STAG Industrial, Inc DEF 14A, filed Mar 20, 2024
STAG Industrial, Inc. (STAG)
DEF 14A
2024-03-20
For: 2024-04-29
View Original
Added on
June 12, 2026
About this DEF 14A
STAG Industrial, Inc filed this DEF 14A on March 20, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒
Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
Boston, Massachusetts 02110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 2024
TO BE HELD ON APRIL 29, 2024
To our stockholders:
You are cordially invited to attend the 2024 annual meeting of stockholders of STAG Industrial, Inc., a Maryland corporation, that will be held on April 29, 2024, at 1:00 p.m., Eastern Time, in a virtual-only meeting format. You will be able to attend the annual meeting by visiting www.virtualshareholdermeeting.com/STAG2024. Please follow the instructions in this proxy statement to join the virtual annual meeting. At the meeting, stockholders will consider and vote on the following matters:
1.
the election of 10 directors to hold office until the 2025 annual meeting of stockholders and until their successors are duly elected and qualified;
2.
the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2024;
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the approval, by non-binding vote, of our executive compensation; and
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the recommendation, by non-binding vote, on the frequency of executive compensation votes.
In addition, stockholders will consider and vote on such other business as may properly come before the annual meeting, including any adjournments or postponements of the meeting.
If you owned shares of our common stock as of the close of business on March 4, 2024, you can vote those shares by proxy or at the virtual annual meeting. Pursuant to rules promulgated by the Securities and Exchange Commission, we are providing access to our proxy materials over the internet. On or about March 20, 2024, we expect to mail our stockholders either (i) a copy of this proxy statement, the accompanying proxy card, our annual report and the notice of internet availability of proxy materials (the “Notice”) or (ii) the Notice only, each in connection with the solicitation of proxies by the Board of Directors for use at the annual meeting and any adjournments or postponements thereof. If you received only the Notice by mail, you will not receive a printed copy of the proxy materials other than as described herein. The Notice contains instructions for how to access our proxy materials over the internet, how to authorize your proxy to vote online and how to request a paper copy of our proxy materials.
It is very important that your shares be represented and voted at the annual meeting. You may authorize your proxy to vote your shares over the internet as described in the Notice. Alternatively, if you received a paper copy of the proxy card by mail, please complete, date, sign and promptly return the proxy card in the self-addressed stamped envelope provided. You also may vote by telephone as described in your proxy card. If you vote your shares over the internet, by mail or by telephone before the annual meeting, you may nevertheless revoke your proxy and cast your vote at the virtual annual meeting.
By order of the Board of Directors:
JEFFREY M. SULLIVAN
Executive Vice President, General Counsel and Secretary
Executive Vice President, General Counsel and Secretary
Boston, Massachusetts
March 20, 2024
March 20, 2024
TABLE OF CONTENTS
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2024 ANNUAL MEETING OF STOCKHOLDERS
PROXY SUMMARY
2023 Business and Financial Performance Highlights
We are a real estate investment trust (“REIT”) focused on the acquisition, ownership and operation of industrial properties throughout the United States. Our primary business objective is to own and operate a balanced and diversified industrial real estate portfolio that maximizes cash flows and enhances stockholder value over time. Our business strategy has resulted in a consistent track record of creating strong operational and financial performance and long-term value for our stockholders.
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Total stockholder return (“TSR”) is defined as common stock price appreciation plus dividends, assuming reinvestment of dividends into additional shares of common stock.
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Funds from operations (“FFO”) and net operating income (“NOI”) meet the definition of “non-GAAP financial measures” as set forth in Item 10(e) of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”). Please refer to Appendix A attached hereto for an explanation of why we consider these measures and reconciliations of the measures to the nearest measure under generally accepted accounting principles (“GAAP”).
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Executive Compensation Highlights
Below are certain features of our executive compensation program, which reflect our commitment to a pay-for-performance compensation structure:
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✔ We pay for performance.
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Approximately 81% of our Chief Executive Officer’s 2023 compensation was “at risk” compensation and strongly aligned with the interests of stockholders.
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Annual base salaries are intended to be less than 25% of total compensation.
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We do not guarantee annual base salary increases, but consider increases when merited.
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✔ Our 2023 annual cash incentive bonuses encouraged executives to achieve short-term performance goals.
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Bonuses are based on Company performance goals (80%) and individual performance goals (20%).
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Our 2023 Company performance goal components were Core FFO per Share (50%), Acquisition Volume (10%), Net Debt to Run Rate Adjusted EBITDAre (10%) and Same Store Cash NOI Growth (10%).
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We do not guarantee bonuses of a minimum amount (bonuses can be zero) and do not provide uncapped bonuses.
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| | | ✔ Our 2023 equity awards encourage executives to achieve long-term performance goals. | | |
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Performance award share units (“performance units”) granted under the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “Equity Incentive Plan”), are based on our TSR over a three-year period compared to both relative returns (TSR vs. two benchmarks) and an absolute return (we must achieve a cumulative 25% TSR for payouts above target on 50% of the performance units).
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Performance units will have zero value (no payout) for performance below the 30th percentile.
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We target outperformance; target payouts under the performance units are achieved at the 55th percentile.
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| | | ✔ Stockholders have expressed support for our executive compensation practices. | | |
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At the 2023 annual meeting of stockholders, approximately 96.0% of the votes cast in the say-on-pay vote were in favor.
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For more information, see “Executive Officer Compensation Discussion and Analysis” below.
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Snapshot of Corporate Governance Practices
The table below presents a snapshot of our corporate governance policies.
| | Annual election of directors to the Board of Directors (the “Board”) | | |
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| | Majority voting standard for the election of directors (with a director resignation policy) | | |
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| | Regular executive sessions of independent directors | | |
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| | Independent Board; eight of our 10 directors are “independent” under New York Stock Exchange (“NYSE”) rules | | |
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| | Designation of an independent Chairman of the Board or Lead Independent Director | | |
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| | All members of the Audit, Compensation and Nominating and Corporate Governance Committees are “independent” under NYSE rules | | |
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| | All five members of the Audit Committee qualify as “audit committee financial experts” as defined by the SEC | | |
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| | Diverse Board; two of our directors are women, one of whom is Asian, and one of our directors is Black/African American | | |
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| | Annual Board, committee and director self-evaluations, assisted by outside counsel | | |
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| | Regular Board review of management succession plans | | |
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| | Stockholder ability to amend our Bylaws | | |
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| | No stockholder rights plan (i.e., “poison pill”) without stockholder approval or ratification | | |
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| | Opted out of Maryland control share acquisition and business combination statutes and may not opt back in without stockholder approval | | |
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| | Robust Stock Ownership Guidelines for executive officers and directors | | |
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| | Anti-hedging and anti-pledging policies | | |
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| | Recovery policy for incentive-based executive compensation (“Clawback Policy”) | | |
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| | Code of Business Conduct and Ethics for employees and directors | | |
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Corporate Responsibility Highlights
We have a robust corporate responsibility program that incorporates environmental, social and governance (“ESG”) initiatives into our overall business, investment and asset management strategies to increase both the sustainability and the value of our portfolio. Since December 2021, we have published an annual Environmental, Social and Governance Report (our “Sustainability Report”), which includes information regarding our ESG policies and programs, historic results and performance targets, including our long-term greenhouse gas (GHG) reduction goal as approved by the Science-Based Targets Initiative (SBTi). While our tenants maintain operational control of the properties under triple-net leases, we seek to (i) identify, assess and manage environmental risks and opportunities at our properties, (ii) collaborate with
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our tenants on sustainable strategies to optimize property performance, and (iii) partner with our tenants to improve the efficiency of our properties through the implementation of environmentally focused practices and solutions.
2023 Environmental Sustainability Highlights
During 2023, we enhanced our environmental programs and achieved the following milestones and accomplishments:
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GRESB “A” Score
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In October 2023, we announced that we achieved a 2023 public disclosure assessment score of “A” from the Global Real Estate Sustainability Benchmark (“GRESB”), which is an entity that provides a ranking system to evaluate and compare ESG efforts in the real estate industry. We have achieved an “A” score since 2022, which compares favorably to the average score of “B” for all companies, globally, rated by GRESB and to the average score of “B” for the 10 industrial real estate companies in our GRESB comparison group. As of December 2023, we were ranked third out of the 10 industrial real estate companies rated by GRESB in its public disclosure assessment.
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Solar Panel Installations
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We pursue solar energy opportunities in our portfolio nationwide and have executed contracts for solar development or leasing in multiple states. As of December 31, 2023, our properties hosted or were undergoing construction for solar projects with more than 30.4 megawatts capacity in aggregate and we had identified up to 40 additional projects that we are vetting over the next five years.
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Green Lease Leader—Gold Level
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In 2020, we were recognized by the Institute for Market Transformation as a Green Lease Leader at the “Gold” level. This Gold level recognition was renewed in 2023. We achieved this recognition by modifying our standard form of lease to require sharing of tenant utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption.
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Reflective Roofing
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Since 2015, the majority of our roof replacements utilized reflective roofing, which typically is a white membrane that reflects sunlight and reduces building heat load and utility consumption. As of December 31, 2023, approximately 48% of our buildings benefited from reflective roofing.
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Lighting Conversions
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As of December 31, 2023, we had fluorescent or LED lighting systems in more than 95% of our portfolio. Since 2016, we have replaced less efficient lights with LED systems in more than 27.3 million square feet of our portfolio.
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2023 Corporate Donations and Volunteering
During 2023, we continued to support several local and national charities with a focus on child welfare, youth empowerment, equality and social justice:
| | | Charitable Action Committee | | |
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We established our Charitable Action Committee (the “CAC”) to promote quality interaction with our local community in Boston. The CAC is funded by our Company and managed by volunteer employees with differing seniorities and responsibilities. We support several local and national charities, through a combination of financial support (both direct and employee matching) and volunteer activities (i.e., food and clothing distribution, habitat improvement, etc.).
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| | | Charitable Action Fund | | |
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As an expression of our commitment to good corporate citizenship, we established the STAG Industrial Charitable Action Fund (the “Charitable Action Fund”) in cooperation with the Boston Foundation. The Charitable Action Fund supports our social responsibility endeavors, including promoting equality and inspiring children and young adults—particularly those at risk—to realize their potential and benefit future generations.
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Other 2023 ESG Highlights
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Stockholder engagement. We provide institutional investors with many opportunities and events to provide feedback directly to our management team throughout the year, including formal events, one-on-one sessions and group meetings. During 2023, our management team attended (in-person and virtually) six investor conferences and numerous other individual investor meetings, where they met with more than 120 institutional investors. These meetings covered a range of topics, including our financial condition and results of operations, our investment, finance and operation strategies, our stock price performance, economic, industry and market trends, our ESG and executive compensation policies and other matters. In addition to, and apart from, our regular investor meetings, we speak exclusively about our ESG and executive compensation policies with a number of our investors each year.
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Board diversity. We recognize the benefits of having a diverse Board and remain focused on appointing women and other diverse candidates to the Board as opportunities arise. Women and minorities currently represent 30% of the Board. Beginning in 2023, the Board started an initiative, led by the Nominating and Corporate Governance Committee, to determine the needed skill set and experience for an additional director and identify qualified nominees with a focus on female candidates. In connection with this initiative, the Board has engaged a search firm to help identify director candidates and bring additional diversity to the Board.
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Board leadership. Pursuant to the previously announced Board leadership succession plan, on June 30, 2023, Benjamin S. Butcher retired as Executive Chairman and began his service as a non-management director. Effective as of July 1, 2023, Larry T. Guillemette, who has served as our Lead Independent Director since 2015, become our independent Chairman of the Board.
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Clawback Policy. In accordance with applicable laws and NYSE listing standards, effective as of November 1, 2023, the Board adopted our Clawback Policy that requires the of certain “incentive-based compensation” (as defined in the policy) received by our current or former executive officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the U.S. securities laws.
For more information, see “Board of Directors and Its Committees” and “Corporate Responsibility” below. Additional information regarding our corporate responsibility program is included in our Sustainability
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Report, which is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com. The information located on, or accessible from, our website is not, and should not be deemed to be, part of this proxy statement or incorporated into any other filing that we submit to the SEC.
Matters to be Voted On at the 2024 Annual Meeting
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Proposal
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Board
Recommendation |
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| | | Proposal 1: Election of Directors | | |
FOR
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| | | Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm | | |
FOR
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| | | Proposal 3: Advisory (Non-Binding) Vote on Executive Compensation | | |
FOR
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| | | Proposal 4: Advisory (Non-Binding) Vote on Frequency of Executive Compensation Votes | | |
FOR
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Q:
Why did I receive these proxy materials?
A:
The Board is soliciting proxies to be voted at the 2024 annual meeting of stockholders. You received these materials because you were a stockholder as of March 4, 2024, the record date fixed by the Board, and are therefore entitled to receive notice of the annual meeting and to vote on matters presented at the annual meeting, which will be held virtually on April 29, 2024.
Pursuant to rules promulgated by the SEC, we are providing access to our proxy materials over the internet. On or about March 20, 2024, we are mailing to our stockholders of record as of March 4, 2024, either (i) a copy of this proxy statement, the accompanying proxy card, our annual report and the notice of internet availability of proxy materials (the “Notice”) or (ii) the Notice only. The Notice and this proxy statement summarize the information you need to know in order to vote by proxy or at the virtual annual meeting.
Q:
When was the Notice mailed?
A:
The Notice was mailed to stockholders beginning on or about March 20, 2024.
Q:
When and where is the annual meeting being held?
A:
The annual meeting will be held on Monday, April 29, 2024, at 1:00 p.m., Eastern Time, in a virtual-only meeting format. You will be able to attend the annual meeting by visiting www.virtualshareholdermeeting.com/STAG2024. Note that the decision to proceed with a virtual-only meeting again this year will not mean we will utilize a virtual-only format or any means of remote communication for future annual meetings.
Q:
Who can attend the annual meeting?
A:
You are entitled to attend the annual meeting if you were a common stockholder of record (i.e., stockholders holding shares of common stock directly in their name with our transfer agent) as of the close of business on March 4, 2024, the record date for the annual meeting, or hold a duly authorized proxy for the meeting provided by your broker, bank or other nominee. You do not need to attend the annual meeting in order to vote.
Q:
How do I attend the annual meeting?
A:
You will be able to attend the annual meeting online through live audio webcast at www.virtualshareholdermeeting.com/STAG2024. Online registration will begin 30 minutes before the meeting. To attend and vote at the annual meeting, you must login with your 16-digit control number included on your proxy card, voting instruction form or the Notice you previously received.
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May stockholders ask questions at the annual meeting?
A:
Yes. Stockholders will be able to submit live questions during the virtual annual meeting online at www.virtualshareholdermeeting.com/STAG2024. All live questions will be subject to time restrictions, but we will do our best to accommodate as many as possible.
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What if I have trouble accessing the annual meeting virtually?
A:
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet connection wherever they intend to participate in the annual meeting. We encourage you to access the virtual meeting platform prior to the start time. Please allow ample time for online check-in, which will begin at 12:30 p.m. Eastern Time. If you encounter any difficulties accessing the virtual meeting platform during the check-in time or during the annual meeting, please call the technical support number that will be posted on www.virtualshareholdermeeting.com/STAG2024.
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Q:
Who is entitled to vote at the annual meeting?
A:
All holders of common stock as of the close of business on the record date, March 4, 2024, are entitled to vote at the annual meeting.
Q:
What is the quorum for the meeting?
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A quorum at the annual meeting will consist of a majority of the votes entitled to be cast by the holders of outstanding shares of common stock. No business may be conducted at the meeting if a quorum is not present. As of the record date, 181,834,658 shares of common stock were issued and outstanding. If less than a majority of outstanding shares entitled to vote are represented at the annual meeting, the chair of the meeting may adjourn the annual meeting to another date, time or place, not later than 120 days after the original record date of March 4, 2024. Notice need not be given of the new date, time or place if announced at the meeting before an adjournment is taken.
Q:
How many votes do I have?
A:
You are entitled to one vote for each share of common stock you held as of the record date. Our stockholders do not have the right to cumulate their votes for directors.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares are registered in your name with our transfer agent, Continental Stock Transfer & Trust Company, LLC, you are the “stockholder of record” of those shares.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares. The Notice and proxy statement and any accompanying documents have been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares by following the instructions provided by the institution holding your shares for voting on the internet or by telephone or mail.
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How do I vote?
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If you are the stockholder of record:
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On the internet: You may submit your proxy over the internet by following the instructions in the Notice, proxy card or voting instruction card that you received.
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By telephone: You may submit your proxy by telephone by following the instructions in the Notice, proxy card or voting instruction card that you received.
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By mail: If you received a paper copy of a proxy card or voting instruction card by mail, you may submit your proxy by completing, signing and dating your proxy card or voting instruction card and mailing it in the accompanying self-addressed stamped envelope. No postage is necessary if mailed in the United States.
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At the virtual annual meeting: You may vote during the virtual annual meeting by following the instructions available on the meeting website during the meeting.
If you are the beneficial owner of shares held by a broker, bank or other nominee, you may instruct your broker, bank or other nominee to vote your shares by following the instructions that the institution holding the shares provides to you. If you are the beneficial owner and want to vote during the meeting, you must obtain a duly authorized proxy executed in your favor, from the institution holding the shares in order to vote your shares at the virtual annual meeting.
Properly completed and submitted proxy cards and voting instruction cards, as well as proxies properly completed and submitted on the internet or by telephone prior to the annual meeting, will be voted at the annual meeting in accordance with the instructions provided as long as they are received in time for voting and not revoked.
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Whether or not you plan to attend the annual meeting, we recommend that you authorize a proxy in advance as described above so that your vote will be counted if you later decide not to attend the annual meeting. Authorizing your proxy over the internet, or by telephone or mail, will not limit your right to attend the annual meeting and vote your shares.
Q:
Can I change my vote after I have voted?
A:
Yes. If you are the stockholder of record, you may revoke a proxy at any time prior to its exercise by filing with our Secretary a duly executed revocation of proxy, by properly submitting, either on the internet or by telephone or mail, a proxy bearing a later date or by attending the virtual annual meeting and voting. Attendance at the annual meeting will not by itself constitute revocation of a proxy.
If you are the beneficial owner of shares held by a broker, bank or other nominee, please follow the instructions provided by the institution holding the shares regarding how to revoke your voting instructions.
Q:
What am I voting on?
A:
You will be voting on:
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Proposal 1: the election of 10 directors to hold office until the 2025 annual meeting of stockholders and until their successors are duly elected and qualified;
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Proposal 2: the ratification of the appointment of PricewaterhouseCoopers LLP to act as our independent registered public accounting firm for year ending December 31, 2024;
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Proposal 3: the approval, by non-binding vote, of our executive compensation; and
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Proposal 4: the recommendation, by non-binding vote, on the frequency of executive compensation votes.
In addition, you will be voting on such other business as may properly come before the annual meeting, including any adjournments or postponements thereof.
Q:
What vote is required to approve the proposals assuming that a quorum is present at the annual meeting?
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A:
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Proposal 1:
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The election of the director nominees must be approved by a majority of the votes cast. |
Proposal 2:
The ratification of the appointment of the independent registered public accounting firm requires a majority of the votes cast.
Proposal 3:
The advisory vote approving executive compensation requires an affirmative vote of a majority of the votes cast.
Proposal 4:
The advisory vote on the frequency of the vote on executive compensation receiving the greatest number of votes (every one, two or three years) will be considered the frequency recommended by the stockholders.
Q:
What is a broker non-vote?
A:
If you are the beneficial owner of shares held by a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares. A “broker non-vote” occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If your shares are held by a broker, bank or other nominee, your broker, bank or other nominee has discretionary voting authority under NYSE rules to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm even if the institution does not receive voting instructions from you. However, your broker, bank or other nominee does not have discretionary authority to vote on the election of directors, the advisory vote approving our executive compensation or the advisory vote on the frequency of the vote on our executive compensation, in which case a broker non-vote will occur and your shares will not be voted on these matters.
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Q:
How are abstentions and broker non-votes treated?
A:
Pursuant to Maryland law, abstentions and broker non-votes are counted as present for purposes of determining the presence of a quorum.
For purposes of the election of directors and the votes on Proposals 3 and 4, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
For purposes of the vote on Proposal 2, abstentions will not be counted as votes cast and will have no effect on the result of the vote.
Q:
Will there be any other items of business on the agenda?
A:
The Board does not know of any other matters that may be brought before the annual meeting nor does it foresee or have reason to believe that proxy holders will have to vote for substitute or alternate nominees for election to the Board. If any other matter should come before the annual meeting or any nominee is not available for election, the persons named in the enclosed proxy will have discretionary authority to vote all proxies with respect to such matters in accordance with their discretion.
Q:
What happens if I submit my proxy without providing voting instructions on all proposals?
A:
Proxies properly submitted via the internet, mail or telephone will be voted at the annual meeting in accordance with your directions. If the properly-submitted proxy does not provide voting instructions on a proposal, the proxy will be voted as follows:
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if you are a stockholder of record, to elect (FOR) each of the director nominees listed in “Proposal 1: Election of Directors;” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur;
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if you are a stockholder of record or a beneficial owner of shares held by a broker, bank or other nominee, in favor of (FOR) “Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm;”
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if you are a stockholder of record, in favor of (FOR) “Proposal 3: Advisory (Non-Binding) Vote on Executive Compensation;” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur; and
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if you are a stockholder of record, in favor of (FOR) an advisory vote on executive compensation every year (box “1 YEAR” on the proxy card) under “Proposal 4: Advisory (Non-Binding) Vote on Frequency of Executive Compensation Votes” if you are a beneficial owner of shares held by a broker, bank or other nominee, a broker non-vote will occur.
Q:
Where can I find the voting results after the annual meeting?
A:
We will announce the preliminary voting results at the annual meeting and will report the final voting results in a current report on Form 8-K (or quarterly report on Form 10-Q) filed with the SEC within four business days after the annual meeting.
Q:
Will anyone contact me regarding this vote?
A:
No arrangements or contracts have been made with any solicitors as of the date of this proxy statement, although we reserve the right to engage solicitors at any time if we deem them necessary. Such solicitations may be made by mail, telephone, facsimile, e-mail or personal interviews.
Q:
Who has paid for this proxy solicitation?
A:
We have paid the entire expense of preparing, printing and mailing the Notice and, to the extent requested by our stockholders, the proxy materials and any additional materials furnished to stockholders. Proxies may be solicited by our directors, officers or employees personally or by telephone without additional compensation for such activities. We also will request persons, firms and corporations holding shares in their names or in the names of their nominees, which are beneficially owned by others, to
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send appropriate solicitation materials to such beneficial owners. We will reimburse such holders for their reasonable expenses.
Q:
How many copies should I receive if I share an address with another stockholder?
The SEC has adopted rules that permit companies and intermediaries, such as a broker, bank or other nominee, to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our proxy materials, unless the affected stockholder has provided us with contrary instructions. This procedure provides extra convenience for stockholders and cost savings for companies.
We and brokers, banks or other nominees may be householding our proxy materials. A single Notice and, if applicable, a single set of our proxy materials, including this proxy statement, the accompanying proxy card, our annual report and the Notice, will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker, bank or other nominee that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. Stockholders may revoke their consent at any time by contacting Broadridge ICS, either by calling toll-free (800) 542-1061 or by writing to Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, a single set of our proxy materials, to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice and, if applicable, our proxy materials, you may send a written request to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary. In addition, if you are receiving multiple copies of the Notice and, if applicable, our proxy materials, you can request householding by contacting our Secretary in the same manner.
Q:
What does it mean if I receive more than one Notice?
A:
It means that you have multiple accounts at the transfer agent or with brokers, banks or other nominees. Please submit all of your proxies over the internet, following the instructions provided in the Notice, by mail or by telephone to ensure that all of your shares are voted.
Q:
Can I find additional information on the Company’s website?
A:
Yes. Our website is www.stagindustrial.com. You can view additional information on the website, such as our corporate responsibility and ESG policies, including our Sustainability Report, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, our Stock Ownership Guidelines, charters of the Board committees and reports that we file with the SEC. However, the information located on, or accessible from, our website is not, and should not be deemed to be, part of this proxy statement or incorporated into any other filing that we submit to the SEC. A copy of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, our Stock Ownership Guidelines and the charters of the Board committees may be obtained free of charge by writing to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary.
11
PROPOSAL 1:
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Board currently consists of 10 members with directors serving one-year terms and until their successors are duly elected and qualified. The term for each director expires at each annual meeting of stockholders. At the 2024 annual meeting, 10 directors will be elected to serve until the 2025 annual meeting and until their successors are duly elected and qualified. The Board has nominated the following current directors (the “nominees”) to serve as directors: Benjamin S. Butcher, Jit Kee Chin, Virgis W. Colbert, William R. Crooker, Michelle S. Dilley, Jeffrey D. Furber, Larry T. Guillemette, Francis X. Jacoby III, Christopher P. Marr and Hans S. Weger. The Board anticipates that each nominee will serve, if elected, as a director. However, if anyone nominated by the Board is unable to accept election, the proxies will be voted for the election of such other person or persons as the Board may recommend.
