investor conferences. ● Navigated shareholder activism and mitigated disruption to business.
Overall Employee Satisfaction: ● Maintained high over-all employee morale, evidenced by a positive rating on a third-party employee survey. |
80 | % |
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The Compensation Committee continues to believe that Mr. Eglin’s strategic vision of an industrial focused, primarily single-tenant REIT in target markets with a strong development pipeline will lead to enhanced shareholder value throughout market cycles.
|
||||||
Beth Boulerice Executive Vice President, Chief Financial Officer and Treasurer
|
During 2022, Ms. Boulerice oversaw all of our financial reporting, planning and analysis and balance sheet management.
Quality & Efficiency of Financial Reporting: ● Our independent registered public accounting firm opined that our financial statements present fairly, in all material respects, our financial position as of December 31, 2022 in conformity with GAAP as set forth in our Annual Report on Form 10-K for the year ended December 31, 2022. ○ Due to efficiencies led by Ms. Boulerice, we were able to report our 2022 year-end results a week earlier than we had reported since 2006. ● Oversaw our financial planning and analysis team. ● Led our general and administrative budgeting process and efforts to manage expenses and was actively involved in our property budget committee. ● Oversaw our reporting process and was a member of our disclosure committee.
Quality of internal controls: ● Oversaw compliance with the requirements of the Sarbanes-Oxley Act of 2002 and our internal controls over financial reporting, including managing those controls in a virtual environment; and ○ Our independent registered public accounting firm expressed an unqualified opinion on our internal controls over financial reporting as set forth in our Annual Report on Form 10-K for the year ended December 31, 2022.
Balance Sheet Management: ● Managed our common share repurchases. ● Led the recasting of our unsecured credit facility and the transition of our unsecured credit agreement from LIBOR to SOFR. ● Acted as primary liaison with credit rating agencies.
Investor Outreach: ● Significant participation in our marketing efforts and preparation of our investor materials.
Ms. Boulerice also participated in our strategic alternative review process.
|
100 | % |
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Joseph S. Bonventre Executive Vice President, Chief Operating Officer, General Counsel and Secretary |
During 2022, Mr. Bonventre oversaw our legal and operational activities and assisted on our strategic activities.
Legal Risk Management: ● Advised and guided our Board of Trustees on substantially all matters, including board refreshment, shareholder activism and the strategic alternatives review process. ● Selected and monitored all outside counsel assignments.
Efficiency of Operations: ● Oversaw our ESG efforts, including our submissions to reporting frameworks, as a member of our ESG Taskforce. ● Assisted in monitoring our general and administrative expenses. ● Actively participated in our diversity, equity and inclusion efforts as a member of the Diversity, Equity and Inclusion Committee. ● Oversaw our information technology initiatives, including our cybersecurity efforts.
Quality of Disclosures and Reporting: ● Assisted with the preparation and review of our public disclosures and reporting. Was a member of our disclosure committee.
Mr. Bonventre assisted in all of our leasing, investment and disposition activity and participated in meetings with our largest passive investors.
|
100 | % | |||
Brendan P. Mullinix Executive
Vice
|
During 2022, Mr. Mullinix implemented our acquisition strategy, overseeing all our investment activity.
Investment Quality & Volume: ● Led the purchase of three industrial assets for an aggregate cost of $131million. ● Led the investment of $298 million in development activity. ● Led the ground leasing of approximately 100 acres of land held for industrial development in Phoenix, AZ for an initial term of 20 years, with initial ground rent of $5.2 million.
Investor Outreach: ● Participated in our marketing efforts. |
100 | % | |||
James Dudley Executive Vice President and Director of Asset Management
|
During 2022, Mr. Dudley oversaw our asset management, including direct involvement in all leasing activity.
Leasing Activity: ● Oversaw 4.1 million square feet of new leases and lease extensions, raising industrial Base and Cash Base Rents by 30.7% and 25.6%, respectively.
Property Operations: ● Oversaw our property operations group and the budgeting process as a member of the property budget committee. ● Oversaw tenant relations resulting in high tenant retention and repeat tenant leasing. |
150 | % |
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● Oversaw significant number of construction projects, including in-house construction management group resulting in savings for landlord required work and revenue for tenant required work.
Investor Outreach: ● Participated in our marketing efforts.
Mr. Dudley also assisted with investment and disposition activities and ESG activities.
|
Overall, the subjective award percentage for 2022 decreased year over year due to our common share performance despite our strong operating performance. Our Compensation Committee believes that our named executive officers worked well as a team to overcome the challenges that 2022 presented and substantially complete our transformation to an industrial focused REIT.
Annual Long-Term Incentive Award. The 2022 annual long-term incentive award was disclosed in the proxy statement for the 2022 Annual Meeting of Shareholders. The awards granted were as follows:
| Performance-Based Opportunity | ||||||||||||||||||||
| Officer | Threshold | Target | Maximum | Service-Based Award | Total
Target Opportunity |
|||||||||||||||
| T. Wilson Eglin | $ | 900,000 | $ | 1,800,000 | $ | 3,600,000 | $ | 1,200,000 | $ | 3,000,000 | ||||||||||
| Beth Boulerice | $ | 180,000 | $ | 360,000 | $ | 720,000 | $ | 240,000 | $ | 600,000 | ||||||||||
| Joseph S. Bonventre | $ | 375,000 | $ | 750,000 | $ | 1,500,000 | $ | 500,000 | $ | 1,250,000 | ||||||||||
| Brendan P. Mullinix | $ | 240,000 | $ | 480,000 | $ | 960,000 | $ | 320,000 | $ | 800,000 | ||||||||||
| James Dudley | $ | 144,000 | $ | 288,000 | $ | 576,000 | $ | 192,000 | $ | 480,000 | ||||||||||
The long-term incentive opportunity for the 2022 executive compensation program for our named executive officers was a long-term incentive award consisting of a mix of performance-based non-vested shares and service-based non-vested shares. Vesting for performance-based non-vested shares is tied to our TSR relative to other REITs, which we think is more appropriate than absolute TSR. No performance-based shares are earned for results below the threshold level.
| Type: | Performance-Based Non-Vested Shares | Service-Based Non-Vested Shares | ||||
| Amount of Target Award: | 30% | 30% | 40% | |||
| Comparator Group: | MSCI US REIT Index | Competitor peer group(1) | N/A | |||
| Vesting Conditions: | Cliff-based vesting after three-year performance period commencing January 1, 2022.
Performance Levels Threshold: 33rd Percentile Target: 50th Percentile Maximum: 75th Percentile
Straight-line interpolation is used to determine awards for results between performance levels. |
Pro-rata vesting annually over three years. | ||||
| Dividends | Accrue and are only payable if and to the extent the shares vest. | Currently paid. | ||||
| (1) | Initially consisting of: Broadstone Net Lease, Inc. (BNL), EastGroup Properties, Inc. (EGP), Essential Properties Realty Trust, Inc. (EPRT), First Industrial Realty Trust Inc. (FR), Getty Realty Corp. (GTY), National Retail Properties, Inc. (NNN), PS Business Parks, Inc. (PSB), Rexford Industrial Realty, Inc. (REXR), Stag Industrial, Inc. (STAG), STORE Capital Corporation (STOR), Terreno Realty Corporation (TRNO), and W.P. Carey Inc. (WPC). |
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Performance-Based Opportunity of Outstanding Long-Term Incentive Awards.
The table below summarizes the results of the 2020 performance-based long-term incentive awards, which was completed at the end of 2022, and the performance to the end of 2022 for the 2021 and 2022 performance-based long-term incentive awards, which are currently in the middle of their original three-year performance periods.
| Grant Year (Performance Period) and Metrics | Metric Weighting | 2020 | 2021 | 2022 | 2023 | 2024 | Payout as % of Target | |
| 2020 Grant (Jan 2020-Dec 2022) | ||||||||
| Relative TSR vs. Peer Group | 50% | Between Threshold and Target Achieved | 71% | |||||
| Relative TSR vs. Index | 50% | Between Target and Maximum Achieved | 170% | |||||
| 2021 Grant (Jan 2021-Dec 2023) | ||||||||
| Relative TSR vs. Peer Group | 50% | Tracking at below Threshold | 0% | |||||
| Relative TSR vs. Index | 50% | Tracking at Target | 124% | |||||
| 2022 Grant (Jan 2022-Dec 2024) | ||||||||
| Relative TSR vs. Peer Group | 50% | Tracking at below Threshold | 0% | |||||
| Relative TSR vs. Index | 50% | Tracking at between Threshold and Target | 75% | |||||
The following table shows the values realized for the 2020 performance-based long-term incentive awards based on the grant date value and the market value on January 3, 2023, which was the date of vesting:
| Officer | Grant
Date Value |
Market Value |
||||||
| T. Wilson Eglin | $ | 1,046,807 | $ | 1,672,745 | ||||
| Beth Boulerice | $ | 146,119 | $ | 233,482 | ||||
| Joseph S. Bonventre | $ | 244,258 | $ | 390,308 | ||||
| Brendan P. Mullinix | $ | 130,855 | $ | 209,101 | ||||
| James Dudley | $ | 87,238 | $ | 139,397 | ||||
Upon vesting, accrued dividends were also paid on the awards that vested, which will be shown in All Other Compensation in the 2023 Proxy Statement.
The actual payouts for the 2021 awards will be disclosed in the proxy statement for the 2024 Annual Meeting of Shareholders and the actual payouts for the 2022 awards will be disclosed in the proxy statement for the 2025 Annual Meeting of Shareholders.
Correlation between CEO Compensation and Performance.
A significant portion of our Chief Executive Officer’s compensation is long-term and equity based. As a result, the amounts in the summary compensation table are not the same as realizable pay. Realizable pay includes Salary, Non-Equity Incentive Plan Compensation, Nonqualified Deferred Compensation Earnings and All Other Compensation from the Summary Compensation Table below for the applicable year and the value realized upon vesting of share awards for the applicable years. Our share awards consist of the following:
| ● | Service-based equity awards: Fair value of the award is based on the closing price of the common shares on the date of grant (or, if the date of grant was not a trading day, the last trading day prior to the date of grant) and does not reflect any time-based vesting conditions or service period even though it is not “realized” pay. |
| ● | Performance-based equity awards: Fair value of the award is determined using a Monte Carlo simulation model, which is an estimation of the value based on hypothetical models. However, if such performance is never achieved, the awards will not result in “realized” pay. |
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Reported pay is the Total amount in the Summary Compensation Table below, and realized pay is calculated by subtracting the Share Awards in the Summary Compensation Table from reported pay and adding the Value Realized on Vesting from the Option Exercises and Stock Vested table below.
Elements of Compensation Program Applicable to Named Executive Officers for 2023.
