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Section 1: PRE 14A (PRE 14A)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No. )

Filed by Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

 

 

 

    

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a‑12

 

 

 

 

 

FRANKLIN STREET PROPERTIES CORP.

 

 

 

 

 

(Name of Registrant as Specified in Its Charter)

 

 

 

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a‑6(i)(1) and 0‑11

 

 

 

 

1)

Title of each class of securities to which transaction applies:

 

 

 

 

2)

Aggregate number of securities to which transaction applies:

 

 

 

 

3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

4)

Proposed maximum aggregate value of transaction:

 

 

 

 

5)

Total fee paid:

 

 

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

 

 

1)

Amount Previously Paid:

 

 

 

 

2)

Form, Schedule or Registration Statement No.:

 

 

 

 

3)

Filing Party:

 

 

 

 

4)

Date Filed:

 

 

 


 

Table of Contents

 

 

 

Picture 10 

 

 

March [__], 2019

Dear Fellow Stockholder:

It is our pleasure to invite you to attend the 2019 Annual Meeting of Stockholders. The Annual Meeting will be held at the Four Points by Sheraton Wakefield Boston Hotel & Conference Center, One Audubon Road, Wakefield, Massachusetts 01880 on Thursday, May 9, 2019 at 11:00 a.m., Eastern Time. The attached Notice of Annual Meeting and Proxy Statement contain details of the business to be conducted at the Annual Meeting. We urge you to review these proxy materials carefully and to use this opportunity to take part in the affairs of Franklin Street Properties by voting on the matters described in the Proxy Statement.

We are pleased to inform you that we will again be taking advantage of the “Notice and Access” method of providing proxy materials via the Internet. On or about [______],  March [__], 2019, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our 2019 Proxy Statement and 2018 Annual Report and how to vote. This notice also contains instructions on how to receive a paper or e-mail copy of the proxy materials. We believe that this method will expedite your receipt of proxy materials, help conserve natural resources and reduce our printing and mailing costs.

Your vote is important. We hope that you will be able to attend the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. Instructions on how to vote are contained in this Proxy Statement.

Thank you for your continued support of Franklin Street Properties. We look forward to seeing you on May 9, 2019.

 

 

 

Sincerely,

 

 

 

Picture 1

 

 

George J. Carter

 

Chairman of the Board and Chief Executive Officer

 

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Stockholders to be Held on May 9, 2019

The Proxy Statement and 2018 Annual Report to Stockholders

are available electronically at www.proxyvote.com

INFORMATION REGARDING ADMISSION TO THE ANNUAL MEETING

Anyone attending the Annual Meeting may be asked to present both proof of ownership of common stock of Franklin Street Properties and a valid picture identification, such as a driver’s license or passport. If your shares are held in the name of a broker, financial institution or other nominee, you will need a recent brokerage statement or letter from such entity reflecting your stock ownership as of the record date. If you do not have both proof of ownership of Franklin Street Properties common stock and a valid picture identification, you may be denied admission to the Annual Meeting.

Cameras, sound or video recording devices, and large bags or packages will not be allowed in the meeting room. Attendees may be subject to security inspections and other security precautions.

 


 

Table of Contents

TABLE OF CONTENTS

 

 

 

    

Page

 

 

 

Notice of Annual Meeting of Stockholders 

 

1

 

 

 

Proxy Summary 

 

2

 

 

 

Questions and Answers 

 

6

 

 

 

Proxy Materials, Voting Information and Annual Meeting Information 

 

6

Communications and Stockholder Proposals 

 

10

 

 

 

Proposal One – Election of Directors 

 

12

 

 

 

Nominees for Director 

 

12

Director Qualifications and Biographical Information 

 

13

 

 

 

Corporate Governance 

 

20

 

 

 

Introduction 

 

20

Board of Directors and its Committees 

 

20

Director Independence 

 

20

Board Meetings, Annual Meeting of Stockholders, and Attendance 

 

21

Current Board Leadership Structure 

 

21

Lead Independent Director 

 

21

The Board’s Role in Succession Planning 

 

22

The Board’s Role in Risk Oversight 

 

22

Executive Sessions 

 

22

Committees of the Board 

 

22

Director Nomination Process 

 

24

Stockholder Recommendations and Board Nominations 

 

24

Stockholder Power to Amend Bylaws 

 

25

Code of Business Conduct and Ethics 

 

25

Compensation Committee Interlocks and Insider Participation 

 

25

 

 

 

Director Compensation and Stock Ownership Guidelines 

 

26

 

 

 

Non-employee Director Ownership and Stock Holding Requirements 

 

26

 

 

 

Report of the Audit Committee 

 

27

 

 

 

Independent Registered Public Accountants Fees and Services 

 

29

 

 

 

Proposal Two – Ratification of the Appointment of Independent Registered Public Accountant Firm 

 

30

 

 

 

Proposal Three — Advisory Vote on Executive Compensation 

 

31

 

 

 

Compensation Discussion and Analysis 

 

32

 

 

 

Overview 

 

32

The objectives of our executive compensation programs 

 

32

What our executive compensation programs are designed to reward and how we determine the amount (and, where applicable, the formula) for each element to pay 

 

33

Each element of compensation and why we choose to pay each element 

 

33

How each element and our decisions regarding that element fit into our overall compensation objectives and effect decisions regarding other elements 

 

35

 

 

 

Summary Compensation Table 

 

37

 

 

 

Compensation Committee Report 

 

38

 


 

Table of Contents

 

 

 

Potential Payments Upon Termination or Change in Control 

 

39

 

 

 

Pay Ratio Disclosure 

 

40

 

 

 

Proposal Four – Amendment to Articles of Incorporation to Declassify Board of Directors 

 

41

 

 

 

Security Ownership of Certain Beneficial Owners and Management 

 

43

 

 

 

Securities Authorized for Issuance Under Equity Compensation Plans 

 

45

 

 

 

Transactions with Related Persons 

 

46

 

 

 

Other Information 

 

49

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance 

 

49

Matters to be Considered at the Meeting 

 

49

Solicitation of Proxies 

 

49

Stockholder Proposals 

 

49

Important Notice Regarding Delivery of Security Holder Documents 

 

49

 

 

 

 

 

 

 

 

 

Annex A 

 

 

 

 

 


 

Table of Contents

FRANKLIN STREET PROPERTIES CORP.

401 Edgewater Place, Suite 200

Wakefield, Massachusetts 01880

Picture 1

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held May 9, 2019

The 2019 Annual Meeting of Stockholders of Franklin Street Properties Corp. will be held on Thursday, May 9, 2019, at 11:00 a.m. Eastern Time, at the Four Points by Sheraton Wakefield Boston Hotel & Conference Center, One Audubon Road, Wakefield, Massachusetts 01880 for the following purposes:

1.To elect two Class I  Directors, each to serve for a term expiring at the 2022 Annual Meeting of Stockholders and until his respective successor is duly elected and qualified;

2.To ratify the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019;

3.To approve, by non-binding vote, our executive compensation;

4.To approve an amendment to our articles of incorporation to declassify our Board of Directors; and

5.To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

These matters are more fully described in the accompanying Proxy Statement.

You may vote if you were a stockholder of record as of the close of business on March 1, 2019. If you do not plan to attend the Annual Meeting and vote your shares of common stock in person, we urge you to vote your shares as instructed in the Proxy Statement.

If your shares of common stock are held by a broker, financial institution or other nominee, please follow the instructions you receive from your broker, financial institution or other nominee to have your shares of common stock voted.

Any proxy may be revoked at any time prior to its exercise at the Annual Meeting.

Wakefield, Massachusetts

March [__], 2019

 

 

 

By order of the Board of Directors,

 

 

Picture 3

 

 

Scott H. Carter, Esq. 

 

Executive Vice President, General Counsel and Secretary

 

 

INFORMATION REGARDING ADMISSION TO THE ANNUAL MEETING

Anyone attending the Annual Meeting may be asked to present both proof of ownership of common stock of Franklin Street Properties and a valid picture identification, such as a driver’s license or passport. If your shares are held in the name of a broker, financial institution or other nominee, you will need a recent brokerage statement or letter from such entity reflecting your stock ownership as of the record date. If you do not have both proof of ownership of Franklin Street Properties common stock and a valid picture identification, you may be denied admission to the Annual Meeting.

Cameras, sound or video recording devices, and large bags or packages will not be allowed in the meeting room.  Attendees may be subject to security inspections and other security precautions.

 

 

 

 

 


 

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   PROXY SUMMARY   

 

PROXY SUMMARY

This is a summary only, and does not contain all of the information that you should consider in connection with this Proxy Statement. Please read the entire Proxy Statement carefully before voting.

Annual Meeting of Stockholders

 

 

   Time and Date

11:00 a.m. Eastern Time, May 9, 2019

   Place

Four Points by Sheraton Wakefield Boston Hotel & Conference Center, One Audubon Road, Wakefield, Massachusetts 01880

   Record date

March 1, 2019

   Voting

Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals.

   Admission

Proof of ownership and picture identification may be required to enter the Annual Meeting.

 

Voting Matters

Stockholders are being asked to vote on the following matters:

 

 

Items of Business

Our Board’s Recommendation

1.   Election of Directors (page 12)

FOR all Nominees

2.   Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm for FY 2019  (page 30)

FOR

3.   Advisory Vote to Approve Executive Compensation (page 31)

FOR

4.  Approval of an Amendment to our Articles of Incorporation to Declassify our Board of Directors (page 41)

FOR

 

Stockholders also will transact any other business that may properly come before the meeting or any adjournment thereof.