Vote Required
The affirmative vote of a majority of the votes cast at a meeting at which a quorum is present is required for the election of the nominees. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
Recommendation
The Board recommends a vote FOR each nominee.
Snapshot of Board Composition
12
Director Nominees for Election to Term Expiring 2025
The following tables and biographical descriptions set forth certain information with respect to each nominee, including the specific experience, qualifications, attributes and skills that led to the conclusion by the Board that such person should continue to serve as a director.
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Director Nominees
|
| |
Age
|
| |
Principal Occupation
|
| |
Director
Since |
| ||||||
| | Benjamin S. Butcher | | | | | 70 | | | | Retired Chief Executive Officer | | | | | 2010 | | |
| | Jit Kee Chin | | | | | 45 | | | | Executive Vice President and Chief Technology Officer at Suffolk Construction | | | | | 2020 | | |
| | Virgis W. Colbert | | | | | 84 | | | |
Retired Executive Vice President of Miller Brewing Company
|
| | | | 2014 | | |
| | William R. Crooker | | | | | 44 | | | | President and Chief Executive Officer | | | | | 2022 | | |
| | Michelle S. Dilley | | | | | 52 | | | | Chief Executive Officer of Awesome Leaders, NFP | | | | | 2018 | | |
| | Jeffrey D. Furber | | | | | 65 | | | | Chairman Emeritus of AEW | | | | | 2011 | | |
| | Larry T. Guillemette | | | | | 68 | | | |
Chairman of the Board / Retired Chief Executive Officer and
President of Amtrol |
| | | | 2011 | | |
| |
Francis X. Jacoby III
|
| | | | 62 | | | | Chief Financial Officer and Executive Vice President of Leggat McCall Properties, LLC | | | | | 2011 | | |
| | Christopher P. Marr | | | | | 59 | | | | President and Chief Executive Officer of CubeSmart | | | | | 2012 | | |
| | Hans S. Weger | | | | | 60 | | | | Strategic Consultant | | | | | 2011 | | |
Director Qualifications
| | | | |
Butcher
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Chin
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Colbert
|
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Crooker
|
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Dilley
|
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Furber
|
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Guillemette
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Jacoby
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Marr
|
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Weger
|
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CEO/public company executive
|
| | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | |
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Data analytics
|
| | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Finance/accounting
|
| | | | | | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
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Industrial operations
|
| | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | |
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Logistics
|
| | | | • | | | | | | • | | | | | | | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Real estate / construction / development / finance
|
| | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | • | | |
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Real estate or property technology
|
| | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Risk management
|
| | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | | | | | | | | | | | • | | | | | | • | | |
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Strategic planning
|
| | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | | | | | • | | |
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Supply chain management
|
| | | | • | | | | | | | | | | | | • | | | | | | | | | | | | • | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
13
Director Nominees
| | |
Benjamin S. Butcher
Director
Committees:
•
Investment (Chair)
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Mr. Butcher served as our Executive Chairman of the Board from July 2022 through July 2023, Chief Executive Officer and Chairman of the Board from 2010 to 2022 and President from 2010 to 2021. Prior to the formation of our Company, Mr. Butcher oversaw the growth of our predecessor business, serving as a member of the Board of Managers of STAG Capital Partners, LLC, STAG Capital Partners III, LLC, and their affiliates from 2003 to 2011. From 1999 to 2003, Mr. Butcher was engaged as a private equity investor in real estate and technology. From 1997 to 1998, Mr. Butcher served as a Director at Credit Suisse First Boston, where he sourced and executed transactions for the principal transactions group (real estate debt and equity). Prior to that, he served as a Director at Nomura Asset Capital from 1993 to 1997, where he focused on marketing and business development for its commercial mortgage-backed securities group. Mr. Butcher serves as a member of the Board of Trustees and a member of the Nominating and Corporate Governance Committee and Compensation Committee of Elme Communities, Inc. (NYSE: ELME) (formerly Washington Real Estate Investment Trust (NYSE: WRE)), an owner of properties in the greater Washington, D.C. metropolitan area. Mr. Butcher holds a Bachelor of Arts degree from Bowdoin College and a Master of Business Administration degree from the Tuck School of Business at Dartmouth.
In light of his extensive Company-specific operational, finance and market experience, his leadership abilities, his foundership of our Company, and his expertise in the acquisition, ownership and management of single-tenant industrial properties, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Butcher to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
| | |
Jit Kee Chin
Independent Director
Committees:
•
Audit
Diversity Information:
•
Gender: Female
•
Race/Ethnicity: Asian
|
| | |
Dr. Jit Kee Chin has served since 2023 as Executive Vice President and Chief Technology Officer at Suffolk Construction Corporation Inc. (“Suffolk”), a national privately-held general contractor, and also served as the Chief Data Officer since 2017 and Chief Innovation Officer since 2019. In her roles, Dr. Chin is responsible for building new technology capabilities for Suffolk, setting vision and strategy, driving business insight through analytics and operationalizing the transformation. She is also a co-founder and Managing Partner of Suffolk Technologies, a venture investment entity that invests in disruptive technologies within the built environment. Before joining Suffolk, from 2008 to 2017, she served in various positions with McKinsey & Company, a global strategy consulting company, including as a senior expert in analytics from 2016 to 2017, where she specialized in the design and implementation of end-to-end analytics transformations, and as an associate principal from 2013 to 2016, where she focused on strategic, commercial and analytics consulting for transport, travel, hospitality and logistics clients. Dr. Chin is a member of the Board of Trustees of CubeSmart (NYSE: CUBE) and also serves on their audit committee. Dr. Chin holds a Doctor of Philosophy degree from the Massachusetts Institute of Technology and a Bachelor of Science degree from the California Institute of Technology.
In light of her extensive data, analytics and technology infrastructure expertise, including the development and implementation of strategic initiatives, the Board believes that it is in the best interests of our Company and our stockholders for Dr. Chin to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
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14
| | |
Virgis W. Colbert
Independent Director
Committees:
•
Compensation
•
Nominating and Corporate Governance
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: Black/African American
|
| | |
Mr. Colbert served in a variety of key leadership positions with Miller Brewing Company from 1979 until his retirement in 2005, including Executive Vice President of Worldwide Operations from 1997 to 2005 and Senior Vice President of Operations from 1993 to 1997. As Executive Vice President, Mr. Colbert was responsible for plant operations, international operations, brewing, research and quality assurance, engineering, procurement, order production/planning and logistics. Since his retirement, he continues to serve as a Senior Advisor to MolsonCoors LLC. Mr. Colbert also serves on the board of the Hutchins Center for African & African American Research at Harvard University (since 2013). From 2019 until 2023, Mr. Colbert served as a director of Drive Shack, Inc., which was a publicly-reporting company until 2023. He previously served on the boards of Lorillard, Inc. from 2008 to 2015 (including as lead director from 2013 to 2015), The Hillshire Brands Company (formerly known as Sara Lee Corporation) from 2006 to 2013, Bank of America Corp. (NYSE: BAC) from 2008 to 2013, Merrill Lynch & Co., Inc. from 2006 to 2008, Stanley Black & Decker from 2003 to 2012 and The Manitowoc Company, Inc. from 2002 to 2012. He is the former Chairman and current Chairman Emeritus of the Board for the Thurgood Marshall College Fund, and the former Chairman of the Board for Fisk University. Mr. Colbert received Honorary Doctor of Humane Letters degrees from Fisk University in 2005 and from Kentucky State University in 2001. He holds a Bachelor of Science degree from Central Michigan University.
In light of his extensive public company board and corporate governance experience and his significant operational experience, including logistics, plant operations and other issues common to our tenants, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Colbert to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
| | |
William R. Crooker
President, Chief Executive Officer and Director
Committees:
•
Investment
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Mr. Crooker has served as our Chief Executive Officer and a director since 2022 and president since 2021. Previously, Mr. Crooker served as our Chief Financial Officer and Treasurer from 2016 to 2022, Executive Vice President from 2016 to 2021, Chief Accounting Officer from 2011 to 2016 and Senior Vice President of Capital Markets from 2015 to 2016. Prior to the formation of our Company, Mr. Crooker served as Chief Accounting Officer for STAG Capital Partners, LLC from 2010 to 2011. From 2002 to 2010, Mr. Crooker worked for KPMG LLP in its real estate practice, focusing primarily on publicly-traded REITs. He held various positions with KPMG LLP, including most recently as Senior Manager. Mr. Crooker is a certified public accountant and received his Bachelor of Science degree from Bentley University.
In light of his extensive Company specific operational experience, his leadership abilities, and his financial and capital markets expertise, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Crooker to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
15
| | |
Michelle S. Dilley
Independent Director
Committees:
•
Compensation
•
Nominating and Corporate Governance
Diversity Information:
•
Gender: Female
•
Race/Ethnicity: White
|
| | |
Ms. Dilley has served as the Chief Executive Officer of Awesome Leaders, NFP since July 2020. AWESOME (Achieving Women’s Excellence in Supply Chain Operations, Management and Education) is the supply chain industry’s most active and prominent organization focused on advancing and transforming the future of supply chain leadership. Prior to joining AWESOME, Ms. Dilley served as Chief Supply Chain Transformation Officer and additionally as Chief Operating Officer at DSC Logistics, Inc. (“DSC”), a logistics and supply chain management organization, from 2017 to 2020. In these roles, she led the vision for the company’s operating platform, implemented strategic initiatives to deliver continuous improvement and was directly responsible for DSC’s network of logistics centers and supply chain packaging operations throughout North America. From 2014 to 2017, she served as Senior Vice President, Operations at LaSalle Bristol, LP, a product distributor and manufacturer for factory-built housing, recreational vehicles and other markets, where she was accountable for supply chain operations and transportation throughout the United States and Canada. From 2009 to 2014, she served as Vice President, Supply Chain at Ascension Health, a non-profit health system, where she led the supply chain business transformation and operational redesign. Ms. Dilley started her career at Whirlpool Corporation, where she served in a variety of roles, including general manager, global indirect goods & services sourcing from 2005 to 2009. Ms. Dilley holds a Bachelor of Arts degree from the University of Michigan.
In light of her significant supply chain, finance and operational experience, including experience in the development and implementation of strategic initiatives, and her recent experience with diversity initiatives in the supply chain industry, the Board believes that it is in the best interests of our Company and our stockholders for Ms. Dilley to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
| | |
Jeffrey D. Furber
Independent Director
Committees:
•
Compensation (Chair)
•
Investment
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Jeffrey D. Furber is Chairman Emeritus of AEW. He served as the Global Chairman of AEW from 2020 until his retirement in December 2023. From 1999 until transitioning to the then newly created role of Global Chairman in 2020, Mr. Furber served as Global Chief Executive Officer. As one of the leading real estate investment advisors, AEW manages approximately $90 billion of real estate assets and securities on behalf of a global client base of public and corporate pension funds, sovereign wealth funds, endowments, foundations and high net worth investors. Mr. Furber had oversight responsibility for all of AEW’s operating business units in the United States, Europe and Asia. He was also a member of AEW’s risk management committee and the investment committees in North America, Europe and Asia. Mr. Furber has approximately 40 years of real estate investment experience, including 25 years in his capacity as Chief Executive Officer or Chairman of AEW. Mr. Furber is a member of the board of the Boston Children’s Hospital Trust and the Ogunquit Playhouse, as well as a former member of the board of The Howard Hughes Corporation (NYSE: HHC). Mr. Furber holds a Bachelor of Arts degree from Dartmouth College and a Master of Business Administration degree from Harvard Business School.
In light of his significant leadership, corporate governance and capital markets experience and his more than 30 years of real estate investment experience, including 22 years as Chief Executive Officer of AEW, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Furber to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
16
| | |
Larry T. Guillemette
Chairman of the Board
Committees:
•
Audit
•
Compensation
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Mr. Guillemette served as Chairman of the Board, Chief Executive Officer and President of Amtrol Inc., a multi-national pressure vessel manufacturer (“Amtrol”), from 2006 until his retirement in 2017. Mr. Guillemette also served as Executive Vice President and Chief Financial Officer of Amtrol from 2000 to 2006 and as Executive Vice President of Marketing and Business Development from 1998 to 2000. Prior to joining Amtrol, Mr. Guillemette served as Chief Executive Officer and President of Balcrank Products, Inc., a manufacturer of lubrication equipment for the automotive service market and other industrial product lines from 1991 to 1998. From 1990 to 1991, he served as Senior Vice President and Senior Financial Officer of The O’Connor Group, a real estate investment, management and development firm. Prior to that, from 1986 to 1990, Mr. Guillemette served as a Vice President for Hampton Partners/G.M. Cypres & Co., Inc., an investment banking partnership. From 1979 to 1986, Mr. Guillemette served in various management positions with units of the Henley Group and its predecessors, including Allied-Signal, The Signal Companies and Wheelabrator-Frye. Mr. Guillemette holds a Bachelor of Arts degree from Dartmouth College and a Master of Business Administration degree from the Tuck School of Business at Dartmouth.
In light of his extensive leadership experience through his senior officer and director positions and his accounting and real estate experience, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Guillemette to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
| | |
Francis X. Jacoby III
Independent Director
Committees:
•
Audit
•
Investment
•
Nominating and Corporate Governance
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Since 2016, and from 1995 to 2001, Mr. Jacoby has served as Executive Vice President and Chief Financial Officer of Leggat McCall Properties, LLC, a real estate development company. From 2013 to 2016, Mr. Jacoby served as an independent consultant providing real estate finance, development and disposition related services. From 2008 to 2013, he served as President of Kensington Investment Company, Inc., the wealth management office for a family that owns travel-related businesses and passenger ships and makes investments in real estate, private equity and venture capital. In addition, in 2012, Mr. Jacoby served as the Chief Financial Officer of Grand Circle Corporation, an affiliate of Kensington Investment Company, Inc. From 2001 to 2008, Mr. Jacoby served as the Senior Vice President and Chief Financial Officer for GID Investment Advisers LLC, a family wealth management office whose primary focus is developing, acquiring and managing apartment communities, suburban office properties and flex industrial business parks throughout the United States for its own account and for joint ventures with institutional investors. From 1983 to 1995, Mr. Jacoby held a variety of senior management positions in the acquisitions, asset management and finance departments of Winthrop Financial Associates, a real estate investment company which owned and managed multiple property types. Mr. Jacoby holds a Bachelor of Arts degree from Dartmouth College and a Master of Business Administration degree from Boston University.
In light of his extensive investment and capital markets experience and his significant financial and real estate investment experience, including structuring, negotiating and closing complex transactions, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Jacoby to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
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| |
17
| | |
Christopher P. Marr
Independent Director
Committees:
•
Audit
•
Nominating and Corporate Governance (Chair)
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Mr. Marr has served as Chief Executive Officer and member of the Board of Trustees of CubeSmart (NYSE: CUBE), a real estate company that acquires, owns, operates and develops self-storage facilities in the United States, since 2014 and as President of CubeSmart since 2008. Previously, he served as Chief Operating Officer of CubeSmart from 2012 to 2014, as Chief Financial Officer from June 2006 to November 2008 and Treasurer from 2006 to 2012. From 2002 to 2006, Mr. Marr served as Senior Vice President and Chief Financial Officer of Brandywine Realty Trust (NYSE: BDN), a publicly-traded office REIT. Prior to joining Brandywine Realty Trust, Mr. Marr served as Chief Financial Officer of Storage USA, Inc., a publicly-traded self-storage REIT, from 1998 to 2002. Mr. Marr holds a Bachelor of Arts degree from Loyola University.
In light of his public company leadership, financial reporting and operations experience as an executive officer of several publicly-traded REITs, including chief executive officer experience, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Marr to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
|
| |
| | |
Hans S. Weger
Independent Director
Committees:
•
Audit (Chair)
•
Compensation
•
Investment
Diversity Information:
•
Gender: Male
•
Race/Ethnicity: White
|
| | |
Mr. Weger provides consulting services to real estate and other companies. Prior to that, Mr. Weger served as Chief Financial Officer of Focus Brands Inc., the franchisor and operator of restaurants and cafes in the United States, Puerto Rico and 63 foreign countries, from 2014 to 2016. From 2012 to 2014, Mr. Weger served as Chief Financial Officer of Outrigger Enterprises Group, a privately-held leisure lodging and hospitality company. From 1998 to 2011, Mr. Weger served as Chief Financial Officer, Executive Vice President and Treasurer of LaSalle Hotel Properties (NYSE: LHO), a REIT focused on the acquisition, ownership, redevelopment and leasing of primarily upscale and luxury full-service hotels. In addition, Mr. Weger served as Secretary of LaSalle Hotel Properties from 1999 to 2011. Mr. Weger was responsible for all of the company’s financial, accounting, human resources and information technology activities. Prior to joining LaSalle Hotel Properties, Mr. Weger served as Vice President and Treasurer for La Quinta Inns, Inc. where he was responsible for all financing activities. From 1992 until 1997, Mr. Weger served in various management roles with Harrah’s Entertainment, Inc. where he was responsible for strategic planning, mergers and acquisitions and project financing. Mr. Weger holds a Bachelor of Science degree from the University of Southern Mississippi and a Master of Business Administration degree from the University of Chicago.
In light of his real estate and real estate financing knowledge and his financial reporting and operations experience as the chief financial officer of a publicly-traded REIT and a privately held company, the Board believes that it is in the best interests of our Company and our stockholders for Mr. Weger to continue to serve as a director on the Board, subject to stockholder approval at the annual meeting.
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18
Biographical Information Regarding Executive Officers Who Are Not Directors
The biographical descriptions below set forth certain information with respect to each of our current executive officers, other than Mr. Crooker whose information appears above.
| | |
Matts S. Pinard
Executive Vice President, Chief Financial Officer and Treasurer
Age: 41
|
| | |
Mr. Pinard has served as our Executive Vice President, Chief Financial Officer and Treasurer since January 2022. Mr. Pinard served as Senior Vice President of Capital Markets and Investor Relations from 2019 to 2022. Previously, Mr. Pinard served as our Vice President of Capital Markets and Investor Relations group from 2015 until 2019. Prior to joining our Company in 2013, Mr. Pinard held various positions within capital markets and portfolio management. Mr. Pinard holds a Bachelor of Arts degree from Tufts University and a Master of Business Administration degree from Boston College.
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| |
| | |
Jeffrey M. Sullivan
Executive Vice President, General Counsel and Secretary
Age: 55
|
| | |
Mr. Sullivan has served as our Executive Vice President, General Counsel and Secretary since 2015. From 2012 to 2014, Mr. Sullivan was a partner in the corporate group of Hunton & Williams LLP, and from 2005 to 2012, Mr. Sullivan was a partner in the finance group of DLA Piper LLP (US). Before joining DLA Piper LLP (US), Mr. Sullivan was an associate and then partner in the corporate transactions and securities group of Alston & Bird LLP from 1998 to 2005. While in private practice, Mr. Sullivan focused on securities law, mergers and acquisitions, corporate governance matters and general corporate law, primarily involving REITs and other real estate companies, private equity funds and underwriters. Mr. Sullivan holds a Bachelor of Arts degree from University of North Carolina at Chapel Hill and a Juris Doctor degree from Vanderbilt University Law School.
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| | |
Steven T. Kimball
Executive Vice President—Real Estate Operations
Age: 57
|
| | |
Mr. Kimball has served as our Executive Vice President—Real Estate Operations since March 2023. From 2021 to 2023, Mr. Kimball served as an Executive Director at PGIM Real Estate (“PGIM”), where he oversaw the asset management of a Northeastern industrial property portfolio, including active joint venture development projects. Before joining PGIM, Mr. Kimball held various positions at Prologis, Inc. (NYSE: PLD) (formerly AMB Property Corporation until 2011) from 1995 to 2021, including serving as Managing Director, Head of Operations, East Region from 2014 to 2021, as Senior Vice President, Head of Operations, East Region from 2005 to 2014, and as Senior Vice President, Regional Manager, Chicago from 2000 to 2005. Before joining AMB Property Corporation in 1995, Mr. Kimball held positions with financial and insurance companies involving real estate assets. Mr. Kimball holds a Bachelor of Science degree from University of Vermont and a Master of Business Administration from University Colorado Boulder.
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Michael C. Chase
Executive Vice President, and Chief Investment Officer
Age: 51
|
| | |
Mr. Chase has served as our Executive Vice President since July 2022 and as our Chief Investment Officer since 2020. Mr. Chase previously served as a Senior Vice President from 2011 to 2022. Prior to the formation of our Company, Mr. Chase served as Managing Director for STAG Capital Partners, LLC from 2003 to 2011, where he was responsible for managing an acquisition team in the sourcing, underwriting, negotiating and closing of deals with a territory of approximately half the country. Mr. Chase was the Vice President of Acquisitions at Paradigm Properties from March 1999 to June 2002, where he was responsible for originating, underwriting, analyzing and closing new investments. Mr. Chase holds a Bachelor of Science degree from the University of Vermont.
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19
BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
Our business is managed through the oversight and direction of the Board. A majority of the Board is “independent,” as determined by the Board, consistent with the rules of the NYSE. The two members of the Board who are not independent are Mr. Crooker, our Chief Executive Officer, and Mr. Butcher, our former Chief Executive Officer.
Board Meetings and Executive Sessions
Our directors stay informed about our business by attending meetings of the Board and its committees and through supplemental reports and communications. In 2023, the Board held six meetings and each director attended at least 75% of the aggregate of the Board meetings and his or her respective committee meetings. The Board does not have a policy with respect to directors’ attendance at annual meetings of stockholders. Nevertheless, all of our directors attended the 2023 annual meeting of stockholders.
As required by the NYSE rules, the independent directors of the Board regularly meet in executive session, without the presence of management or non-independent directors. Generally, these executive sessions follow after each quarterly meeting. In 2023, the independent directors of the Board met in executive session without management or non-independent directors present four times at each quarterly meeting, the Audit Committee met in executive session without management or non-independent directors present four times at each quarterly meeting, the Compensation Committee met in executive session without management or non-independent directors present four times at each quarterly meetings (except one session included our General Counsel), and the Nominating and Corporate Governance Committee met in executive session without management or non-independent directors present two times at two quarterly meetings (except one session included our General Counsel). Our independent Chairman of the Board or Lead Independent Director, as applicable, presides over such independent, non-management sessions of the Board. Executive sessions of the Audit, Compensation and Nominating and Corporate Governance Committees are presided over by the respective Chair of each committee.
Director Independence
Under the enhanced corporate governance standards of the NYSE, at least a majority of our directors, and all of the members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, must meet the test of “independence.” The NYSE standards provide that, to qualify as an “independent” director, in addition to satisfying certain bright-line criteria, the Board must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). The Board has affirmatively determined that each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger satisfies the bright-line independence criteria of the NYSE and that none has a relationship with us that would interfere with such person’s ability to exercise independent judgment as a member of the Board. Therefore, we believe that all of these directors, who constitute a majority of the Board, are independent under the NYSE rules.
We have implemented procedures for interested parties, including stockholders, to communicate directly with our independent directors. We believe that providing a method for interested parties to communicate directly with our independent directors, rather than with the full Board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. See “Corporate Responsibility—Other Corporate Governance Matters—Communication with the Board of Directors, Independent Directors and the Audit Committee.”
Board Committees
The Board has established an Investment Committee, an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee and has adopted a written charter for each of these committees. Each of the Audit Committee, the Compensation Committee and the Nominating and
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Corporate Governance Committee is composed exclusively of independent directors, as required by and defined in the rules and listing qualifications of the NYSE and, with respect to the members of the Audit Committee, Rule 10A-3 promulgated pursuant to the Exchange Act. Moreover, the Compensation Committee is composed exclusively of individuals intended to be, to the extent required by Rule 16b-3 of the Exchange Act, non-management directors. The Board may from time to time establish other committees to facilitate the management of our Company. Matters submitted for approval by any one of our four committees must be approved by a majority of the directors on the committee who are present at a meeting at which there is a quorum or by unanimous written consent of the directors on that committee.
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Director
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Investment
Committee |
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Audit
Committee |
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Compensation
Committee |
| |
Nominating and
Corporate Governance Committee |
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| | Benjamin S. Butcher | | |
Chair
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| | | | | | | | | |
| | Jit Kee Chin | | | | | |
•
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| | | | | | |
| | William R. Crooker | | |
•
|
| | | | | | | | | |
| | Virgis W. Colbert | | | | | | | | |
•
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•
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|
| | Michelle S. Dilley | | | | | | | | |
•
|
| |
•
|
|
| | Jeffrey D. Furber | | |
•
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| | | | |
Chair
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| | | |
| | Larry T. Guillemette | | | | | |
•
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•
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| | | |
| | Francis X. Jacoby III | | |
•
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•
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| | | | |
•
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| | Christopher P. Marr | | | | | |
•
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| | | | |
Chair
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| | Hans S. Weger | | |
•
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Chair
|
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•
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| | | |
| | Meetings Held in 2023 | | |
4
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4
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7
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4
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Investment Committee
The Board has established an Investment Committee composed of five directors, three of whom are independent directors. The Investment Committee’s primary function is to review, evaluate and ultimately approve acquisitions and dispositions with an individual purchase or sale price of more than $50 million and up to $100 million, as well as development and redevelopment projects with a development cost of more than $25 million and up to $100 million. Proposed acquisitions, dispositions and development and redevelopment projects with an individual purchase or sale price or development cost of more than $100 million require approval by the Board. The Board, in its discretion, may change the Investment Committee’s authority to approve acquisitions, dispositions and development and redevelopment projects from time to time, including the dollar thresholds.