Base Salary. For 2023, the Compensation Committee approved increases in base salaries for our named executive officers as noted below to ensure base salaries, and, in certain situations, overall compensation, remains competitive and in line with their roles and responsibilities. Base salaries are as follows:
| Officer | 2023 Base Salary |
2022 Base Salary |
% Change | |||||||
| T. Wilson Eglin | $ | 825,000 | $ | 800,000 | 3% | |||||
| Beth Boulerice | $ | 465,000 | $ | 440,000 | 6% | |||||
| Joseph S. Bonventre | $ | 515,000 | $ | 500,000 | 3% | |||||
| Brendan P. Mullinix | $ | 460,000 | $ | 440,000 | 5% | |||||
| James Dudley | $ | 375,000 | $ | 350,000 | 7% | |||||
Annual Cash Incentive Opportunity. The annual cash incentive opportunity for the 2023 executive compensation program for our named executive officers will be a percentage of base salary as follows:
| Officer | Threshold | Target | Maximum | |||||||||||||||||||
| T. Wilson Eglin | 56.25 | % | $ | 464,063 | 112.5 | % | $ | 928,125 | 225 | % | $ | 1,856,250 | ||||||||||
| Beth Boulerice | 50 | % | $ | 232,500 | 100 | % | $ | 465,000 | 200 | % | $ | 930,000 | ||||||||||
| Joseph S. Bonventre | 50 | % | $ | 257,500 | 100 | % | $ | 515,000 | 200 | % | $ | 1,030,000 | ||||||||||
| Brendan P. Mullinix | 50 | % | $ | 230,000 | 100 | % | $ | 460,000 | 200 | % | $ | 920,000 | ||||||||||
| James Dudley | 50 | % | $ | 187,500 | 100 | % | $ | 375,000 | 200 | % | $ | 750,000 | ||||||||||
Our Chief Executive Officer’s target total cash compensation (base salary plus target annual cash incentive) of $1,753,125 is approximately 1% greater than the average target total cash compensation in the average of the two 2022 peer groups, which we believe is in-line with market.
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Seventy percent of the annual cash incentive opportunity for our named executive officers will be determined by predefined objective performance measures based on our 2023 business plan for the period commencing January 1, 2023 and ending December 31, 2023. The following is a summary of the objective performance measures:
| Item | Weighting | ||||
| Investments | 30% | ||||
| Item Rationale: While we expect investment volume to continue to be modest in 2023, we expect management to focus on stabilizing our development projects and maintain our leverage levels. Weighting remains the same as in 2022, and the volume and development start metrics have been replaced with square footage of stabilized development, number of buildings stabilized and pre-promote stabilized development yield metrics. | |||||
| Dispositions | 5% | ||||
| Item Rationale: We still expect management to exit the remaining non-industrial assets and to recycle out of certain non-target market industrial assets to help fund the development pipeline. Weighting is down from 10% in 2022, but the disposition metric will continue to be focused on volume. | |||||
| Portfolio Management | 30% | ||||
| Item Rationale: We believe we have an embedded mark-to-market opportunity in our portfolio and portfolio management is critical to our revenue growth. Weighting is down from 2022 and we have added industrial percent leased as an additional metric to industrial same store NOI growth and warehouse/distribution leasing spreads. | |||||
| Balance Sheet | 20% | ||||
| Item Rationale: Our balance sheet strategy has been to maintain a strong balance sheet that can weather market cycles. The weighting has increased from 10% in 2022 and we have added back Net Debt to Adjusted EBITDA Ratio as a metric in addition to our credit ratings. | |||||
| ESG | 15% | ||||
| Item Rationale: Our ESG platform continues to grow and obtain recognition. We want to incentivize management to continue to grow our ESG platform because we believe investing in our ESG platform will provide returns for all of our stakeholders. The weighting has increased from 10% in 2022 and we now have the following five third-party determined items that are equally weighted: (1) ISS Governance Average Score, (2) GRESB Score compared to peer average, (3) tenant satisfaction score compared to Kingsley average, (4) Green Lease Leader recognition, and (5) employee satisfaction survey results. | |||||
The target and actual amounts and the Compensation Committee’s determination of whether an item was met will be disclosed in the proxy statement for the 2024 Annual Meeting of Shareholders.
The remaining 30% of the annual cash incentive will be based on subjective factors, similar to the factors discussed with respect to the 2022 Annual Cash Incentive Opportunity above.
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Long-Term Incentive Opportunity. The long-term incentive opportunity for the 2023 executive compensation program for our named executive officers is a long-term incentive award consisting of a mix of performance-based non-vested shares and service-based non-vested shares. Vesting for performance-based non-vested shares is tied to our TSR relative to other REITs, which we think is more appropriate than absolute TSR.
| Type: | Performance-Based Non-Vested Shares | Service-Based Non-Vested Shares | ||||
| Amount of Target Award: | 30% | 30% | 40% | |||
| Comparator Group: | MSCI US REIT Index | Competitor peer group(1) | N/A | |||
| Vesting Conditions: | Cliff-based vesting after three-year performance period commencing January 1, 2023.
Performance Levels Threshold: 33rd Percentile Target: 50th Percentile Maximum: 75th Percentile
Straight-line interpolation is used to determine awards for results between performance levels. |
Pro-rata vesting annually over three years. | ||||
| Dividends | Accrue and are only payable if and to the extent the shares vest. | Currently paid. | ||||
| Rationale | Performance assessments within our applicable industry group and competitor peer group similar to shareholder comparison when making an investment decision. | Enhance retention and promote longer-term equity ownership in us. | ||||
| (1) | Initially consisting of: Broadstone Net Lease, Inc. (BNL), EastGroup Properties, Inc. (EGP), Essential Properties Realty Trust, Inc. (EPRT), First Industrial Realty Trust Inc. (FR), Getty Realty Corp. (GTY), Industrial Logistics Properties Trust (ILPT), National Retail Properties, Inc. (NNN), Rexford Industrial Realty, Inc. (REXR), Stag Industrial, Inc. (STAG), Spirit Realty Capital, Inc. (SRC), Terreno Realty Corporation (TRNO), and W.P. Carey Inc. (WPC). |
The long-term incentive opportunity is as follows:
| Performance-Based Opportunity | Service-Based | Total Target | Change | ||||||||||||||||||||
| Officer | Threshold | Target | Maximum | Award | Opportunity | from 2022 | |||||||||||||||||
| T. Wilson Eglin | $ | 900,000 | $ | 1,800,000 | $ | 3,600,000 | $ | 1,200,000 | $ | 3,000,000 | 0 | % | |||||||||||
| Beth Boulerice | $ | 255,000 | $ | 510,000 | $ | 1,020,000 | $ | 340,000 | $ | 850,000 | 42 | % | |||||||||||
| Joseph S. Bonventre | $ | 375,000 | $ | 750,000 | $ | 1,500,000 | $ | 500,000 | $ | 1,250,000 | 0 | % | |||||||||||
| Brendan P. Mullinix | $ | 300,000 | $ | 600,000 | $ | 1,200,000 | $ | 400,000 | $ | 1,000,000 | 25 | % | |||||||||||
| James Dudley | $ | 180,000 | $ | 360,000 | $ | 720,000 | $ | 240,000 | $ | 600,000 | 25 | % | |||||||||||
The target long-term incentive opportunity for our Chief Executive Officer of $3,000,000 is approximately 9% less than the average of the average target long-term incentive award in the two peer groups, which we believe is in-line with market.
The number of performance-based non-vested shares (calculated using maximum opportunity level for accounting purposes) and service-based non-vested shares granted and issued was based on the closing price of our common shares on January 10, 2023 (the date specified in the Compensation Committee’s approval), which was $10.65 per share; with the number of performance-based non-vested shares rounded to the nearest share and the number of service-based non-vested shares rounded up to the nearest 10 shares to avoid fractional shares when vesting. We expect to disclose the amount of performance-based non-vested shares that vest in our definitive proxy statement for the 2026 Annual Meeting of Shareholders.
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CEO 2023 Total Target Direct Compensation
Companywide Retirement and Health and Welfare Benefits.
In addition to the executive compensation programs outlined in this proxy statement, our named executive officers participate in retirement and health and welfare benefits that are available to all employees with no distinction made among any groups of employees other than as required by applicable tax rules. We do not believe that any of these benefits are excessive or above market.
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COMPENSATION TABLES
Summary Compensation Table
The following table sets forth summary information concerning the compensation earned by our named executive officers for the fiscal years ended December 31, 2022, 2021 and 2020.
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($) | Share Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change
in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All
Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||
| T. Wilson Eglin | 2022 | 800,000 | — | 3,444,528 | — | 972,000 | (670,019 | ) | 845,988 | 6,062,516 | |||||||||||||||||||||||||
| Chief Executive Officer | 2021 | 785,000 | — | 3,216,612 | — | 1,468,931 | 710,586 | 1,813,056 | 7,994,185 | ||||||||||||||||||||||||||
| and President | 2020 | 765,000 | — | 2,664,761 | — | 1,367,318 | 54,962 | 859,341 | 5,711,382 | ||||||||||||||||||||||||||
| Beth Boulerice | 2022 | 440,000 | — | 689,024 | — | 501,600 | — | 97,158 | 1,727,782 | ||||||||||||||||||||||||||
| Executive Vice President, | 2021 | 400,000 | — | 476,586 | — | 725,333 | — | 147,400 | 1,749,319 | ||||||||||||||||||||||||||
| Chief Financial Officer | 2020 | 380,000 | — | 371,948 | — | 603,725 | — | 81,914 | 1,437,587 | ||||||||||||||||||||||||||
| and Treasurer | |||||||||||||||||||||||||||||||||||
| Joseph S. Bonventre | 2022 | 500,000 | — | 1,435,283 | — | 570,000 | — | 166,813 | 2,672,096 | ||||||||||||||||||||||||||
| Executive Vice President, | 2021 | 420,000 | — | 834,021 | — | 761,600 | — | 258,967 | 2,274,588 | ||||||||||||||||||||||||||
| Chief Operating Officer, | 2020 | 390,000 | — | 621,840 | — | 619,613 | — | 139,325 | 1,770,778 | ||||||||||||||||||||||||||
| General Counsel and | |||||||||||||||||||||||||||||||||||
| Secretary | |||||||||||||||||||||||||||||||||||
| Brendan Mullinix | 2022 | 440,000 | — | 918,553 | — | 501,600 | — | 121,561 | 1,981,714 | ||||||||||||||||||||||||||
| Executive Vice President, | 2021 | 375,000 | — | 714,876 | — | 680,000 | — | 170,307 | 1,940,183 | ||||||||||||||||||||||||||
| and Chief Investment | 2020 | 310,000 | — | 333,192 | — | 492,513 | — | 94,671 | 1,230,376 | ||||||||||||||||||||||||||
| Officer | |||||||||||||||||||||||||||||||||||
| James Dudley | 2022 | 350,000 | — | 551,138 | — | 451,500 | — | 53,673 | 1,406,311 | ||||||||||||||||||||||||||
| Executive Vice President and Director of Asset Management | |||||||||||||||||||||||||||||||||||
| (1) | The amounts shown include amounts earned but a portion of which may be deferred at the election of the officer under our 401(k) Plan. |
| (2) | Equals the aggregate grant date fair value of awards granted in the applicable year computed in accordance with Financial Accounting Standards Board Accounting Standard Codification Topic 718. The fair value of share awards subject to time-based vesting conditions or service periods is based on the closing price of the common shares on the date of grant (or, if the date of grant was not a trading day, the last trading day prior to the date of grant) and does not reflect any time-based vesting conditions or service period. The fair value of share awards subject to performance-based vesting conditions is determined using a Monte Carlo simulation model and the amount set forth above assumes “maximum” performance. |
| (3) | Amounts were paid pursuant to a non-equity incentive plan described in the applicable year’s definitive proxy statement. |
| (4) | Non-qualified deferred compensation consists solely of a trust established for the benefit of Mr. Eglin, into which, in previous years, he had the option to place non-vested common share awards. Dividends on these shares are the same as all those paid on all common shares and are paid by us to the trust, which makes a corresponding distribution to the participant. Earnings consist of dividends and increase/decrease in market value of the common shares in the trust. None of the earnings were above-market. See “Non-Qualified Deferred Compensation,” below. |
| (5) | Amount represents: (i) dividends paid on service-based non-vested common shares and accrued dividends paid upon vesting of performance-based non-vested common shares and long-term retention non-vested common shares, (ii) the dollar value of life insurance premiums paid by us during the applicable fiscal year with respect to portable life insurance policies for the life of our Chief Executive Officer, and (iii) contributions by us to the executive officer’s account under our 401(k) Plan. The premiums paid by us under company sponsored health care insurance, dental insurance, long-term disability insurance and life insurance available to all employees, are excluded. The following table details the 2022 other compensation amounts for each executive officer: |
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| Executive | Dividends Paid on Certain Equity Awards |
401(k) Company Contributions |
Total | |||||||||
| T. Wilson Eglin | $ | 830,738 | $ | 15,250 | $ | 845,988 | ||||||
| Beth Boulerice | $ | 81,908 | $ | 15,250 | $ | 97,158 | ||||||
| Joseph S. Bonventre | $ | 151,563 | $ | 15,250 | $ | 166,813 | ||||||
| Brendan P. Mullinix | $ | 106,311 | $ | 15,250 | $ | 121,561 | ||||||
| James Dudley | $ | 38,423 | $ | 15,250 | $ | 53,673 | ||||||
Grants of Plan-Based Awards
The following table sets forth summary information concerning all grants of plan-based awards made to the named executive officers during the fiscal year ended December 31, 2022.