How to Vote

You are entitled to vote at the 2019 Annual Meeting of Stockholders if you were a stockholder of record at the close of business on March 1, 2019, the record date for the Annual Meeting. On the record date, there were 107,231,155 shares of common stock outstanding and entitled to vote at the Annual Meeting. For more details on voting and the Annual Meeting logistics, refer to pages 6‑11 of this Proxy Statement.

FRANKLIN STREET PROPERTIES CORP. | 2019 PROXY STATEMENT


 

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   PROXY SUMMARY   

 

Corporate Governance Highlights

We are committed to good corporate governance, which we believe promotes the long-term interests of stockholders and strengthens Board and management accountability. We believe good governance also fosters trust in the Company by all our stakeholders. The “Corporate Governance” section, beginning on page 20, describes our governance framework, which includes the following features:

   Affirmative vote of a majority of votes cast and affirmatively withheld for directors required in uncontested elections

   Board regularly informed of investor feedback through Investor Relations updates at meetings

   6 of 7 directors are independent

   Annual Board and committee evaluations

   Stockholders have the power to amend our bylaws

   Annual advisory say-on-pay vote to approve executive compensation

   Independent directors have ability to hold executive sessions of independent directors

   Lead independent director with real estate experience and oversight of independent directors’ executive sessions and information flow to the Board

   Directors are subject to stock ownership guidelines

   Prohibition of hedging and short sales by Section 16 officers and directors

   Risk oversight by full Board and designated committees

   No poison pill in place

   Formal code of business conduct and ethics  

   Common stock is currently the only class of stock issued and outstanding with equal voting rights for all holders

   Director resignation policy for directors that fail to receive the affirmative vote of a majority of votes cast

FRANKLIN STREET PROPERTIES CORP. | 2019 PROXY STATEMENT 3


 

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   PROXY SUMMARY   

 

Board Nominees (Proposal 1)

We are asking our stockholders to vote “FOR” our nominees, Brian N. Hansen and Dennis J. McGillicuddy, as Class I directors for a three-year term expiring at our 2022 Annual Meeting. We understand the importance of having a Board comprised of the right people, with the highest integrity and the necessary skills and qualifications to oversee our business. The following table provides summary information about each of the director nominees and the continuing directors, who have a diverse and balanced skill set including extensive real estate, financial, investment, corporate, securities, management, and investor relations experience. We encourage you to review the qualifications, skills and experience of our directors on pages 12‑19.  In addition, the charts below the table show the composition of our Board by various tenure, independence and gender.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Director

 

 

 

 

 

 

 

 

Committee Memberships

 

 

Other Public Co.

 

Name

 

 

Age

 

 

Since

 

 

Principal Occupation

 

 

Independent

 

 

AC

 

 

CC

 

 

NG

 

 

Boards

 

George J. Carter
(Chairman of the Board)

 

 

70 

 

 

2002 

 

 

Chief Executive Officer,
Franklin Street Properties Corp.

 

 

No

 

 

 

 

 

 

 

 

 

 

 

Yes

 

Georgia Murray
(Lead Independent Director)

 

 

68 

 

 

2005 

 

 

Director
(Retired commercial real estate executive)

 

 

Yes

 

 

x

 

 

Picture 7

 

 

 

 

 

-

 

Brian N. Hansen

 

 

47 

 

 

2012 

 

 

President and Chief Operating Officer,
Confluence Investment Management LLC

 

 

Yes

 

 

x

 

 

x

 

 

Picture 8

 

 

-

 

John N. Burke

 

 

57 

 

 

2004 

 

 

Managing Principal, Burke & Associates CPAs, Inc.

 

 

Yes

 

 

Picture 11

 

 

x

 

 

x

 

 

-

 

Dennis J. McGillicuddy

 

 

77 

 

 

2002 

 

 

Director
(Retired private investor)

 

 

Yes

 

 

x

 

 

 

 

 

 

 

 

-

 

Kenneth A. Hoxsie

 

 

68 

 

 

2016 

 

 

Director
(Retired corporate and securities lawyer)

 

 

Yes

 

 

x

 

 

 

 

 

x

 

 

-

 

Kathryn P. O’Neil

 

 

55 

 

 

2016 

 

 

Director
(Retired investor relations and private equity executive)

 

 

Yes

 

 

 

 

 

x

 

 

x

 

 

-

 

 

 

 

 

 

Picture 13   Chair

    

AC    Audit Committee

x   Member

 

CC    Compensation Committee

 

 

NG    Nominating and Corporate Governance
Committee

 

 

Director Tenure

Average Tenure: 10.86 years

Average Age:  63.14 years

 

Independence

 

Gender

 

 

 

 

 

 

Picture 6

 

 

 

Picture 9

 

 

 

Picture 12

 

 

Director Attendance — During the time each director nominee and continuing director served on the Board in 2018, each attended more than 75% of the meetings of the Board and committees on which he or she served.

FRANKLIN STREET PROPERTIES CORP. | 2019 PROXY STATEMENT


 

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   PROXY SUMMARY   

 

Auditors (Proposal 2)

We are asking our stockholders to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2019. Although stockholder ratification of the appointment is not required, the Audit Committee believes it is appropriate to seek such ratification. Additional information is provided on pages 27‑30.

 

 

 

 

 

 

2018 Auditor Fees

 

Fee Category

 

Audit Fees

  

  

$

710,500 

 

Audit-Related Fees

 

 

$

7,200 

 

Total Fees

 

 

$

717,700 

 

 

Executive Compensation Highlights (Proposal 3)

The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its Named Executive Officers, or NEOs. The Board values stockholders’ opinions, and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.  Additional information is provided on page 31 and pages 32‑38.

Our executive compensation programs are built on the following principles and objectives:

Competitive pay structure, including base salary, the potential for a cash bonus, matching for individual 401(k) plan contributions, and the potential for a payment or payments under our change-in-control program to enable us to attract and retain experienced and capable leaders and motivate those individuals to achieve exceptional results and reward them for being instrumental in reaching our strategic goals.

Simplicity and transparency, including not offering stock options, restricted stock awards, deferred compensation, non-equity incentive plan compensation, or perquisites.

Our Compensation Discussion and Analysis, or CD&A, on pages 32‑38 describes the compensation decision-making process and details our programs and policies.

Our stockholders approved each of the prior two years’ “say-on-pay” proposals by over 95% of votes cast.

Board Declassification (Proposal 4)

We are asking our stockholders to approve an amendment to our articles of incorporation that would provide for the annual election of directors.  Additional information is provided on pages 41-42.

Additional Information

Please see the “Questions and Answers” section that immediately follows for important information about the Annual Meeting, proxy materials, voting, Company documents, communications and deadlines to submit shareholder proposals for the 2020 Annual Meeting of Stockholders.

 

 

FRANKLIN STREET PROPERTIES CORP. | 2019 PROXY STATEMENT 5


 

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   QUESTIONS AND ANSWERS   

 

FRANKLIN STREET PROPERTIES CORP.

401 Edgewater Place, Suite 200

Wakefield, Massachusetts 01880

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

May 9, 2019

QUESTIONS AND ANSWERS

Proxy Materials, Voting Information and Annual Meeting Information

1. Why Did I Receive a Notice of Internet Availability of Proxy Materials?

We sent you a Notice of Internet Availability of Proxy Materials (the “Notice”) because the Board of Directors (sometimes referred to as the “Board”) of Franklin Street Properties Corp. (sometimes referred to as the “Company,” “FSP,” “Franklin Street Properties,” “we,” “us,” or “our”) is soliciting your proxy to vote at the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) and at any postponements or adjournments of the Annual Meeting. The Annual Meeting will be held on May 9, 2019, at 11:00 a.m., Eastern Time, at the Four Points by Sheraton Wakefield Boston Hotel & Conference Center, located at One Audubon Road, Wakefield, Massachusetts 01880.

As permitted by rules adopted by the Securities and Exchange Commission (the “SEC”), we are making this Proxy Statement and our 2018 Annual Report to Stockholders, which includes a copy of our Annual Report on Form 10‑K and financial statements for the year ended December 31, 2018, available to our stockholders electronically via the Internet. On or about March [__], 2019, we will begin mailing the Notice to our stockholders containing instructions on how to access this Proxy Statement and our 2018 Annual Report to Stockholders online, as well as instructions on how to vote. Also on or about March [__], 2019, we will begin mailing printed copies of these proxy materials to stockholders who have requested printed copies. If you receive the Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request a copy. Instead, the Notice instructs you on how to access the documents online to review all of the important information contained in this Proxy Statement and our 2018 Annual Report to Stockholders. The Notice also instructs you on how you may vote via the Internet. If you received the Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice for requesting such materials. Our 2018 Annual Report to Stockholders is not part of the proxy solicitation material.  To request a printed copy of our Annual Report on Form 10‑K, which we will provide to you free of charge, or to obtain directions to be able to attend the Annual Meeting and vote in person, write to Investor Relations, Franklin Street Properties Corp., 401 Edgewater Place, Suite 200, Wakefield, Massachusetts 01880.