The Investment Committee has adopted a written charter that outlines certain specified responsibilities of the Investment Committee. A copy of the Investment Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Audit Committee
The Board has established an Audit Committee, which is composed exclusively of independent directors. Four members of the Audit Committee, Messrs. Guillemette, Jacoby, Marr and Weger, qualify as Audit Committee financial experts, as defined by the SEC, and all members are financially literate and able to read and understand fundamental financial statements. The Audit Committee assists the Board in overseeing, among other things:
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our system of internal controls;
•
our accounting and financial reporting processes;
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•
the integrity and audits of our consolidated financial statements;
•
our compliance with legal and regulatory requirements;
•
our risk exposures and policies to assess and manage risks (including financial risks);
•
the qualifications and independence of our independent auditors; and
•
the performance of our independent auditors and any internal auditors.
The Audit Committee also is responsible for engaging our independent public accountants, reviewing with the independent public accountants the plans and results of the audit engagement, approving professional services provided by the independent public accountants, reviewing the independence of the independent public accountants, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate.
The Audit Committee has adopted a written charter that outlines certain specified responsibilities of the Audit Committee and complies with the rules of the SEC and the NYSE. A copy of the Audit Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Compensation Committee
The Board has established a Compensation Committee, which is composed exclusively of independent directors. The principal functions of the Compensation Committee are to:
•
evaluate the performance and compensation of our Chief Executive Officer;
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review and approve the compensation and benefits of our executive officers and members of the Board;
•
administer the Equity Incentive Plan, as well as any other compensation, stock option, stock purchase, incentive or other benefit plans;
•
produce an annual report on executive compensation for inclusion in our proxy statement after reviewing our compensation discussion and analysis;
•
oversee and monitor our executive officer and director compensation policies and practices, including our Stock Ownership Guidelines for executive officers and non-management directors;
•
annually review and assess our compensation policies and practices to assess whether they could encourage unnecessary risk taking behavior, and discuss the relationship between risk management policies and practices, business strategy and compensation arrangements;
•
administer and interpret our Clawback Policy that requires the recovery of certain incentive-based compensation received by our current or former executive officers in the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the U.S. securities laws; and
•
collaborate with the Nominating and Corporate Governance Committee on human capital management, which may include executive diversity, pay equity, inclusion, recruiting, retention, career development and succession planning.
The Compensation Committee is primarily responsible for establishing and implementing our compensation program and policies. To fulfill its responsibilities, the Compensation Committee may engage, oversee and provide appropriate funding for advisors and consultants to advise the committee on executive compensation matters.
The Compensation Committee has adopted a written charter that outlines certain specified responsibilities of the Compensation Committee and complies with the rules of the SEC and the NYSE. A copy of the Compensation Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
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Nominating and Corporate Governance Committee
The Board has established a Nominating and Corporate Governance Committee, which is composed exclusively of independent directors. The principal functions of the Nominating and Corporate Governance Committee include:
•
seeking, considering and recommending to the full Board qualified candidates for election as directors;
•
recommending a slate of nominees for election as directors at the annual meeting of stockholders;
•
annually recommending to the Board nominees for each committee of the Board;
•
annually facilitating the assessment of the Board’s performance as a whole and of each committee and the individual directors;
•
reviewing and making recommendations on matters involving the general operation of the Board and our corporate governance, including our ESG policies and practices (and related policies for tenants, communities and vendors);
•
reviewing our ESG risk oversight and management and related governance reporting; and
•
reviewing our performance metrics concerning ESG matters.
The Nominating and Corporate Governance Committee has adopted a written charter that outlines certain specified responsibilities of the Nominating and Corporate Governance Committee and complies with the rules of the SEC and the NYSE. A copy of the Nominating and Corporate Governance Committee charter is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or has been employed by us. None of our executive officers currently serves, or in the past three years has served, as a member of the Board or Compensation Committee of another entity that has one or more executive officers serving on the Board or Compensation Committee. No member of the Compensation Committee has any other business relationship or affiliation with us other than his or her service as a director.
Board and Committee Evaluations
The Board performs an annual performance evaluation, with each director performing a self-evaluation of his or her Board and committee experiences. The Nominating and Corporate Governance Committee oversees the evaluation process and considers all methods of performing these evaluations. To assist the Board in its 2023 performance evaluations, we engaged outside counsel to conduct one-on-one interviews of each director, which are designed, among other purposes, to identify any areas in which the Board would be better served by adding new members with different skills, backgrounds or areas of experience. We believe using outside counsel fosters candor, facilitates participation in the evaluation process and enables individual assessments of each director. Generally, the evaluation process described below is managed by outside counsel with assistance from our General Counsel and oversight by the Chair of the Nominating and Corporate Governance Committee to ensure the process remains as thorough and transparent as possible. The Board discusses the self-evaluation process each year to ensure the process remains relevant, thorough and transparent.
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| | |
The Board evaluations cover the following topics:
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| |
•
Organization and membership
•
Key responsibilities
•
Accountability and independence
•
Meetings, information and resources
Board Refreshment and Nomination Process
Board refreshment is important to our Company. Before each annual meeting of stockholders, the Nominating and Corporate Governance Committee (i) assesses the composition and needs of the Board as a whole, including with respect to diversity (and such matters are also the subject of full Board discussions annually), (ii) rigorously evaluates all current directors, and (iii) considers the nomination of all directors whose terms expire at the next annual meeting of stockholders. The Nominating and Corporate Governance Committee also considers new candidates whenever there is a vacancy on the Board or whenever a vacancy is anticipated due to a change in the size or composition of the Board, a retirement of a director or for any other reason. In addition to considering incumbent directors, the Nominating and Corporate Governance Committee may identify director candidates based on recommendations from the directors and executive officers and may engage the services of third-party search firms to assist in identifying or evaluating director candidates.
The Board considers director candidates based on a number of factors including:
•
whether the Board member will be “independent,” as such term is defined by the NYSE listing standards;
•
whether the candidate possesses the highest personal and professional ethics, integrity and values;
•
whether the candidate has demonstrated leadership ability, with broad experience, diverse perspectives, and the ability to exercise sound business judgment;
•
whether the candidate has experience in areas important to the operations of our Company;
•
whether the candidate has an inquisitive and objective perspective, practical wisdom and mature judgment; and
•
whether the candidate provides a diversity of viewpoints, background, experience and demographics as compared to the current members of the Board.
Candidates also are evaluated based on their understanding of our business and willingness to devote adequate time to carrying out their duties. The Nominating and Corporate Governance Committee monitors the mix of skills, experience and background to assure that the Board has the necessary composition to effectively perform its oversight function. While diversity characteristics of a candidate are just one of several factors considered by the committee when evaluating director candidates, we believe that diversity is a valuable component of an effective and dynamic Board and will continue to make diversity an integral part
24
of the Board’s search for future directors. See “Corporate Responsibility—Corporate Governance and Ethical Business Practices—Enhancing Board Diversity” below. In general, a candidate will neither be included nor excluded from consideration solely based on his or her diversity traits. The Nominating and Corporate Governance Committee conducts regular reviews of current directors in light of the considerations described above and their past contributions to the Board. The Board reviews the effectiveness of its director nominating policies annually.
The Nominating and Corporate Governance Committee will consider appropriate nominees for directors whose names are submitted in writing by a stockholder of our Company. Director candidates submitted by our stockholders will be evaluated by the Nominating and Corporate Governance Committee on the same basis as any other director candidates. We did not receive any nominations of directors by stockholders for the 2024 annual meeting. Nominations must be addressed to STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary, indicating the nominee’s qualifications and other relevant biographical information and providing confirmation of the nominee’s consent to serve as director, if elected. To be considered for the next annual election of directors, any such written request must comply with the requirements set forth in our Bylaws and below under “Other Matters—Stockholder Proposals.”
Board Leadership
The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and the right Board leadership structure may vary as circumstances warrant. Consistent with this understanding, our independent directors consider the Board’s leadership structure on an annual basis.
The Board annually elects a Chairman of the Board, who may or may not be our Chief Executive Officer. Pursuant to our previously announced management succession plan, effective as of July 1, 2023, Mr. Butcher retired as Executive Chairman and Mr. Guillemette became the Chairman of the Board. Mr. Butcher continues to serve on the Board as a non-executive director.
If the Chairman of the Board is not an independent director, the Board will annually elect a non-management and independent director to serve in a lead capacity, to coordinate the activities of the other non-management and independent directors and to perform any other duties and responsibilities that the Board may determine are advisable. The responsibilities of the Lead Independent Director will include (i) serving as liaison between the Chairman of the Board and the independent directors, (ii) reviewing the type of information sent to the Board, (iii) reviewing, in consultation with the Chairman of the Board and others, agendas and Board meeting schedules to determine whether sufficient time is allocated to agenda items, and (iv) holding the authority to call meetings of the independent directors.
In considering its leadership structure, the Board has taken a number of factors into account. The Board, which consists of a majority of independent directors (eight of the 10 members), exercises a strong, independent oversight function. This oversight function is enhanced by the Audit, Compensation and Nominating and Corporate Governance Committees being comprised entirely of independent directors. A number of Board and committee processes and procedures, including regular executive sessions of independent directors and a regular review of our executive officers’ performance, provide substantial independent oversight of our management’s performance. Finally, under our Bylaws and Corporate Governance Guidelines, the Board has the ability to change its structure, should that be deemed appropriate and in the best interest of our Company and our stockholders. The Board believes that these factors provide the appropriate balance between the authority of those who oversee our Company and those who manage it on a day-to-day basis.
The Chairman of the Board presides over all meetings of the stockholders and the Board as a whole, including executive sessions of the independent directors. The Chairman performs such other duties, and exercises such powers, as from time to time shall be prescribed in our Bylaws or by the Board.
Director Resignation Policy
We have a majority voting standard for uncontested election of directors and a plurality standard for elections in which the number of director nominees exceeds the number of directors to be elected. Pursuant
25
to our Bylaws, director nominees in uncontested elections of directors will be elected by the vote of a majority of the votes cast with respect to the director, which means that the number of votes cast for a director must exceed the number of votes cast against the director.
Our Corporate Governance Guidelines require incumbent director nominees who fail to receive a majority of the votes cast to submit promptly a written offer to resign from the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation. Taking into account the recommendation of the Nominating and Corporate Governance Committee, the Board will determine whether to accept or reject any such resignation within 90 days after the certification of the voting results, and we will report such decision in a current report on Form 8-K furnished to the SEC. A copy of our Corporate Governance Guidelines is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Role of the Board in Risk Oversight
Overview
While risk management is primarily the responsibility of our senior management team, the Board plays an active role in overseeing our risk management processes and controls. The Board administers this oversight function directly, with support from the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which addresses risks specific to their respective areas of oversight. While the committees assume responsibilities to evaluate certain risks and oversee management’s plan regarding such risks, the full Board keeps itself regularly informed regarding such risks through committee and management reports.
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| | |
BOARD OF DIRECTORS
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| | |
One of the key functions of the Board is informed oversight of our risk management process. The full Board has primary responsibility for overseeing and evaluating:
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Strategic and operational risk management
•
Information security risks, including cybersecurity and data privacy risks (see “—Information Security” below)
•
Management and Board succession planning (see “—Management Succession Plans” below)
In addition, as discussed above under “—Board and Committee Evaluations,” the Board conducts an annual self-evaluation in order to evaluate its performance for the purpose of improving Board and committee processes and effectiveness.
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Audit Committee
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| | |
Compensation Committee
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Nominating and Corporate Governance Committee
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•
Financial risks, including our guidelines and policies to govern the process by which risk assessment and management is undertaken
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Compliance with legal and regulatory requirements
•
Internal audit function
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| | |
•
Risks related to our compensation policies and practices, including whether any of our compensation policies and practices has the potential to encourage excessive risk taking
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| | |
•
Corporate governance risks, including our Corporate Governance Guidelines to prevent illegal or improper liability-creating conduct
•
ESG risks, including environmental sustainability risks, corporate social responsibility and related governance reporting
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SENIOR MANAGEMENT TEAM
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| | ||||||||
| | | Our senior management team reviews and prioritizes significant risks, allocates resources for mitigation and provides the Board or the applicable Board committee with regular reports on potential risks, including our primary strategic, operational, information security, ESG, human resources, financial, legal, REIT and regulatory risks, and the measures we are taking to mitigate such risks. | | | ||||||||
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Information Security Risks
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| | |
Disclosure Risks
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| | |
Environmental Risks
|
| |
| | | Our General Counsel, to whom our information technology team reports, present an information security update at selected quarterly Board meetings. Aspects of information security are reviewed through internal audit. See “—Information Security” below. | | | | Our disclosure committee, consisting of certain executives and senior employees, reports to our Chief Financial Officer and meets at least quarterly to ensure the accuracy, completeness and timeliness of our disclosure statements and to evaluate the effectiveness of our disclosure controls and procedures. | | | | Our senior vice president—head of development and sustainability, who reports to our General Counsel with respect to ESG matters, is responsible for identifying, implementing and monitoring sustainability initiatives across our portfolio. In cooperation with our legal team, he is also responsible for monitoring, assessing and insuring our portfolio against environmental risks. | | |
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Information Security
As discussed above, the Board has the primary responsibility for overseeing our information security risk management, including cybersecurity and data privacy risks.
We use third-party experts to review and test our information security systems, including regular penetration tests of our network. We also use third-party systems to monitor our information security continually. We maintain a cybersecurity insurance policy, and we conduct mandatory information security training for all employees and regularly test our employees for information security awareness and adherence to our information security recommendations. To our knowledge, we have not experienced an information security breach in the last three years or otherwise.
Please see our Annual Report on Form 10-K for the year ended December 31, 2023 for more information on our processes and procedures for addressing and managing cybersecurity and data privacy risks.
Management Succession Plans
The Board oversees the recruitment, development and retention of executive talent and reviews or discusses our management succession plans at least annually. Management succession is generally discussed throughout the year with the Chief Executive Officer at Board meetings and in executive sessions. Management succession discussions generally focus on the Chief Executive Officer and other senior executive roles, but also include broader discussions about our employee workforce. The Board has regular and direct exposure to senior leadership and high-potential employees at Board meetings held throughout each year. The Board has framed and continues to evolve plans with an adaptable timeframe for orderly management succession of other key positions.
In addition, in order to minimize the potential disruption to our Company upon the unexpected resignation, termination, death, disability or other form of absence of our Chief Executive Officer, the Board has approved a Chief Executive Officer emergency succession policy (the “CEO Emergency Succession Policy”). The CEO Emergency Succession Policy is general in nature and is intended to provide the Board and the Nominating and Corporate Governance Committee with contingency procedures upon a sudden succession of our Chief Executive Officer.
Board Compensation for 2023
The Compensation Committee is responsible for reviewing the compensation of our non-management directors and may revise director compensation in its discretion. If a director is also one of our officers, we will not pay any compensation for services rendered as a director. Non-management director compensation in 2023 consisted of an annual cash fee and an annual grant of equity for services as a director and an additional annual cash fee for each of the independent Chairman of the Board or Lead Independent Director, as applicable, and the Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees in amounts set forth in the table below. All members of the Board are reimbursed for their costs and expenses in attending Board meetings.
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Position Held
|
| |
Annual
Cash Fee(1) |
| |
Annual
Equity Grant(2) |
| ||||||
| | Non-Management Director | | | | $ | 55,000 | | | | | $ | 110,000 | | |
| | Independent Chairman of the Board | | | | $ | 75,000 | | | | | | — | | |
| | Lead Independent Director | | | | $ | 25,000 | | | | | | — | | |
| | Audit Committee Chair | | | | $ | 20,000 | | | | | | — | | |
| | Compensation Committee Chair | | | | $ | 15,000 | | | | | | — | | |
| | Nominating and Corporate Governance Committee Chair | | | | $ | 15,000 | | | | | | — | | |
(1)
Our directors have the option to receive fees in shares of common stock rather than in cash. The value of such shares of common stock is based on the 10-day average closing price of our common stock
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determined three days prior to the quarterly fee payment date. All of our independent directors elected to receive shares of our common stock in lieu of cash for payment of the fees payable to them in 2023.
(2)
Represents the value of the 2023 annual grant of equity at the time of grant. Any non-management director who joins the Board in the future receives an initial grant of LTIP units (“LTIP units”) of our operating partnership, STAG Industrial Operating Partnership, L.P. (our “Operating Partnership”), upon the commencement of his or her service. The LTIP units granted annually vest on January 1 of the following year, subject to the recipient’s continued service as a director. LTIP units can be converted to common units (“common units”) of our Operating Partnership on a one for one basis once a material equity transaction has occurred that results in the accretion of the member’s capital account to the economic equivalent of the common unit.
The following table summarizes the compensation that we paid to our non-management directors in 2023:
2023 Director Compensation Table
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Name
|
| |
Fees Earned(1)
|
| |
Stock Awards(2)(3)
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| |
Total
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| |||||||||
| | Benjamin S. Butcher(4) | | | | $ | 27,500 | | | | | $ | — | | | | | $ | 27,500 | | |
| | Jit Kee Chin | | | | $ | 55,000 | | | | | $ | 109,989 | | | | | $ | 164,989 | | |
| | Virgis W. Colbert | | | | $ | 55,000 | | | | | $ | 109,989 | | | | | $ | 164,989 | | |
| | Michelle S. Dilley | | | | $ | 55,000 | | | | | $ | 109,989 | | | | | $ | 164,989 | | |
| | Jeffrey D. Furber | | | | $ | 70,000 | | | | | $ | 109,989 | | | | | $ | 179,989 | | |
| | Larry T. Guillemette | | | | $ | 105,000 | | | | | $ | 109,989 | | | | | $ | 214,989 | | |
| | Francis X. Jacoby III | | | | $ | 55,000 | | | | | $ | 109,989 | | | | | $ | 164,989 | | |
| | Christopher P. Marr | | | | $ | 70,000 | | | | | $ | 109,989 | | | | | $ | 179,989 | | |
| | Hans S. Weger | | | | $ | 75,000 | | | | | $ | 109,989 | | | | | $ | 184,989 | | |
(1)
All of our non-management directors elected to receive shares of our common stock in lieu of cash for payment of the fees payable to them for their service in 2023. The aggregate numbers of shares of common stock earned by the independent directors for their service in 2023 were as follows: Mr. Butcher, 752; Dr. Chin, 1,546; Mr. Colbert, 1,546; Ms. Dilley, 1,546; Mr. Furber, 1,967; Mr. Guillemette, 2,933; Mr. Jacoby, 1,546; Mr. Marr, 1,967; and Mr. Weger, 2,108. These shares were issued based on the calculation previously disclosed in this proxy statement and are not indicative of the fair market value on the date the directors received the shares.
(2)
As of December 31, 2023, Mr. Butcher held an aggregate of 48,146 unvested LTIP units and each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger held an aggregate 3,299 unvested LTIP units. As of December 31, 2023, the aggregate number of LTIP units held by each non-management director was as follows: Mr. Butcher, 740,215; Dr. Chin, 12,862; Mr. Colbert, 9,469; Ms. Dilley, 20,620; Mr. Furber, 48,521; Mr. Guillemette, 48,521; Mr. Jacoby, 48,521; Mr. Marr, 41,111; and Mr. Weger, 48,521.
(3)
Represents 3,299 LTIP units granted to each of Dr. Chin, Ms. Dilley and Messrs. Colbert, Furber, Guillemette, Jacoby, Marr and Weger on January 11, 2023. The dollar value is computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718, Compensation—Stock Compensation (“ASC Topic 718”). See Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on January 11, 2023 was $33.34.
(4)
Effective as of July 1, 2023, Mr. Butcher retired as Executive Chairman and began to receive compensation for his service as a non-management director.
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Board Compensation for 2024
In 2023, the Compensation Committee engaged its independent compensation consultant, Ferguson Partners Consulting (“FPC”), to evaluate the structure and competitiveness of our non-management director compensation and recommend changes, as appropriate. Based on this review, effective for 2024 and later, the Compensation Committee recommended and the Board approved the annual cash fee and annual grant of equity for services as a non-management director and the additional annual cash fees for the chair of the Audit, Compensation and Nominating and Corporate Governance Committees in the amounts set forth in the table below. All other components of the non-management director compensation program, including the additional annual cash fee paid to the Independent Chairman of the Board, remained unchanged.
| |
Position Held
|
| |
Annual Cash Fee
|
| |
Annual Equity Grant
|
| ||||||
| | Non-Management Director | | | | $ | 65,000 | | | | | $ | 120,000 | | |
| | Audit Committee Chair | | | | $ | 25,000 | | | | | | — | | |
| | Compensation Committee Chair | | | | $ | 20,000 | | | | | | — | | |
| | Nominating and Corporate Governance Committee Chair | | | | $ | 17,500 | | | | | | — | | |
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CORPORATE RESPONSIBILITY
We have a robust corporate responsibility program that incorporates ESG initiatives into our overall business, investment and asset management strategies to increase both the sustainability and the value of our portfolio. During 2023, we continued to enhance and refine our corporate responsibility program and related initiatives.
To provide a Board-guided leadership structure to oversee and drive our ESG initiatives, the charter of the Nominating and Corporate Governance Committee sets forth certain Board oversight responsibilities, including (i) reviewing and making recommendations on our ESG policies and practices (and related policies for tenants, communities and vendors), (ii) reviewing our ESG risk oversight and management and related governance reporting and (iii) reviewing our performance metrics concerning ESG matters. For more information, see “Board of Directors and Its Committees—Board Committees—Nominating and Corporate Governance Committee” and “—Role of the Board in Risk Oversight” above.
Since December 2021, we have published an annual Sustainability Report, which includes information regarding our ESG policies and programs, historic results and performance targets, including our long-term GHG reduction goal as approved by the Science-Based Targets Initiative (SBTi). Our Sustainability Report and our Board-approved ESG policies and practices, including an Environmental Sustainability Policy, a Human Rights Policy and a Vendor Code of Conduct, each of which is discussed in more detail below, are available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
Environmental Sustainability
2023 Environmental Sustainability Overview
As the long-term owner of industrial buildings, we have a vested interest in making investments and working with our tenants to create a portfolio of industrial buildings with modern sustainable features that will continue to meet tenant demand and help our tenants run their operations as efficiently as possible. While our tenants maintain operational control of the properties under triple-net leases, we seek to (i) identify, assess and manage environmental risks and opportunities at our properties, (ii) collaborate with our tenants on sustainable strategies to optimize property performance, and (iii) partner with our tenants to improve the efficiency of our properties through the implementation of environmentally focused practices and solutions. We have made progress on environmental issues in four primary areas:
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Energy Savings—With respect to our investments to garner energy savings, we are working with our tenants to accelerate the replacement of inefficient equipment, including modernization of lighting and HVAC equipment, and, in doing so, generate significant electrical and natural gas cost savings, decrease resource consumption and increase the value of and return on our properties. These cost savings initially accrue to the tenants under our triple-net leases, but will make our buildings more competitive and attractive to potential tenants when exposed to market conditions in future lease negotiations. In addition, when one of our buildings becomes vacant, we advance these cost-saving modernization efforts on our own initiative.
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Alternative Energy—With respect to alternative energy systems, the most promising technology for local power generation at our industrial sites is solar (photovoltaic). We have been aggressively pursuing solar panel installations in the states that are most receptive to these installations.
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Energy Consumption—With respect to energy consumption, through the terms in our standard lease agreement, we are working with our tenants to develop more transparency in the energy consumption at our buildings. Our standard form of lease requires tenants to share utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption. Our capital decisions are then prioritized based on where deployment would yield maximum utility savings.
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Reflective Roofing—With respect to the conversion of our portfolio from non-reflective to reflective roofing, we continue to use white membranes in the majority of our re-roof projects.
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These white, or cool, roofs reflect sunlight and reduce the heat load on our buildings, which allows our tenants to keep the buildings at comfortable temperatures while minimizing utility usage.
2023 Environmental Sustainability Highlights
During 2023, we enhanced our environmental programs and achieved the following milestones and accomplishments:
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GRESB “A” Score
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In October 2023, we announced that we achieved a 2023 public disclosure assessment score of “A” from the GRESB, which is an entity that provides a ranking system to evaluate and compare ESG efforts in the real estate industry. We have achieved an “A” score since 2022, which compares favorably to the average score of “B” for all companies, globally, rated by GRESB and to the average score of “B” for the 10 industrial real estate companies in our GRESB comparison group. As of December 2023, we were ranked third out of the 10 industrial real estate companies rated by GRESB in its public disclosure assessment.