| Estimated
Future Payouts Under Non-Equity Incentive Plan Awards (Cash) ($) (1) | Estimated
Future Payouts Under Equity Incentive Plan Awards (Shares) (#) | All
Other Share Awards; Number of | All
Other Option Awards; Number of Shares Underlying | Exercise Price of Option | Grant
Date Fair Value of Share and Option | ||||||||||||||||||||||||||||
| Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Shares (#) | Option Awards | Awards ($) | Awards ($) | ||||||||||||||||||||||
| T. Wilson Eglin | 1/6/2022 | — | — | — | 61,729 | 123,457 | 246,914 | 82,310 | — | — | 3,444,528 | ||||||||||||||||||||||
| 5/23/2022 | $ | 450,000 | $ | 900,000 | $ | 1,800,000 | — | — | — | — | — | — | — | ||||||||||||||||||||
| Beth Boulerice | 1/6/2022 | — | — | — | 12,346 | 24,692 | 49,383 | 16,470 | — | — | 689,024 | ||||||||||||||||||||||
| 5/23/2022 | $ | 220,000 | $ | 440,000 | $ | 880,000 | — | — | — | — | — | — | — | ||||||||||||||||||||
| Joseph S. Bonventre | 1/6/2022 | — | — | — | 25,720 | 51,441 | 102,881 | 34,300 | — | — | 1,435,283 | ||||||||||||||||||||||
| 5/23/2022 | $ | 250,000 | $ | 500,000 | $ | 1,000,000 | — | — | — | — | — | — | — | ||||||||||||||||||||
| Brendan P. Mullinix | 1/6/2022 | — | — | — | 16,461 | 32,922 | 65,844 | 21,950 | — | — | 918,553 | ||||||||||||||||||||||
| 5/23/2022 | $ | 220,000 | $ | 440,000 | $ | 880,000 | — | — | — | — | — | — | — | ||||||||||||||||||||
| James Dudley | 1/6/2022 | — | — | — | 9,877 | 19,754 | 39,507 | 13,170 | — | — | 551,138 | ||||||||||||||||||||||
| 5/23/2022 | $ | 175,000 | $ | 350,000 | $ | 700,000 | — | — | — | — | — | — | — | ||||||||||||||||||||
| (1) | See “Compensation Discussion and Analysis — Recap of 2022 Executive Compensation Program,” above, for the actual payouts. Share amounts are rounded. |
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth summary information concerning outstanding equity awards held by each of the named executive officers as of December 31, 2022.
| Option Awards | Share Awards | |||||||||||||||||||||||
| Name | Number
of Securities Underlying Unexercised Options (#) Exercisable |
Number
of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units That Have Not Vested(2) (#) |
Market Value of Shares or Units That Have Not Vested ($)(1) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
||||||||||||||||
| T. Wilson Eglin | — | — | — | — | 183,554 | 1,839,211 | 455,849 | 4,567,603 | ||||||||||||||||
| Beth Boulerice | — | — | — | — | 31,213 | 312,754 | 70,936 | 710,775 | ||||||||||||||||
| Joseph S. Bonventre | — | — | — | — | 59,773 | 598,925 | 128,524 | 1,287,813 | ||||||||||||||||
| Brendan P. Mullinix | — | — | — | — | 41,524 | 416,070 | 89,535 | 897,140 | ||||||||||||||||
| James Dudley | — | — | — | — | 22,273 | 223,175 | 46,938 | 470,317 | ||||||||||||||||
(1) | Market value has been calculated using the closing price of our common shares on the NYSE on December 31, 2022, which was $10.02 per share. |
| (2) | The shares set forth above vest (subject to continued service) as follows: |
| 1/2023 | 1/2024 | 1/2025 | ||||||||
| T. Wilson Eglin | 93,141 | 62,977 | 27,436 | |||||||
| Beth Boulerice | 14,967 | 10,756 | 5,490 | |||||||
| Joseph S. Bonventre | 27,690 | 20,649 | 11,434 | |||||||
| Brendan P. Mullinix | 18,991 | 15,217 | 7,316 | |||||||
| James Dudley | 10,199 | 7,684 | 4,390 |
| (3) | The shares set forth above, and the market value, are based on actual performance for shares vesting 1/2023, threshold performance for peer group shares vesting 1/2024 and maximum performance for index shares vesting on 1/2024, threshold performance for peer group shares vesting 1/2025 and target performance for index shares vesting on 1/2025. The actual performance shares outstanding and the vesting dates (subject to continued service and achievement of performance) are as follows: |
| 1/2023 | 1/2024 | 1/2025 | ||||||||
| T. Wilson Eglin | 271,443 | 319,843 | 246,914 | |||||||
| Beth Boulerice | 37,889 | 47,385 | 49,383 | |||||||
| Joseph S. Bonventre | 63,337 | 82,923 | 102,881 | |||||||
| Brendan P. Mullinix | 33,931 | 71,077 | 65,844 | |||||||
| James Dudley | 22,621 | 29,616 | 39,507 |
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Option Exercises and Stock Vested
The following table sets forth summary information concerning option exercises and vesting of stock awards for each of the named executive officers during the year ended December 31, 2022.
| Option Awards | Share Awards | |||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($)(1) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(2) |
||||||||||||
| T. Wilson Eglin | — | — | 436,269 | 6,661,710 | ||||||||||||
| Beth Boulerice | — | — | 49,785 | 765,208 | ||||||||||||
| Joseph S. Bonventre | — | — | 87,836 | 1,348,431 | ||||||||||||
| Brendan P. Mullinix | — | — | 65,458 | 1,006,753 | ||||||||||||
| James Dudley | — | — | 30,442 | 471,957 | ||||||||||||
| (1) | The value realized on exercise is calculated as the product of (a) the number of common shares for which the share options were exercised and (b) the excess of the closing price of our common shares on the NYSE on the day before the date of exercise (or for a broker assist exercise, at the price the underlying common shares were sold) over the applicable exercise price per share option. Includes shares withheld to satisfy exercise price and tax obligations, as applicable. |
| (2) | The value realized on vesting is calculated as the product of (a) the number of non-vested common shares that vested and (b) the closing price of our common shares on the NYSE on the day used for calculation of taxable income. Includes shares withheld to satisfy tax obligations. Excludes accrued dividends, if any, which are in All Other Compensation in the “Summary Compensation Table” above. |
Pension Benefits
We do not provide any pension benefits to the named executive officers. We maintain a 401(k) Plan as disclosed above.
Non-Qualified Deferred Compensation
The following table sets forth summary information concerning non-qualified deferred compensation for each of the named executive officers during the year ended December 31, 2022. Non-qualified deferred compensation consists solely of a trust established for the benefit of Mr. Eglin in which in previous years Mr. Eglin had the option to place non-vested common share awards. Dividends on these shares are the same as all those paid on all common shares and are paid by us to the trust, which makes a corresponding distribution to Mr. Eglin. Earnings consist of dividends paid and the change in market value of the common shares in the trust. The earnings are included in the Summary Compensation Table above.
| Name | Executive Contributions in 2022 ($) |
Registrants Contributions in 2022 ($) |
Aggregate Earnings in 2022 ($) |
Aggregate Withdrawals/ Distributions in 2022 ($) |
Aggregate Balance at December 31, 2022 ($)(1) |
|||||||||||||
| T. Wilson Eglin | — | — | — | (2) | 62,814 | 1,311,247 | ||||||||||||
| Beth Boulerice | — | — | — | — | — | |||||||||||||
| Joseph S. Bonventre | — | — | — | — | — | |||||||||||||
| Brendan P. Mullinix | — | — | — | — | — | |||||||||||||
| James Dudley | — | — | — | — | — | |||||||||||||
| (1) | In accordance with the trust agreement, complete distribution/withdrawal of Mr. Eglin’s account will be made in the event of a change in control or termination of Mr. Eglin’s employment. |
| (2) | Due to the change in market value of non-vested common share awards, there were no earnings in 2022, and losses in 2022 were $670,019. |
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Potential Payments upon Termination or Change in Control
As of December 31, 2022, each of the named executive officers had the right to receive severance compensation upon the occurrence of certain termination events under a severance arrangement applicable to certain executive officers. None of our named executive officers were entitled to any payments in the event of a change of control without a termination of employment.
The executive severance arrangement provides that the executive officer would be entitled to receive severance payments upon termination by us without “cause” and termination by the executive officer with “good reason”, including if either occurs within a “change in control” (as defined in the severance agreement) equal to two and one half times the base salary, the average of the last two annual cash incentive awards and continuation of certain benefits for two and one half years for Mr. Eglin and two times the base salary, the average of the last two annual cash incentive awards and continuation of certain benefits for two years for all others, and a pro rata annual bonus determined by multiplying the average of the last two annual cash investment awards by a fraction equal to the number of days employed during the calendar year divided by 365 for all of the named executive officers.
Each of the named executive officers would also be entitled to receive severance payments upon termination for “Disability” (as defined in the severance agreement) or death equal to one times the base salary, a pro-rata bonus and continuation of certain benefits for two years.
Upon certain terminations, (x) all non-vested time-based long-term incentive awards, including long-term retention awards, and all non-vested but earned performance-based long-term incentive awards shall accelerate, become fully earned and vested, (y) the end of the performance period for all non-vested but unearned performance-based long-term incentive awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested (provided, that upon certain events in connection the a change in control, all such awards, instead of a pro rata amount of such awards, shall then be deemed earned awards), and (z) all unexercised share option awards shall terminate within six months of such termination of employment.