2. What is the Purpose of the Annual Meeting?

At the Annual Meeting, stockholders will be asked to vote upon the matters set forth in the accompanying notice of the Annual Meeting:

·

Proposal 1: Election of two Class I directors, each to serve for a term expiring at the 2022 Annual Meeting of Stockholders and until his respective successor is duly elected and qualified;

·

Proposal 2: Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019;

FRANKLIN STREET PROPERTIES CORP. | 2019 PROXY STATEMENT


 

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   QUESTIONS AND ANSWERS   

 

·

Proposal 3: The approval, by non-binding vote, of our executive compensation; and

·

Proposal 4: The approval of an amendment to our articles of incorporation to declassify our Board of Directors.

3. What are the Voting Recommendations of the Board?

Your Board recommends that you vote your shares as follows:

“FOR” each director nominee and “FOR” Proposal 2, Proposal 3 and Proposal 4.

Proposal 1 is for the election of two Class I directors. It is a binding vote and, if approved, the nominees will be elected to serve another three-year term on our Board.

Proposal 2 is for the ratification of the appointment of our independent registered public accounting firm. It is a non-binding vote and is not required, but our Audit Committee will carefully consider the outcome of this vote in determining its next selection of our independent registered public accounting firm.

Proposal 3 is a vote on our executive compensation and, under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and related SEC regulations, it is an advisory, or non-binding, vote. Our Board will carefully consider the outcome of this vote.

Proposal 4 is for the approval of an amendment to our articles of incorporation to declassify our Board of Directors.  Under Maryland law and our articles of incorporation, this amendment to our articles of incorporation must first be approved by a majority of our directors and then, at a subsequent stockholder meeting, the affirmative vote of the holders of not less than 80% of the shares of our common stock (“Common Stock”) issued and outstanding and entitled to vote. Our Board of Directors approved this amendment to our articles of incorporation on January 31, 2019.

4. Who can Vote at the Annual Meeting?

Our Board has fixed March 1, 2019 as the record date (the “Record Date”) for the Annual Meeting.  If you were a stockholder of record on the Record Date, you are entitled to vote (in person or by proxy) all of the shares that you held on that date at the Annual Meeting and at any postponement, or adjournment thereof.

Franklin Street Properties has only one class of Common Stock outstanding. Each share of Common Stock outstanding as of the close of business on the Record Date is entitled to one vote at the Annual Meeting. As of the Record Date, Franklin Street Properties had 107,231,155 shares of Common Stock outstanding and entitled to vote at the Annual Meeting.

5. Can I Vote if my Shares are Held in “street name”?

All shares of Common Stock owned by you as of the Record Date may be voted by you. These shares include those (1) held directly in your name as a stockholder of record and (2) held for you as the beneficial owner through a broker, financial institution or other nominee.

Most of the stockholders of Franklin Street Properties hold their shares in “street name” through a broker, financial institution or other nominee rather than directly in their own name. As summarized below, there are some distinctions between being a “record” holder and being a “beneficial” holder of our shares.

6. What does it Mean to be a Stockholder of Record?

If, on the Record Date, your shares of Common Stock are registered directly in your name with Franklin Street Properties’ transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record of those shares, and the Notice or set of printed proxy materials, as applicable, is being sent directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to the persons named in the proxy card or to vote in person at the Annual Meeting. If you request a paper copy of the materials as described in the Notice, a proxy card will be sent to you with those materials.

FRANKLIN STREET PROPERTIES CORP. | 2019 PROXY STATEMENT 7


 

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   QUESTIONS AND ANSWERS   

 

7. What does it Mean to Beneficially Own Shares in Street Name?

If, on the Record Date, your shares of Common Stock are held in a brokerage account by a broker, financial institution or other nominee, you are considered the beneficial owner of shares held on your behalf in “street name”, and the Notice or set of printed proxy materials, as applicable, is being forwarded to you by your broker, financial institution or other nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, financial institution or other nominee on how to vote the shares held in your account or to vote in person at the Annual Meeting. You should receive information from your broker, financial institution or other nominee on how you can direct the voting of your shares. In addition, since you are not the stockholder of record, in order to vote in person at the Annual Meeting, you will need to obtain a “legal proxy” from the broker, financial institution or other nominee that holds your shares of Common Stock of record. If you request a paper copy of the proxy materials as indicated in the Notice, your broker, financial institution or other nominee will provide a voting instruction card for you to use to direct the voting of your shares.

8. May I Attend the Annual Meeting?

All stockholders of record of shares of Common Stock at the close of business on the Record Date, or their designated proxies, are authorized to attend the Annual Meeting. Each stockholder and proxy may be asked to present a valid government-issued photo identification, such as a driver’s license or passport, before being admitted.

If you are not a stockholder of record but hold shares through a broker, financial institution or other nominee (i.e., if you hold your shares in “street name”), you will need to provide proof of beneficial ownership as of the Record Date, such as an account statement reflecting your stock ownership as of the Record Date, a copy of the voting instruction card provided by your broker, or other similar evidence of ownership. We reserve the right to determine the validity of any purported proof of beneficial ownership. If you do not have proof of ownership, you may not be admitted to the Annual Meeting.

Attendees are not permitted to bring cameras, recording devices and other electronic devices to the Annual Meeting, and attendees may be subject to security inspections and other security precautions. You may obtain directions to the Annual Meeting by visiting the hotel’s website at: http://www.fourpointswakefieldboston.com/.  Please note that this website is not part of this Proxy Statement and is not incorporated by reference in this Proxy Statement.

9. How do I Vote?

Voting in Person at the Annual Meeting. If you are a stockholder of record and attend the Annual Meeting, you may vote in person at the Annual Meeting either by delivering your proxy in person or using a ballot, which will be available at the Annual Meeting. If your shares of Common Stock are held in street name and you wish to vote in person at the Annual Meeting, prior to the Annual Meeting, you will need to obtain a “legal proxy” from the broker, financial institution or other nominee that holds your shares of Common Stock as stockholder of record.

Voting by Proxy for Shares Registered Directly in the Name of the Stockholder. If you are a stockholder of record, you may instruct the proxy holders named in the proxy card how to vote your shares of Common Stock in one of the following ways:

·

Vote by Internet. You may vote via the Internet by following the instructions provided in the Notice or, if you received printed materials, on your proxy card. The website for Internet voting is www.proxyvote.com and is also printed on the Notice and on your proxy card. Please have your Notice or proxy card in hand. Internet voting is available 24 hours per day until 11:59 p.m., Eastern Time, on May 8, 2019. You will receive a series of instructions that will allow you to vote your shares of Common Stock. You will also be given the opportunity to confirm that your instructions have been properly recorded. IF YOU VOTE VIA THE INTERNET, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.

·

Vote by Telephone. If you received printed copies of the proxy materials, you also have the option to vote by telephone by calling the toll-free number listed on your proxy card. Telephone voting is available 24 hours per day until 11:59 p.m., Eastern Time, on May 8, 2019. When you call, please have your proxy card in hand. You will receive a series of voice instructions that will allow you to vote your shares of Common Stock. You will also be given the opportunity to confirm that your instructions have been properly recorded. If you did not receive printed materials and would like to vote by telephone, you must request printed copies of the proxy materials by following the instructions on your Notice. IF YOU VOTE BY TELEPHONE, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.

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   QUESTIONS AND ANSWERS   

 

·

Vote by Mail. If you received printed materials and would like to vote by mail, then please mark, sign and date your proxy card and return it promptly in the postage-paid envelope provided with your printed materials. If you did not receive printed materials and would like to vote by mail, you must request printed copies of the proxy materials by following the instructions on your Notice.

Voting by Proxy for Shares Registered in Street Name. If your shares of Common Stock are held in “street name”, you will receive instructions from your broker, financial institution or other nominee that you must follow in order to have your shares of Common Stock voted as you direct. Those instructions may have accompanied these printed materials.

10. What are the Quorum and Voting Requirements for the Proposals?

The presence, in person or by proxy, of holders of at least a majority of the total number of outstanding shares of Common Stock entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. As of the Record Date, there were 107,231,155 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. Abstentions and broker non-votes (described below), if any, will be considered present for the purpose of determining the presence of a quorum.

The affirmative vote of a majority of the total votes cast for and affirmatively withheld as to each nominee for director is required to approve the election of each nominee for director in Proposal 1.  In addition, a majority of the votes cast at the Annual Meeting is required for approval of the ratification of the appointment of the independent registered public accounting firm (Proposal 2) and approval of the advisory vote on executive compensation (Proposal 3), each of which is a non-binding vote. The amendment to our articles of incorporation to declassify our Board of Directors (Proposal 4) must be approved by the affirmative vote of not less than 80% of the shares of Common Stock issued and outstanding and entitled to vote.

Broker non-votes occur when brokers, financial institutions or other nominees do not receive voting instructions from their customers on how to vote the customers’ shares on a proposal and the broker, financial institution or other nominee does not have discretionary voting authority or chooses not to exercise it with respect to a proposal. If you hold shares in “street name” and you do not give instructions as to how to vote your shares, your broker, financial institution or other nominee may have authority to vote your shares on certain routine matters but not on non-routine matters. Proposal 2 is a routine proposal, and your broker, financial institution or other nominee has discretionary voting authority to vote on that proposal. Your broker, financial institution or other nominee does not have discretionary voting authority with respect to any of the other proposals on the ballot: the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 3) and the approval of an amendment to our articles of incorporation to declassify our Board of Directors (Proposal 4).