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Solar Panel Installations
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We pursue solar energy opportunities in our portfolio nationwide and have executed contracts for solar development or leasing in multiple states. As of December 31, 2023, our properties hosted or were undergoing construction for solar projects with more than 30.4 megawatts capacity in aggregate and we had identified up to 40 additional projects that we are vetting over the next five years.
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Green Lease Leader—Gold Level
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In 2020, we were recognized by the Institute for Market Transformation as a Green Lease Leader at the “Gold” level. This Gold level recognition was renewed in 2023. We achieved this recognition by modifying our standard form of lease to require sharing of tenant utility usage so that we can identify those of our buildings that are outliers with respect to energy consumption.
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Reflective Roofing
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Since 2015, the majority of our roof replacements utilized reflective roofing, which typically is a white membrane that reflects sunlight and reduces building heat load and utility consumption. As of December 31, 2023, approximately 48% of our buildings benefited from reflective roofing.
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Lighting Conversions
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As of December 31, 2023, we had fluorescent or LED lighting systems in more than 95% of our portfolio. Since 2016, we have replaced less efficient lights with LED systems in more than 27.3 million square feet of our portfolio.
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Environmental Sustainability Policy
The Board has adopted an Environmental Sustainability Policy, which outlines our practices regarding understanding environmental risks and opportunities in our business and promoting greater tenant engagement and awareness and responsibility among our employees. A copy of our Environmental Sustainability Policy is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
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Tenant Engagement on Environmental Policies
With respect to the properties in our existing portfolio, we are committed to appropriate environmental stewardship, monitoring the performance of our responsible investments and measuring our progress toward improving the environmental footprint of our properties through the implementation of targeted environmental efficiency projects and equipment upgrades, such as solar panel systems and LED lighting. We regularly conduct a tenant survey to provide an opportunity for tenants to provide feedback on their properties that they did not communicate during our physical visits each year. We also use the survey as an opportunity to remind tenants that we are willing to finance capital improvements that lead to energy savings and to promote our capital investment program, where we invest additional capital in the building and, to pay for the project, receive monthly payments from the tenant that are less than or equal to the monthly savings realized through execution of the project. This program allows for a more efficient building at similar or reduced monthly operational cost.
Environmental Considerations in Investment Decisions
We are a growth-oriented company, and much of our growth comes from acquisitions. Accordingly, we believe our environmental strategies are most effective if they influence how we price and purchase a building, rather than being restricted to incremental improvement of already-owned real estate. We employ responsible investing practices as part of our acquisition due diligence process. Where feasible, in considering potential acquisitions, we evaluate and underwrite building systems, equipment and technologies that improve efficiency and conserve natural resources.
Social Responsibility and Human Rights
We are committed to good corporate citizenship. This commitment to social responsibility and human rights extends to all, including employees, tenants, communities, investors, suppliers and visitors. Our mission is to extend our financial resources, time and core values and principles to improve our communities and to provide a work environment that attracts, develops and retains high-performing individuals and that treats employees with dignity and respect.
Human Rights Policy
To evidence our commitment to maintaining a work environment where every employee is treated with dignity and respect, is free from discrimination and harassment, and is allowed to devote their full attention and best efforts to performing their job to the best of their respective abilities, the Board has adopted a Human Rights Policy. This policy solidifies our core principles regarding equal opportunity, competitive compensation, ethical behavior, workplace safety, open and risk-free communication and legal compliance. These commitments align seamlessly with our pledge to provide a work environment that attracts, develops and retains top talent by affording our employees an engaging work experience that allows for career development and opportunities for meaningful civic involvement. A copy of our Human Rights Policy is available under the “Corporate Responsibility” section of our website at www.stagindustrial.com.
Employee Engagement
We continually assess and strive to enhance employee satisfaction and engagement. Since our initial public offering in 2011, our employee headcount has increased from 26 employees to 95 employees at year-end 2023, an increase of approximately 265%, while maintaining a low attrition rate. Our 95 employees as of December 31, 2023, have an average tenure of approximately six years.
We recognize that our employees, more than any other stakeholder, best understand our employee engagement and culture. Since 2018, we have participated in or conducted external and internal employee surveys that provided employees an opportunity to share their perspectives on what is and is not working within our organization. For example, we have participated in a third-party survey of our employees designed to identify opportunities for improving employee engagement and business success. The results of the survey included benchmarking scores against comparably-sized businesses. In addition, we previously conducted an internally-developed survey of our employees centered on culture (as opposed to engagement).
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We created the survey based on professional frameworks to assess how our employees view our culture by archetype and gain insight on what makes certain employees successful. The results of this survey helped us better understand employee morale, satisfaction and engagement and have informed our strategies for improving our culture and communications with employees.
Diversity and Inclusion
We offer equal employment opportunities to all of our employees and seek to foster a diverse and vibrant workplace with employees who possess a broad range of experiences, backgrounds and skills. We are committed to promoting diversity and inclusion within our Company culture and throughout our operations. We believe diversity in the workplace contributes to a more positive and inclusive environment. We are further committed to creating a respectful environment in which our employees can flourish. As part of that commitment, we endeavor to maintain a workplace free from discrimination and harassment on the basis of race, color, religion, creed, gender, gender identity or expression, sexual orientation, genetic information, national origin, ancestry, age, disability, military or veteran status, and political affiliation or activities, among others. We conduct training to prevent discrimination and harassment and monitor and address employee conduct.
Employee Compensation and Benefit Programs
We are committed to compensating our employees at competitive industry rates while, at the same time, monitoring our compensation programs to ensure that we are continuously attracting and retaining top talent. We also provide our employees with highly competitive health and wellness benefits, including medical, dental, vision, life and short-term disability insurance, with the premiums therefor entirely paid by us. We also offer flexible spending accounts for medical care, a program to pay commuting and office parking costs with pre-tax income and a competitive vacation policy, including paid holidays, personal time off and a variety of leave benefits.
Employee Training and Development
We believe that our employees’ training and development is critical to our long-term success. Our employees are offered regular opportunities to participate in personal growth and professional development programs and social or team building events. We believe that developing our employees through skill building, mentorship and educational opportunities fosters a more collaborative and sustainable work environment. We also recognize the importance of preparing employees for upward mobility and ensuring employees are capable of assuming other roles and responsibilities within the organization. We seek to identify and develop future leaders within our Company and periodically review with our Chief Executive Officer and the Board the identity, skills and characteristics of those persons who could succeed to senior and executive positions. For additional information on our management succession plans, see “Board of Directors and Its Committees—Role of the Board in Risk Oversight—Management Succession Plans” above.
Corporate Donations and Volunteering
We strive to collaborate with local non-profit organizations that provide opportunities to inspire and empower children and young adults. Our employees demonstrate their personal commitment by volunteering time and resources into these organizations that we believe will help children and young adults realize their potential and make an impact to future generations.
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During 2023, we continued to support several local and national charities with a focus on child welfare, youth empowerment, equality and social justice:
| | | Charitable Action Committee | | |
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We established the CAC to promote quality interaction with our local community in Boston. The CAC is funded by our Company and managed by volunteer employees with differing seniorities and responsibilities. We support several local and national charities, through a combination of financial support (both direct and employee matching) and volunteer activities (such as food and clothing distribution, habitat improvement, etc.), with a focus on supporting children, young adults, equality and social justice.
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As an expression of our commitment to good corporate citizenship, we established the Charitable Action Fund in cooperation with the Boston Foundation. The Charitable Action Fund supports our social responsibility endeavors, including promoting equality and inspiring children and young adults—particularly those at risk—to realize their potential and benefit future generations. The Charitable Action Fund was formed to be the predominant channel for our monetary charitable giving and augments our ongoing Company-wide volunteer programs. The Charitable Action Fund is a donor advised fund sponsored by the Boston Foundation, which is a non-profit organization qualified under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Our executive officers oversee the Charitable Action Fund, in conjunction with the CAC.
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More information about our corporate donations and volunteer activities is available under “Social Responsibility” in the “Corporate Responsibility” section of our website at www.stagindustrial.com.
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Corporate Governance and Ethical Business Practices
Corporate Governance Overview
We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:
| | Annual election of directors to the Board | | |
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| | Regular executive sessions of independent directors | | |
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| | Independent Board; eight of our 10 directors are “independent” under NYSE rules | | |
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| | Designation of an independent Chairman of the Board or Lead Independent Director | | |
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| | All members of the audit, compensation and Nominating and Corporate Governance Committees are “independent” under NYSE rules | | |
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| | All five members of the Audit Committee qualify as “audit committee financial experts” as defined by the SEC | | |
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| | Diverse Board; two of our directors are women, one of whom is Asian, and one of our directors is Black/African American | | |
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| | Annual Board, committee and director self-evaluations, assisted by outside counsel | | |
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| | Regular Board review of management succession plans | | |
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| | Stockholder ability to amend our Bylaws | | |
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| | No stockholder rights plan (i.e., “poison pill”) without stockholder approval or ratification | | |
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| | Opted out of Maryland control share acquisition and business combination statutes and may not opt back in without stockholder approval | | |
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| | Robust Stock Ownership Guidelines for executive officers and non-management directors | | |
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| | Anti-hedging and anti-pledging policies | | |
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| | Clawback Policy for incentive-based executive compensation | | |
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| | Code of Business Conduct and Ethics for employees and directors | | |
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For more information about the Board and its committees, including Board elections, leadership, independence and policies related to annual self-evaluations and oversight of risk management, see “Board of Directors and Its Committees” above.
Vendor Code of Conduct
We encourage all our vendors to join our commitment to moral and ethical standards in conducting their businesses, and to refrain from engaging in or tolerating any unethical, improper or immoral business practices, including, but not limited to, bribery, corruption, extortion, fraud or misrepresentation. To promote
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that effort, the Board has adopted a Vendor Code of Conduct, which sets vendor standards for fair and ethical business practices, safe labor conditions, respect for human rights and environmental stewardship. A copy of our Vendor Code of Conduct is available under the “Corporate Responsibility” tab of our website at www.stagindustrial.com.
Stockholder Engagement
Our management team participates in an active stockholder engagement process each year:
We provide institutional investors with many opportunities and events to provide feedback directly to our management team throughout the year, including formal events, one-on-one sessions and group meetings. During 2023, our management team attended (in-person and virtually) six investor conferences and numerous other individual investor meetings, where they met with more than 120 institutional investors. These meetings covered a range of topics, including our financial condition and results of operations, our investment, finance and operation strategies, our stock price performance, economic, industry and market trends, our ESG and executive compensation policies and other matters. In addition to, and apart from, our regular investor meetings, we speak exclusively about our ESG and executive compensation policies with a number of our investors each year.
We engage with stockholders throughout the year in order to:
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provide visibility and transparency into our business, performance and corporate practices;
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hear from our stockholders about issues that are important to them and their expectations for our Company; and
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assess emerging issues that may affect our business, inform our decision making, enhance our public disclosures and help shape our practices.
Our management team recognizes the benefits that come from this dialogue with our stockholders. Stockholder feedback is thoughtfully considered and has led to modifications in our ESG practices, executive compensation program and public disclosures.
Enhancing Board Diversity
We are committed to diversity and recognize the benefits of having a diverse Board. We view increasing diversity at the Board level as essential to maintaining our competitive advantage and supporting the
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attainment of our strategic objectives. Not only does diversity promote the inclusion of different perspectives and ideas, and ensure that we have the opportunity to benefit from all available talent, but the promotion of a diverse Board also makes prudent business sense and makes for better corporate governance. We believe that a truly diverse Board will include and make good use of differences in the skills, regional and industry experience, background, race, gender, cultural and other distinctions between directors. These differences are considered in determining the optimum composition of the Board. All Board appointments are based on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.
We remain focused on appointing women and other diverse candidates to the Board as opportunities arise. Women and minorities currently represent 30% of the Board. As part of the annual performance evaluation of the effectiveness of the Board, Board committees and individual directors (described above under “Board of Directors and Its Committees—Board and Committee Evaluations”), the Nominating and Corporate Governance Committee considers the balance of skills, experience, independence and knowledge of our Company, the diversity representation of the Board, including gender, ethnicity and race, how the Board works together as a unit, and other factors relevant to its effectiveness. Beginning in 2023, the Board started an initiative, led by the Nominating and Corporate Governance Committee, to determine the needed skill set and experience for an additional director and identify qualified nominees with a focus on female candidates. In connection with this initiative, the Board has engaged a search firm to help identify director candidates and bring additional diversity to the Board.
Stock Ownership Guidelines
The Compensation Committee monitors the Stock Ownership Guidelines that apply to our executive officers and non-management directors. Our Stock Ownership Guidelines require that our executive officers and non-management directors own qualified securities as follows:
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Stock Ownership Guidelines
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| | Chief Executive Officer | | | • | | | • | | | • | | | • | | | • | | | • | | | 6x base salary | |
| | Other Executive Officers | | | • | | | • | | | • | | | | | | | | | | | | 3x base salary | |
| | Non-Management Directors | | | • | | | • | | | • | | | • | | | • | | | | | | 5x base salary | |
Qualified securities include common stock, preferred stock, common units and LTIP units, whether owned directly or indirectly. Newly appointed executive officers and non-management directors will have up to five years to comply with our Stock Ownership Guidelines. As of the date hereof, all of our executive officers and non-management directors are in compliance with our Stock Ownership Guidelines.
Prohibition Against Hedging and Pledging
Our insider trading policy prohibits our officers, directors, employees and their respective family members from, among other prohibited activities, engaging in short-term, speculative and other transactions in our securities that may lead to inadvertent violations of insider trading laws, including, (i) directly or indirectly engaging in strategies using puts, calls, equity swaps or other derivative securities on an exchange or in any other market in order to hedge or offset any decreases in the market value of any directly or indirectly owned securities of the Company, (ii) engaging in short sale or forward sale transactions or any short-term, speculative or other transactions in our securities that may lead to inadvertent violations of insider trading laws and (iii) pledging our securities as collateral for a loan or otherwise using our securities to secure a debt, including through the use of traditional margin accounts with a broker.
Clawback Policy
In accordance with applicable laws and NYSE listing standards, effective as of November 1, 2023, the Board adopted our Clawback Policy that requires the recovery of certain “incentive-based compensation” (as defined in the policy) received by our current or former executive officers (as defined in Rule 16a-1(f) under the Exchange Act) in the event that we are required to prepare an accounting restatement due to material
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noncompliance with any financial reporting requirement under the U.S. securities laws. Under this policy, unless an exception applies, we will seek to recover the portion of incentive-based compensation paid to our current or former executive officers during a specified look-back period that would not have been earned had our restated financial statements been used in the determination of the amount of incentive-based compensation originally awarded.
Other Corporate Governance Matters
Code of Business Conduct and Ethics and Corporate Governance Guidelines
We have adopted a Code of Business Conduct and Ethics and Corporate Governance Guidelines that apply to all of our executive officers and employees and each member of the Board. The Corporate Governance Guidelines provide the framework for the governance of our Company and represent the Board’s current views with respect to selected corporate governance issues considered to be of significance to our stockholders. The Corporate Governance Guidelines direct the Board’s actions with respect to, among other things, Board composition and director qualifications, selection of our Chief Executive Officer, Chairman of the Board and Lead Independent Director (as applicable), composition of the Board’s standing committees, director resignation policy, executive sessions, stockholder communications with the Board, management succession planning and the Board’s annual performance evaluation.
Within the time period required by the SEC, we will disclose on our website any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any director, executive officer or senior financial officer of any provision of the Code of Business Conduct and Ethics that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.
Copies of the Code of Business Conduct and Ethics and Corporate Governance Guidelines are available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com. Copies of such documents are also available in print to any stockholder who requests them. Requests should be sent STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary.
Related Party Transactions
The Board has adopted a policy for the review and approval of related party transactions requiring disclosure under Rule 404(a) of Regulation S-K promulgated by the SEC. The policy provides that the Nominating and Corporate Governance Committee is responsible for reviewing and approving or disapproving all related party transactions, including any transaction, arrangement or relationship in which (i) the amount involved may be expected to exceed $120,000 in any fiscal year, (ii) we will be a participant and (iii) a “related person” has a direct or indirect material interest. A “related person” is defined as an executive officer, director or nominee for election as director, or a greater than 5% beneficial owner of our common stock, or an immediate family member of the foregoing. See “Certain Relationships and Related Party Transactions.”
Conflicts of Interests
Our Code of Business Conduct and Ethics expressly prohibits the continuation of any conflict of interest by an employee, officer or director except under guidelines approved by the Board. Our policies provide that any transaction involving us in which any of our directors or officers has a material interest must be approved by a vote of a majority of our disinterested directors. Our Code of Business Conduct and Ethics requires any employee, officer or director to report any actual conflict of interest to our compliance officer, who will then seek guidance from the Board. In addition, our Corporate Governance Guidelines require that each member of the Board consult the Chairman of the Board in advance of accepting an invitation to serve on another company’s board should there be a possible conflict and notify the Nominating and Corporate Governance Committee in writing of the outcome. Because the facts and circumstances regarding potential conflicts are difficult to predict, the Board has not adopted a written policy for evaluating conflicts of interests. If a conflict of interest arises, the Board will review, among other things, the facts
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and circumstances of the conflict, our applicable corporate governance policies, the effects of any potential waivers of those policies, applicable state law, and applicable NYSE rules, and will consider the advice of counsel before making any decisions regarding the conflict.
Communication with the Board of Directors, Independent Directors and the Audit Committee
The Board may be contacted by any party via mail or e-mail at the addresses listed below:
Board of Directors
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
boardofdirectors@stagindustrial.com
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
boardofdirectors@stagindustrial.com
We believe that providing a method for interested parties to communicate directly with our independent directors, rather than to the full Board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. The presiding director of independent executive sessions of directors is the independent Chairman of the Board and may be contacted by any party via mail or e-mail at the addresses listed below:
Independent Chairman of the Board
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
leadindependentdirector@stagindustrial.com
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
leadindependentdirector@stagindustrial.com
The Audit Committee has adopted a process for anyone to send communications to the Audit Committee with concerns or complaints concerning our regulatory compliance, accounting, audit or internal controls. The Audit Committee may be contacted by any party via mail or e-mail at the addresses listed below:
Chair
Audit Committee
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
auditcommittee@stagindustrial.com
Audit Committee
STAG Industrial, Inc.
One Federal Street, 23rd Floor
Boston, Massachusetts 02110
auditcommittee@stagindustrial.com
Alternatively, anyone may call our whistleblower hotline toll-free at (877) 472-2110. A copy of our whistleblower policy is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
Relevant communications are distributed to the Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded or redirected, as appropriate, including, among others, business solicitations or advertisements, junk mail, spam, surveys and other mass mailings, and resumes and other forms of job inquiries. In addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded; however, any communication that is excluded will be made available to any outside director upon request.
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EXECUTIVE OFFICER COMPENSATION DISCUSSION AND ANALYSIS
This section discusses the principles underlying the material components of our compensation program for our executive officers who are named in the “Summary Compensation Table” below and the factors relevant to an analysis of our compensatory policies and decisions. The name and current title of each of our “named executive officers” for 2023 are set forth below:
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William R. Crooker, President and Chief Executive Officer
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Matts S. Pinard, Executive Vice President, Chief Financial Officer and Treasurer
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Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary
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Steven T. Kimball, Executive Vice President—Real Estate Operations
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Michael C. Chase, Executive Vice President and Chief Investment Officer
Executive Summary
2023 Business and Financial Performance Highlights
During 2023, we continued to deliver strong operating and financial results, while creating significant long-term value for our stockholders. Key highlights include the following:
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Our acquisition platform and process create significant external growth.
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Since our initial public offering in 2011, as of December 31, 2023, we have deployed approximately $7.7 billion of capital, representing the acquisition of 603 buildings, land parcels and buildings under development, totaling approximately 120.9 million rentable square feet.
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During 2023, we acquired 16 buildings totaling approximately 2.2 million rentable square feet for a total purchase price of approximately $322.0 million, including land parcels and one building under development.
Five-Year Acquisition Volume
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Our balance sheet enables capital access and liquidity and facilitates our strategic growth.
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As of December 31, 2023, our ratio of net debt to total real estate cost basis was approximately 36.3% and our ratio of total long-term indebtedness to total enterprise value was approximately 26.6%.
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We sold 10 buildings for a total sales price of approximately $108.1 million, including a portfolio sale of two properties for gross proceeds of approximately $26.8 million.
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We maintained two investment grade ratings from nationally recognized statistical rating agencies.
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We paid a monthly dividend on shares of our common stock at an annualized rate of $1.47 per share, which represents a dividend yield of approximately 3.7% based on the year-end closing stock price of $39.26.
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We continue to execute on our operational goals and maintained strong occupancy during the year.
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As of December 31, 2023, we achieved an occupancy rate of 98.2% on the total portfolio and 98.4% on the operating portfolio.
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Our operating and financial performance has translated into significant long-term stockholder returns.
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We believe that the value creation produced from an investment in real estate should be assessed over a long-term period, and our strategy has focused on long-term value creation.
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As of December 31, 2023, our TSR performance has been +41.70% over three years, +96.60% over five years and +128.20% over seven years. We have outperformed the MSCI US REIT Index over the three-year, five-year and seven-year periods.
Cumulative TSR (2021-2023)
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Our TSR for 2023 placed us at approximately the 74th percentile and the 83rd percentile in our 2023 industry peer group and the group of companies constituting the MSCI US REIT Index, respectively.
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Our investment strategy and execution generate significant cash flow and earnings growth.
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For the year ended December 31, 2023:
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Net income was approximately $197.2 million as compared to net income of approximately $182.2 million in 2022, an increase of approximately 8.2%. These amounts included approximately $54.1 million and $57.5 million, respectively, of gain from sales of properties in 2023 and 2022. Excluding gain from sales of properties, our net income increased by approximately 14.8% from 2022 to 2023.
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FFO was approximately $421.3 million as compared to FFO of approximately $401.4 million in 2022, an increase of approximately 5.0%.
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NOI was approximately $568.2 million as compared to NOI of approximately $531.6 million in 2022, an increase of approximately 6.9%.
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During 2023, we continued to increase our annual revenue by, among other matters, actively managing our portfolio, completing acquisitions in our robust investment pipeline and executing build-to-suit transactions.
Five-Year Annual Revenue & Year-Over-Year Revenue Growth
Please refer to Appendix A attached hereto for certain definitions and reconciliations of FFO and NOI to the nearest measure under GAAP.
2023 Say-On-Pay Vote
At the 2023 annual meeting of stockholders, approximately 96.0% of the votes cast in the advisory vote on the 2022 compensation of our named executive officers were in favor. We have consistently received strong support for our annual say-on-pay proposal and positive stockholder feedback since we revised our executive compensation program in 2019. As a result, our 2023 executive compensation program maintains a similar construct to our recent programs.
Executive Compensation Program Highlights
Our executive compensation program is designed to provide a total compensation package intended to attract and retain high-caliber executive officers and employees and incentivize employee contributions that are consistent with our corporate objectives and stockholder interests. It is our policy to provide a competitive total compensation package and share our success with the named executive officers, as well as our other employees, when our objectives are met.
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Below are certain key features of our current executive compensation practices—both the practices we believe drive performance and the practices we have not implemented because we do not believe they would serve the stockholders’ long-term interests:
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What We Don’t Do
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We mitigate undue risk, including utilizing retention provisions, multiple performance targets, and robust Board and management processes to identify risk.
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We do not believe the executive compensation program creates risks that are reasonably likely to pose a material adverse impact to our Company.
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A substantial majority of compensation is tied to performance based on Company financial and operational goals and individual performance goals.
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We do not guarantee annual base salary increases or bonuses of a minimum amount (bonuses can be zero).
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We measure performance against multiple metrics and indices to avoid the risk of poor correlation of performance and reward.
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We do not provide uncapped bonuses.
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We require positive TSR (25% or greater) as a condition to higher payouts under the performance units; relative TSR below the 30th percentile would result in no payout under the performance units.
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✘
We do not reprice stock options or stock appreciation rights without stockholder approval; exercise or base prices may not be less than grant date fair market value of our common stock.
|
| |
| | |
✔
The Equity Incentive Plan generally requires a minimum one-year vesting period for stock options and stock appreciation rights.
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| | |
✘
We prohibit liberal share recycling; we may not reuse shares withheld or delivered for tax withholdings or exercise prices or use “net share counting” for stock appreciation rights.
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| |
| | |
✔
We have reasonable severance provisions and generally provide for cash payments after a change of control only if an employee is also terminated within one year (a double-trigger).
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| | |
✘
Our employment agreements do not include tax gross-up provisions with respect to payments contingent upon a change of control. We do not have pension plans.
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| |
| | |
✔
We provide modest perquisites that have a sound benefit to our business.
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| | |
✘
We do not distribute dividends on unearned performance unit awards.
|
| |
| | |
✔
The Compensation Committee benefits from its utilization of an independent compensation consulting firm.
|
| | |
✘
The compensation consulting firm did not provide any services to us not related to compensation, succession planning or executive assessments.
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| |
| | |
✔
We have Stock Ownership Guidelines for executive officers and directors and a Clawback Policy for incentive-based executive compensation.