Our severance arrangements do not contain: (1) a high multiple, (2) any multiple on long-term incentive awards, (3) vesting of all non-vested performance-based awards regardless of whether the performance targets were met, or (4) a “gross-up” of the severance payment to cover the excise taxes imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, on the benefits, thereby providing such benefits to the employee on a net basis, after payment of excise tax.
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The tables below estimate the payments and benefits to each of the named executive officers assuming they were terminated on December 31, 2022. Continuation of benefits are assumed to be paid by a lump-sum payment at termination based on annualized December 2022 premiums. Bonus portion of severance payment is based on the average of the 2022 and 2021 actual annual cash incentive awards. Value of accelerated equity awards (1) is based on the closing price of our common shares on the NYSE on December 31, 2022 of $10.02 per share, and (2) consists of time-based non-vested shares set forth in Outstanding Equity Awards at Fiscal Year-End table above and a pro rata amount of expected performance-based non-vested shares, based on performance to date (using the methodology used in the Outstanding Equity awards at Fiscal Year-End table above) and the number of days completed in the period, and excludes accrued dividends. Each named executive officer is entitled to a pro-rata bonus equal to the average of the 2022 and 2021 annual cash incentive awards multiplied by a fraction, the denominator of which is 365 and the numerator of which is the number of days from the beginning of the calendar year of termination to the date of termination.
| T. Wilson Eglin | Without Cause or With Good Reason ($) |
Upon
a Change in Control (“Single Trigger”) ($) |
Death
or Disability ($) |
With Cause or Without Good Reason ($) |
||||||||
| Base salary portion of severance payment | 2,000,000 | — | 800,000 | — | ||||||||
| Bonus portion of severance payment (including pro rata bonus) | 4,271,629 | — | 1,220,466 | — | ||||||||
| Group healthcare benefits | 107,681 | — | 86,145 | — | ||||||||
| Value of accelerated equity awards | 6,406,815 | — | 6,406,815 | — | ||||||||
| Total Payments and Benefits | 12,786,125 | — | 8,513,426 | — |
| Beth Boulerice | Without Cause or With Good Reason ($) |
Upon
a Change in Control (“Single Trigger”) ($) |
Death
or Disability ($) |
With
Cause or Without Good Reason ($) |
||||||||
| Base salary portion of severance payment | 880,000 | — | 440,000 | — | ||||||||
| Bonus portion of severance payment (including pro rata bonus) | 1,840,400 | — | 613,467 | — | ||||||||
| Group healthcare benefits | 60,415 | — | 60,415 | — | ||||||||
| Value of accelerated equity awards | 1,023,529 | — | 1,023,549 | — | ||||||||
| Total Payments and Benefits | 3,804,344 | — | 2,137,411 | — |
| Joseph S. Bonventre | Without Cause or With Good Reason ($) |
Upon
a Change in Control (“Single Trigger”) ($) |
Death
or Disability ($) |
With
Cause or Without Good Reason ($) |
||||||||
| Base salary portion of severance payment | 1,000,000 | — | 500,000 | — | ||||||||
| Bonus portion of severance payment (including pro rata bonus) | 1,997,400 | — | 665,800 | — | ||||||||
| Group healthcare benefits | 86,145 | — | 86,145 | — | ||||||||
| Value of accelerated equity awards | 1,886,738 | — | 1,886,738 | — | ||||||||
| Total Payments and Benefits | 4,970,283 | — | 3,138,683 | — |
53
| Brendan P. Mullinix | Without Cause or With Good Reason ($) |
Upon
a Change in Control (“Single Trigger”) ($) |
Death
or Disability ($) |
With Cause or Without Good Reason ($) |
||||||||
| Base salary portion of severance payment | 880,000 | — | 440,000 | — | ||||||||
| Bonus portion of severance payment (including pro rata bonus) | 1,772,400 | — | 590,800 | — | ||||||||
| Group healthcare benefits | 30,445 | — | 30,445 | — | ||||||||
| Value of accelerated equity awards | 1,313,210 | — | 1,313,210 | — | ||||||||
| Total Payments and Benefits | 3,996,055 | — | 2,374,455 | — |
| James Dudley | Without Cause or With Good Reason ($) |
Upon
a Change in Control (“Single Trigger”) ($) |
Death
or Disability ($) |
With Cause or Without Good Reason ($) |
||||||||
| Base salary portion of severance payment | 700,000 | — | 350,000 | — | ||||||||
| Bonus portion of severance payment (including pro rata bonus) | 1,277,250 | — | 425,750 | — | ||||||||
| Group healthcare benefits | 69,441 | — | 69,441 | — | ||||||||
| Value of accelerated equity awards | 693,492 | — | 693,492 | — | ||||||||
| Total Payments and Benefits | 2,740,183 | — | 1,538,683 | — |
54
PAY VERSUS PERFORMANCE DISCLOSURE
Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs(2) | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based On: | Net Income ($000s) | Company Selected Metric – Adjusted Company FFO ($000s)(4) | |
| Total Shareholder Return | Peer Group Total Shareholder Return(3) | |||||||
| 2022 | $ |
$( |
$ |
$ |
$ |
$ |
$ |
$ |
| 2021 | $ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
| 2020 | $ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
| (1) |
| Adjustments | 2022 | 2021 | 2020 |
| Amounts reported under “Stock Awards” in Summary Compensation Table | $( |
$( |
$( |
| Fair Value of Awards Granted in Year and Unvested as of Year-End | $ |
$ |
$ |
| Change in Fair Value from Prior Year-End to Current Year-End of Awards Granted Prior to Year that were Outstanding and Unvested as of Year-End | $( |
$ |
$ |
| Fair Value of Awards Granted and Vested in During Year at Vesting Date | $ |
$ |
$ |
| Change in Fair Value from Prior Year-End to Vesting Date of Awards Granted Prior to Year that Vested During Year | $( |
$ |
$ |
| Fair Value at Year End of Awards Granted Prior to Year that Failed to Meet the Applicable Vesting Conditions During Year | $( |
$ | $ |
| Dividends or Other Earnings Paid During Year prior to Vesting Date of Award Not Otherwise Included in Total Compensation for the Year | $ | $ | $ |
| (2) |
55
| Adjustments | 2022 | 2021 | 2020 |
| Amounts reported under “Stock Awards” in Summary Compensation Table | $( |
$( |
$( |
| Fair Value of Awards Granted in Year and Unvested as of Year-End | $ |
$ |
$ |
| Change in Fair Value from Prior Year-End to Current Year-End of Awards Granted Prior to Year that were Outstanding and Unvested as of Year-End | $( |
$ |
$ |
| Fair Value of Awards Granted and Vested in During Year at Vesting Date | $ |
$ |
$ |
| Change in Fair Value from Prior Year-End to Vesting Date of Awards Granted Prior to Year that Vested During Year | $( |
$ |
$ |
| Fair Value at Year End of Awards Granted Prior to Year that Failed to Meet the Applicable Vesting Conditions During Year | $( |
$ |
$ |
| Dividends or Other Earnings Paid During Year prior to Vesting Date of Award Not Otherwise Included in Total Compensation for the Year | $ |
$ |
$ |
| (3) |
| (4) |
Financial Measures
Our executive compensation programs have significant pay for performance components. The metrics used for our annual cash incentive opportunities are selected based on our then annual business plan and tended to focus on operational matters. The financial measure used for our annual long-term incentive opportunity is solely based on our TSR.
Adjusted Company FFO and TSR are the two most frequently discussed financial measures used with our investors and analysts. Due to the transition of our portfolio from diversified to industrial and the resulting revenue dilution, our Compensation Committee has not included Adjusted Company FFO in the annual cash incentive opportunity as a metric until 2023. The long-term incentive opportunity portion of our executive compensation plan consists of a long-term incentive award 60% of which is performance-based non-vested shares and 40% time-based non-vested shares. The performance-based non-vested shares are split into two tranches: (1) 50% is based on our relative TSR compared to the MSCI US REIT Index after a three-year performance period, and (2) 50% is based on our relative TSR compared to a competitor peer group after a three-year performance period. Performance levels are: (1) threshold requires achieving at least 33rd percentile, (2) target requires achieving at least 50th percentile and (3) maximum requires achieving at least 75th percentile. Straight-line interpolation is used to determine awards for results between performance levels. Dividends on the performance-based non-vested shares accrue and are only payable if and to the extent the shares vest.
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Relationship Between Compensation Actually Paid and Company Performance
Net income is not used in our executive compensation program due to fluctuations in net income experienced by real estate companies due to the impact of items such as depreciation and amortization and gains/losses on sales of properties, which was heavily impacted by the disposition volume in recent years as part of our portfolio transition from diversified to industrial. Although, net income is used to determine certain non-GAAP financial measures used in our executive compensation plan.
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Adjusted Company FFO was not used in our executive compensation program for the three years presented above due to the impact of our portfolio transition. The portfolio transition entailed selling higher yielding, but riskier office and other assets and recycling the proceeds into lower yielding, but less risky warehouse and distribution assets that have greater rent growth and releasing potential. As a result of such impact, Adjusted Company FFO has not been aligned with compensation actually paid.
58
CEO PAY RATIO
For 2022, the annual total compensation of our median employee (other than our CEO) was $163,600 and the annual total compensation of our CEO was $6,062,516, and the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was estimated to be 37 to 1.
To identify the median of the annual total compensation of all of our employees we used Medicare wages and tips for all employees as of December 31, 2022. The annual total compensation of our median employee and our CEO were calculated in accordance with the requirements for the Summary Compensation Table above.
TRUSTEE COMPENSATION
None of our employees receives or will receive any compensation for serving as a member of our Board of Trustees or any of its committees. Our non-employee trustees received the following aggregate amounts of compensation for the year ended December 31, 2022:
| Name | Fees Earned or Paid in Cash ($) |
Share Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Change
in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All
Other Compensation ($) |
Total ($) |
||||||||||||||
| Richard S. Frary | 90,000 | 120,000 | — | — | — | — | 210,000 | ||||||||||||||
| Lawrence L. Gray | 75,000 | 120,000 | — | — | — | — | 195,000 | ||||||||||||||
| Arun Gupta | 45,493 | 141,514 | — | — | — | — | 187,007 | ||||||||||||||
| Jamie Handwerker | 60,000 | 120,000 | — | — | — | — | 180,000 | ||||||||||||||
| Derrick Johnson | 26,671 | 102,695 | — | — | — | — | 129,336 | ||||||||||||||
| Claire A. Koeneman | 75,000 | 120,000 | — | — | — | — | 195,000 | ||||||||||||||
| Nancy Elizabeth Noe | 60,000 | 120,000 | — | — | — | — | 180,000 | ||||||||||||||
| Howard Roth | 80,000 | 120,000 | — | — | — | — | 200,000 |
In 2022, the non-employee trustee compensation arrangements were as follows:
| Retainer Type | Retainer
Amount ($) |
|||
| General Cash | $ | 60,000 | ||
| General Vested Common Share | $ | 120,000 | ||
| Lead Trustee | $ | 30,000 | ||
| Audit and Cyber Risk Chair | $ | 20,000 | ||
| Compensation Chair | $ | 15,000 | ||
| Nominating and ESG Chair | $ | 15,000 | ||
The retainers are paid quarterly in arrears and the portion of the retainer paid in common shares will be based on the average closing price over the applicable quarter.