11. What if I Change my Mind after I have Voted?

You may revoke your proxy and change your vote at any time before it is voted at the Annual Meeting by (1) sending a written notice of revocation to our Secretary at the Company’s address set forth in this Proxy Statement that is received prior to the time at which your proxy is voted at the Annual Meeting and submitting a new written proxy bearing a date later than the date of the proxy being revoked; (2) voting again on the Internet or by telephone prior to 11:59 p.m. Eastern Time on Wednesday, May 8, 2019; or (3) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, in itself, constitute revocation of a previously granted proxy.

If you hold your shares in “street name”, then you may submit new voting instructions by contacting your broker, financial institution or nominee. You may also vote in person at the Annual Meeting if you obtain a legal proxy as described above.

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12. How will my Shares be Voted if I do not Return my Proxy or do not Provide Specific Instructions in the Proxy Card that I Submit?

If you are a stockholder of record, your shares will not be voted if you do not vote over the Internet, by telephone, by returning your proxy or by ballot at the Annual Meeting.  If you submit a proxy card without giving specific voting instructions on one or more proposals listed in the notice for the Annual Meeting, your shares will be voted as recommended by our Board on such proposals, and as the proxyholders may determine in their discretion how to vote with respect to any other proposals properly presented for a vote at the Annual Meeting.

If your shares are held in “street name” at a broker, your broker may under certain circumstances vote your shares on routine proposals, including Proposal 2, if you do not timely provide voting instructions in accordance with the instructions provided by them.  However, if you do not provide timely instructions, your broker does not have the authority to vote on non-routine proposals, including Proposals 1,3 and 4, at the Annual Meeting and a “broker non-vote” would occur.

13. Where do I Find the Voting Results of the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting. We will also publish preliminary or, if available, final voting results within four business days of the Annual Meeting in a Current Report on Form 8‑K to be filed with the SEC. If necessary, we will publish final voting results within four business days after the final voting results are known in an amendment to Current Report on Form 8‑K to be filed with the SEC. Copies of the Current Report on Form 8‑K and any amendments thereto to be filed with the SEC will be available on our website at: http://www.fspreit.com and on the SEC’s website at http://www.sec.gov.

14. Will other Matters be Voted on at the Annual Meeting?

We are not currently aware of any other matters to be presented at the Annual Meeting other than those described in this Proxy Statement. If any other matters not described in the Proxy Statement are properly presented at the Annual Meeting, any proxies received by us will be voted in the discretion of the proxy holders.

Communications and Stockholder Proposals

15. How can I Communicate with the Company’s Directors?

Our Board will give appropriate attention to written communications that are submitted by stockholders and will respond if and as appropriate. The Secretary of Franklin Street Properties is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he or she considers appropriate.

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the Secretary considers to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we may receive repetitive or duplicative communications.

Stockholders who wish to send communications on any topic to our Board should address such communications to Board of Directors, Franklin Street Properties Corp., 401 Edgewater Place, Suite 200, Wakefield, Massachusetts 01880, Attn: Scott H. Carter, Secretary.

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16. How do I Submit a Proposal for Action at the 2020 Annual Meeting?

In accordance with Rule 14a‑8 of the Exchange Act, proposals of stockholders intended to be included in our proxy statement and form of proxy for the 2020 Annual Meeting of Stockholders must be received by Franklin Street Properties at its principal office not later than November [__], 2019. In addition, according to our current bylaws, any stockholder proposal intended to be presented at an annual meeting, including nominations for election to the Board, but not considered for inclusion in our proxy statement relating to such meeting, must be received at Franklin Street Properties’ principal office not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the mailing date of the preceding year’s proxy materials. For the 2020 Annual Meeting of Stockholders, that means that a stockholder must deliver proper notice of a proposed nominee or action that is proposed to be presented at the 2020 Annual Meeting of Stockholders but not be included in the proxy statement for such meeting to the Secretary of Franklin Street Properties between October [__], 2019 and November [__], 2019. In addition to the timing of the delivery of the notice, our bylaws include specific information that must be provided and procedures that must be followed to submit a proposal.

 

 

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   PROPOSAL ONE — ELECTION OF DIRECTORS   

 

PROPOSAL ONE — ELECTION OF DIRECTORS

Our Board is divided into three classes, with members of each class holding office for staggered three-year terms. There are currently two Class I directors, whose terms expire at the Annual Meeting, two Class III directors, whose terms expire at our 2020 Annual Meeting, and three Class II directors, whose terms expire at our 2021 Annual Meeting (in all cases subject to the election and qualification of their successors or to their earlier death, resignation or removal).

Accordingly, at the Annual Meeting, two Class I directors will be elected to serve for a term expiring at our 2022 Annual Meeting and until their respective successors are duly elected and qualified. Following the recommendation of the Nominating and Corporate Governance Committee, our Board has nominated Mr. Brian N. Hansen and Mr. Dennis J. McGillicuddy for election as Class I directors. Each nominee is currently serving as a Class I director of Franklin Street Properties. Our Board anticipates that, if elected, the nominees will serve as directors. However, if any person nominated by our Board is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person(s) as our Board may recommend.

Nominees for Director

The following table provides certain information about each nominee for director.

 

 

 

 

 

 

 

Name

    

Age

    

Position(s) with the Company

    

Director
Since

Brian N. Hansen

 

47 

 

Independent Director

 

2012 

Dennis J. McGillicuddy

 

77 

 

Independent Director

 

2002 

 

Vote Required

The affirmative vote of a majority of the total votes cast for and affirmatively withheld as to each nominee for director is required to approve the election of each nominee for director in this Proposal 1. Votes may be cast FOR or WITHHELD with respect to each nominee. If you own shares in street name, in the absence of your voting instructions, your broker may not use its discretion to vote your shares with respect to the election of directors. Those broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ITS NOMINEES, BRIAN N. HANSEN AND DENNIS J. MCGILLICUDDY.  PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN. PROXIES MAY NOT BE VOTED FOR A GREATER NUMBER OF PERSONS THAN THE NUMBER OF NOMINEES CONTAINED HEREIN.

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Director Qualifications and Biographical Information

Our Board includes individuals with expertise in executive leadership and management, real estate, accounting and finance, private investing, corporate and securities law, and investor relations.  Our directors have a diversity of backgrounds and experiences. We believe that, as a group, they work effectively together in overseeing our business, hold themselves to the highest standards of integrity, and are committed to representing the long-term best interests of our stockholders.

Biographical information for each of the director nominees and the continuing directors, including the key qualifications, experience, attributes, and skills that led our Board to the conclusion that each of them should serve as a director, is set forth on the pages below. In addition to the business and professional experiences described below, our directors also serve on the boards of various civic and charitable organizations.

Nominees for Class I Directors (to be elected to hold office for a term expiring at our 2022 Annual Meeting):

 

Brian N. Hansen

    

Qualifications:

 

   We believe Mr. Hansen’s qualifications to serve on our Board include his investment banking and public accounting experience.

 

 

Director Since 2012

 

Brian N. Hansen, age 47, has been Chair of the Nominating and Corporate Governance Committee since 2013. Since 2007, Mr. Hansen has served as President and Chief Operating Officer of Confluence Investment Management LLC, a St. Louis based Registered Investment Advisor. Prior to founding Confluence in 2007, Mr. Hansen served as a Managing Director in A.G. Edwards’ Financial Institutions & Real Estate Investment Banking practice. While at A.G. Edwards, Mr. Hansen advised a wide variety of real estate investment trusts with numerous capital markets transactions, including public and private offerings of debt and equity securities as well as the analysis of various merger and acquisition opportunities. Prior to joining A.G. Edwards, Mr. Hansen served as a Manager in Arthur Andersen LLP’s Audit & Business Advisory practice. Mr. Hansen has served on the board of a number of non-profit entities and currently serves on the Investment Committee of the Archdiocese of St. Louis and as a member of the St. Louis County Retirement Board. Mr. Hansen earned his M.B.A. from the Kellogg School of Management at Northwestern University and his Bachelor of Science in Commerce from DePaul University. Mr. Hansen is a Certified Public Accountant.

 

 

 

 

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   PROPOSAL ONE — ELECTION OF DIRECTORS   

 

 

Dennis J. McGillicuddy

 

Qualifications:

 

  We believe Mr. McGillicuddy’s qualifications to serve on our Board include his entrepreneurial and investment acumen and experience.

 

 

Director Since 2002

 

Dennis J. McGillicuddy, age 77, graduated from the University of Florida with a B.A. degree and from the University of Florida Law School with a J.D. degree. In 1968, Mr. McGillicuddy co-founded Coaxial Communications, a cable television company. In 1998 and 1999, Coaxial sold its cable systems. Mr. McGillicuddy has served on the boards of various charitable organizations. He is currently president of the Board of Trustees of Florida Studio Theater, a professional non-profit theater organization, and he serves as a Co-Chair, together with his wife, of Embracing Our Differences, an annual two-month art exhibit that promotes the values of diversity and inclusion.  Mr. McGillicuddy also is a director of All-Star Children’s Foundation, an organization engaged in creating a new paradigm for foster care. 

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Class III Directors (holding office for a term expiring at our 2020 Annual Meeting):

 

George J. Carter

    

Qualifications:

 

   We believe Mr. Carter’s qualifications to sit on our Board include his more than 30 years of experience in the commercial real estate and investment banking industries, including as our founder, Chairman and Chief Executive Officer.