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| | |
✘
We prohibit hedging and pledging of our common stock by executive officers and directors.
|
| |
Executive Compensation Objectives and Philosophy
Objectives of Our Executive Compensation Program
The Compensation Committee’s overarching goal is to attract and maintain an excellent executive management team that enhances stockholder value over the long term. The executive compensation program is, therefore, designed to provide substantial incentives to focus executive management’s efforts accordingly. The compensation program also is designed to encourage and reward executives who contribute to our financial, operational and TSR performance by successfully executing our business strategy, providing thoughtful and creative stewardship and exhibiting outstanding performance. The specific objectives of
44
the compensation program are to:
•
align the interests of executive officers with the interests of stockholders;
•
encourage and maintain a performance-driven Company culture;
•
provide the Compensation Committee with the flexibility and discretion to adjust executive compensation to appropriately reflect both individual circumstances and variable business conditions; and
•
attract and retain talented and experienced executive officers.
Pay-for-Performance Philosophy
A substantial majority of executive compensation is tied to our performance and is not guaranteed. The Compensation Committee sets clear goals for Company performance and differentiates certain elements of compensation based on individual achievement. Consistent with these objectives, executive compensation for 2023 was heavily weighted toward (i) Company financial and operational performance metrics for annual cash incentive bonuses and (ii) TSR performance for long-term equity incentives. We believe that the executive compensation program supports these objectives by providing the named executive officers with a multi-faceted compensation package that includes a base salary, the opportunity to earn an annual cash incentive bonus and equity awards under the Equity Incentive Plan.
The diagram below depicts the 2023 cash and equity compensation of Mr. Crooker, our Chief Executive Officer. The diagram demonstrates that a substantial majority of our Chief Executive Officer’s 2023 compensation (approximately 81%) is strongly aligned with the interests of our stockholders because either it was determined by or depended on performance or its value fluctuates with the price of our common stock. Approximately 19% of our Chief Executive Officer’s 2023 compensation was fixed base salary that was not dependent on our stock price performance. All other compensation is variable.
(1)
“Performance based and/or at risk” means the applicable compensation is either determined by or depends on company and individual performance goals (including TSR) or its value fluctuates with the price of our common stock (as in the case of LTIP units subject to forfeiture).
45
Final Results of 2021 Performance Units—Alignment of Pay and Performance
In January 2021, we issued performance units under the Equity Incentive Plan, which provided each executive officer the opportunity to earn a target number of awards as determined by our relative and absolute TSR performance over a three-year performance period compared to pre-established quantitative performance metrics. The following table shows the performance metrics and ultimate 191.6% achievement for the performance units at the completion of the three-year performance period from January 1, 2021 through December 31, 2023.
| | | | |
Performance Metrics
|
| | |
Performance
Result(1) |
| |
Metric
Payout Percentage |
| | |
Weighting
|
| |
Calculated
Payout Percentage(2) |
| | | | | |||||||||
| |
Benchmark
|
| |
30th
Percentile |
| |
50th
Percentile |
| |
75th
Percentile |
| |
95th
Percentile |
| | | ||||||||||||||||
| |
Size-Based Peer Group
|
| |
50%
earned |
| |
100%
earned |
| |
200%
earned |
| |
N/A
|
| | |
68%
|
| |
166.1%
|
| | |
25%
|
| |
41.5%
|
| | | ||
| |
Industry Peer Group
|
| |
50%
earned |
| |
100%
earned |
| |
200%
earned |
| |
N/A
|
| | |
81%
|
| |
200.0%
|
| | |
25%
|
| |
50.0%
|
| | | ||
| |
MSCI US REIT Index(3)
|
| |
50%
earned |
| |
100% earned
|
| |
200% earned
|
| |
300% earned
|
| | |
75%
|
| |
200.1%
|
| | |
50%
|
| |
100.1%
|
| | | ||
| | | | | | | | | | | | | | | | | |
Total Calculated Payout Percentage:
|
| |
191.6%
|
| | | |||||||||
(1)
Rounded to the nearest whole percentile.
(2)
Excludes deemed dividend shares.
(3)
Awards above 100% for this benchmark require us to achieve a minimum absolute TSR of 25%. Our absolute TSR for the performance period from January 1, 2021 through December 31, 2023 was 39.3%.
A comparison of this result to prior years illustrates the true variability of our long-term equity incentive compensation program. The total percentage of target achieved for the 2018-2020, 2019-2021 and 2020-2022 performance units was 141%, 193% and 130%, respectively.
How We Determine Executive Compensation
The Compensation Committee determines compensation for the named executive officers and currently has five independent directors, Ms. Dilley and Messrs. Colbert, Furber, Guillemette and Weger. The Compensation Committee exercises independent discretion with respect to executive compensation matters and administers our equity incentive programs, including reviewing and approving equity grants to the named executive officers pursuant to the Equity Incentive Plan. The Compensation Committee operates under a written charter adopted by the Board, a copy of which is available under “Corporate Governance” in the “Investor Relations” section of our website at www.stagindustrial.com.
The initial compensation arrangements with the named executive officers were determined in negotiations with each individual executive officer and were formalized in the executive officers’ employment agreements, as described below in “Potential Payments Upon Termination or Change in Control—Employment Agreements.” In making compensation decisions for 2023, the Compensation Committee evaluated the performance of our Chief Executive Officer and, together with our Chief Executive Officer, assessed the individual performance of the other named executive officers. The Compensation Committee also reviewed market-based compensation data provided its independent compensation consultant, FPC, and from data publicly available from other sources such as the National Association of Real Estate Investment Trusts (“Nareit”).
Engagement of Compensation Consultant
The Compensation Committee is authorized to retain the services of one or more executive compensation consultants, in its discretion, to assist with the establishment and review of our compensation programs and related policies. The Compensation Committee has sole authority to hire, terminate and set the terms of any future engagement of FPC or any other compensation consultant.
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For compensation advice in 2023, the Compensation Committee engaged FPC, an independent compensation consulting firm, to provide market-based compensation data to assist the committee in the implementation of our comprehensive executive compensation program. In connection with these efforts, FPC prepared for the Compensation Committee reports that included compensation analyses for each executive position, an analysis of a recommended peer group for the Company and a description of the methodology used to provide the compensation analyses. FPC researched competitive market practices, reviewed the proxy statements of its recommended peer group and checked its own proprietary information data bases. The Compensation Committee reviewed the peer group compensation analyses and methodology provided to the Company and approved the 2023 executive compensation program.
Peer Groups
For the 2023 performance units, the Compensation Committee used the following 10 companies that primarily own industrial and/or single-tenant real estate (the “industry peer group”):
| |
Americold Realty Trust
|
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LXP Industrial Trust
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|
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EastGroup Properties, Inc.
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Plymouth Industrial REIT, Inc.
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|
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First Industrial Realty Trust, Inc.
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Prologis, Inc.
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|
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Industrial Logistics Properties Trust
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Rexford Industrial Realty, Inc.
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|
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Innovative Industrial Properties, Inc.
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Terreno Realty Corporation
|
|
For more information regarding how the Compensation Committee used the industry peer group to determine the 2023 performance units, see “—Equity Incentive Compensation Program—Performance Units.”
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Key Elements of Executive Compensation
The key elements of our executive compensation program are designed to be flexible and complementary and to support, collectively, the goals and objectives of the Compensation Committee. The following table summarizes the key elements of our executive compensation program for the named executive officers and each element’s program objectives, including annual cash compensation and equity awards. A more detailed discussion of each element of our executive compensation program follows this table.
| | | Element | | | Description | | | Objectives | | |
| | | Annual Cash Compensation | | | ||||||
| | | Annual Base Salary | | |
Fixed cash compensation. Reviewed and adjusted periodically. Annual base salaries for executives are intended to be less than 25% of total compensation.
|
| |
•
Attract and retain executives
•
Provide steady source of income sufficient to permit executives to focus effectively on their professional responsibilities
•
Help ensure that total cash compensation is competitive but not in excess of market
|
| |
| | | Annual Cash Incentive Bonus Program | | | “At risk” variable cash compensation based on Company performance goals and individual performance goals. | | |
•
Encourage executives to achieve annual Company and individual performance goals
•
Align executives’ interests with the stockholders’ interests
|
| |
| | | Equity Incentive Compensation Program | | | ||||||
| | | LTIP Units | | |
Awards vest in equal installments over multi-year periods, subject to continued service. Value of the award is “at risk” since (i) the award may never have any liquidation value in the absence of sufficient stock price appreciation, and (ii) the value fluctuates with our common stock price. LTIP unit awards for executives should generally constitute approximately 35% of total annual equity incentive compensation.
|
| |
•
Promote long-term equity ownership by executives
•
Encourage the retention of executives
•
Align executives’ interests with the stockholders’ interests
|
| |
| | | Performance Units | | |
“At risk” variable equity compensation based on Company performance over three-year performance period. Awards are paid in common stock or LTIP units. Performance units for executives should generally constitute approximately 65% of total annual equity incentive compensation.
|
| |
•
Encourage executives to achieve long-term Company performance goals
•
Align executives’ interests with the stockholders’ interests
•
Attract and retain executives
|
| |
Annual Base Salary
Annual base salary provides a minimum level of compensation commensurate with an experienced and motivated individual of the appropriate caliber and background to perform an executive officer’s job. It should be benchmarked to current market rates to ensure that we are able to attract new executive officers, if necessary. Base salary levels are intended to provide a steady source of income sufficient to permit our executive officers to focus effectively on their professional responsibilities. Base salaries of the named executive officers are reviewed and may be adjusted periodically by the Compensation Committee. No formulaic base salary increases are provided to the named executive officers. The Compensation Committee has determined that named executive officers’ base salaries should generally constitute less than 25% of total annual compensation.
Annual Cash Incentive Bonus Program
The annual cash incentive bonus program is intended to compensate the named executive officers for achieving annual Company performance goals and individual performance goals. The Compensation
48
Committee believes that incentive cash compensation is central to the attainment of the executive compensation program’s objectives. Annual cash incentive bonuses encourage the named executive officers to achieve Company performance goals, which fosters a performance-driven Company culture that aligns the executives’ interests with the stockholders’ interests.
The annual cash incentive bonus program allows our executive officers to earn from 0% to either 150% or 187.5% (depending on the named executive officer) of base salary based on various pre-defined and pre-weighted annual Company and individual performance goals established by the Compensation Committee (at least 80% of which are objective, calculable Company performance measurements). Individual performance goals are assessed subjectively and are focused, depending on position, on matters such as process efficiencies, capital transactions, investor relations activities, rollover rent and retention results, achievement of department initiatives and others.
The table below provides a summary of our annual cash incentive bonus program, including the 2023 performance goals and their relative weighting:
Each performance goal was assigned a weighting relative to the other annual performance goals. Results between threshold and target or between target and maximum will be based on linear interpolation. Performance below threshold earns 0%, and performance above the maximum is capped at the maximum level (no additional amounts are paid for exceeding the maximum performance goal). The total annual cash incentive bonus earned by an executive officer is the sum of the weighted annual incentive amounts earned with respect to each goal.
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Company Performance Goals
For 2023, 80% of the annual cash incentive bonuses was based on the following Company performance goals:
| | |
Core FFO per Share
|
| | |||
| | |
|
| |
Why we use this measure: FFO is a widely recognized measure of the performance of REITs. We believe that Core FFO, which excludes items that by their nature are not comparable from period to period and tend to obscure actual operating results, is useful to compare our operating performance over a given time period to that of other companies and other time periods in a consistent manner. See Appendix A attached hereto for definitions of FFO and Core FFO.
2023 performance: For 2023, our Core FFO per Share was $2.29, or 1.3% greater than the maximum goal. As a result, our Chief Executive Officer earned 93.8 percentage points and the other named executive officers earned 75 percentage points under this component. See the table below under “—2023 Company Performance Results.”
|
| |
| | |
Acquisition Volume
|
| | |||
| | |
|
| |
Why we use this measure: We are a growth-oriented company, and a substantial portion of our growth is external, from acquisitions. Accordingly, our annual Acquisition Volume measures one of our core operations.
2023 performance: For 2023, our Acquisition Volume was approximately $312.4 million, which was 4.1% greater than the threshold goal. As a result, our Chief Executive Officer earned 6.6 percentage points and the other named executive officers earned 5.3 percentage points under this component. See the table below under “—2023 Company Performance Results.”
|
| |
50
| | |
Net Debt to Run Rate Adjusted EBITDAre
|
| | |||
| | |
|
| |
Why we use this measure: We use the ratio of Net Debt to Run Rate Adjusted EBITDAre, which we view as an important measurement of the strength of our balance sheet, the strength or riskiness of our earnings and our ability to withstand negative economic trends (such as a decrease in our stock price), to compare our performance to that of our industry peers. See Appendix A attached hereto for definitions of Net Debt and Run Rate Adjusted EBITDAre.
2023 performance: For 2023, our Net Debt to Run Rate Adjusted EBITDAre was 4.9x, or 2.0% greater than the maximum goal. As a result, our Chief Executive Officer earned 18.8 percentage points and the other named executive officers earned 15.0 percentage points under this component. See the table below under “—2023 Company Performance Results.”
|
| |
| | |
Same Store Cash NOI Growth
|
| | |||
| | |
|
| |
Why we use this measure: Same Store Cash NOI Growth is a measurement of our internal growth and a primary financial measure for evaluating the core operating performance of our properties. Comparing Cash NOI on a “same store” basis (i.e., looking at the exact same set of stabilized properties over the periods being compared) allows for an apples-to-apples comparison. See Appendix A attached hereto for definitions of NOI, Cash NOI and “same store” Cash NOI.
2023 performance: For 2023, our Same Store Cash NOI Growth was 5.6%, or 6.7% greater than the maximum goal. As a result, our Chief Executive Officer earned 18.8 percentage points and the other named executive officers earned 15.0 percentage points under this component. See the table below under “—2023 Company Performance Results.”
|
| |
See the table below under “—2023 Company Performance Results” for more information about the calculation of the percentage points earned under each Company performance goal component. Also, see Appendix A attached hereto for definitions of Core FFO, Net Debt, Run Rate Adjusted EBITDAre and Same Store Cash NOI.
51
2023 Company Performance Results
In January 2024, the Compensation Committee evaluated our performance against the Company performance goals, which are set forth in the table below.
| | | | | | | | | | |
Points Available
|
| |
Performance Goals
|
| | | | |
Points
Earned (CEO/Other NEOs) |
| ||||||||||||||||||||||||
| |
Metrics
|
| |
Weighting
|
| |
Threshold
(CEO/Other NEOs) |
| |
Target
(CEO/Other NEOs) |
| |
Maximum
(CEO/Other NEOs) |
| |
Threshold
|
| |
Target
|
| |
Maximum
|
| |
Actual
Performance |
| ||||||||||||||||||
| | Core FFO per Share | | | | | 50% | | | | | | 31.3/25.0 | | | | | | 62.5/50.0 | | | | | | 93.8/75.0 | | | |
$2.22
|
| |
$2.24
|
| |
$2.26
|
| |
$2.29
|
| |
Maximum
|
| |
93.8/75.0
|
|
| | Acquisition Volume | | | | | 10% | | | | | | 6.3/5.0 | | | | | | 12.5/10.0 | | | | | | 18.8/15.0 | | | |
$300M
|
| |
$500M
|
| |
$700M
|
| |
$312.4
|
| |
Threshold
|
| |
6.6/5.3
|
|
| | Net Debt to Run Rate Adjusted EBITDAre | | | | | 10% | | | | | | 6.3/5.0 | | | | | | 12.5/10.0 | | | | | | 18.8/15.0 | | | |
5.5x
|
| |
5.25x
|
| |
5.00x
|
| |
4.90x
|
| |
Maximum
|
| |
18.8/15.0
|
|
| | Same Store Cash NOI Growth | | | | | 10% | | | | | | 6.3/5.0 | | | | | | 12.5/10.0 | | | | | | 18.8/15.0 | | | |
4.5%
|
| |
4.88%
|
| |
5.25%
|
| |
5.60%
|
| |
Maximum
|
| |
18.8/15.0
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Total Percentage Points Earned (CEO/Other NEOs):
|
| |
138.0/110.3
|
| | | | | ||||||||||||
Individual Performance Goals
For 2023, 20% of the annual cash incentive bonuses was based on the Compensation Committee’s (and the Chief Executive Officer’s with respect to the other named executive officers) assessment of the following individual goals and contributions:
•
with respect to Mr. Crooker, our overall success, formulation and achievement of strategic objectives; effective and efficient communication with and reporting to the board of directors; serving as our primary spokesperson and representative to investors and market participants; the successful integration of new members of the executive team, including the Executive Vice President—Real Estate Operations; and developing high morale and motivation among our employees;
•
with respect to Mr. Pinard, maintaining our strong balance sheet, including compliance with financial covenants and liquidity; investor relations matters; accounting accuracy and compliance with the requirements of the Sarbanes-Oxley Act of 2002; and achievement of his departments’ initiatives;
•
with respect to Mr. Sullivan, scalability of the legal, information technology and human resources departments balanced against responsiveness to internal clients; SEC, NYSE and other legal compliance; corporate governance and other ESG developments; assistance and advice in connection with executive succession and board of directors matters; and the achievement of his departments’ initiatives;
•
with respect to Mr. Kimball, successfully integrating himself into the executive management team and his departments; re-aligning positions and responsibilities within his departments to increase efficiency and accountability; management of our real estate operations to achieve occupancy, rent growth and other goals; achievement of his departments’ initiatives such as a property management initiative; and contributions (in cooperation with Mr. Chase) to our property development initiative; and
•
with respect to Mr. Chase, re-aligning positions and responsibilities within his departments to increase efficiency and accountability; achievement of his departments’ initiatives; successful acquisition of accretive properties; contributions (in cooperation with Mr. Kimball) to our property development initiative; serving as a leading representative of our Company to property brokerage firms; and contributions to the successful integration of employees working outside of our Company’s Boston headquarters.
With the 20% weighting of the individual performance component, our Chief Executive Officer can earn between 12.5 percentage points (at the threshold level) and 37.5 percentage points (at the maximum level) and our other named executive officers can earn between 10.0 (at the threshold level) and 30.0 (at maximum level) under this component. Based on this assessment, the Compensation Committee determined that Mr. Crooker earned 34.9 percentage points, Mr. Pinard earned 26.0 percentage points, Mr. Sullivan
52
earned 29.0 percentage points, Mr. Kimball earned 29.0 percentage points, and Mr. Chase earned 23.0 percentage points under the individual performance goal component.
Calculation of the Bonuses
Based on our actual performance in 2023, the Compensation Committee approved annual cash incentive bonuses for the named executive officers in the following amounts:
| | | | | | | | | | |
2023 Annual Cash Incentive Bonus Opportunity
|
| |
Percentage Points Earned
|
| | | | | | | ||||||||||||||||||||||||||||||||||||
| |
Executive
|
| |
2023
Base Salary |
| |
Below
Threshold |
| |
Threshold
|
| |
Target
|
| |
Maximum
|
| |
Company
Performance |
| |
Individual
Performance |
| |
Total
|
| |
2023
Bonus |
| |||||||||||||||||||||||||||
| | William R. Crooker | | | | $ | 675,000 | | | | | $ | 0 | | | | | $ | 421,875 | | | | | $ | 843,750 | | | | | $ | 1,265,625 | | | | | | 138.0% | | | | | | 34.9% | | | | | | 172.9% | | | | | $ | 1,166,999 | | |
| | Matts S. Pinard | | | | $ | 412,500 | | | | | $ | 0 | | | | | $ | 206,250 | | | | | $ | 412,500 | | | | | $ | 618,750 | | | | | | 110.3% | | | | | | 26.0% | | | | | | 136.3% | | | | | $ | 562,283 | | |
| | Jeffrey M. Sullivan | | | | $ | 375,000 | | | | | $ | 0 | | | | | $ | 187,500 | | | | | $ | 375,000 | | | | | $ | 562,500 | | | | | | 110.3% | | | | | | 29.0% | | | | | | 139.3% | | | | | $ | 522,416 | | |
| | Steven T. Kimball | | | | $ | 375,000 | | | | | $ | 0 | | | | | $ | 187,500 | | | | | $ | 375,000 | | | | | $ | 562,500 | | | | | | 110.3% | | | | | | 29.0% | | | | | | 139.3% | | | | | $ | 522,416 | | |
| | Michael C. Chase | | | | $ | 375,000 | | | | | $ | 0 | | | | | $ | 187,500 | | | | | $ | 375,000 | | | | | $ | 562,500 | | | | | | 110.3% | | | | | | 23.0% | | | | | | 133.3% | | | | | $ | 499,916 | | |
Equity Incentive Compensation Program
The goals of our long-term, equity-based awards are to incentivize and reward increases in long-term stockholder value and to align the interests of the named executive officers with the interests of our stockholders. Because vesting is based on continued employment or the achievement of performance goals, our equity-based incentives also encourage the retention of the named executive officers through the multi-year vesting or performance periods in the awards. The Compensation Committee considers this alignment of vital importance and, as a result, long-term, equity-based awards will generally constitute a majority of total annual compensation, subject to adjustment at the discretion of the Compensation Committee.
The Compensation Committee sets the total value of LTIP units and target performance units to be granted to each named executive officer based on a percentage such executive’s base salary (250% to 400% depending on the executive officer) and the full grant date fair value per unit determined in accordance with ASC Topic 718. For 2023, the Compensation Committee determined that annual equity awards should consist of approximately 35% in LTIP units (subject to multi-year vesting) and 65% in performance units (with a multi-year measuring period).
Equity Incentive Compensation Program
53
The chart below shows the breakout of our equity incentive compensation for all named executive officers.
LTIP Units
The Compensation Committee has made and may make certain awards to the named executive officers in the form of LTIP units. LTIP units are a separate series of units of limited partnership interests in our Operating Partnership. LTIP units, granted either as free-standing awards or in tandem with other awards under the Equity Incentive Plan, will be valued by reference to the value of shares of our common stock, and will be subject to such conditions and restrictions as the Compensation Committee may determine, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives. If applicable conditions and/or restrictions are not attained, participants will forfeit their LTIP units. Unless otherwise provided, LTIP unit awards, whether vested or unvested, will entitle the participant to receive current distributions from our Operating Partnership equivalent to the dividends that would be payable with respect to the number of shares of our common stock underlying the LTIP unit award.
While the Compensation Committee has the ability to grant various equity formulations to the executive officers under the Equity Incentive Plan, the Compensation Committee has deemed LTIP unit awards to be an effective means to ensure alignment of the executives’ interests with those of the stockholders. LTIP units are structured as “profits interests” for U.S. federal income tax purposes, and we do not expect the grant, vesting or conversion of LTIP units to produce a tax deduction for us based on current U.S. federal income tax law. The key feature of LTIP units is that, at the time of award, LTIP units, as profits interests, initially will not have full parity on a per unit basis, with our Operating Partnership’s common units with respect to liquidating distributions. Upon the occurrence of specified events, LTIP units can over time achieve full parity with common units and therefore accrete to an economic value for the participant equivalent to common units. If such parity is achieved, LTIP units may be converted, subject to the satisfaction of applicable vesting conditions, on a one-for-one basis into common units, which in turn are redeemable by the holder for shares of common stock on a one-for-one basis or for the cash value of such shares, at our election. However, there are circumstances under which LTIP units will not achieve parity with common units, and until such parity is reached, the value that a participant could realize for a given number of LTIP units will be less than the value of an equal number of shares of common stock and may be zero. The Compensation Committee believes that this characteristic of the LTIP units, that they achieve real value only if our share value appreciates, links executive compensation to our performance. Under the Equity Incentive Plan, each LTIP unit awarded will be equivalent to an award of one share of common stock reserved under the Equity Incentive Plan, thereby reducing the number of shares of common stock available for other equity awards on a one-for-one basis.
54
The Compensation Committee believes that using LTIP units for equity-based awards (i) links executive compensation to the performance of the Company, (ii) serves our objectives by increasing the after-tax value of a given equity grant and, therefore, enhances our equity-based compensation package for executives as a whole, (iii) advances the separate goal of promoting long-term equity ownership by executives, (iv) has no worse effect on dilution as compared to using restricted stock, (v) does not increase our recorded expense on account of equity-based compensation awards, (vi) further aligns the interests of executives with the interests of stockholders and (vii) because LTIP units are offered by many of our peers, enables us to remain competitive with our peers in recruiting and retaining talented executives.
In January 2023, the Compensation Committee approved equity awards for fiscal year 2023 in dollar values, with the number of units granted calculated by dividing the dollar value of the approved awards by the closing market price on the NYSE of a share of our common stock on the effective date of grant, after adjustment of the closing price by a discount or premium determined by a third-party valuation of the LTIP units. In determining the size of the long-term equity incentives awarded to the named executive officers for 2023 service, the Compensation Committee considered, among other things, the role and responsibilities of the individual, competitive factors and individual performance history. These awards were intended to enable our executive officers to establish a meaningful equity stake in our Company that would vest over a period of years based on continued service. We believe that these awards enable us to deliver competitive compensation value to the executive officers at levels sufficient to attract and retain top talent within our executive officer ranks.