Non-employee trustees also receive reimbursement of their out-of-pocket travel costs to attend meetings. Any initial equity award for a newly appointed or elected trustee will be decided by the Compensation Committee on a case-by-case basis. In 2022, Mr. Gupta received an initial equity award of common shares with a grant date value of approximately $50,000 and Mr. Johnson received an initial equity award of common shares with a grant date value of approximately $50,000.
59
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the “Compensation Committee”) of the Board of Trustees of LXP Industrial Trust, a Maryland real estate investment trust (the “Trust”), has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, the Compensation Committee recommended to the Board of Trustees that the Compensation Discussion and Analysis be included in the Trust’s proxy statement for the 2023 Annual Meeting of Shareholders and Annual Report on Form 10-K for the year ended December 31, 2022.
Submitted by the Compensation Committee of the Board of Trustees
/s/
Lawrence L. Gray, Chairperson
Richard S. Frary
Claire A. Koeneman
Jamie Handwerker
AUDIT AND AUDIT-RELATED MATTERS
The following table presents audit fees and audit related fees and tax fees billed to us by Deloitte.
| 2022 | 2021 | |||||||
| Audit fees(1) | $ | 1,215,000 | $ | 1,170,000 | ||||
| Audit-related fees(2) | 30,000 | 150,000 | ||||||
| Total audit and audit related fees | 1,245,000 | 1,320,000 | ||||||
| Tax fees(3) | 316,160 | 310,545 | ||||||
| All other fees | — | — | ||||||
| Total fees | $ | 1,561,160 | $ | 1,630,545 | ||||
| (1) | Audit fees are fees for services rendered for the audit and review of our financial statements. |
| (2) | Audit-related fees refers to fees for services that are reasonably related to the performance of the audit or review of our financial statements. |
| (3) | Tax fees consisted of fees for tax compliance and preparation services. |
The Audit and Cyber Risk Committee has determined that the non-audit services provided by the independent registered public accounting firm are compatible with maintaining the accounting firm’s independence. All of the services set forth above in the categories “Audit-related fees,” “Tax fees” and “All other fees” were pre-approved by the Audit and Cyber Risk Committee, as set forth below.
The Audit and Cyber Risk Committee of the Board of Trustees must pre-approve the audit and non-audit services performed by our independent registered public accounting firm and has adopted appropriate policies in this regard. With regard to fees, annually, the independent registered public accounting firm provides the Audit and Cyber Risk Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the fiscal year. Upon the Audit and Cyber Risk Committee’s acceptance of and agreement to the engagement letter, the services within the scope of the proposed audit services are deemed pre-approved pursuant to this policy. The Audit and Cyber Risk Committee must pre-approve any change in the scope of the audit services to be performed by the independent registered public accounting firm and any change in fees relating to any such change. Specific audit-related services and tax services are pre-approved by the Audit and Cyber Risk Committee, subject to limitation on the dollar amount of such fees, which dollar amount is established annually by the Audit and Cyber Risk Committee. Services not specifically identified and described within the categories of audit services, audit-related services and tax services must be expressly pre-approved by the Audit and Cyber Risk Committee prior to us engaging any such services, regardless of the amount of the fees involved. The Chairperson of the Audit and Cyber Risk Committee is delegated the authority to grant such pre-approvals. The decisions of the Chairperson to pre-approve any such activity shall be presented to the Audit and Cyber Risk Committee at its next scheduled meeting. In accordance with the foregoing, the retention by management of our independent registered public accounting firm for tax consulting services for specific projects is pre-approved, provided, that the annual cost of all such retentions does not exceed $100,000. The Audit and Cyber Risk Committee does not delegate to management its responsibilities to pre-approve services to be performed by our independent registered public accounting firm.
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REPORT
OF THE AUDIT AND CYBER RISK COMMITTEE OF OUR
BOARD OF TRUSTEES
The management of LXP Industrial Trust, a Maryland real estate investment trust (the “Trust”), is responsible for the internal controls and financial reporting process of the Trust. The independent registered public accounting firm is responsible for performing an independent audit of the Trust’s consolidated financial statements and auditing the Trust’s internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), and issuing a report thereon. The Audit and Cyber Risk Committee of the Board of Trustees of the Trust (the “Audit and Cyber Risk Committee”) is responsible for monitoring and overseeing these processes. The charter of the Audit and Cyber Risk Committee is designed to assist the Audit and Cyber Risk Committee in complying with applicable provisions of the Securities Exchange Act of 1934, as amended, and the New York Stock Exchange’s listing rules, all of which relate to corporate governance and many of which directly or indirectly affect the duties, powers and responsibilities of the Audit and Cyber Risk Committee. Among the duties, powers and responsibilities of the Audit and Cyber Risk Committee as provided in the Audit and Cyber Risk Committee charter, the Audit and Cyber Risk Committee:
| ● | has sole power and authority concerning the engagement and fees of the independent registered public accounting firm, |
| ● | reviews with the independent registered public accounting firm the scope of the annual audit and the audit procedures to be utilized, |
| ● | pre-approves audit and permitted non-audit services provided by the independent registered public accounting firm, |
| ● | reviews the independence of the independent registered public accounting firm, |
| ● | reviews the adequacy of the Trust’s internal accounting controls, and |
| ● | reviews accounting, auditing and financial reporting matters with the Trust’s independent registered public accounting firm and management. |
In connection with these responsibilities, the Audit and Cyber Risk Committee met with management and Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm, to review and discuss the December 31, 2022 audited consolidated financial statements. The Audit and Cyber Risk Committee has discussed with Deloitte the matters required to be discussed by the PCAOB Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU Section 380), as adopted by the PCAOB in Rule 3200T. The Audit and Cyber Risk Committee also received the written disclosures and the letter from Deloitte, as required by the applicable requirements of the PCAOB regarding Deloitte’s communications with the Audit and Cyber Risk Committee concerning independence, and discussed with Deloitte its independence.
Based upon the Audit and Cyber Risk Committee’s discussions with management and Deloitte referred to above, and the Audit and Cyber Risk Committee’s review of the representations of management, the Audit and Cyber Risk Committee recommended that the Board of Trustees of the Trust include the December 31, 2022 audited consolidated financial statements in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the United States Securities and Exchange Commission on February 16, 2023.
Submitted by the Audit and Cyber Risk Committee of the Board of Trustees
/s/
Howard Roth, Chairperson
Richard S. Frary
Arun Gupta
Jamie Handwerker
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SHARE
OWNERSHIP OF PRINCIPAL SECURITY HOLDERS,
TRUSTEES, AND EXECUTIVE OFFICERS
The following table indicates, as of the close of business on the Record Date, (a) the number of common shares of the Company beneficially owned by each person known by us to own in excess of five percent of the outstanding common shares and (b) the percentage such shares represented of the total outstanding common shares. All shares were owned directly on such date with sole voting and investment power unless otherwise indicated, calculated as set forth in footnote 1 to the table.
| Name and Address of Beneficial Owner | Number
of Common Shares Beneficially Owned(1) |
Percentage
of Class |
|||||
| BlackRock, Inc.(2) | 52,340,021 | 17.9% | |||||
| The Vanguard Group, Inc.(3) | 45,606,831 | 15.6% | |||||
| FMR LLC(4) | 37,725,010 | 12.9% | |||||
| State Street Corporation(5) | 17,976,830 | 6.1% |
| (1) | For purposes of this table, a person is deemed to beneficially own any common shares as of a given date which such person owns or has the right to acquire within 60 days after such date. |
| (2) | Based on information contained in a Schedule 13G filed with the SEC on January 26, 2023. According to such Schedule 13G/A, BlackRock, Inc., together with BlackRock Life Limited, BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, and BlackRock Fund Managers Ltd, collectively have sole dispositive power over 52,340,021 common shares and sole voting power over 51,424,735 common shares. BlackRock Fund Advisors reported that it beneficially owns 5% or greater of the outstanding common shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
| (3) | Based on information contained in a Schedule 13G/A filed with the SEC on February 9, 2023. According to such Schedule 13G/A, The Vanguard Group, Inc. has shared power to vote or direct to vote 424,217 common shares, sole power to dispose of or to direct the disposition of 44,905,849 common shares, and shared power to dispose or to direct the disposition of 700,982 common shares. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. |
| (4) | Based on information contained in a Schedule 13G/A filed with the SEC on February 9, 2023. According to such Schedule 13G/A, FMR LLC, together with FIAM LLC, Fidelity Institutional Asset Management Trust Company, Fidelity Management & Research Company LLC (“FMR Co.”) and Strategic Advisers LLC, has sole power to vote or direct to vote 37,410,266 common shares and sole power to dispose of or to direct the disposition of 37,725,010 common shares. FMR Co. reported that it beneficially owns 5% or greater of the outstanding common shares. The address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
| (5) | Based on information contained in a Schedule 13G/A filed with the SEC on February 6, 2023. According to such Schedule 13G/A, State Street Corporation, together with SSGA Funds Management, Inc., State Street Global Advisors Europe Limited, State Street Global Advisors Limited, State Street Global Advisors Trust Company, State Street Global Advisors, Australia, Limited, and State Street Global Advisors (Japan) Co., LTD., has shared power to vote or direct to vote 14,098,278 common shares and shared power to dispose of or to direct the disposition of 17,976,830 common shares. State Street Corporation reported that it beneficially owns 5% or greater of the outstanding common shares. The address of State Street Corporation is State Street Financial Center, One Lincoln Street, Boston, MA 02111. |
62
The following table indicates, as of the close of business on the Record Date, (a) the number of common shares beneficially owned by each trustee and each named executive officer, as identified in the Compensation Discussion and Analysis below, and by all trustees and executive officers as a group, and (b) the percentage such shares represented of the total outstanding common shares. All shares were owned directly on such date with sole voting and investment power unless otherwise indicated, calculated as set forth in footnotes 1 and 2 to the table. The address for each trustee and named executive officer listed below is c/o LXP Industrial Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4015.