 

 

Director Since 2002

 

George J. Carter, age 70, has served as Chairman of the Board and Chief Executive Officer of Franklin Street Properties since 2002. Mr. Carter also served as President of Franklin Street Properties from 2002 to May 2016.  He is responsible for all aspects of the business of Franklin Street Properties and its affiliates, with special emphasis on the evaluation, acquisition and structuring of real estate investments. Prior to the conversion of Franklin Street Partners Limited Partnership, or the Partnership, into the Company in 2002, Mr. Carter was President of the general partner of the Partnership and was responsible for all aspects of the business of the Partnership and its affiliates. From 1992 through 1996 he was President of Boston Financial Securities, Inc. Prior to joining Boston Financial Securities, Inc., Mr. Carter was owner and developer of Gloucester Dry Dock, a commercial shipyard in Gloucester, Massachusetts. From 1979 to 1988, Mr. Carter served as Managing Director in charge of marketing at First Winthrop Corporation, a national real estate and investment banking firm headquartered in Boston, Massachusetts. Prior to that, Mr. Carter held a number of positions in the brokerage industry, including positions with Merrill Lynch & Co. and Loeb Rhodes & Co. Mr. Carter is a graduate of the University of Miami (B.S.). Mr. Carter’s son, Scott H. Carter, serves as Executive Vice President, General Counsel and Secretary of the Company and Mr. Carter’s other son, Jeffrey B. Carter, serves as President and Chief Investment Officer of the Company.

 

 

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   PROPOSAL ONE — ELECTION OF DIRECTORS   

 

 

 

 

 

 

 

    

 

 

Georgia Murray

 

Qualifications:

 

   We believe Ms. Murray’s qualifications to serve on our Board include her more than 28 years of experience in the commercial real estate industry, board experience in the banking industry and general expertise in corporate strategy development and organizational acumen.

 

 

Director Since 2005

 

 

 

Georgia Murray, age 68, has been Chair of the Compensation Committee since 2006 and Lead Independent Director since 2014. Ms. Murray is retired from Lend Lease Real Estate Investments, Inc., where she served as a Principal from November 1999 until May 2000. From 1973 through October 1999, Ms. Murray worked at The Boston Financial Group, Inc., serving as Senior Vice President and a Director at times during her tenure. Boston Financial was an affiliate of the Boston Financial Group, Inc. She is a past Trustee of the Urban Land Institute and a past President of the Multifamily Housing Institute. Ms. Murray previously served on the Board of Directors of Capital Crossing Bank. She also serves on the boards of numerous non-profit entities. Ms. Murray is a graduate of Newton College.

 

 

 

 

 

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Class II Directors (holding office for a term expiring at our 2021 Annual Meeting):

 

John N. Burke

    

Qualifications:

 

   We believe Mr. Burke’s qualifications to serve on our Board include his more than 30 years of experience in the practice of public accounting with extensive experience in the real estate and REIT industry.

 

 

Director Since 2004

 

 

 

John N. Burke, age 57, has been Chair of the Audit Committee since 2004. Mr. Burke is a certified public accountant with over 30 years of experience in the practice of public accounting working with both private and publicly traded companies and extensive experience serving clients in the real estate and REIT industry. His experience includes analysis and evaluation of financial reporting, accounting systems, internal controls and audit matters. Mr. Burke has been involved as an advisor on several public offerings, private equity and debt financings and merger and acquisition transactions. Mr. Burke’s consulting experience includes a wide range of accounting, tax and business planning matters. Prior to starting his own firm, Burke & Associates CPAs, Inc., in 2003 with which he currently practices, Mr. Burke was an Audit Partner in the Boston office of BDO USA, LLP. Mr. Burke is a member of the American Institute of Certified Public Accountants and the Massachusetts Society of CPAs. Mr. Burke earned an M.S. in Taxation and studied undergraduate accounting at Bentley University. 

 

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   PROPOSAL ONE — ELECTION OF DIRECTORS   

 

 

 

 

 

Kenneth A. Hoxsie

 

Qualifications:

 

   We believe Mr. Hoxsie’s qualifications to serve on our Board include his significant legal and real estate capital markets expertise from his extensive experience in corporate and securities laws as well as public company counselling.  In addition, as a long-time legal advisor to the Company, Mr. Hoxsie brings in-depth knowledge about the Company’s history to the Board.

 

 

Director Since 2016

 

 

 

Kenneth A. Hoxsie, age 68, was a Partner at the international law firm of Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”) until his retirement on December 31, 2015.  He joined Hale and Dorr (the predecessor of WilmerHale) in 1981, subsequently worked at Copley Real Estate Advisors, an institutional real estate investment advisory firm, and rejoined Hale and Dorr in 1994. Mr. Hoxsie has over 30 years’ experience in real estate capital markets transactions, fund formation, public company counselling and mergers and acquisitions and has advised the Company since its formation in 1997. Mr. Hoxsie earned his J.D. (Cum Laude) from Harvard Law School, his M.A. from Harvard University and his B.A. (Summa Cum Laude) from Amherst College, where he was elected to Phi Beta Kappa. 

 

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Kathryn P. O’Neil

 

Qualifications:

 

   We believe Ms. O’Neil’s qualifications to serve on our Board include her extensive investor relations and private equity experience, as well as her broad business operating experience.

 

 

Director Since 2016

 

 

 

Kathryn P. O’Neil, age 55, was a Director at Bain Capital in the Investor Relations area from 2011 until her retirement in 2014 where she focused on Private Equity and had oversight of the Investment Advisory sector.  From 1999 to 2007, Ms. O’Neil was a Partner at FLAG Capital Management LLC, a manager of fund-of-funds investment vehicles in Private Equity, Venture Capital, Real Estate and Natural Resources.  Previously, Ms. O’Neil was an Investment Consultant at Cambridge Associates where she specialized in Alternative Assets.  Ms. O’Neil currently serves on a variety of non-profit boards, including the Peabody Essex Museum, where she is a Director and a member of the Finance, Audit, and Investment Committees, Horizon’s for Homeless Children where she is a Director and serves on the Executive and Finance Committees, and the Trustees of Reservations where she serves on the President’s Council and Investment Committee.  Ms. O’Neil is a Trustee Emeritus of Colby College and a former member of the Board of Overseers of the Boston Museum of Science. Ms. O’Neil holds a B.A. (Summa Cum Laude) and M.A. (Honorary) from Colby College, where she was elected to Phi Beta Kappa.  Ms. O’Neil received her M.B.A. from The Harvard Graduate School of Business Administration. 

 

 

 

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   CORPORATE GOVERNANCE   

 

CORPORATE GOVERNANCE

We operate within a comprehensive corporate governance structure that includes the highest standards of professional and personal conduct. Our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, the charters for our Audit, Compensation, and Nominating and Corporate Governance Committees, and other corporate governance information, are available on our website at http://www.fspreit.com under the heading “Investor Relations” and then under the subheading “Governance Documents” under “Corporate Information.”  The information on our website is not a part of this Proxy Statement and is not incorporated into any of our filings made with the SEC.

Introduction

Our Common Stock trades on NYSE American under the symbol “FSP”. We began trading on the American Stock Exchange in June 2005. The exchange’s name was changed to NYSE Amex after it was acquired by NYSE Euronext on October 1, 2008,  was later known as NYSE MKT and is now NYSE American.

Board of Directors and its Committees

Franklin Street Properties is currently managed by a seven member Board, which is divided into three classes (Class I, Class II and Class III). Our Board is currently composed of two Class I directors (Brian N. Hansen and Dennis J. McGillicuddy), three Class II directors (John N. Burke, Kenneth A. Hoxsie and Kathryn P. O’Neil) and two Class III directors (George J. Carter and Georgia Murray). The members of each class of our Board of Directors serve for staggered three-year terms. The terms of our current Class I, Class II and Class III directors expire upon the election and qualification of directors at the Annual Meetings of stockholders to be held in 2019, 2021 and 2020, respectively, where directors will be elected or re-elected for a full term of three years to succeed those directors whose terms are expiring.

Director Independence

Under the NYSE American corporate governance standards, set out in the NYSE American LLC Company Guide (the “NYSE American Rules”), at least a majority of the Board must be “independent directors” as defined in Section 803A of the NYSE American Rules. According to Section 803A, “independent director” means a person other than an executive officer or employee of Franklin Street Properties. In addition, to qualify as an “independent director,” the Board of Directors must affirmatively determine that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Section 803A of the NYSE American Rules also includes the following non-exclusive list of persons who shall not be considered independent:

a.    a director who is, or during the past three years was, employed by us, other than prior employment as an interim executive officer (provided the interim employment did not last longer than one year);

b.    a director who accepted or has an immediate family member who accepted any compensation from us in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:

i.     compensation for Board or Board committee service,

ii.    compensation paid to an immediate family member who is an employee (other than an executive officer) of Franklin Street Properties,

iii.   compensation received for former service as an interim executive officer (provided the interim employment did not last longer than one year), or

iv.   benefits under a tax-qualified retirement plan, or non-discretionary compensation;

c.    a director who is an immediate family member of an individual who is, or at any time during the past three years was, employed by us as an executive officer;

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d.    a director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which we made, or from which we received, payments (other than those arising solely from investments in our securities or payments under non-discretionary charitable contribution matching programs) that exceed 5% of the organization’s consolidated gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years;

e.    a director who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of our executive officers serve on the compensation committee of such other entity; or

f.     a director who is, or has an immediate family member who is, a current partner of our outside auditor, or was a partner or employee of our outside auditor who worked on our audit at any time during any of the past three years.