The following table sets forth the number and value of (i) the LTIP units granted to Messrs. Crooker, Pinard, Sullivan and Chase in January 2023 for 2023 compensation, which vest over four years in equal installments on a quarterly basis beginning on March 31, 2023, subject to continued service, and (ii) the LTIP units granted to Mr. Kimball in connection with his appointment in March 2023 pursuant to the terms of his employment agreement, which vest in equal installments on a quarterly basis over the four-year period ending December 31, 2026, subject to continued service. The LTIP units were issued on January 11, 2023 and March 31, 2023, based on the full grant date fair value determined in accordance with ASC Topic 718. See Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our accounting of LTIP units.
| |
Executive
|
| |
Date of Grant
|
| |
Number of LTIP
Units Issued |
| |
Value of LTIP
Unit Award |
| ||||||
| | William R. Crooker | | |
January 11, 2023
|
| | | | 22,046 | | | | | $ | 735,014 | | |
| | Matts S. Pinard | | |
January 11, 2023
|
| | | | 9,842 | | | | | $ | 328,132 | | |
| | Jeffrey M. Sullivan | | |
January 11, 2023
|
| | | | 9,842 | | | | | $ | 328,132 | | |
| | Steven T. Kimball | | |
March 31, 2023
|
| | | | 19,345 | | | | | $ | 628,132 | | |
| | Michael C. Chase | | |
January 11, 2023
|
| | | | 10,826 | | | | | $ | 360,939 | | |
In January 2024, the Compensation Committee approved the grant of an aggregate of 72,305 LTIP units to Messrs. Crooker, Pinard, Sullivan, Kimball and Chase for 2024 compensation. The grants were made on January 8, 2024. These LTIP unit awards vest over four years in equal installments on a quarterly basis beginning on March 31, 2024, subject to continued service. The 2024 grants of LTIP units will be reflected in the “Summary Compensation Table” and “2024 Grants of Plan-Based Awards” table in our proxy statement for the 2025 annual meeting of stockholders.
Performance Units
The Compensation Committee grants performance units to the named executive officers as an additional long-term incentive award designed to align the executive officers’ interests more closely with those of the stockholders. The ultimate value of the performance units depends on our TSR over a three-year period commencing January 1, 2023. The award measures both relative return (TSR vs. two benchmarks) and, as a condition for higher levels of value, an absolute return.
55
At the end of the three-year measuring period, the performance units convert into shares of common stock (or other securities) at a rate depending on our TSR over the measuring period as compared to two different benchmarks and on the absolute amount of our TSR. A recipient of performance units may receive as few as zero shares or as many as 250% of the number of target units, plus deemed dividends on earned shares. That is, at the end of the measuring period, a recipient of 10,000 performance units may receive no value (no shares of common stock or other securities and no dividends) or receive as much as 25,000 shares of common stock (or other securities) plus dividends on earned shares (as if the dividends were paid and reinvested into additional shares of common stock during the measuring period).
The target amount of the performance units is nominally allocated:
•
50% to our TSR compared to the TSR of the industry peer group; and
•
50% to our TSR compared to the TSR of the companies in the MSCI US REIT Index.
The potential of the portion of the award allocated to the industry peer group comparison ranges from 0% to 200% of the allocated target amount. The potential of the portion of the award allocated to the MSCI US REIT Index group comparison ranges from 0% to 300% of the allocated target amount, except that the portion of the award attributable to performance against the MSCI US REIT Index group may not exceed target (100% of the allocated amount) unless we achieve a minimum absolute TSR of 25% over the measuring period.
The table below indicates the potential levels of awards within the industry peer group and the MSCI US REIT Index group benchmarks. Awards for performance between the indicated percentile rankings (e.g., between the 30th percentile and the 55th percentile) are determined by interpolating between the earned amounts (e.g., between 50% earned and 100% earned).
Percentile Ranking within Applicable Benchmark (Based on TSR)
| |
Benchmark
|
| |
Below 30th
Percentile |
| |
30th
Percentile |
| |
55th
Percentile |
| |
75th
Percentile |
| |
95th
Percentile |
|
| |
Industry Peer Group
(Allocated 50% of the Target Amount) |
| |
0% earned
|
| |
50% earned
|
| |
100% earned
|
| |
200% earned
|
| |
No increase
for performance beyond 75th percentile |
|
| |
MSCI US REIT Index(1)
(Allocated 50% of the Target Amount) |
| |
0% earned
|
| |
50% earned
|
| |
100% earned
|
| |
200% earned
|
| |
300% earned
|
|
(1)
Awards above 100% for this benchmark require us to achieve a minimum absolute TSR of 25%.
No dividends are paid to the recipient during the measuring period. At the end of the measuring period, if our TSR is such that the recipient earns shares of common stock or other securities (“Award Shares”), the recipient will receive additional common stock (or other securities) relating to dividends deemed to have been paid on the Award Shares. The additional shares are equal to the number of shares that the recipient would have acquired if the recipient held the Award Shares at the beginning of the measuring period and re-invested all dividends paid on the Award Shares over the measuring period into common stock on the dividend payment dates. In the discretion of the Compensation Committee, we may pay the cash value of the deemed dividends instead of issuing additional shares.
The number of Award Shares is determined at the end of the measuring period, and the Award Shares will be immediately and fully vested and transferable upon settlement after the measuring period. Any dividend shares will also be immediately and fully vested and transferable.
The following table sets forth the target number and value of (i) the performance units granted to Messrs. Crooker, Pinard, Sullivan and Chase in January 2023 for 2023 compensation, and (ii) the performance units granted to Mr. Kimball in connection with his appointment in March 2023 pursuant to the terms of his employment agreement. The performance units were issued on January 11, 2023 and March 31, 2023, based on the full grant date fair value determined in accordance with ASC Topic 718. See
56
Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our accounting of performance units.
| |
Executive
|
| |
Date of Grant
|
| |
Target Number of
Performance Units Issued |
| |
Value of
Performance Unit Award (at target) |
| ||||||
| | William R. Crooker | | |
January 11, 2023
|
| | | | 31,900 | | | | | $ | 1,365,001 | | |
| | Matts S. Pinard | | |
January 11, 2023
|
| | | | 14,241 | | | | | $ | 609,372 | | |
| | Jeffrey M. Sullivan | | |
January 11, 2023
|
| | | | 14,241 | | | | | $ | 609,372 | | |
| | Steven T. Kimball | | |
March 31, 2023
|
| | | | 14,624 | | | | | $ | 609,382 | | |
| | Michael C. Chase | | |
January 11, 2023
|
| | | | 15,665 | | | | | $ | 670,305 | | |
In January 2024, the Compensation Committee approved the grant of an aggregate target of 111,877 performance units to Messrs. Crooker, Pinard, Sullivan, Kimball and Chase for 2024 compensation. The 2024 grants of performance units will be reflected in the “Summary Compensation Table” and “2024 Grants of Plan-Based Awards” table in our proxy statement for the 2025 annual meeting of stockholders.
Employee Benefits
Our full-time employees, including the named executive officers, are eligible to participate in health and welfare benefit plans, which provide medical, dental, prescription, life insurance, disability insurance and related benefits.
Employment Agreements
We have entered into an employment agreement with each of our executive officers. See “Potential Payments Upon Termination or Change in Control—Employment Agreements” below for more information.
Clawback Policy
The Compensation Committee administers and interprets our Clawback Policy that requires the recovery of certain incentive-based compensation received by our current or former executive officers in the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the U.S. securities laws. See “Corporate Responsibility—Corporate Governance and Ethical Business Practices—Clawback Policy” above for more information.
Additional Compensation Components
In the future, as we further formulate and implement our compensation program, we may provide different and/or additional compensation components, benefits and/or perquisites to the named executive officers, to ensure that we provide a balanced and comprehensive compensation structure. We believe that it is important to maintain flexibility to adapt our compensation structure when needed to properly attract, motivate and retain the top executive talent for which we compete.
57
EXECUTIVE OFFICER COMPENSATION TABLES
Summary Compensation Table
The following table sets forth the information required by Item 402 of Regulation S-K promulgated by the SEC. The table sets forth the base salary and other compensation that was paid to or earned by the named executive officers in 2023. With respect to equity incentive awards, the dollar amounts indicated in the table under “Stock Awards” are the aggregate grant date fair value of awards computed in accordance with ASC Topic 718.
| |
Name and Principal Position
|
| |
Year
|
| |
Salary
|
| |
Bonus
|
| |
Stock
Awards(4) |
| |
Non-Equity Incentive
Plan Compensation |
| |
All Other
Compensation(5) |
| |
Total
|
| |||||||||||||||||||||
| |
William R. Crooker(1)
President and Chief Executive Officer |
| | | | 2023 | | | | | $ | 675,000 | | | | | $ | — | | | | | $ | 2,100,015 | | | | | $ | 1,166,999 | | | | | $ | 46,854 | | | | | $ | 3,988,868 | | |
| | | | 2022 | | | | | $ | 550,000 | | | | | $ | — | | | | | $ | 1,737,484 | | | | | $ | 855,938 | | | | | $ | 44,950 | | | | | $ | 3,188,372 | | | |||
| | | | 2021 | | | | | $ | 466,667 | | | | | $ | — | | | | | $ | 1,099,999 | | | | | $ | 672,778 | | | | | $ | 42,646 | | | | | $ | 2,282,090 | | | |||
| |
Matts S. Pinard(2)
Executive Vice President, Chief Financial Officer and Treasurer |
| | | | 2023 | | | | | $ | 412,500 | | | | | $ | — | | | | | $ | 937,504 | | | | | $ | 562,283 | | | | | $ | 44,342 | | | | | $ | 1,956,629 | | |
| | | | 2022 | | | | | $ | 371,329 | | | | | $ | — | | | | | $ | 925,022 | | | | | $ | 464,162 | | | | | $ | 42,658 | | | | | $ | 1,803,171 | | | |||
| |
Jeffrey M Sullivan
Executive Vice President, General Counsel and Secretary |
| | | | 2023 | | | | | $ | 375,000 | | | | | $ | — | | | | | $ | 937,504 | | | | | $ | 522,416 | | | | | $ | 40,514 | | | | | $ | 1,875,434 | | |
| | | | 2022 | | | | | $ | 332,188 | | | | | $ | — | | | | | $ | 750,000 | | | | | $ | 408,951 | | | | | $ | 42,609 | | | | | $ | 1,533,748 | | | |||
| | | | 2021 | | | | | $ | 300,000 | | | | | $ | — | | | | | $ | 749,996 | | | | | $ | 432,500 | | | | | $ | 41,358 | | | | | $ | 1,523,854 | | | |||
| |
Steven T. Kimball(3)
Executive Vice President—Real Estate Operations |
| | | | 2023 | | | | | $ | 281,971 | | | | | $ | — | | | | | $ | 1,237,514 | | | | | $ | 522,416 | | | | | $ | 15,969 | | | | | $ | 2,057,870 | | |
| |
Michael C. Chase
Executive Vice President and Chief Investment Officer |
| | | | 2023 | | | | | $ | 375,000 | | | | | $ | — | | | | | $ | 1,031,244 | | | | | $ | 499,916 | | | | | $ | 42,236 | | | | | $ | 1,948,396 | | |
(1)
Mr. Crooker became our Chief Executive Officer on July 1, 2022. Mr. Crooker also served as our Chief Financial Officer and Treasurer until Mr. Pinard’s appointment on January 10, 2022.
(2)
Mr. Pinard became our Executive Vice President, Chief Financial Officer and Treasurer on January 10, 2022.
(3)
Mr. Kimball became our Executive Vice President—Real Estate Operations on March 31, 2023.
(4)
For 2023, represents the total grant date fair value of LTIP units and performance units granted on January 11, 2023 and March 31, 2023 under the Equity Incentive Plan, determined in accordance with ASC Topic 718. See Notes 7 and 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our accounting of LTIP units and performance units and the assumptions used.
The grant date fair values for the following named executive officers relating to 2023 LTIP unit awards granted on January 11, 2023 and March 31, 2023 are as follows: William R. Crooker—$735,014; Matts S. Pinard—$328,132; Jeffrey M. Sullivan—$328,132; Steven T. Kimball—$628,132; and Michael C. Chase—$360,939. The LTIP unit awards granted in 2023 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.
The grant date fair values for the named executive officers relating to 2023 performance unit awards granted on January 11, 2023 and March 31, 2023 are as follows: William R. Crooker—$1,365,001; Matts S. Pinard—$609,372; Jeffrey M. Sullivan—$609,372; Steven T. Kimball—$609,382; and Michael C. Chase $670,305. The maximum value of the 2023 performance unit awards assuming that the highest level of performance is achieved are as follows: William R. Crooker—$3,412,503; Matts S. Pinard—$1,523,410; Jeffrey M. Sullivan—$1,523,410; Steven T. Kimball—$1,523,455; and Michael C. Chase—$1,675,742.
58
(5)
All other compensation for 2023 represents amounts paid for insurance premiums, 401(k) matching contributions and commuting/parking allowances, as follows:
| |
Name
|
| |
Insurance
Premiums |
| |
401(K) Matching
Contributions |
| |
Commuting/
Parking Allowances |
| |
Total
|
| ||||||||||||
| | William R. Crooker | | | | $ | 30,614 | | | | | $ | 9,900 | | | | | $ | 6,340 | | | | | $ | 46,854 | | |
| | Matts S. Pinard | | | | $ | 30,614 | | | | | $ | 9,900 | | | | | $ | 3,828 | | | | | $ | 44,342 | | |
| | Jeffrey M. Sullivan | | | | $ | 30,614 | | | | | $ | 9,900 | | | | | $ | — | | | | | $ | 40,514 | | |
| | Steven T. Kimball | | | | $ | 15,621 | | | | | $ | — | | | | | $ | 348 | | | | | $ | 15,969 | | |
| | Michael C. Chase | | | | $ | 30,614 | | | | | $ | 9,900 | | | | | $ | 1,722 | | | | | $ | 42,236 | | |
59
2023 Grants of Plan-Based Awards
The following table sets forth information with respect to plan-based awards granted in 2023 to the named executive officers.
| | | | | | | |
Estimated Possible Payouts
Under Non-Equity Incentive Plan Awards(1) |
| |
Estimated Future Payouts Under
Equity Incentive Plan Awards(2) |
| |
All Other
Stock Awards: Number of Shares or Units (#)(3) |
| | | | | | | |||||||||||||||||||||||||||||||||
| |
Name
|
| |
Date of Grant
|
| |
Threshold
($) |
| |
Target
($) |
| |
Maximum
($) |
| |
Threshold
(#) |
| |
Target
(#) |
| |
Maximum
(#) |
| |
Grant Date
Fair Value(4) |
| |||||||||||||||||||||||||||
| | William R. Crooker | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Annual cash incentive bonus
|
| | | | | | $ | 421,875 | | | | | $ | 843,750 | | | | | $ | 1,265,625 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
LTIP units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,046 | | | | | $ | 735,014 | | |
| |
Performance units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | — | | | | | | 31,900 | | | | | | 79,750 | | | | | | | | | | | $ | 1,365,001 | | |
| | Matts S. Pinard | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Annual cash incentive bonus
|
| | | | | | $ | 206,250 | | | | | $ | 412,500 | | | | | $ | 618,750 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
LTIP units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,842 | | | | | $ | 328,132 | | |
| |
Performance units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | — | | | | | | 14,241 | | | | | | 35,602 | | | | | | | | | | | $ | 609,372 | | |
| | Jeffrey M. Sullivan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Annual cash incentive bonus
|
| | | | | | $ | 187,500 | | | | | $ | 375,000 | | | | | $ | 562,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
LTIP units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,842 | | | | | $ | 328,132 | | |
| |
Performance units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | — | | | | | | 14,241 | | | | | | 35,602 | | | | | | | | | | | $ | 609,372 | | |
| | Steven T. Kimball | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Annual cash incentive bonus
|
| | | | | | $ | 187,500 | | | | | $ | 375,000 | | | | | $ | 562,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
LTIP units
|
| |
March 31, 2023
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,345 | | | | | $ | 628,132 | | |
| |
Performance units
|
| |
March 31, 2023
|
| | | | | | | | | | | | | | | | | | | | | | — | | | | | | 14,624 | | | | | | 36,560 | | | | | | | | | | | $ | 609,382 | | |
| | Michael C. Chase | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Annual cash incentive bonus
|
| | | | | | $ | 187,500 | | | | | $ | 375,000 | | | | | $ | 562,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
LTIP units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,826 | | | | | $ | 360,939 | | |
| |
Performance units
|
| |
January 11, 2023
|
| | | | | | | | | | | | | | | | | | | | | | — | | | | | | 15,665 | | | | | | 39,162 | | | | | | | | | | | $ | 670,305 | | |
(1)
For the year ended December 31, 2023, the Compensation Committee approved annual cash incentive bonuses for Messrs. Crooker, Pinard, Sullivan, Kimball and Chase of $1,166,999, $562,283, $522,416, $522,416 and $499,916, respectively. For more information regarding the Company and individual performance goals for these annual cash incentive bonuses, see “Executive Officer Compensation Discussion and Analysis—Annual Cash Incentive Bonus Program.”
(2)
Equity incentive plan awards were made in the form of performance units. At the end of the three-year measuring period, the performance units convert into shares of common stock (or other securities) at a rate depending on our TSR over the measuring period as compared to two different benchmarks and on the absolute amount of our TSR. A recipient of performance units may receive as few as zero shares or as many as 250% of the number of target units, plus deemed dividends on earned shares. For more information regarding the performance criteria for these performance unit awards, see “Executive Officer Compensation Discussion and Analysis—Equity Incentive Compensation Program—Performance Units.”
60
(3)
Stock awards were made in the form of LTIP units. The LTIP units will vest over four years in equal installments on a quarterly basis beginning on March 31, 2023, subject to continued service. For more information regarding the LTIP unit awards, see “Executive Officer Compensation Discussion and Analysis—Equity Incentive Compensation Program—LTIP Units.”
(4)
The amounts included in this column represent the full grant date fair value of the LTIP units and performance units, determined in accordance with ASC Topic 718. See Notes 7 and 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of our accounting of LTIP units and performance units and the assumptions used.
Outstanding Equity Awards at Fiscal Year-End 2023
The following table sets forth information with respect to outstanding equity awards held by the named executive officers as of December 31, 2023. No option awards were outstanding as of December 31, 2023. The aggregate dollar values indicated in the table below for equity incentive plan awards are the market or payout values and not the grant date fair values determined in accordance with ASC Topic 718 or the compensation expense recognized in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. In addition, the number of unearned performance units in the equity incentive plan awards are the actual amounts earned under the 2021 performance unit awards and target amounts that may be earned under the 2022 and 2023 performance unit awards. For more information regarding the threshold, target and maximum amounts with respect to equity incentive plan awards granted in 2023, see “—2023 Grants of Plan-Based Awards.”
| | | | |
Stock Awards
|
| |||||||||||||||||||||
| |
Name
|
| |
Number of
Shares of Stock or Units that Have Not Vested(1) |
| |
Market
Value of Shares or Units that Have Not Vested(2) |
| |
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(3)(4) |
| ||||||||||||
| | William R. Crooker | | | | | 27,182 | | | | | $ | 1,067,165 | | | | | | 100,609 | | | | | $ | 3,949,909 | | |
| | Matts S. Pinard | | | | | 12,016 | | | | | $ | 471,748 | | | | | | 31,792 | | | | | $ | 1,248,154 | | |
| | Jeffrey M. Sullivan | | | | | 13,167 | | | | | $ | 516,936 | | | | | | 53,108 | | | | | $ | 2,085,020 | | |
| | Steven T. Kimball | | | | | 14,509 | | | | | $ | 569,623 | | | | | | 14,624 | | | | | $ | 574,138 | | |
| | Michael C. Chase | | | | | 12,190 | | | | | $ | 478,579 | | | | | | 32,273 | | | | | $ | 1,267,038 | | |
(1)
The following table summarizes the awards (time-based LTIP units) for which a portion of the awards remain unvested as of December 31, 2023. The table also provides information about the applicable vesting periods.
| | | | | | | | | | |
Number of Units
|
| | |||||||||||||||||||||||||||||
| |
Grant Date
|
| |
Grant Date
Fair Value |
| |
Crooker
|
| |
Pinard
|
| |
Sullivan
|
| |
Kimball
|
| |
Chase
|
| |
Vesting Periods
|
| ||||||||||||||||||
| | January 7, 2021 | | | | $ | 28.13 | | | | | | 13,686 | | | | | | 3,149 | | | | | | 10,665 | | | | | | — | | | | | | 6,968 | | | |
Units vest over four years in equal
installments on a quarterly basis |
|
| |
January 10, 2022
|
| | | $ | 42.07 | | | | | | 14,455 | | | | | | 7,696 | | | | | | 6,240 | | | | | | — | | | | | | 4,659 | | | |
Units vest over four years in equal
installments on a quarterly basis |
|
| |
January 11, 2023
|
| | | $ | 33.34 | | | | | | 22,046 | | | | | | 9,842 | | | | | | 9,842 | | | | | | — | | | | | | 10,826 | | | |
Units vest over four years in equal
installments on a quarterly basis |
|
| | March 31, 2023 | | | | $ | 32.47 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,345 | | | | | | — | | | |
Units vest over four years in equal
installments on a quarterly basis |
|
(2)
Based on our common stock closing price of $39.26 on December 31, 2023.
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(3)
The following table summarizes the performance unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2023, assuming the performance unit awards are earned at the conclusion of the applicable measurement period. The table also provides information about the applicable vesting periods.
| | | | | | | | | | |
Number of Performance Units
|
| | |||||||||||||||||||||||||||||
| |
Grant Date
|
| |
Grant Date
Fair Value |
| |
Crooker
|
| |
Pinard
|
| |
Sullivan
|
| |
Kimball
|
| |
Chase
|
| |
Vesting Periods
|
| ||||||||||||||||||
| | January 7, 2021 | | | | $ | 33.19 | | | | | | 21,543 | | | | | | 2,669 | | | | | | 13,558 | | | | | | — | | | | | | 5,905 | | | |
Earned shares/units vest
immediately |
|
| | January 10, 2022 | | | | $ | 51.04 | | | | | | 22,127 | | | | | | 11,780 | | | | | | 9,551 | | | | | | — | | | | | | 3,840 | | | |
Earned shares/units vest
immediately |
|
| | January 11, 2023 | | | | $ | 42.79 | | | | | | 31,900 | | | | | | 14,241 | | | | | | 14,241 | | | | | | — | | | | | | 15,665 | | | |
Earned shares/units vest
immediately |
|
| | March 31, 2023 | | | | $ | 41.67 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,624 | | | | | | — | | | |
Earned shares/units vest
immediately |
|
(4)
For performance units, value is based on our closing price of $39.26 on December 31, 2023. For the 2021 performance unit awards, the number and value set forth in the table is based on the amount that the named executive officers earned for the three-year performance period ended December 31, 2023. The Compensation Committee determined the number of shares of common stock and LTIP units earned under the 2021 performance unit awards on January 8, 2024. For the 2022 and 2023 performance unit awards, the number and value set forth in the table assumes that the named executive officers earn the target amounts of performance units. See footnote 3 above.