| Name and Address of Beneficial Owner | Number
of Common Shares Beneficially Owned(1) |
Percentage
of Class(2) |
| |||||
| T. Wilson Eglin | 2,980,320 | (3) | | 1% | ||||
| Beth Boulerice | 460,797 | (4) | | * | ||||
| Joseph S. Bonventre | 707,025 | (5) | | * | ||||
| Brendan P. Mullinix | 567,906 | (6) | | * | ||||
| James Dudley | 261,284 | (7) | | * | ||||
| Richard S. Frary | 189,685 | (8) | | * | ||||
| Lawrence L. Gray | 84,471 | (9) | | * | ||||
| Arun Gupta | 34,844 | * | ||||||
| Jamie Handwerker | 82,350 | | * | |||||
| Derrick Johnson | 9,995 | * | ||||||
| Claire A. Koeneman | 89,291 | | * | |||||
| Nancy Elizabeth Noe | 21,026 | (10) | * | |||||
| Howard Roth | 68,220 | | * | |||||
| All trustees and executive officers as a group (15 persons)(11) | 5,812,401 | | 2.0% | |||||
| _________________________ |
| * | Represents beneficial ownership of less than 1.0% |
| (1) | For purposes of this table, a person is deemed to beneficially own any common shares as of a given date which such person owns or has the right to acquire within 60 days after such date. |
| (2) | For purposes of computing the percentage of outstanding shares held by each beneficial owner named above on a given date, any security (including, without limitation, limited partnership units redeemable into common shares) deemed owned by such person or persons is included in the total number of outstanding common shares but is not included in the total number of outstanding common shares for the purpose of computing the percentage ownership of any other beneficial owner (with the exception of determining the percentage owned by all trustees and executive officers as a group). |
| (3) | Includes (i) 1,741,578 common shares held directly by Mr. Eglin, (ii) 1,107,879 common shares held by Mr. Eglin which are subject to performance or time-based vesting requirements, and (iii) 130,863 common shares held in trust in which Mr. Eglin is a beneficiary. |
| (4) | Includes (i) 240,719 common shares held by Ms. Boulerice which are subject to performance or time-based vesting requirements, and (ii) 220,078 common shares held in trust in which Ms. Boulerice is a beneficiary and a trustee. |
| (5) | Includes (i) 301,342 common shares held directly by Mr. Bonventre and (ii) 405,683 common shares held directly by Mr. Bonventre which are subject to performance or time-based vesting requirements. |
| (6) | Includes (i) 258,215 common shares held directly by Mr. Mullinix, and (ii) 309,691 common shares held directly by Mr. Mullinix which are subject to performance or time-based vesting requirements. |
| (7) | Includes (i) 89,941 common shares held directly by Mr. Dudley, and (ii) 171,343 common shares held directly by Mr. Dudley which are subject to performance or time-based vesting requirements. |
| (8) | Includes (i) 151,985 common shares held directly by Mr. Frary, (ii) 36,500 common shares held in Mr. Frary’s individual retirement account, and (iii) 1,200 common shares owned by Mr. Frary’s wife. |
| (9) | All common shares held in a trust in which Mr. Gray is a trustee and/or beneficiary. |
| (10) | All common shares held in a trust in which Ms. Noe is a trustee and/or beneficiary. |
| (11) | Includes Nabil Andrawis, our Executive Vice President and Director of Taxation, and Mark Cherone, our Senior Vice President and Chief Accounting Officer, in addition to the listed trustees and named executive officers. |
63
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our trustees, executive officers, and beneficial owners of more than 10 percent of the total outstanding common shares to file initial reports of ownership and reports of changes in ownership of common shares and other equity securities with the SEC and the NYSE. Trustees, executive officers, and beneficial owners of more than 10 percent of the total outstanding common shares are required to furnish us with copies of all Section 16(a) forms they file. Based on a review of the copies of such reports furnished to us and written representations from our trustees and executive officers, we believe that, during the 2022 fiscal year, our trustees, executive officers and beneficial owners of more than 10 percent of the total outstanding common shares complied with all Section 16(a) filing requirements applicable to them, except that Jamie Handwerker failed to timely report the purchase of 5,000 common shares on May 9, 2022, which purchase was subsequently reported on June 15, 2022.
OTHER MATTERS
The Board of Trustees is not aware of any business to come before the Annual Meeting other than (1) the election of trustees, (2) the advisory, non-binding resolution to approve executive compensation, (3) the advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation, and (4) the proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. However, if any other matters should properly come before the Annual Meeting or any postponement or adjournment thereof, including matters relating to the conduct of the Annual Meeting, it is intended that proxies in the accompanying form or as authorized via the Internet or telephone will be voted in respect thereof in accordance with the discretion of the person or persons voting the proxies.
64
QUESTIONS AND ANSWERS
Why did you send me an Important Notice Regarding the Availability of Proxy Materials for the LXP Industrial Trust Shareholder Meeting to be Held on May 23, 2023?
We sent you the Important Notice Regarding the Availability of Proxy Materials for the LXP Industrial Trust Shareholder Meeting to be Held on May 23, 2023, or the Notice, regarding this proxy statement because we are holding the Annual Meeting and our Board of Trustees is asking for your proxy to vote your shares at the Annual Meeting. We have summarized information in this proxy statement that you should consider in deciding how to vote at the Annual Meeting. You do not have to attend the Annual Meeting in order to have your shares voted. Instead, you may simply authorize a proxy to vote your shares electronically via the Internet, by telephone or by completing and returning the proxy card if you requested paper proxy materials. Voting instructions are provided in the Notice. If you requested printed materials, the instructions are printed on your proxy card and included in the accompanying proxy statement.
Why did I receive the Notice instead of a paper copy of proxy materials?
The United States Securities and Exchange Commission, or SEC, has approved “Notice and Access” rules relating to the delivery of proxy materials over the Internet. These rules permit us to furnish to Shareholders proxy materials related to the Annual Meeting, including this proxy statement and our related annual report, by providing access to such documents on the Internet instead of mailing printed copies. Most Shareholders will not receive printed copies of the proxy materials unless they properly request them. Instead, the Notice, which was mailed to Shareholders, provides notice of the Annual Meeting and instructs you as to how you may access and review all of the proxy materials on the Internet or by telephone. The Notice also instructs you as to how you may submit your proxy on the Internet or by telephone. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. Any request to receive proxy materials by mail or email will remain in effect until you properly revoke it.
How can I attend the Annual Meeting?
The Annual Meeting will be a completely virtual meeting of Shareholders, which will be conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were a Shareholder as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held and members of our Board of Trustees and management will also attend by webcast.
You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.meetnow.global/MGV4HMU. You also will be able to vote your shares online by attending the Annual Meeting by webcast.
To participate in the Annual Meeting, you will need to review the information included on the Notice, on your proxy card or on the instructions that accompanied your proxy materials.
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below.
The online Annual Meeting will begin promptly at 2:00 p.m., Eastern Time. We encourage you to access the Annual Meeting prior to the start time leaving ample time for the check-in. Please follow the registration instructions as outlined in this proxy statement. For technical support, please contact 1-888-724-2416.
How do I register to attend the Annual Meeting virtually on the Internet?
Registered Shareholders. If you are a registered Shareholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually on the Internet. Please follow the instructions on the notice or proxy card that you received.
65
Beneficial Shareholders. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet. To register to attend the Annual Meeting by webcast you must submit proof of your proxy power (legal proxy) reflecting your LXP holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 18, 2023. You will receive a confirmation of your registration by email after we receive your registration materials. Requests for registration should be directed to us at the following:
By email: Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com
By
mail: Computershare
LXP Industrial Trust Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Why are you holding a virtual meeting instead of a physical meeting?
Attendance at our past, in-person, annual meetings has been sparse. In 2020, we held our first virtual meeting primarily due to the COVID-19 pandemic.
We believe that hosting a virtual meeting provides expanded access, improved communication and cost savings. In future years, we expect to continue to provide a virtual option to attend our annual meetings of shareholders.
Who is entitled to vote?
All Shareholders of record as of the close of business on the Record Date are entitled to vote at the Annual Meeting. There was no other class of voting securities of the Company outstanding as of the close of business on the Record Date other than common shares.
What is the quorum for the Annual Meeting?
In order for any business to be conducted at the Annual Meeting, the holders entitled to cast a majority of the votes entitled to be cast at the Annual Meeting must be present, either in person via webcast or represented by proxy. For the purpose of determining the presence of a quorum, abstentions and broker non-votes, if any, will be counted as present. As of the close of business on the Record Date, 292,555,025 common shares were issued and outstanding representing an equal number of votes entitled to be cast. Therefore, in order for a quorum to be present, holders of at least 146,277,513 common shares must be present, either in person via webcast or represented by proxy.
What is a broker non-vote?
Broker votes occur when a broker or nominee has either received voting instructions from the beneficial owner on how to vote the beneficial owner’s shares or casts a discretionary vote without voting instructions from the beneficial owner on a “routine” matter, (as defined by the NYSE). In contrast, broker non-votes occur when a broker or nominee has not received voting instructions from the beneficial owner on a “non-routine” matter, as defined by the NYSE and, therefore, is not permitted under NYSE rules to cast a discretionary vote on that matter.
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Will my shares be voted if I do not provide my proxy?
Depending on the proposal, your shares may be voted if they are held in the name of a brokerage firm, even if you do not provide the brokerage firm with voting instructions, which are broker votes as discussed above. The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm is generally considered a “routine” matter for which brokerage firms may vote shares without receiving voting instructions, unless there is a contested matter being voted upon at the Annual Meeting, as described above. The election of trustees, the advisory resolution on the compensation of our named executive officers, and the advisory resolution on the frequency of future advisory votes on executive compensation are considered “non-routine matters” and if you do not provide the brokerage firm with voting instructions on these proposals, your shares will not be voted on these proposals and will be considered broker non-votes.
How many votes do I have?
Each common share outstanding on the Record Date is entitled to one vote for each trustee to be elected at the Annual Meeting and to cast one vote on each other item properly submitted for consideration at the Annual Meeting.
How do I vote or authorize a proxy to vote my shares that are held of record by me?
| ● | Via Internet: Log on to www.envisionreports.com/LXP and follow the on-screen instructions. You will be prompted for certain information that can be found on your proxy card or Notice. |
| ● | By Telephone: Call toll-free 1-800-652-VOTE (8683) and follow the instructions. You will be prompted for certain information that can be found on your proxy card or Notice. |
| ● | In Person: Vote at the Annual Meeting online via webcast. |
How do I vote or authorize a proxy to vote my shares that are held by my bank, broker or other nominee?
If you have shares held by a bank, broker or other nominee (which is also known as holding shares in “street name”), you may instruct your bank, broker or other nominee to vote your shares by following the instructions that the bank, broker or other nominee provides to you. Most banks, brokers or other nominees offer voting instructions by mail, telephone and on the Internet. If your shares are held in “street name,” your bank, broker or other nominee will not vote your shares unless you provide such instructions to your bank, broker or other nominee on how to vote your shares. If you would like to vote in person via webcast at the Annual Meeting, you must contact your bank, broker or other nominee and follow your bank’s, broker’s or other nominee’s instructions, including the instructions on how to obtain a proxy.
Are dissenters’ or appraisal rights available to Shareholders with respect to any of the proposals at the Annual Meeting?
No dissenters’ or appraisal rights are available with respect to any of the proposals being submitted to Shareholders for their consideration at the Annual Meeting.
What am I voting on?
You will be voting on the following proposals:
| (1) | to elect eight trustees to serve until the 2024 Annual Meeting of Shareholders or their earlier removal or resignation and until their respective successors, if any, are elected and qualify; |
| (2) | to consider and vote upon an advisory, non-binding resolution to approve the compensation of our named executive officers, as disclosed in this proxy statement; |
| (3) | to consider and vote upon an advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation; |
| (4) | to consider and vote upon the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and |
| (5) | to transact such other business as may properly come before the 2023 Annual Meeting of Shareholders or any adjournment or postponement thereof. |
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Will there be any other items of business on the agenda?
The Board of Trustees is not presently aware of any other items of business to be properly presented for a vote at the Annual Meeting other than the proposals noted above. Nonetheless, in case there is an unforeseen need, your proxy gives discretionary authority to Joseph S. Bonventre and Beth Boulerice, or either of them, with respect to any other matters that might be properly presented at the meeting or any postponement or adjournment thereof.
Why am I being asked to vote on executive compensation?
The Dodd-Frank Act requires us, as a public company, to seek a non-binding advisory vote from our Shareholders to approve the compensation awarded to our named executive officers, as disclosed in this proxy statement. Based on the non-binding advisory recommendation selecting an annual frequency of such non-binding advisory votes at the 2017 Annual Meeting of Shareholders, we are currently seeking a vote from Shareholders on an advisory resolution to approve the compensation awarded to our named executive officers on an annual basis. This advisory vote is non-binding, but the Board of Trustees considers our Shareholders’ concerns and takes them into account in determinations concerning our executive compensation program. See “Compensation of Executive Officers,” above. We are also seeking a recommendation on the frequency of such non-binding advisory votes at the Annual Meeting.