For purposes of Section 803A of the NYSE American Rules, “immediate family member” includes a person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, and anyone who resides in such person’s home (other than domestic employees).

Because Mses. Murray and O’Neil and Messrs. Burke, Hansen, Hoxsie, and McGillicuddy do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, our Board has determined that they are “independent directors” for purposes of the NYSE American.

Board Meetings, Annual Meeting of Stockholders, and Attendance

During 2018, each director attended more than 75% of the meetings of the Board and of the committees on which he or she served. The Board held seven meetings in 2018.

Each of our directors attended the 2018 Annual Meeting.

Current Board Leadership Structure

At the present time, our Board has chosen to combine the Chairman and Chief Executive Officer positions. Our Board believes that George J. Carter is best suited to serve as both Chairman and Chief Executive Officer because he is most familiar with Franklin Street Properties’ business and industry and is most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Mr. Carter has served as Chief Executive Officer and Chairman since he founded Franklin Street Properties, originally Franklin Street Partners Limited Partnership. Our Board believes that independent directors and management have different perspectives and roles in our strategy development. Our independent directors bring experience, oversight and expertise from outside Franklin Street Properties and its industry, while the Chief Executive Officer brings company-specific experience and expertise. Our Board believes that, at the present time, the combined role of Chairman and Chief Executive Officer is in the best interest of Franklin Street Properties and our stockholders and is consistent with good corporate governance. The combined role promotes strategy development and execution and facilitates information flow between management and the Board, which are essential to effective governance.

Lead Independent Director

On February 7, 2014, our Board appointed Georgia Murray as Lead Independent Director.  The Lead Independent Director’s duties include: coordinating the activities of our independent directors, coordinating the agenda for and chairing sessions of our independent directors, serving as the principal liaison for consultation and communication between our independent directors and our stockholders, facilitating communications between our independent directors, the other members of our Board and our management, and performing such other duties as our Board may from time to time delegate.  In performing the duties described above, the Lead Independent Director is expected to consult with the chairs of the appropriate Board committees and solicit their participation in order to avoid diluting the authority or responsibility of such committee chairs.

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   CORPORATE GOVERNANCE   

 

The Board’s Role in Succession Planning

The Board expects management to have an ongoing program for effective senior leadership development and succession. As reflected in our Corporate Governance Guidelines, the Board works on a periodic basis with the Chief Executive Officer to review, maintain and revise, if necessary, the Company’s succession plan upon the conclusion of the Chief Executive Officer’s service as our Chief Executive Officer for any reason.  The Chief Executive Officer reports periodically to the Board on succession planning for the Chief Executive Officer and senior management positions, which report includes a discussion of assessments, leadership development plans and other relevant factors.

The Board’s Role in Risk Oversight

Our Board has the primary responsibility for overseeing the Company’s risk management processes.  A portion of this responsibility has been delegated by the Board to the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each with respect to the assessment of the risks and risk management in their respective areas of oversight. In general, our Board oversees risk management activities relating to business strategy, acquisitions, capital allocation, organizational structure and certain operational risks. Our Audit Committee oversees risk management activities related to financial controls and legal and compliance risks; our Compensation Committee oversees risk management activities relating to our compensation policies and practices; and our Nominating and Corporate Governance Committee oversees risks relating to our nominating and corporate governance policies and practices. Each committee reports to the full Board on a regular basis, including reports with respect to the committee’s risk oversight activities as appropriate. These committees and the full Board focus on the most significant risks facing the Company and the Company’s general risk management strategy, and also ensure that risks undertaken by the Company are consistent with the Board’s appetite for risk. While the Board oversees the Company’s risk management, the Company’s management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing the Company and that the leadership structure of our Board supports this approach.  The Board and each of our committees regularly discusses with management our major risk exposures, their potential financial impact on Franklin Street Properties, and the steps we take to manage them.

Executive Sessions

Each director has the right to call an executive session without management participation after each regularly scheduled meeting of the entire Board and at such other times that the directors deem such a meeting to be appropriate. Similarly, each independent director has the right to call an executive session with only independent directors present after each regularly scheduled meeting of the entire Board and at such other times that an independent director deems appropriate. At a minimum, the independent directors meet in executive session at least annually without the presence of non-independent directors and management.

Committees of the Board

Our Board has the following three standing committees: (1) Audit, (2) Compensation and (3) Nominating and Corporate Governance. The membership and the function of each of these committees are described below.

 

 

 

 

 

 

Audit

    

Compensation

    

Nominating and Corporate Governance

 

John N. Burke, Chair

 

Georgia Murray, Chair

 

Brian N. Hansen, Chair

 

Brian N. Hansen

 

John N. Burke

 

John N. Burke

 

Dennis J. McGillicuddy

 

Brian N. Hansen

 

Kenneth A. Hoxsie

 

Kenneth A. Hoxsie

 

Kathryn P. O’Neil

 

Kathryn P. O’Neil

 

Georgia Murray

 

 

 

 

 

 

Audit Committee. Our Board has established an Audit Committee which operates pursuant to a charter approved by our Board and that is reviewed and reassessed at least annually. The Audit Committee, among other functions, (1) has the sole authority to appoint, evaluate, terminate and determine the compensation of our independent registered public accounting firm, (2) reviews with our independent registered public accounting firm the scope and results of the audit engagement, (3) approves professional services provided by our independent registered public accounting firm, (4) reviews

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the independence of our independent registered public accounting firm, (5) reviews and approves our policies and procedures for reviewing and approving or ratifying related person transactions and (6) reviews and approves our entry into swaps. Our Board has determined that each member of the Audit Committee is “independent” as that term is defined under the NYSE American Rules, including the independence requirements contemplated by Rule 10A‑3 under the Exchange Act.  Our Board determined that Mr. Burke qualifies as an “audit committee financial expert” as that term is defined in the rules of the SEC. The Audit Committee Report is included later in this Proxy Statement. The Audit Committee met five times during 2018.

Compensation Committee. Our Board has established a Compensation Committee which operates pursuant to a charter that was approved by our Board and that is reviewed and reassessed at least annually. Our Board has determined that each member of the Compensation Committee has been determined to be “independent” under the NYSE American Rules, including the independence requirements under Rule 10C‑1 under the Exchange Act.  The Compensation Committee’s responsibilities include, among other duties, the responsibility to (1) review and approve the corporate goals and objectives relevant to the compensation of the Chief Executive Officer, (2) evaluate the performance of the Chief Executive Officer in light of such goals and objectives and either determine and approve or recommend to our Board for approval the compensation of the Chief Executive Officer based on such evaluation, (3) oversee the evaluation of our other executive officers, (4) review and approve, or make recommendations to our Board with respect to, the compensation of our other executive officers, (5) review and make recommendations to our Board with respect to incentive compensation and equity-based plans, (6) review and make recommendations to our Board with respect to the compensation of our non-employee directors and (7) perform other functions or duties deemed appropriate by the Board.

The Compensation Committee is authorized to retain and terminate any compensation consultant to be used to assist in the evaluation of executive officer compensation and to approve the consultant’s fees and other retention terms and to pay the compensation without further action by the Board. The Compensation Committee also has authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors as the Compensation Committee deems necessary or appropriate, and is responsible for assessing the independence of such consultants and advisors, overseeing the work of such consultants and advisors and authorizing the payment of such consultants and advisors. The Compensation Committee makes all compensation decisions relating to compensation of our executive officers other than the Chief Executive Officer and makes a recommendation regarding the compensation of our Chief Executive Officer to the Board. The Chief Executive Officer is not permitted to be present during any deliberations or voting relating to the Chief Executive Officer’s compensation. The Compensation Committee takes into consideration recommendations made by the Chief Executive Officer with respect to compensation decisions relating to executive officers other than the Chief Executive Officer.

The Compensation Committee Report is included later in this Proxy Statement. The Compensation Committee met one  time during 2018.

Nominating and Corporate Governance Committee. Our Board has established a Nominating and Corporate Governance Committee which operates pursuant to a charter approved by our Board and is reviewed and reassessed by the Nominating and Corporate Governance Committee at least annually.  The Nominating and Corporate Governance Committee is responsible for identifying and recommending individuals to become members of our Board, periodically reviewing our Corporate Governance Guidelines and other corporate governance documents and recommending any changes, as well as ensuring that we are in compliance with all corporate governance and listing standards of the NYSE American.  The Nominating and Corporate Governance Committee is authorized to retain advisors and consultants and to compensate them for their services.

The Nominating and Corporate Governance Committee met one time during 2018.

General Committee Information.  A copy of each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee Charters is available on our website at http://www.fspreit.com under the heading “Investor Relations” and then under the subheading “Governance Documents” under “Corporate Information.”  In addition, our Board adopted Corporate Governance Guidelines, a copy of which is available in the same place on our website.

Our Board may from time to time establish other special or standing committees to facilitate the management of Franklin Street Properties or to discharge specific duties delegated to a committee by the full Board.