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2023 Option Exercises and Stock Vested
The following table sets forth the aggregate number of LTIP units and shares of common stock that vested or were earned and issued, as applicable, in 2023. The value realized on vesting is the product of (i) the fair market value of a share of common stock on the vesting or issuance date, multiplied by (ii) the number of LTIP units or shares vesting or issued. The value realized is before payment of any applicable withholding tax and brokerage commissions. No options were exercised during 2023.
| |
Name
|
| |
Vesting Date
|
| |
Closing
Market Price |
| |
Number of Shares
Acquired on Vesting(1)(2) |
| |
Value Realized
on Vesting |
| |||||||||
| | William R. Crooker | | |||||||||||||||||||||
| | | | |
January 11, 2023
|
| | | $ | 34.73 | | | | | | 30,427 | | | | | $ | 1,056,730 | | |
| | | | |
March 31, 2023
|
| | | $ | 33.82 | | | | | | 3,953 | | | | | $ | 133,690 | | |
| | | | |
June 30, 2023
|
| | | $ | 35.88 | | | | | | 3,954 | | | | | $ | 141,870 | | |
| | | | |
September 30, 2023
|
| | | $ | 34.51 | | | | | | 3,953 | | | | | $ | 136,418 | | |
| | | | |
December 31, 2023
|
| | | $ | 39.26 | | | | | | 3,954 | | | | | $ | 155,234 | | |
| | Matts S. Pinard | | |||||||||||||||||||||
| | | | |
January 11, 2023
|
| | | $ | 34.73 | | | | | | 3,153 | | | | | $ | 109,504 | | |
| | | | |
March 31, 2023
|
| | | $ | 33.82 | | | | | | 1,449 | | | | | $ | 49,005 | | |
| | | | |
June 30, 2023
|
| | | $ | 35.88 | | | | | | 1,450 | | | | | $ | 52,026 | | |
| | | | |
September 30, 2023
|
| | | $ | 34.51 | | | | | | 1,450 | | | | | $ | 50,040 | | |
| | | | |
December 31, 2023
|
| | | $ | 39.26 | | | | | | 1,451 | | | | | $ | 56,966 | | |
| | Jeffrey M. Sullivan | | |||||||||||||||||||||
| | | | |
January 11, 2023
|
| | | $ | 34.73 | | | | | | 19,150 | | | | | $ | 665,080 | | |
| | | | |
March 31, 2023
|
| | | $ | 33.82 | | | | | | 2,307 | | | | | $ | 78,023 | | |
| | | | |
June 30, 2023
|
| | | $ | 35.88 | | | | | | 2,309 | | | | | $ | 82,847 | | |
| | | | |
September 30, 2023
|
| | | $ | 34.51 | | | | | | 2,307 | | | | | $ | 79,615 | | |
| | | | |
December 31, 2023
|
| | | $ | 39.26 | | | | | | 2,309 | | | | | $ | 90,651 | | |
| | Steven T. Kimball | | |||||||||||||||||||||
| | | | |
March 31, 2023
|
| | | $ | 33.82 | | | | | | 1,209 | | | | | $ | 40,888 | | |
| | | | |
June 30, 2023
|
| | | $ | 35.88 | | | | | | 1,209 | | | | | $ | 43,379 | | |
| | | | |
September 30, 2023
|
| | | $ | 34.51 | | | | | | 1,209 | | | | | $ | 41,723 | | |
| | | | |
December 31, 2023
|
| | | $ | 39.26 | | | | | | 1,209 | | | | | $ | 47,465 | | |
| | Michael C. Chase | | |||||||||||||||||||||
| | | | |
January 1, 2023
|
| | | $ | 32.31 | | | | | | 1,725 | | | | | $ | 55,735 | | |
| | | | |
January 11, 2023
|
| | | $ | 34.73 | | | | | | 7,745 | | | | | $ | 268,984 | | |
| | | | |
March 31, 2023
|
| | | $ | 33.82 | | | | | | 1,790 | | | | | $ | 60,538 | | |
| | | | |
June 30, 2023
|
| | | $ | 35.88 | | | | | | 1,788 | | | | | $ | 64,153 | | |
| | | | |
September 30, 2023
|
| | | $ | 34.51 | | | | | | 1,790 | | | | | $ | 61,773 | | |
| | | | |
December 31, 2023
|
| | | $ | 39.26 | | | | | | 1,790 | | | | | $ | 70,275 | | |
(1)
Time-based LTIP units vest over four years in equal installments on a quarterly basis on March 31, June 30, September 30, and December 31 of each year. Vested LTIP units can be converted to common units in our Operating Partnership on a one-for-one basis once a material equity transaction has occurred that results in the accretion of the member’s capital account to the economic equivalent of the common unit. During 2023, there was a material equity transaction in our Operating Partnership which resulted in an accretion of the member’s capital account to the economic value equivalent of the common units. The LTIP units may be converted to common units.
63
(2)
Pursuant to the Equity Incentive Plan, on January 11, 2023, the Compensation Committee determined the number of LTIP units to be issued pursuant to the January 2020 performance unit awards as follows: Mr. Crooker, 30,427 LTIP units that vested on the issuance date; Mr. Pinard, 3,153 LTIP units that vested on the issuance date; Mr. Sullivan, 19,150 LTIP units that vested on the issuance date; and Mr. Chase, 7,745 LTIP units that vested on the issuance date.
Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2023, relating to our equity compensation plans pursuant to which we grant options, restricted stock, LTIP units or other rights to acquire shares from time to time.
| |
Plan Category
|
| |
Number of securities to be
issued upon exercise of outstanding options, warrants and rights(1) |
| |
Weighted-average
exercise price of outstanding options, warrants and rights |
| |
Number of securities
remaining available for future issuance under equity compensation plans |
| |||||||||
| |
Equity compensation plans approved by security holders(2)
|
| | | | 2,361,920 | | | | | | — | | | | | | 4,226,328 | | |
| |
Equity compensation plans not approved by security holders
|
| | | | — | | | | | | — | | | | | | — | | |
| |
Total
|
| | | | 2,361,920 | | | | | | — | | | | | | 4,226,328 | | |
(1)
Consists entirely of LTIP units that, upon the satisfaction of certain conditions, are convertible into common units, which may then be redeemed for cash, or at our option, an equal number of shares of common stock, subject to certain restrictions. There is no exercise price associated with LTIP units.
(2)
2011 Equity Incentive Plan, as amended and restated.
Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K promulgated by the SEC, we are providing the following information about the ratio of the median employee’s total annual compensation to the total annual compensation of our Chief Executive Officer for the year ended December 31, 2023.
For 2023, our last completed fiscal year:
•
the median employee total annual compensation (excluding our Chief Executive Officer) was $216,442;
•
Chief Executive Officer total annual compensation (as reported in the “Summary Compensation Table” presented above) was $3,988,868; and
•
the ratio of Chief Executive Officer to median employee total annual compensation was 18:1.
In determining the median employee, we prepared a list of all employees as of December 31, 2023 and reviewed the amount of salary, wages and equity awards of all such employees reported to the Internal Revenue Service on Form W-2 for 2023. We also reviewed pre-tax wages that were contributed by employees to a pre-tax parking program, a flexible spending account program and supplemental insurance policy premiums. More specifically, for each employee, we aggregated the amounts indicated on the face of his or her Form W-2 and pre-tax wages allocated to commuting costs, flexible spending accounts and supplemental insurance policy premiums. We had 95 employees as of December 31, 2023. Salaries, wages and bonuses were annualized for those employees that were not employed for the full year of 2023. In addition, bonuses for employees who were not employed for the full year of 2022 were annualized because the Form W-2 amounts reflect bonuses paid in 2023 for 2022 employment. We identified the median employee using this compensation measure, which was consistently applied to all employees included in the calculation. Because all employees are located in the United States, we did not make any cost-of-living adjustments in identifying the median employee.
64
Once the median employee was identified, we combined all of the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K promulgated by the SEC, resulting in median employee total annual compensation of $216,442. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
Pay-Versus-Performance
Pay-Versus-Performance Table
The following table presents certain information regarding compensation paid to our Chief Executive Officers and other named executive officers, and certain measures of financial performance, for the four years ended December 31, 2023. The amounts shown below are calculated in accordance with Item 402(v) of Regulation S-K promulgated by the SEC.
| | Year(1) | | | Summary Compensation Table Total for CEO (Crooker) | | | Summary Compensation Table Total for CEO (Butcher) | | | Compensation Actually Paid to CEO (Crooker)(2)(3) | | | Compensation Actually Paid to CEO (Butcher)(2)(4) | | | Average Summary Compensation Table Total for Non-CEO NEOs | | | Average Compensation Actually Paid for Non-CEO NEOs(2)(5) | | | Value of Initial Fixed $100 Investment Based on: | | | | | | | | | Company Selected Measure | | ||||||||||||||||||||||||||||||
| | Company TSR | | | MSCI US REIT Index TSR | | | Net Income(6) | | | per Share | | |||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2023 | | | | $ | | | | | | | | | | $ | | | | | | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||||||||
| | 2022 | | | | $ | | | | | $ | | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||||||
| | 2021 | | | | | | | | | $ | | | | | | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||||||||
| | 2020 | | | | | | | | | $ | | | | | | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | | | $ | | | ||||||||||
(1)
Our Chief Executive Officer and other named executive officers for the applicable years were as follows:
•
2023: Mr. Crooker served as our Chief Executive Officer and Messrs. Pinard, Sullivan, Kimball and Chase served as the other named executive officers.
•
2022: Mr. Butcher served as our Chief Executive Officer through June 30, 2022, Mr. Crooker has served as our Chief Executive Officer since July 1, 2022, and Messrs. Pinard, Sullivan and Stephen C. Mecke, our former Executive Vice President and Chief Operating Officer, served as the other named executive officers.
•
2021: Mr. Butcher served as our Chief Executive Officer and Messrs. Crooker, Sullivan and Mecke and David G. King, our former Executive Vice President and Director of Real Estate Operations, served as the other named executive officers.
•
2020: Mr. Butcher served as our Chief Executive Officer and Messrs. Crooker, Sullivan, Mecke and King served as the other named executive officers.
(2)
Represents the amount of “compensation actually paid” to our Chief Executive Officers and other named executive officers, as computed in accordance with Item 402(v) of Regulation S-K. To calculate the compensation “actually paid,” we (i) deducted the amounts presented in the Stock Awards column of the Summary Compensation Table for the applicable year and (ii) added equity awards amounts calculated in accordance with Item 402(v)(2)(iii)(C) of Regulation S-K promulgated by the SEC that reflect the aggregate of the following components, as applicable: (a) the fair value as of the end of the applicable year of unvested equity awards granted in that year; (b) the change in fair value during the applicable year of equity awards granted in prior years that remained outstanding and unvested at the end of the year and (c) the change in fair value during the applicable year through the vesting date of equity awards granted in prior years that vested during the year, less the fair value at the end of the prior year of awards granted prior to the applicable year that failed to meet applicable vesting
65
conditions during the year. Equity values are calculated in accordance with ASC Topic 718, and the valuation methods used to calculate fair values did not materially differ from those disclosed at the time of the grant.
(3)
In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Crooker’s total compensation for 2023 and 2022 to determine the compensation actually paid (using the methodology described in footnote 2 above).
| | Year | | | Summary Compensation Table Total | | | “Stock Awards” Column of Summary Compensation Table | | | Equity Award Adjustments | | | Compensation Actually Paid | | ||||||||||||
| | 2023 | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | |||
| | 2022 | | | | $ | | | | | $ | ( | | | | | $ | ( | | | | | $ | | | ||
(4)
In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Butcher’s total compensation for 2022, 2021 and 2020 to determine the compensation actually paid (using the methodology described in footnote 2 above).
| | Year | | | Summary Compensation Table Total | | | “Stock Awards” Column of Summary Compensation Table | | | Equity Award Adjustments | | | Compensation Actually Paid | | ||||||||||||
| | 2022 | | | | $ | | | | | $ | ( | | | | | $ | ( | | | | | $ | ( | | | |
| | 2021 | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | |||
| | 2020 | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | |||
(5)
In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for the other named executive officers as a group for each year to determine the compensation actually paid (using the methodology described in footnote 2 above):
| | Year | | | Average Summary Compensation Table Total | | | Average “Stock Awards” Column of Summary Compensation Table | | | Average Equity Award Adjustments | | | Average Compensation Actually Paid | | ||||||||||||
| | 2023 | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | |||
| | 2022 | | | | $ | | | | | $ | ( | | | | | $ | ( | | | | | $ | ( | | | |
| | 2021 | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | |||
| | 2020 | | | | $ | | | | | $ | ( | | | | | $ | | | | | $ | | | |||
(6)
Net income amounts presented in thousands.
66
Financial Performance Measures
As described in greater detail in “Executive Officer Compensation Discussion and Analysis,” our executive compensation program reflects a variable pay-for-performance philosophy. The metrics that we use for both our long-term and short-term incentive awards are selected based on our objective to incentivize the named executive officers to increase the value of our enterprise for our stockholders. The most important financial performance measures that we used to link compensation actually paid to the named executive officers for 2023 to Company performance are as follows:
| | | Most Important Performance Measures | | |
| | | • • • • | | |
See Appendix A attached hereto for definitions of Core FFO, Net Debt, Run Rate Adjusted EBITDAre and Same Store Cash NOI.
Relationship Between Compensation Actually Paid and Company Performance
The relationship between compensation actually paid to our Chief Executive Officers and other named executive officers and our financial performance for the four-year period shown in the table above is described in more detail below. For comparison purposes, the compensation of our Chief Executive Officer for the year ended December 31, 2022 discussed below reflects the average of the compensation actually paid to Messrs. Crooker and Butcher in 2022.
Compensation Actually Paid and Company TSR
As demonstrated by the following graph, the amount of compensation actually paid to our Chief Executive Officer and the average amount of compensation actually paid to the other named executive officers is generally aligned with our cumulative TSR for the four-year period presented in the table above. While we use numerous financial and non-financial performance measures for purposes of our executive compensation program, a significant portion of the compensation actually paid to the named executive officers is comprised of performance unit awards based on TSR performance. For more information regarding the performance criteria for performance unit awards, see “Executive Officer Compensation Discussion and Analysis—Equity Incentive Compensation Program—Performance Units.”
67
Compensation Actually Paid and Net Income
The following graph compares the amount of compensation actually paid to our Chief Executive Officer and the average amount of compensation actually paid to the other named executive officers to our net income for the four-year period presented in the table above. Net income included approximately $54.1 million, $57.5 million, $98.0 million and $135.7 million, respectively, of gain from sales of properties in 2023, 2022, 2021 and 2020. Excluding gain from sales of properties, our net income increased by approximately 14.8% from 2022 to 2023, 26.7% from 2021 to 2022 and 38.4% from 2020 to 2021. While we do not use net income as a performance measure in our executive compensation program, net income is correlated with certain financial performance measures used to determinate annual cash incentive bonuses, including Core FFO per Share, Run Rate Adjusted EBITDAre and Same Store Cash NOI Growth. For more information regarding the performance criteria for annual cash incentive bonuses, see “Executive Officer Compensation Discussion and Analysis—Annual Cash Incentive Bonus Program.”
Compensation Actually Paid and Core FFO per Share
As demonstrated by the following graph, the amount of compensation actually paid to our Chief Executive Officer and the average amount of compensation actually paid to the other named executive officers is generally aligned with our Core FFO per Share performance for the four-year period presented in the table above. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our executive compensation program, we determined that Core FFO per Share is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by us to link compensation actually paid to the named executive officers for 2023 to our performance. For more information regarding the performance criteria for annual cash incentive bonuses, see “Executive Officer Compensation Discussion and Analysis—Annual Cash Incentive Bonus Program.”
68
Company TSR and MSCI US REIT Index TSR
As demonstrated by the following graph, our cumulative TSR for the four-year period presented in the table above was +47.6%, while the cumulative TSR of the MSCI US REIT Index was +13.5% for the same period. For more information regarding our performance and executive compensation program see “Executive Officer Compensation Discussion and Analysis.”
69
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Employment Agreements
We have entered into employment agreements with each of the named executive officers. We believe that the employment agreements benefit us by helping to retain the executives and by requiring the executive officers to devote the necessary business attention and time to our affairs. The current terms of the employment agreements with Mr. Crooker and each of Messrs. Pinard, Sullivan, Kimball and Chase expire on July 1, 2025 and December 31, 2024, respectively; and the term of each agreement renews automatically for successive one-year periods unless, not fewer than 60 days before the termination of the then existing term, either party provides notice of non-renewal to the other party.
Pursuant to the employment agreements, the named executive officers are eligible to receive awards of LTIP units and other equity awards, subject to the terms of the Equity Incentive Plan (or other then effective incentive plan) and the applicable award agreement and the discretion of the Compensation Committee. The employment agreements also provide for participation in any other employee benefit plans, insurance policies or contracts maintained by us relating to retirement, health, disability, vacation and other related benefits.
The employment agreements with each of Messrs. Crooker, Pinard, Sullivan, Kimball and Chase provide that, upon the termination of his employment either by us without “cause” or by the executive officer for “good reason,” or in the event that following a change of control we or our successor gives him a notice of non-renewal within 12 months following the change of control, each executive officer will be entitled to the following severance payments and benefits, subject to his execution of a general release in our favor:
•
a pro rata bonus based on the portion of the fiscal year elapsed at the time of termination;
•
with respect to Mr. Crooker, a lump-sum cash payment equal to three times the sum of (i) his then-current annual base salary and (ii) the bonus paid to Mr. Crooker for the most recently completed fiscal year;
•
with respect to Messrs. Pinard, Sullivan, Kimball and Chase, a lump sum cash payment equal to two times the sum of (i) his then current annual base salary and (ii) the bonus paid to the executive officer for the most recently completed fiscal year;
•
group health premiums or other insurance for a period of 18 months; and
•
immediate vesting of all outstanding equity-based awards (other than performance-based awards) held by the executive officer.
In addition, the employment agreements with Messrs. Crooker, Pinard, Sullivan, Kimball and Chase provide that, upon termination of employment by reason of the executive officer’s death or disability, the executive officer will be entitled to receive (i) his accrued and unpaid then-current annual base salary as of the date of his death or disability, (ii) a bonus pro-rated through the date of his death or disability and (iii) group health premiums or other insurance for a period of 18 months.
In some instances, the terms of the performance units modify the provisions of the employment agreements that otherwise provide for full vesting of all equity awards upon certain terminations. For example, in most terminations of employment, the performance units vest on a pro rata basis, rather than in full.
The employment agreements with each of Messrs. Crooker, Pinard, Sullivan, Kimball and Chase provide that each executive officer will be subject to a non-competition provision for the 12-month period following any termination of employment, except if we terminate his employment without “cause,” if we provide a notice of non-renewal or if the executive officer terminates his employment for “good reason.”
Pursuant to the employment agreements, Messrs. Crooker, Pinard, Sullivan, Kimball and Chase are eligible to receive a reasonable allowance for monthly commuting and parking expenses.
70
None of the employment agreements contains an excise tax gross-up provision under Section 280G of the Code.
Accelerated Vesting of Equity Awards
LTIP Unit Agreements
Under the LTIP unit agreements, the vesting of unvested LTIP units is accelerated upon a change in control (as defined in the applicable agreements) or termination of employment by reason of death or disability.
Performance Unit Agreements
Under the performance unit agreements, the awarding of unearned and unvested performance units is accelerated upon a change in control (as defined in the performance unit agreements). Upon a change in control of our Company, the measuring period for the performance units ends, and performance is measured and the award calculated and made, without pro ration, based on TSR through the date of the change in control. Upon a termination of a recipient’s employment by reason of death or disability, by the Company without “cause” (as defined in the performance unit agreement) or by the recipient for “good reason” (as defined in the performance award agreement), the measuring period for such recipient’s performance units ends, and performance is measured and the award calculated and made, after pro ration, based on the portion of the full measuring period elapsed and our TSR through the date of termination. Upon a termination of the recipient’s employment during the measuring period by the Company for “cause” or by the recipient without “good reason,” the performance units terminate without any award of shares.
Employee Retirement Vesting Program
The Compensation Committee has adopted the STAG Industrial, Inc. Employee Retirement Vesting Program (the “Retirement Vesting Program”) to provide supplemental retirement benefits for eligible employees. The Retirement Vesting Program will be administered by the Compensation Committee.
Under the Retirement Vesting Program, upon an eligible employee’s Qualifying Retirement (as defined below), the employee would be entitled to: (i) the immediate vesting of all outstanding time-based equity awards (i.e., awards that are subject to forfeiture solely pursuant to a time-based vesting schedule); and (ii) subject to the Compensation Committee’s future certification that the performance goals for the applicable period have been achieved, a prorated portion of any outstanding performance-based equity awards (i.e., awards for which the performance period has not expired and which remain subject to vesting based on the specified performance measures). The prorated portion of such performance-based equity awards will be determined at the end of the applicable performance period based on our actual performance and will be calculated by multiplying the full amount of any such award so payable by a fraction, the numerator of which shall equal the number of days such employee was employed during the performance period and the denominator of which shall equal the number of days in the performance period.
To be eligible to participate in the Retirement Vesting Program upon a Qualifying Retirement, an employee must satisfy certain terms and conditions, including the employee must (i) provide us with at least six months’ advance written notice of his or her retirement, and (ii) sign and not revoke a general release and non-competition agreement, with ongoing non-competition and employee non-solicitation provisions that remain in effect for at least 12 months following termination of employment (which non-competition and employee non-solicitation provisions, in the discretion of the Compensation Committee, may be those already established in an employment agreement with us).
For purposes of the Retirement Vesting Program, “Qualifying Retirement” means an employee’s voluntarily termination of employment (other than where grounds for “cause” exist) at or after having satisfied the “Rule of 70.” “Rule of 70” means when an employee’s years of service with us or our affiliates or predecessors (must be at least 10 years, based on 120 months of continuous employment, not calendar years) plus his or her age (must be at least 55 years old) on the date of termination of service equals or exceeds 70. An employee’s “service” for purposes of the Retirement Vesting Program will continue until he or she is no longer serving in the role as employee, director or consultant of our Company or any affiliate.
71
Termination Payment Table
The following table indicates the cash amounts and accelerated vesting that Messrs. Crooker, Pinard, Sullivan, Kimball and Chase would be entitled to receive under various termination or change of control circumstances pursuant to the terms of their employment agreements and the applicable award agreements under the Equity Incentive Plan. This table assumes that the termination or change of control, as applicable, occurred on December 31, 2023.
| |
Name and Termination or Change of Control Scenario
|
| |
Cash Payment
|
| |
Acceleration of
Vesting of Equity Awards(1)(2) |
| |
Total
|
| |||||||||
| | William R. Crooker | | | | | | | | | | | | | | | | | | | |
| |
Voluntary termination, retirement or involuntary termination for cause
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Qualifying retirement
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Termination by Company without cause or by employee for good reason
|
| | | $ | 3,462,920 | | | | | $ | 4,671,233 | | | | | $ | 8,134,153 | | |
| |
Accelerated vesting upon change of control(2)
|
| | | $ | — | | | | | $ | 6,976,620 | | | | | $ | 6,976,620 | | |
| |
Notice of non-renewal within 12 months following change of control
|
| | | $ | 3,462,920 | | | | | $ | 4,671,233 | | | | | $ | 8,134,153 | | |
| |
Death or disability(3)
|
| | | $ | 1,212,920 | | | | | $ | 4,671,233 | | | | | $ | 5,884,153 | | |
| | Matts S. Pinard | | | | | | | | | | | | | | | | | | | |
| |
Voluntary termination, retirement or involuntary termination for cause
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Qualifying retirement
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Termination by Company without cause or by employee for good reason
|
| | | $ | 1,508,204 | | | | | $ | 1,562,195 | | | | | $ | 3,070,399 | | |
| |
Accelerated vesting upon change of control(2)
|
| | | $ | — | | | | | $ | 2,627,083 | | | | | $ | 2,627,083 | | |
| |
Notice of non-renewal within 12 months following change of control
|
| | | $ | 1,508,204 | | | | | $ | 1,562,195 | | | | | $ | 3,070,399 | | |
| |
Death or disability(3)
|
| | | $ | 608,204 | | | | | $ | 1,562,195 | | | | | $ | 2,170,399 | | |
| | Jeffrey M. Sullivan | | | | | | | | | | | | | | | | | | | |
| |
Voluntary termination, retirement or involuntary termination for cause
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Qualifying retirement
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Termination by Company without cause or by employee for good reason
|
| | | $ | 1,318,337 | | | | | $ | 2,448,136 | | | | | $ | 3,766,473 | | |
| |
Accelerated vesting upon change of control(2)
|
| | | $ | — | | | | | $ | 3,471,212 | | | | | $ | 3,471,212 | | |
| |
Notice of non-renewal within 12 months following change of control
|
| | | $ | 1,318,337 | | | | | $ | 2,448,136 | | | | | $ | 3,766,473 | | |
| |
Death or disability(3)
|
| | | $ | 568,337 | | | | | $ | 2,448,136 | | | | | $ | 3,016,473 | | |
| | Steven T. Kimball | | | | | | | | | | | | | | | | | | | |
| |
Voluntary termination, retirement or involuntary termination for cause
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Qualifying retirement
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Termination by Company without cause or by employee for good reason
|
| | | $ | 1,295,848 | | | | | $ | 1,002,897 | | | | | $ | 2,298,745 | | |
| |
Accelerated vesting upon change of control(2)
|
| | | $ | — | | | | | $ | 1,869,483 | | | | | $ | 1,869,483 | | |
| |
Notice of non-renewal within 12 months following change of control
|
| | | $ | 1,295,848 | | | | | $ | 1,002,897 | | | | | $ | 2,298,745 | | |
| |
Death or disability(3)
|
| | | $ | 545,848 | | | | | $ | 1,002,897 | | | | | $ | 1,548,745 | | |
| | Michael C. Chase | | | | | | | | | | | | | | | | | | | |
| |
Voluntary termination, retirement or involuntary termination for cause
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Qualifying retirement
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | |
| |
Termination by Company without cause or by employee for good reason
|
| | | $ | 1,295,837 | | | | | $ | 1,588,028 | | | | | $ | 2,883,865 | | |
| |
Accelerated vesting upon change of control(2)
|
| | | $ | — | | | | | $ | 2,588,333 | | | | | $ | 2,588,333 | | |
| |
Notice of non-renewal within 12 months following change of control
|
| | | $ | 1,295,837 | | | | | $ | 1,588,028 | | | | | $ | 2,883,865 | | |
| |
Death or disability(3)
|
| | | $ | 545,837 | | | | | $ | 1,588,028 | | | | | $ | 2,133,865 | | |
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(1)
Amounts in this column reflect accelerated vesting of unvested LTIP units and performance units granted pursuant to the Equity Incentive Plan. For purposes of this table, each LTIP unit and performance unit was valued at $39.26, the closing price of our common stock on the NYSE on December 31, 2023.