How many votes are required to act on the proposals?
Assuming a quorum is present at the Annual Meeting, the affirmative vote of a majority of the votes cast by holders of common shares at the Annual Meeting will be sufficient for (1) the election of each nominee for trustee named herein, (2) the adoption of the advisory, non-binding resolution to approve the compensation of our named executive officers, (3) the adoption of the advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation, and (4) the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.
If you abstain or your shares are treated as broker non-votes, your abstention or broker non-votes will not be counted as a vote cast and will have no effect on the result of the vote on (1) the election of trustees, (2) the resolution to approve, on an advisory, non-binding basis, the compensation of our named executive officers, or (3) the advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation. As noted above, the proposal to ratify the appointment of Deloitte & Touche LLP as our independent auditors is generally considered a “routine” matter for which brokerage firms may vote shares without receiving voting instructions, unless there is a contested matter being voted upon at the Annual Meeting. Accordingly, there will be no broker non-votes regarding the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm and any abstentions by you or your broker will have no effect on the result of the vote. The election of trustees, the advisory, non-binding resolution on the compensation of our named executive officers, and the advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation are also considered “non-routine matters” and if you do not provide the brokerage firm with voting instructions on these proposals, your shares will not be voted on these proposals and will be “broker non-votes.”
For purposes of the election of trustees, a majority of votes cast means the number of shares voted “FOR” a nominee must exceed the number of shares cast “AGAINST” with respect to a nominee. If a nominee that is already serving as a trustee is not elected, such trustee is required to offer to tender their resignation to our Board of Trustees. The Nominating and ESG Committee will make a recommendation to our Board of Trustees on whether to accept or reject the resignation, or whether other action should be taken. Our Board of Trustees is required to act on the Nominating and ESG Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The trustee who tenders their resignation will not participate in our Board of Trustee’s decision.
For purposes of the remaining proposals properly brought before the Annual Meeting other than the election of trustees, a majority of votes cast means the number of shares voted “FOR” a proposal must exceed the number of shares as to which the holders elected to vote “AGAINST” such proposal. The votes on (1) the advisory resolution to approve the compensation of our named executive officers, (2) the advisory, non-binding recommendation on the frequency of future votes on executive compensation, and (3) the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm, are non-binding and serve only as recommendations to the Board of Trustees and the Audit and Cyber Risk Committee, as applicable.
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What happens if I authorize my proxy without voting on all proposals?
When you return a properly executed proxy card or authorize your proxy telephonically or by the Internet, the shares that the proxy card or authorization represents will be voted in accordance with your directions. If you return the signed proxy card with no direction on a proposal, other than in the case of broker non-votes, the shares represented by your proxy will be voted in favor of (FOR) each of our nominees for trustee in Proposal No. 1 and in favor of (FOR) Proposals No. 2, and No. 4 and in favor of (FOR) one (1) year for Proposal 3 and will be voted in the discretion of the proxy holder on any other matter that properly comes before the Annual Meeting.
What if I want to change my vote after I return my proxy?
If you are a Shareholder of record, you may revoke your proxy at any time before its exercise by:
| (1) | delivering written notice of revocation to our Secretary at c/o LXP Industrial Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4015; |
| (2) | submitting to us a duly executed proxy card bearing a later date; |
| (3) | authorizing a proxy via the Internet or by telephone at a later date; or |
| (4) | attending the Annual Meeting and voting at the annual meeting online via webcast; |
provided, however, that no such revocation under clause (1) or (2) shall be effective until written notice of revocation or a later dated proxy card is received by our Secretary on or before 11:59 p.m., Eastern Time, on May 22, 2023.
Participating in our Annual Meeting will not constitute a revocation of a previously delivered proxy unless you affirmatively indicate at our Annual Meeting that you intend to vote your shares by voting your shares online during the Annual Meeting webcast.
If you have shares held by a broker, you must follow the instructions given by your broker to change or revoke your voting instructions.
Will anyone contact me regarding this vote?
It is contemplated that brokerage houses will forward the proxy materials to Shareholders at our request. In addition to the solicitation of proxies by use of the mail, our trustees, officers, and other employees may solicit proxies by telephone, facsimile, e-mail, or personal interviews without additional compensation. We may, from time to time, engage and pay outside proxy solicitation firms, although we have not engaged an outside firm at this time.
Who has paid for this proxy solicitation?
We will bear the cost of preparing, printing, assembling and mailing the Notice, proxy card, proxy statement, and other materials that may be sent to Shareholders in connection with this solicitation. We may also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their expenses incurred in forwarding solicitation materials to the beneficial owners of shares held of record by such persons.
How do I nominate a trustee or submit a proposal for the 2024 Annual Meeting of Shareholders?
If you wish to submit a shareholder proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, for inclusion in our proxy statement and proxy card for our 2024 Annual Meeting of Shareholders, you must submit the proposal to our Secretary at our principal executive office no later than December 12, 2023.
If you wish to submit a trustee nomination pursuant to the “proxy access” provisions of our bylaws for inclusion in our proxy statement and proxy card for our 2024 Annual Meeting of Shareholders, you must submit the trustee nomination in accordance with the requirements of Section 1.13 of our bylaws not earlier than November 12, 2023 and not later than 5:00 p.m., Eastern Time, on December 12, 2023.
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In addition, any Shareholder who wishes to submit a proposal or trustee nomination pursuant to the “advance notice” provisions of our bylaws for the 2024 Annual Meeting of Shareholders (other than pursuant to Rule 14a-8 under the Exchange Act) must comply with Section 1.11 our bylaws, including delivering the required information and certifications to our Secretary at our principal executive offices not earlier than November 12, 2023 and not later than the close of business on December 12, 2023.
Our Board of Trustees will review any Shareholder proposals or trustee nominations that are timely submitted and will determine whether such proposals meet the criteria for inclusion in the proxy solicitation materials or for consideration at the 2024 Annual Meeting of Shareholders.
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts at the transfer agent and/or with brokers. Please complete and return all proxy cards to ensure that all your shares are voted.
Can I find additional information on the Company’s web site?
Yes. Our web site is located at www.lxp.com. Although the information contained on our web site is not part of this proxy statement, you can view additional information on the web site, such as our code of business conduct and ethics, corporate governance guidelines, charters of board committees, and reports that we file and furnish with the SEC. Copies of our code of business conduct and ethics, corporate governance guidelines, and charters of board committees also may be obtained by written request addressed to (1) LXP Industrial Trust, One Penn Plaza, Suite 4015, New York, New York 10119-4015, Attention: Investor Relations or (2) ir@lxp.com.
Important Notice Regarding the Availability of Proxy Materials for the LXP Industrial Trust Shareholder Meeting To Be Held on May 23, 2023 — This proxy statement and the Annual Report to Shareholders are available at www.envisionreports.com/LXP.
We have elected to provide access to our proxy materials to our Shareholders on the Internet. Accordingly, an Important Notice of Meeting and Notice Regarding the Availability of Proxy Materials for the LXP Industrial Trust Shareholder Meeting to be Held on May 23, 2023 was or will be mailed on or about April 10, 2023 to our Shareholders of record as of the close of business on the Record Date. If you wish to receive a hard copy of the proxy materials, please visit or contact:
| (1) | By Internet: www.envisionreports.com/LXP |
| (2) | By Telephone: 1-866-641-4276 |
| (3) | By E-Mail*: investorvote@computershare.com |
Please make the requests as instructed above on or before May 10, 2023 to facilitate timely delivery.
How do I obtain a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 from the Company?
Upon written request to (1) LXP Industrial Trust, One Penn Plaza, Suite 4015, New York, NY 10119-4105, Attention: Investor Relations or (2) ir@lxp.com, we will provide any Shareholder, without charge, a hardcopy of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC, including our financial statements and schedule, but without exhibits. You may also obtain our Annual Report to Shareholders, which includes our Annual Report on Form 10-K, at www.envisionreports.com/LXP.
What is “householding”?
“Householding” allows companies to deliver only one copy of notices and other proxy materials to multiple shareholders who share the same address (if they appear to be members of the same family) unless the company has received contrary instructions from an affected shareholder. We do not offer “householding” for shareholders of record. Please contact your broker if you are not a shareholder of record to find out if your broker offers “householding.”
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* If requesting materials by e-mail, please send an e-mail with “Proxy Materials LXP Industrial Trust” in the subject line. Include your full name and address, plus the number located in the shaded bar on the reverse side of the Notice of Proxy, and state that you want a paper copy of the meeting materials. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor.
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Appendix A
Certain Definitions
“GAAP” means United States generally accepted accounting principles in effect from time to time.
“Adjusted EBITDA” represents EBITDA (earnings before interest, taxes, depreciation and amortization) modified to include other adjustments to GAAP net income for gains on sales of properties, non-cash sales-type lease adjustments, impairment charges, debt satisfaction gains (losses), net, non-cash charges, net, straight-line adjustments, change in credit loss revenue, non-recurring charges and adjustments for pro-rata share of nonwholly owned entities. LXP’s calculation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. LXP believes that net income is the most directly comparable GAAP measure to Adjusted EBITDA.
“Base Rent” means GAAP rental revenue and ancillary income, but excluding billed tenant reimbursements and lease termination income.
“Cash Base Rent” is calculated by making adjustments to GAAP rental revenue to remove the impact of GAAP required adjustments to rental income such as adjustments for straight-line rents related to free rent periods and contractual rent increases. Cash Base Rent excludes billed tenant reimbursements, non-cash sales-type lease income and lease termination income and includes ancillary income.
“Net operating income (NOI)” is a measure of operating performance used to evaluate the individual performance of an investment. This measure is not presented or intended to be viewed as a liquidity or performance measure that presents a numerical measure of LXP’s historical or future financial performance, financial position or cash flows.
“Funds from Operations (FFO)” and “Adjusted Company FFO”
We believe that Funds from Operations, or FFO, which is a non-GAAP measure, is a widely recognized and appropriate measure of the performance of an equity REIT. We believe FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. As a result, FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not necessarily be apparent from net income.
The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as “net income (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains and losses from the sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. The reconciling items include amounts to adjust earnings from consolidated partially-owned entities and equity in earnings of unconsolidated affiliates to FFO.” FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs.
A-1
We present FFO available to common shareholders and unitholders - basic and also present FFO available to all equityholders and unitholders - diluted on a company-wide basis as if all securities that are convertible, at the holder's option, into our common shares, are converted at the beginning of the period. We also present Adjusted Company FFO available to all equityholders and unitholders - diluted, which adjusts FFO available to all equityholders and unitholders - diluted for certain items which we believe are not indicative of the operating results of our real estate portfolio. We believe this is an appropriate presentation as it is frequently requested by securities analysts, investors and other interested parties. Since others do not calculate these measures in a similar fashion, these measures may not be comparable to similarly titled measures as reported by others. These measures should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity.