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   CORPORATE GOVERNANCE   

 

Director Nomination Process

The process followed by the Nominating and Corporate Governance Committee to identify and evaluate director candidates includes requests to our directors and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by our directors.  The Nominating and Corporate Governance Committee has established director qualification standards for consideration in recommending candidates to our Board.  The Nominating and Corporate Governance Committee is responsible for reviewing with our Board, on an annual basis, the appropriate characteristics, skills and experience required for our Board as a whole and its individual members.  In evaluating the suitability of individual candidates (both new candidates and current members of our Board), the Nominating and Corporate Governance Committee, in recommending candidates for election, and our Board, in approving the nomination of (and, in the case of vacancies, electing) such candidates, may take into account a variety of subjective factors, including, without limitation:

(1)     personal and professional integrity, ethics and values;

(2)     experience in corporate management, such as serving as an officer or former officer of a publicly-held company, and a general understanding of marketing, finance and other elements relevant to the success of a publicly-traded company in today’s business environment;

(3)     experience in our industry and/or in an industry or industries that may be beneficial to us;

(4)     experience as a board member of another publicly-held company;

(5)     academic expertise in an area of our operations;

(6)     practical and mature business judgment, including ability to make independent analytical inquiries; and

(7)     any relationships, financial, professional or social in nature, that a candidate may have with members of management or other board members in so far as they may affect the independence of such candidate.

Although our Board does not have a formal diversity policy, the Nominating and Corporate Governance Committee and our Board also consider diversity of our Board in its evaluation of candidates for board membership. The Nominating and Corporate Governance Committee and our Board believe that diversity with respect to viewpoint, skills and experience should be an important factor in board composition. The Nominating and Corporate Governance Committee and our Board discuss diversity considerations in connection with each potential nominee, as well as on a periodic basis in connection with the composition of our Board as a whole. The Nominating and Corporate Governance Committee and our Board do not assign specific weight to particular factors, and no particular factor is a prerequisite for each prospective nominee. The Nominating and Corporate Governance Committee and our Board believe that the backgrounds and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow our Board to fulfill its responsibilities.  Our Board evaluates each individual in the context of our Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas. In determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of our Board.

Stockholder Recommendations and Board Nominations

Stockholders may recommend individuals to our Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials to our principal office, 401 Edgewater Place, Suite 200, Wakefield, Massachusetts 01880, Attn: Scott H. Carter, Secretary. Assuming that appropriate biographical and background material has been provided on a timely basis, our Nominating and Corporate Governance will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others. If our Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy card for the next Annual Meeting.

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Stockholders also have the right under our bylaws to directly nominate director candidates, without any action or recommendation on the part of our Nominating and Corporate Governance Committee or Board, by following the procedures set forth below under “Other Information—Stockholder Proposals.” Candidates nominated by stockholders in accordance with the procedures set forth in the bylaws would be presented as a nominee at the next Annual Meeting but would not be included in our proxy card for the next Annual Meeting.

Stockholder Power to Amend Bylaws

After engaging with the Company’s stockholders during the fourth quarter of 2017, on and effective February 2, 2018, our Board amended and restated the Company’s bylaws to, among other items, provide stockholders with the power to amend the Company’s bylaws by the affirmative vote of the holders of two-thirds of the outstanding shares of Common Stock pursuant to a binding proposal submitted by any stockholder or group of up to five stockholders holding at least one percent of the outstanding shares of Common Stock for at least one year (the “Ownership Threshold”).  Such a stockholder proposal submitted under Article XIV (Amendment of Bylaws) of the bylaws may not alter or repeal Article XIV without the approval of the Board.

We believe the Ownership Threshold enables stockholders who have held a meaningful stake in the Company for more than a brief period of time to propose binding amendments to the Company’s bylaws.  As of February 19, 2019, (i) 14 stockholders each held more than one percent of the outstanding shares of Common Stock (representing more than 60.5% of outstanding shares in the aggregate), (ii) an additional 25 stockholders each held at least 0.2 percent of the outstanding shares of Common Stock (representing more than 10.45% of outstanding shares in the aggregate), and (iii) these 30 stockholders together owned more than 70.97% of the outstanding shares of Common Stock.

The Company’s decision to amend the bylaws to provide stockholders with the power to amend the bylaws was guided, in part, by the fact that approximately 44.1% of the Russell 3000 companies have supermajority thresholds for stockholders to amend the bylaws, and that the default voting standard for charter amendments and extraordinary actions under Maryland law is two-thirds of the outstanding shares of voting stock.

Code of Business Conduct and Ethics

Franklin Street Properties is committed to establishing and maintaining an effective ethics and compliance program that is intended to increase the likelihood of preventing, detecting, and correcting ethical lapses and violations of law or Company policy. The Company has adopted a Code of Business Conduct and Ethics (the “Code”) which applies to all officers, and employees, as well as to our Board.

The Code is available on the Company’s website at http://www.fspreit.com under the heading “Investor Relations” and then under the subheading “Governance Documents” under “Corporate Information.”  We will disclose amendments to, or waivers of our Code that are required to be disclosed under the securities rules, by posting such information on the Company’s website, www.fspreit.com. Any waiver of our Code for directors or executive officers must be approved by the Board. The Company did not grant any such waivers during 2018 and does not anticipate granting any such waivers during 2019.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2018, Georgia Murray (Chair), Kathryn O’Neil, John Burke and Brian Hansen served as members of the Compensation Committee.  No executive officer of Franklin Street Properties has served as a director or member of the compensation committee (or other committee serving an equivalent function, or in the absence of any such committee, the entire board of directors) of any other entity that has one of its executive officers serving or having served as a member of our Board or Compensation Committee.

 

 

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   DIRECTOR COMPENSATION AND STOCK OWNERSHIP REQUIREMENTS   

 

DIRECTOR COMPENSATION AND STOCK OWNERSHIP REQUIREMENTS

The Compensation Committee of the Board is responsible for reviewing and recommending to the Board the form and amount of compensation for our non-employee directors.

Non-employee Director Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

    

  

  

    

  

  

    

  

  

    

  

  

Change in

  

  

    

  

  

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

 

and Nonqualified

 

 

 

 

 

 

 

 

 

Fees earned  

 

 

Stock

 

 

 

 

 

Incentive Plan

 

 

Deferred

 

 

All Other

 

 

 

 

 

 

or paid in

 

 

Awards

 

 

Option

 

 

Compensation

 

 

Compensation

 

 

Compensation

 

 

 

Name

 

 

cash ($)

 

 

($)

 

 

Awards ($)

 

 

($)

 

 

Earnings

 

 

($)

 

 

Total ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John N. Burke

 

 

$

85,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

85,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brian N. Hansen

 

 

$

75,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

75,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth A. Hoxsie

 

 

$

75,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

75,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dennis J. McGillicuddy

 

 

$

75,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

75,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Georgia Murray

 

 

$

75,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

75,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kathryn P. O’Neil

 

 

$

75,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

75,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We compensate our non-employee directors for their services as directors in the annual amount of $75,000, plus an additional $10,000 annually for the Chair of the Audit Committee. We also reimburse our non-employee directors for expenses incurred by them in connection with attendance at Board meetings.

Non-employee Director Stock Ownership Requirements

The Board believes that all non-employee directors should maintain a meaningful personal financial stake in the Company to align their long-term interests with those of our stockholders. Pursuant to our Corporate Governance Guidelines, non-employee directors are required to own shares of Common Stock valued at five times the cash portion of their annual directors’ retainer (excluding any additional cash retainer payable for serving as a committee chair or attendance at meetings).

For purposes of determining compliance with these requirements, the “value” of Common Stock shall be determined using the greater of (i) the actual cost basis of such shares or (ii) the Company’s average closing stock price for the preceding calendar year.

Non-employee directors serving as of February 7, 2014 (the date of initial adoption of these requirements) will have until February 7, 2021, seven years following the initial adoption of these requirements, to meet the minimum ownership requirements. Non-employee directors who are elected or appointed after the initial adoption of these requirements will have seven years from the time they are elected or appointed to meet the minimum ownership requirements.

If an individual becomes subject to an increased ownership amount due to an increase in cash retainer or base salary, the individual is expected to satisfy the incrementally higher ownership amount within seven years of the effective date of the increased requirement.

All non-employee directors were in compliance with these stock ownership requirements as of March 1, 2019.

 

 

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   REPORT OF THE AUDIT COMMITTEE  

 

REPORT OF THE AUDIT COMMITTEE

The Audit Committee reviewed Franklin Street Properties’ audited consolidated financial statements for the year ended December 31, 2018 and discussed these consolidated financial statements with management and Ernst & Young LLP, Franklin Street Properties’ independent registered public accounting firm. Management is responsible for the preparation of Franklin Street Properties’ consolidated financial statements, internal controls, and for the appropriateness of accounting principles used by Franklin Street Properties. Franklin Street Properties’ independent registered public accounting firm is responsible for performing an independent audit of Franklin Street Properties’ consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and issuing a report on the audit of those consolidated financial statements, performing an independent audit in accordance with the standards of the Public Company Accounting Oversight Board of the effectiveness of Franklin Street Properties’ internal control over financial reporting and issuing a report on the results of such audit, and reviewing Franklin Street Properties’ unaudited interim consolidated financial statements. As appropriate, the Audit Committee reviews, evaluates and discusses with management, internal accounting, financial and auditing personnel and the independent registered public accounting firm, the following:

the plan for, and the independent registered public accounting firm’s report on, each audit of Franklin Street Properties’ financial statements;

Franklin Street Properties’ financial disclosure documents, including all financial statements and reports filed with the Securities and Exchange Commission or sent to stockholders;

management’s selection, application and disclosure of critical accounting policies;

changes in Franklin Street Properties’ accounting practices, principles, controls or methodologies;

significant developments or changes in accounting rules applicable to Franklin Street Properties; and

the adequacy of Franklin Street Properties’ internal controls and accounting, financial and auditing personnel.