(2)
For a discussion of the vesting of equity awards upon the occurrence of certain triggering events, including a change in control, termination without cause and Qualifying Retirement, see “—Accelerated Vesting of Equity Awards” above.
(3)
Upon death of the named executive officer, the executive officer will receive a prorated bonus for services performed during the year. The prorated bonus will be derived from the bonus paid in the previous fiscal year. Under the equity award agreements, the vesting of unvested LTIP units and unearned and unvested performance units is accelerated at death or disability. See “—Accelerated Vesting of Equity Awards” above.
73
COMPENSATION COMMITTEE REPORT
The following is a report by the Compensation Committee submitted in connection with its review of the Compensation Discussion and Analysis section of this proxy statement prepared in connection with the annual meeting.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K promulgated by the SEC. Based on such review and discussion, the Compensation Committee recommended to the Board (and the Board has approved) that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Compensation Committee of the Board
Jeffrey D. Furber (Chair)
Virgis W. Colbert
Michelle S. Dilley
Larry T. Guillemette
Hans S. Weger
Virgis W. Colbert
Michelle S. Dilley
Larry T. Guillemette
Hans S. Weger
74
AUDIT COMMITTEE REPORT
The following is a report by the Audit Committee submitted in connection with its review of our financial reports for the fiscal year ended December 31, 2023. Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate this proxy statement in future filings with the SEC, in whole or in part, the following report shall not be deemed incorporated by reference into any such filing.
The Audit Committee oversees our financial reporting process on behalf of the Board, in accordance with the charter of the Audit Committee. Management is responsible for our financial statements and the financial reporting process, including implementing and maintaining effective internal control over financial reporting and for the assessment of, and reporting on, the effectiveness of internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management and PricewaterhouseCoopers LLP the audited financial statements for STAG Industrial, Inc. for the fiscal year ended December 31, 2023.
In addition, the Audit Committee has (i) discussed with the representatives of PricewaterhouseCoopers LLP the matters that are required to be discussed by the Statement on Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board, (ii) discussed and received the written disclosures and the letter from PricewaterhouseCoopers LLP that are required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning independence, and (iii) discussed with PricewaterhouseCoopers LLP the auditors’ independence from the Company and management.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC. Our Annual Report on Form 10-K was filed with the SEC on February 13, 2024.
The members of the Audit Committee have oversight responsibilities only and are not acting as experts in accounting and auditing. Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and the independent registered public accountants. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with GAAP or that PricewaterhouseCoopers LLP is in fact “independent.”
Submitted by the Audit Committee of the Board
Hans S. Weger (Chair)
Jit Kee Chin
Larry T. Guillemette
Francis X. Jacoby III
Christopher P. Marr
Jit Kee Chin
Larry T. Guillemette
Francis X. Jacoby III
Christopher P. Marr
75
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Proposal
The Audit Committee of the Board has selected the accounting firm of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for the year ending December 31, 2024, and the Board is asking stockholders to ratify this appointment. Although current law, rules and regulations, as well as the charter of the Audit Committee, require the Company’s independent auditor to be engaged, retained and supervised by the Audit Committee, the Board considers the selection of the independent auditor to be an important matter of stockholder concern and is submitting the selection of PricewaterhouseCoopers LLP for ratification by stockholders as a matter of good corporate practice. PricewaterhouseCoopers LLP has served as our independent registered public accounting firm since our formation in July 2010 and is considered by our management to be well qualified.
A representative of PricewaterhouseCoopers LLP will be present at the annual meeting, will be given the opportunity to make a statement and will be available to respond to appropriate questions.
Fee Disclosure
The following is a summary of the fees incurred or billed by PricewaterhouseCoopers LLP for professional services rendered for our Company for the years ended December 31, 2023 and December 31, 2022:
| | | | |
Year Ended
December 31, 2023 |
| |
Year Ended
December 31, 2022 |
| ||||||
| | Audit Fees | | | | $ | 1,191,928 | | | | | $ | 1,072,450 | | |
| | Tax Fees | | | | | — | | | | | | — | | |
| | Audit-Related Fees | | | | | — | | | | | | — | | |
| | All Other Fees | | | | $ | 3,081 | | | | | $ | 2,900 | | |
| | Total | | | | $ | 1,195,009 | | | | | $ | 1,075,350 | | |
Audit Fees
“Audit Fees” consist of fees and related expenses incurred for professional services rendered for the audit of the financial statements and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements. For example, audit fees include fees for professional services rendered in connection with quarterly and annual reports, and the issuance of consents by PricewaterhouseCoopers LLP to be named, filed with the SEC and to the use of their audit report in, our registration statements filed with the SEC.
Tax Fees
“Tax Fees” consist of fees and related expenses incurred or billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance and tax planning and structuring.
Audit-Related Fees and All Other Fees
“Audit-Related Fees” and “All Other Fees” consist of fees and related expenses for products and services other than services described under “Audit Fees” and “Tax Fees.”
Pre-Approval Policy
All audit, tax and other services provided to us were reviewed and pre-approved by the Audit Committee or a member of the Audit Committee designated by the full committee to pre-approve such services. The
76
Audit Committee or designated member concluded that the provision of such services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
Vote Required
The affirmative vote of a majority of the votes cast at a meeting at which a quorum is present is required to ratify the appointment of our independent registered public accounting firm, which is considered a routine matter. For purposes of the vote on the ratification of the appointment of our independent registered public accounting firm, abstentions will not be counted as votes cast and will have no effect on the result of the vote.
Recommendation
The Board recommends a vote FOR the ratification of the appointment of the independent registered public accounting firm.
77
PROPOSAL 3:
ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
Proposal
Section 14A(a)(1) of the Exchange Act generally requires each public company to include in its proxy statement a separate resolution subject to a non-binding stockholder vote to approve the compensation of the Company’s named executive officers, as disclosed in its proxy statement pursuant to Item 402 of Regulation S-K promulgated by the SEC, not less frequently than once every three years. This is commonly known as a “say-on-pay” proposal or resolution.
At the 2018 annual meeting of stockholders held on April 30, 2018, our stockholders voted on, among other matters, a proposal regarding the frequency of holding a say-on-pay vote. A majority of the votes cast on the frequency proposal were cast in favor of holding a say-on-pay vote every year, which was consistent with the recommendation of the Board. The Board considered the voting results with respect to the frequency proposal and other factors, and the Board currently intends to hold a say-on-pay vote every year until the next required advisory vote on the frequency of say-on-pay votes at the annual meeting.
Accordingly, we are presenting the following proposal, which gives you as a stockholder the opportunity to endorse or not endorse our executive compensation program for our named executive officers by voting for or against the following resolution.
“—RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2024 annual meeting of stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Executive Officer Compensation Discussion and Analysis, the compensation tables and the other related disclosure.”
While this vote is advisory and not binding on us, it will provide information to us and the Compensation Committee regarding stockholder sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining executive compensation for the remainder of 2024 and beyond.
Vote Required
The affirmative vote of a majority of the votes cast at a meeting at which a quorum is present is required to approve, by non-binding vote, executive compensation. For purposes of this advisory vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
Recommendation
The Board recommends a vote FOR the approval of the compensation of the named executive officers as disclosed in this proxy statement.
78
PROPOSAL 4:
ADVISORY (NON-BINDING) VOTE ON
FREQUENCY OF EXECUTIVE COMPENSATION VOTES
ADVISORY (NON-BINDING) VOTE ON
FREQUENCY OF EXECUTIVE COMPENSATION VOTES
Proposal
In addition to the advisory approval of our executive compensation program, we are also presenting the following proposal, which gives you as a stockholder the opportunity to inform us as to how often you wish us to include a proposal, similar to Proposal 3, in our proxy statement. While the Board intends to carefully consider the stockholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature.
“RESOLVED, that the stockholders determine, on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s named executive officers as set forth in the Company’s proxy statement should be every year, every two years, or every three years.”
After careful consideration, the Board has determined that an advisory vote on named executive officer compensation that occurs every year is the most appropriate alternative, and therefore the Board recommends that you vote for a one-year interval for the advisory vote on executive compensation.
Annual votes will provide us with the clearest feedback regarding the compensation of the named executive officers. The primary focus of the disclosure of the compensation of the named executive officers required to be included in our proxy statements is compensation granted in or for the prior fiscal year. Additionally, the Compensation Committee evaluates the compensation of the named executive officers each year. An annual say-on-pay resolution will match the annual focus of this proxy statement disclosure and provide us with the clearest and most timely feedback of the three alternatives. This feedback may then be considered by the Compensation Committee in its next annual decision-making process. Additionally, the administrative process of submitting a non-binding, advisory say-on-pay proposal to stockholders on an annual basis is not expected to impose substantial additional costs.
Vote Required
The frequency of the advisory vote on executive compensation receiving the greatest number of votes (every one, two or three years) will be considered the frequency recommended by the stockholders. For purposes of this advisory vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote.
Recommendation
The Board recommends a vote FOR the option of every year (box “1 YEAR” on the proxy card) as the preferred frequency for advisory votes on executive compensation.
79
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the record date, March 4, 2024, the beneficial ownership of shares of our common stock and common units in our Operating Partnership for (i) each stockholder that is known to us to be the beneficial owner of 5% or more of the outstanding shares of our common stock based upon filings made with the SEC, (ii) each director and named executive officer and (iii) all directors and named executive officers as a group.
In accordance with SEC rules, each listed person’s beneficial ownership includes all shares the person actually owns beneficially or of record, all shares over which the person has or shares voting or dispositive control (such as in the capacity as a general partner of an investment fund), and all shares the person has the right to acquire within 60 days.
Unless otherwise indicated, each person named in the table has sole voting and investment power with respect to all shares shown as beneficially owned by such person and none of the directors or named executive officers has pledged shares as collateral. Furthermore, unless otherwise indicated, the business address for each of the identified stockholders is our principal executive office, One Federal Street, 23rd Floor, Boston, Massachusetts 02110.
| |
Name of Beneficial Owner
|
| |
Number of Shares
and Common Units Beneficially Owned(1) |
| |
Percent of
All Shares(2) |
| |
Percent of
All Shares and Common Units(3) |
| |||||||||
| | Holders of 5% or More | | | | | | | | | | | | | | | | | | | |
| | BlackRock, Inc.(4) | | | | | 21,749,644 | | | | | | 12.0% | | | | | | 11.7% | | |
| | State Street Corporation(5) | | | | | 10,044,432 | | | | | | 5.5% | | | | | | 5.4% | | |
| | The Vanguard Group—23-1945930(6) | | | | | 26,060,931 | | | | | | 14.3% | | | | | | 14.0% | | |
| | Directors and Executive Officers | | | | | | | | | | | | | | | | | | | |
| | William R. Crooker(7) | | | | | 314,836 | | | | | | * | | | | | | * | | |
| | Matts S. Pinard(7) | | | | | 53,645 | | | | | | * | | | | | | * | | |
| | Jeffrey M. Sullivan(7) | | | | | 259,492 | | | | | | * | | | | | | * | | |
| | Stephen T. Kimball(7) | | | | | 28,213 | | | | | | * | | | | | | * | | |
| | Michael C. Chase(7) | | | | | 84,192 | | | | | | * | | | | | | * | | |
| | Benjamin S. Butcher(8) | | | | | 760,652 | | | | | | * | | | | | | * | | |
| | Jit Kee Chin(8) | | | | | 22,366 | | | | | | * | | | | | | * | | |
| | Virgis W. Colbert(8) | | | | | 31,275 | | | | | | * | | | | | | * | | |
| | Michelle S. Dilley(8) | | | | | 33,314 | | | | | | * | | | | | | * | | |
| | Jeffrey D. Furber(8) | | | | | 101,465 | | | | | | * | | | | | | * | | |
| | Larry T. Guillemette(8) | | | | | 92,565 | | | | | | * | | | | | | * | | |
| | Francis X. Jacoby III(8) | | | | | 81,524 | | | | | | * | | | | | | * | | |
| | Christopher P. Marr(8)(9) | | | | | 69,187 | | | | | | * | | | | | | * | | |
| | Hans S. Weger(8)(10) | | | | | 90,722 | | | | | | * | | | | | | * | | |
| |
All directors and named executive officers as a group (14 persons)
|
| | | | 2,023,448 | | | | | | 1.1% | | | | | | 1.1% | | |
80
*
Represents ownership of less than 1.0%.
(1)
Ownership consists of shares of common stock, common units and LTIP units. Subject to certain restrictions, common units may be redeemed for cash, or at our option, an equal number of shares of common stock. Upon achieving parity with the common units and becoming “redeemable” in accordance with the terms of the partnership agreement of our Operating Partnership, LTIP units may be redeemed for cash, or at our option, an equal number of shares of common stock, subject to certain restrictions.
(2)
Based on 181,834,658 shares of common stock outstanding as of March 4, 2024. In computing the percentage ownership of a person or group, we have assumed that the common units and LTIP units held by that person or the persons in the group have been redeemed for shares of common stock and that those shares are outstanding but that no common units or LTIP units held by other persons are redeemed for shares of common stock, notwithstanding that not all of the LTIP units have vested to date.
(3)
Based on 185,970,949 shares of common stock and units outstanding as of March 4, 2024 on a fully-diluted basis, comprised of 181,834,658 shares of common stock and 4,136,291 shares of common stock issuable upon exchange or conversion of outstanding common units and LTIP units of our Operating Partnership.
(4)
This information and the information in this footnote were obtained from a Schedule 13G/A filed with the SEC on January 23, 2024. BlackRock, Inc., in its capacity as a parent holding company or control person, is deemed to have the sole power to vote or to direct the vote with respect to 20,431,102 shares of common stock and is deemed to have the sole power to dispose or direct the disposition with respect to 21,749,644 shares of common stock. The business address for BlackRock, Inc. is 50 Hudson Yards, New York, New York 10001.
(5)
This information and the information in this footnote were obtained from a Schedule 13G filed with the SEC on January 29, 2024. State Street Corporation, in its capacity as an investment advisor, is deemed to have the shared power to vote or to direct the vote with respect to 7,665,771 shares of common stock and is deemed to have the shared power to dispose or direct the disposition with respect to 10,026,232 shares of common stock. The business address for State Street Corporation is State Street Financial Center, 1 Congress Street, Suite 1, Boston, Massachusetts 02114-2016.
(6)
The information and the information in this footnote were obtained from a Schedule 13G/A filed with the SEC on February 13, 2024. The Vanguard Group—23-1945930 (“Vanguard Group”), in its capacity as an investment adviser, is deemed to have shared power to vote or to direct the vote with respect to 216,498 shares of common stock, is deemed to have sole power to dispose or to direct the disposition with respect to 25,653,093 shares of common stock, and is deemed to have shared power to dispose or to direct the disposition with respect to 407,838 shares of common stock. The business address for Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(7)
Includes 314,836, 52,694, 259,492, 28,213, and 68,445 LTIP units held by each of Messrs. Crooker, Pinard, Sullivan, Kimball and Chase, respectively, and 6,325 common units held by Mr. Chase. Not all of the LTIP units have vested.
(8)
Includes 16,105, 23,863, 809,482, 12,712, 51,764, 51,764, 51,764, 44,354 and 51,764 LTIP units held by each of Dr. Chin, Ms. Dilley and Messrs. Butcher, Colbert, Furber, Guillemette, Jacoby, Marr and Weger, respectively, and 9,320 common units held by Mr. Butcher. Not all of these LTIP units have vested.
(9)
Includes 20,152 shares of common stock held indirectly in a trust. Mr. Marr disclaims beneficial ownership of these shares of common stock.
(10)
Includes 32,206 shares of common stock held indirectly in a trust. Mr. Weger disclaims beneficial ownership of these shares of common stock.
81
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Review and Approval of Future Transactions with Related Parties
The Board has adopted a policy for the review and approval of related party transactions requiring disclosure under Rule 404(a) of Regulation S-K promulgated by the SEC. The policy provides that the Nominating and Corporate Governance Committee is responsible for reviewing and approving or disapproving all related-party transactions, including any transaction, arrangement or relationship in which (i) the amount involved may be expected to exceed $120,000 in any fiscal year, (ii) we will be a participant and (iii) a “related person” has a direct or indirect material interest. A “related person” will be defined as an executive officer, director or nominee for election as director, or a greater than 5% beneficial owner of our common stock, or an immediate family member of the foregoing.
OTHER MATTERS
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act (“Section 16(a)”) requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities (“10% Holders”), to file reports of ownership and changes in ownership with the SEC. Officers, directors and 10% Holders are required by SEC regulations to furnish our Company with copies of all Section 16(a) forms that they file. To our knowledge, based solely on review such reports, or written representations from reporting persons that all reportable transactions were reported, we believe that during the year ended December 31, 2023, the executive officers, directors and 10% Holders timely filed all reports they were required to file under Section 16(a).
Stockholder Proposals
Stockholder proposals intended to be presented at the 2025 annual meeting of stockholders must be received by our Secretary no later than November 20, 2024 in order to be considered for inclusion in our proxy statement relating to the 2025 annual meeting pursuant to Rule 14a-8 under the Exchange Act (“Rule 14a-8”).
Our Bylaws currently provide that in order for a proposal of a stockholder to be presented at the 2025 annual meeting of stockholders, other than a stockholder proposal included in our proxy statement pursuant to Rule 14a-8, it must be received at our principal executive offices no earlier than the close of business on October 21, 2024, and on or before November 20, 2024. If the 2025 annual meeting is scheduled to take place before March 30, 2025, or after May 29, 2025, then notice must be delivered no earlier than the close of business on the 150th day prior to the 2025 annual meeting and not later than the close of business on the later of the 120th day prior to the 2025 annual meeting or the 10th day following the day on which public announcement of the date of the 2025 annual meeting is first made public.
In addition to satisfying the foregoing requirements under our Bylaws, stockholders who intend to solicit proxies in support of director nominees (other than the Board’s nominees) must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act. Such notice must be postmarked or transmitted electronically no earlier than the close of business on October 21, 2024, and on or before November 20, 2024.
Any proposals should be mailed to: STAG Industrial, Inc., One Federal Street, 23rd Floor, Boston, Massachusetts, 02110, Attention: Jeffrey M. Sullivan, Executive Vice President, General Counsel and Secretary. A copy of our Bylaws may be obtained by written request to the same address.
82
Additional Matters
The Board does not know of any matters other than those described in this proxy statement that will be presented for action at the annual meeting. If other matters are presented, proxies will be voted in accordance with the best judgment of the proxy holders.
By order of the Board:
JEFFREY M. SULLIVAN
Executive Vice President, General Counsel and Secretary
Executive Vice President, General Counsel and Secretary
Boston, Massachusetts
March 20, 2024
March 20, 2024
83
Appendix A
DEFINITIONS AND NON-GAAP FINANCIAL MEASURES
Certain Definitions
In this proxy statement, we define:
•
“net debt” as our total long-term indebtedness outstanding less cash and cash equivalents on hand;
•
“long-term indebtedness” as the principal outstanding on our unsecured credit facility, unsecured term loans, unsecured notes and mortgage notes;
•
“real estate cost basis” as the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization; and
•
“enterprise value” as the market value of our common stock and Operating Partnership units (including LTIP units) outstanding (based on the period-end closing price on the New York Stock Exchange (“NYSE”)) plus the liquidation value of our preferred stock and amounts outstanding on our long-term indebtedness.
FFO and Core FFO
Funds from operations (“FFO”) should not be considered as an alternative to net income (determined in accordance with generally accepted accounting principles (“GAAP”)) as an indication of our performance, and we believe that to understand our performance further, FFO should be compared with our reported net income (loss) in accordance with GAAP, as presented in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). FFO represents GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating buildings, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures.
Management uses FFO as a supplemental performance measure because it is a widely recognized measure of the performance of a real estate investment trust (“REIT”). FFO may be used by investors as a basis to compare our operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our buildings that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the Nareit definition, and, accordingly, our FFO may not be comparable to that of other REITs’. FFO should not be used as a measure of our liquidity, and is not indicative of funds available for our cash needs, including our ability to pay dividends.
“Core FFO” excludes transaction costs, amortization of above and below market leases, net, loss on extinguishment of debt, gain (loss) on involuntary conversion, gain (loss) on swap ineffectiveness, and non-recurring other expenses. We believe that Core FFO, which excludes items that by their nature are not comparable from period to period and tend to obscure actual operating results, is useful to compare our operating performance over a given time period to that of other companies and other time periods in a consistent manner.
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The following table sets forth a reconciliation of our FFO attributable to common stockholders and unit holders for the periods presented to net income, the nearest GAAP equivalent.
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Year ended December 31,
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Reconciliation of Net Income to FFO (in thousands)
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2023
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2022
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| | Net income | | | | $ | 197,201 | | | | | $ | 182,234 | | |
| | Rental property depreciation and amortization | | | | | 278,216 | | | | | | 274,823 | | |
| | Loss on impairments | | | | | — | | | | | | 1,783 | | |
| | Gain on the sales of rental property, net | | | | | (54,100) | | | | | | (57,487) | | |
| | FFO | | | | $ | 421,317 | | | | | $ | 401,353 | | |
| | Amount allocated to restricted shares of common stock and unvested units | | | | | (546) | | | | | | (558) | | |
| | FFO attributable to common stockholders and unit holders | | | | $ | 420,771 | | | | | $ | 400,795 | | |
NOI and Cash NOI
We consider net operating income (“NOI”) to be an appropriate supplemental performance measure to net income (loss) because we believe it helps investors and management understand the core operations of our buildings. NOI is defined as rental income, which includes billings for common area maintenance, real estate taxes and insurance, less property expenses. NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI.
The following table sets forth a reconciliation of our NOI for the periods presented to net income, the nearest GAAP equivalent.
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Year ended December 31,
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Reconciliation of Net Income to NOI (in thousands)
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2023
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2022
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| | Net income | | | | $ | 197,201 | | | | | $ | 182,234 | | |
| | General and administrative | | | | | 47,491 | | | | | | 46,958 | | |
| | Depreciation and amortization | | | | | 278,447 | | | | | | 275,040 | | |
| | Interest and other income | | | | | (68) | | | | | | (103) | | |
| | Interest expense | | | | | 94,575 | | | | | | 78,018 | | |
| | Loss on impairments | | | | | — | | | | | | 1,783 | | |
| | Debt extinguishment and modification expenses | | | | | — | | | | | | 838 | | |
| | Other expenses | | | | | 4,693 | | | | | | 4,363 | | |
| | Gain on the sales of rental property, net | | | | | (54,100) | | | | | | (57,487) | | |
| | NOI | | | | $ | 568,239 | | | | | $ | 531,644 | | |
We define “Cash NOI” as NOI less straight-line rent adjustments and less intangible amortization of above and below market leases, net. Comparing Cash NOI on a “same store” basis (i.e., looking at the exact same set of stabilized properties over the periods being compared) allows for an apples-to-apples comparison. We also exclude lease termination fees, solar income and revenue associated with one-time tenant reimbursements of capital expenditures when calculating Cash NOI on a “same store” basis.
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EBITDAre, Adjusted EBITDAre and Run Rate Adjusted EBITDAre
We define “EBITDAre” in accordance with the standards established by Nareit. EBITDAre represents net income (loss) (computed in accordance with GAAP) before interest income and expense, tax, depreciation and amortization, gains or losses on the sale of rental property, and loss on impairments. “Adjusted EBITDAre” further excludes transaction costs, straight-line rent adjustments, non-cash compensation expense, amortization of above and below market leases, net, gain (loss) on involuntary conversion, loss on extinguishment of debt, and other non-recurring items. “Run Rate Adjusted EBITDAre” is Adjusted EBITDAre plus incremental Adjusted EBITDAre adjusted for a full period of acquisitions and dispositions. Run Rate Adjusted EBITDAre does not reflect our historical results and does not predict future results, which may be substantially different. We believe that EBITDAre, Adjusted EBITDAre and Run Rate Adjusted EBITDAre are helpful to investors as supplemental measures of the operating performance of a real estate company because they are direct measures of the actual operating results of our properties. We also use these measures in ratios to compare our performance to that of our industry peers, such as Net Debt to Run Rate Adjusted EBITDAre, which we view as an important measurement of the strength of our balance sheet, the strength or riskiness of our earnings and our ability to withstand negative economic trends such as a decrease in our stock price.
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SCAN TOVIEW MATERIALS & VOTE STAG INDUSTRIAL, INC.ONE FEDERAL STREET, 23RD FLOOR BOSTON, MA 02110 VOTE BY INTERNETBefore The Meeting - Go to www.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 28, 2024. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/STAG2024You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 28, 2024. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V33675-P05090 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.V33676-P05090STAG INDUSTRIAL, INC.Annual Meeting of Stockholders April 29, 2024 1:00 PMThis proxy is solicited by the Board of DirectorsThe undersigned hereby appoints Matts S. Pinard and Jeffrey M. Sullivan, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of STAG INDUSTRIAL, INC. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders to be held virtually at www.virtualshareholdermeeting.com/STAG2024 at 1:00 PM EDT on April 29, 2024, and any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the meeting.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO SUCH DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH DIRECTOR NOMINEE UNDER PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3 AND 1 YEAR FOR PROPOSAL 4, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.Continued and to be signed on reverse side