“Same-store NOI” represents the NOI for consolidated properties that were owned and included in our portfolio for two comparable reporting periods. As same-store NOI excludes the change in NOI from acquired and disposed of properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating same-store NOI, and accordingly same-store NOI may not be comparable to other REITs. Management believes that same-store NOI is a useful supplemental measure of our operating performance. However, same-store NOI should not be viewed as an alternative measure of our financial performance since it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact our results from operations. We believe that net income is the most directly comparable GAAP measure to same-store NOI.
A-2
The following presents a reconciliation of net income attributable to common shareholders to FFO available to common shareholders and unitholders and Adjusted Company FFO available to all equityholders and unitholders for 2020 to 2022 (dollars in thousands, except share and per share amounts):
| Twelve
Months Ended December 31, | |||||||||||||
| 2022 | 2021 | 2020 | |||||||||||
| FUNDS FROM OPERATIONS: | |||||||||||||
| Basic and Diluted: | |||||||||||||
| Net income attributable to common shareholders | $ | 107,307 | $ | 375,848 | $ | 176,788 | |||||||
| Adjustments: | |||||||||||||
| Depreciation and amortization | 177,725 | 173,833 | 158,655 | ||||||||||
| Impairment charges - real estate, including our share of non-consolidated entities | 8,137 | 5,541 | 14,460 | ||||||||||
| Noncontrolling interests - OP units | 156 | 1,672 | 2,347 | ||||||||||
| Amortization of leasing commissions | 2,842 | 2,881 | 2,937 | ||||||||||
| Joint venture and noncontrolling interest adjustment | 11,112 | 8,370 | 8,578 | ||||||||||
| Gains on sales of properties, including our share of non-consolidated entities | (83,562 | ) | (367,274 | ) | (139,596 | ) | |||||||
| FFO available to common shareholders and unitholders - basic | 223,717 | 200,871 | 224,169 | ||||||||||
| Preferred dividends | 6,290 | 6,290 | 6,290 | ||||||||||
| Amount allocated to participating securities | 186 | 510 | 224 | ||||||||||
| FFO available to all equityholders and unitholders - diluted | 230,193 | 207,671 | 230,683 | ||||||||||
| Selling profit from sales-type leases (1) | (47,059 | ) | — | — | |||||||||
| Allowance for credit loss | 93 | — | — | ||||||||||
| Transaction costs (2) | 4,177 | 432 | 255 | ||||||||||
| Debt satisfaction losses, net, including our share of non-consolidated entities | 1,615 | 13,894 | (21,396 | ) | |||||||||
| Other non-recurring costs (3) | 2,573 | 1,199 | — | ||||||||||
| Noncontrolling interest adjustments | 1,469 | — | — | ||||||||||
| Adjusted Company FFO available to all equityholders and unitholders - diluted | $ | 193,061 | $ | 223,196 | $ | 209,542 | |||||||
| Per Common Share and Unit Amounts | |||||||||||||
| Basic: | |||||||||||||
| FFO | $ | 0.80 | $ | 0.72 | $ | 0.83 | |||||||
| Diluted: | |||||||||||||
| FFO | $ | 0.80 | $ | 0.72 | $ | 0.84 | |||||||
| Adjusted Company FFO | $ | 0.67 | $ | 0.78 | $ | 0.76 | |||||||
| Weighted-Average Common Shares | |||||||||||||
| Basic: | |||||||||||||
| Weighted-average common shares outstanding - basic EPS | 279,887,760 | 277,640,835 | 266,914,843 | ||||||||||
| Operating partnership units(4) | 853,259 | 1,918,845 | 3,083,320 | ||||||||||
| Weighted-average common shares outstanding - basic FFO | 280,741,019 | 279,559,680 | 269,998,163 | ||||||||||
| Diluted: | |||||||||||||
| Weighted-average common shares outstanding - diluted EPS | 282,473,458 | 287,369,742 | 268,182,552 | ||||||||||
| Unvested share-based payment awards | 17,381 | 44,261 | 17,180 | ||||||||||
| Operating partnership units (4) | — | — | 3,083,320 | ||||||||||
| Preferred shares - Series C | 4,710,570 | — | 4,710,570 | ||||||||||
| Weighted-average common shares outstanding - diluted FFO | 287,201,409 | 287,414,003 | 275,993,622 | ||||||||||
| (1) | Aggregate gains recognized upon entering into a sales-type lease and exercises of tenant's purchase options in leases. |
| (2) | Includes initial direct costs incurred in connection with entering into investments classified as sales-type leases and other acquisition related costs. |
| (3) | Includes strategic alternatives and costs related to shareholder activism. |
| (4) | Includes OP units other than OP units held by us. |
A-3
The following presents a reconciliation of net income attributable to common shareholders to Adjusted EBITDA and net debt to Adjusted EBITDA for 2022 (dollars in thousands, except share and per share amounts):
| Adjusted EBITDA ($000): | Twelve months ended December 31, 2022 | ||
| Net income attributable to | |||
| LXP Industrial Trust shareholders | $ 113,783 | ||
| Interest and amortization expense | 45,417 | ||
| Provision for income taxes | 1,102 | ||
| Depreciation and amortization | 180,567 | ||
| Straight-line adjustments | (11,412) | ||
| Sales-type lease non-cash income | (342) | ||
| Lease incentives | 518 | ||
| Amortization of above/below market leases | (1,865) | ||
| Gains on sales of properties | (59,094) | ||
| Impairment charges | 3,037 | ||
| Debt satisfaction losses, net | 119 | ||
| Selling profit from sales-type leases | (47,059) | ||
| Sales-type lease adjustments | 4,212 | ||
| Non-cash charges, net | 7,483 | ||
| Non-recurring strategic alternatives and activism costs | 2,573 | ||
| Pro-rata share adjustments: | |||
| Non-consolidated entities adjustment | (325) | ||
| Noncontrolling interests adjustment | 1,591 | ||
| Adjusted EBITDA | $ 240,305 | ||
| Net Debt / Adjusted EBITDA: | |||
| Adjusted EBITDA | $240,305 | ||
| Consolidated debt | $1,488,051 | ||
| less consolidated cash and cash equivalents | (54,390) | ||
| Non-consolidated debt, net | 115,963 | ||
| Net debt | $ 1,549,624 | ||
| Net Debt/Adjusted EBITDA | 6.4x |
A-4
The following is a reconciliation of net income to same-store NOI for periods presented (dollars in thousands):
| Year ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net income | $ | 116,243 | $ | 385,091 | ||||
| Interest and amortization expense | 45,417 | 46,708 | ||||||
| Provision for income taxes | 1,102 | 1,293 | ||||||
| Depreciation and amortization | 180,567 | 176,714 | ||||||
| General and administrative | 38,714 | 35,458 | ||||||
| Transaction costs | 4,177 | 432 | ||||||
| Non-operating/advisory fee income | (6,550 | ) | (4,402 | ) | ||||
| Gains on sales of properties | (59,094 | ) | (367,274 | ) | ||||
| Impairment charges | 3,037 | 5,541 | ||||||
| Selling profit from sales-type leases | (47,059 | ) | — | |||||
| Debt satisfaction losses, net | 119 | 13,894 | ||||||
| Equity in (earnings) losses of non-consolidated entities | (16,006 | ) | 190 | |||||
| Lease termination income, net | (238 | ) | (14,972 | ) | ||||
| Straight-line adjustments | (11,412 | ) | (12,324 | ) | ||||
| Lease incentives | 518 | 780 | ||||||
| Amortization of above/below market leases | (1,865 | ) | (1,551 | ) | ||||
| Sales-type lease adjustments | (249 | ) | — | |||||
| NOI | 247,421 | 265,578 | ||||||
| Less NOI: | ||||||||
| Acquisitions and dispositions | (44,162 | ) | (71,618 | ) | ||||
| Same-Store NOI | $ | 203,259 | $ | 193,960 | ||||
A-5
Proposals — The Board of Directors recommend a vote FOR all the nominees listed, FOR Proposals X – X and for every X YEARS on Proposal X. Two (2) Years Three (3) Years One (1) Abstain Year 3. To consider and vote upon an advisory, non-binding recommendation on the frequency of future advisory votes on executive compensation; and 01 - T. Wilson Eglin 04 - Jamie Handwerker 07 - Nancy Elizabeth Noe 02 - Lawrence L. Gray 05 - Derrick Johnson 08 - Howard Roth 03 - Arun Gupta 06 - Claire A. Koeneman For Against Abstain For Against Abstain For Against Abstain 1 U P X Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 03SDSB + + Trustees recommends a vote “FOR” each nominee in proposal 1, “FOR” proposals 2 and 4 and “one (1) year” A on proposal 3. 2. To consider and vote upon an advisory, non-binding resolution to approve the compensation of the named executive officers, as disclosed in the accompanying proxy statement; 1. Election of Trustees For Against Abstain Please sign exactly as name(s) appears hereon and date. Joint owners should each sign. When signing as attorney, executor, administrator, officer, trustee, guardian, custodian or in any other representative capacity, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q 2023 Annual Meeting Proxy Card To transact such other business as may properly come before the 2023 Annual Meeting of Shareholders or any adjournment or postponement thereof. 4. To consider and vote upon the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ 1234 5678 9012 345 MMMMMMMMM MMMMMMMMMMMMMMM 5 7 2 4 1 3 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND C 1234567890 J N T C123456789 MMMMMMMMMMMM MMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext If no electronic voting, delete QR code and control # . ˜ Online Go to www.envisionreports.com/LXP or scan the QR code — login details are located in the shaded bar below. Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/LXP Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada You may authorize a proxy to vote online or by phone instead of mailing this card. Your vote matters – here’s how to vote! Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/LXP Proxy Solicited by Board of Trustees for 2023 Annual Meeting of Shareholders — May 23, 2023 The undersigned shareholder of LXP Industrial Trust, a Maryland real estate investment trust, hereby appoints Beth Boulerice and Joseph S. Bonventre, or either of them as proxies for the undersigned, each with the power of substitution, to attend the 2023 Annual Meeting of Shareholders of LXP Industrial Trust to be held on May 23, 2023, at 2:00 p.m., Eastern Time, virtually via the internet at www.meetnow.global/MGV4HMU, or any postponement or adjournment thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. The undersigned hereby acknowledges receipt of the Notice of 2023 Annual Meeting of Shareholders and of the accompanying proxy statement, the terms of each of which are incorporated by reference, and revokes any proxy heretofore given with respect to such meeting. Shares represented by this proxy will be voted as instructed below. If no such directions are indicated, but this proxy is properly executed, the Proxies will have authority to vote FOR the election of each nominee in proposal 1, and FOR proposals 2 and 4 and one (1) year on proposal 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any postponement or adjournment thereof. (Items to be voted appear on reverse side) LXP Industrial Trust qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Change of Address — Please print new address below. Comments — Please print your comments below. C Non-Voting Items + + Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders to be held on May 23, 2023. The Proxy Statement and our Annual Report are available at: www.envisionreports.com/LXP The 2023 Annual Meeting of Shareholders of LXP Industrial Trust will be held on Tuesday, May 23, 2023 at 2:00 p.m., Eastern Time, virtually via the internet at www.meetnow.global/MGV4HMU. To access the virtual meeting, you must have the 15 digit number that is printed in the shaded bar located on the reverse side of this form. 2023 Annual Meeting Admission Ticket 2023 Annual Meeting of LXP Industrial Trust Shareholders May 23, 2023, 2:00pm ET