The Audit Committee also received from, and discussed with, the independent registered public accounting firm various communications that the independent registered public accounting firm is required to provide to the Audit Committee, including the matters required to be discussed by Auditing Standard 1301, Communications with Audit Committees, or AS 1301, as adopted by the Public Company Accounting Oversight Board. AS 1301 requires Franklin Street Properties’ independent registered public accounting firm to discuss with the Audit Committee, among other things, the following:

methods to account for significant unusual transactions;

the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;

the process used by management in formulating particularly sensitive accounting estimates and the basis for the auditors’ conclusions regarding the reasonableness of those estimates; and

disagreements with management over the application of accounting principles, the basis for management’s accounting estimates and the disclosures in the financial statements.

Franklin Street Properties’ independent registered public accounting firm also provided the Audit Committee with the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee discussed with the independent registered public accounting firm the matters disclosed in this letter and their independence from Franklin Street Properties.

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   REPORT OF THE AUDIT COMMITTEE  

 

Based on its discussions with management and the independent registered public accounting firm, and its review of the representations and information provided by management and the independent registered public accounting firm referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Franklin Street Properties’ Annual Report on Form 10‑K for the year ended December 31, 2018.

By the Audit Committee of the Board of Directors of Franklin Street Properties

 

 

 

John N. Burke, Chair

 

Brian N. Hansen

 

Dennis J. McGillicuddy

 

Kenneth A. Hoxsie
Georgia Murray

 

This report is not deemed to be incorporated by reference in any filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this report by reference.

 

 

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   INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FEES AND SERVICES   

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FEES AND SERVICES

The following table summarizes the aggregate fees billed by Franklin Street Properties’ independent registered public accounting firm, Ernst & Young LLP, for audit services for each of the last two fiscal years and for other services rendered to the Company in each of the last two fiscal years.

 

 

 

 

 

 

 

 

    

2018 

    

2017 

Audit Fees (1)

 

$

710,500 

 

$

782,249 

Audit Related Fees(2)

 

 

7,200 

 

 

1,995 

Tax Fees (3)

 

 

— 

 

 

— 

All Other Fees(4)

 

 

— 

 

 

— 

Total Fees

 

$

717,700 

 

$

784,244 

 

(1) Audit fees consist of fees for the annual audit of our financial statements, including the audit of internal control over financial reporting, the reviews of the interim financial statements included in our quarterly reports on Form 10‑Q, and other professional services provided in connection with statutory and regulatory filings or engagements.

(2) Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the review of our financial statements and that are not reported under “Audit Fees”.

(3) Tax fees consist of fees for tax compliance, tax advice and tax planning services.

(4) The Company was not billed by Ernst & Young LLP in 2018 or 2017 for any other fees.

 

Pre-Approval Policy and Procedures.  The Audit Committee has adopted policies and procedures that require it to preapprove all audit services to be provided to Franklin Street Properties, whether provided by the principal auditor or other firms, and all other services (review, attest and non-audit) to be provided to Franklin Street Properties by the independent auditor; provided, however, that de minimis non-audit services may instead be approved in accordance with applicable NYSE American and SEC rules. During 2018 and 2017, all services provided to Franklin Street Properties by Ernst & Young LLP were pre-approved by the Audit Committee.

 

 

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   PROPOSAL TWO – RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   

 

PROPOSAL TWO — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board has selected and appointed Ernst & Young LLP as our independent registered public accounting firm and to audit our consolidated financial statements for the year ending December 31, 2019. Ernst & Young LLP has audited our consolidated financial statements since the year ended December 31, 2003. Although ratification by stockholders is not required by law or by our bylaws, the Audit Committee believes that submission of its selection to stockholders is a matter of good corporate governance. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee believes that such a change would be in the best interests of Franklin Street Properties and its stockholders. If our stockholders do not ratify the appointment Ernst & Young LLP, the Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of independent registered public accounting firm.

It is anticipated that a representative of Ernst & Young LLP will attend the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

Vote Required

A majority of all the votes cast at the Annual Meeting is required to ratify the appointment of Ernst & Young LLP. You may vote FOR or AGAINST, or abstain from ratifying the appointment of Ernst & Young LLP. Votes cast FOR ratifying the appointment of Ernst & Young LLP will count as “yes” votes and votes cast AGAINST ratifying the appointment of Ernst & Young LLP will count as “no” votes. Abstentions  will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. If you own shares in street name, in the absence of your voting instructions, your broker, financial institution or other nominee may choose to vote your shares with respect to ratifying the appointment of Ernst & Young LLP in its discretion.

Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS YOU VOTE FOR RATIFYING THE APPOINTMENT OF ERNST & YOUNG LLP. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THIS PROPOSAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.

 

 

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   PROPOSAL THREE —ADVISORY VOTE ON EXECUTIVE COMPENSATION   

 

PROPOSAL THREE — ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act.  After taking into consideration the voting results of the 2018 Annual Meeting of Stockholders and the prior recommendation of our Board of Directors in favor of an annual advisory shareholder vote on the compensation of our Named Executive Officers, we intend to continue to hold advisory votes on the compensation of our Named Executive Officers every year.

Our executive compensation programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. Under these programs, our Named Executive Officers are rewarded for the achievement of our financial and strategic goals and for driving corporate financial performance and stability. The “Executive Compensation” section of this Proxy Statement, including “Compensation Discussion and Analysis,” describes in detail our executive compensation program and the decisions made by the Compensation Committee and the Board with respect to the year ended December 31, 2018. Highlights of our executive compensation program include the following:

·

Our base salary amounts are generally lower than industry standard levels.

·

None of our executive officers has an employment agreement.

·

Except in the case of a change-in-control of Franklin Street Properties, we are not obligated to pay severance or other enhanced benefits to executive officers upon termination of their employment.

·

We do not offer stock options, restricted stock awards, deferred compensation, non-equity incentive plan compensation or perquisites, which we believe keeps our compensation simple and straightforward.

Our Board of Directors is asking stockholders to approve a non-binding advisory vote on the following resolution:

RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in the Proxy Statement, is hereby approved.

Vote Required

A majority of votes cast at the Annual Meeting is required for adoption of this proposal. You may vote FOR or AGAINST this proposal or you may abstain from voting on this proposal. If you own shares in street name, in the absence of your voting instructions, your broker, financial institution or other nominee may not vote your shares with respect to adopting this proposal in its discretion, resulting in a broker non-vote. Abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote. This proposal is non-binding. The outcome of this advisory vote will not overrule any decision by the Company or the Board (or any committee thereof), create or imply any change to the fiduciary duties of the Company or the Board (or any committee thereof), or create or imply any additional fiduciary duties for the Company or the Board (or any committee thereof). However, our Compensation Committee and Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.

Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THIS PROPOSAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.

 

 

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Table of Contents

   COMPENSATION DISCUSSION AND ANALYSIS   

 

COMPENSATION DISCUSSION AND ANALYSIS

Overview

It is critical that we be able to attract, motivate and retain highly talented individuals at all levels of the organization. We believe that compensation levels should be competitive enough to attract and retain experienced and capable leaders and motivate those individuals to achieve exceptional results and reward them for being instrumental in reaching our strategic goals. At the same time, we believe in simplicity and maintaining compensation at responsible levels. For 2018, the compensation of executives consisted of the same four components as were provided to all of our employees: (1) base salary; (2) the potential for a cash bonus; (3) matching for individual 401(k) plan contributions; and (4) the potential for a payment or payments under our change-in-control program. Although our executives are eligible to be granted awards of Common Stock under our 2002 stock incentive plan, we have not made any awards under the plan since our initial listing on the American Stock Exchange (now NYSE American) in June 2005.  In addition, we do not offer stock options, restricted stock awards, deferred compensation, non-equity incentive plan compensation or perquisites. None of our employees have employment agreements and we do not have any policies that require any of our employees to own our Common Stock.

Our executive officers consist of the Chief Executive Officer, the Chief Financial Officer, the President and Chief Investment Officer, the General Counsel, the President of FSP Property Management LLC and the Chief Operating Officer.  For the fiscal year ended December 31, 2018, our Named Executive Officers were George J. Carter, our Chief Executive Officer; John G. Demeritt, our Executive Vice President, Chief Financial Officer and Treasurer; Jeffrey B. Carter, our President and Chief Investment Officer; John F. Donahue, Executive Vice President and President of FSP Property Management LLC; and Scott H. Carter, our Executive Vice President, General Counsel and Secretary.

We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and programs are not reasonably likely to have a material adverse effect on Franklin Street Properties.

The objectives of our executive compensation programs

Our Compensation Committee bases our executive compensation programs on the same core objectives that guide us in establishing all of our compensation programs:

·

Compensation should promote the achievement of our business goals and maximize corporate performance and shareholder returns.

·

Compensation should be based on the principles of competitive and fair compensation and sustained performance.

·

Compensation should be based on the level of job responsibility, individual performance and corporate performance. As employees advance to higher levels within the organization, an increasing proportion of their compensation should be linked to corporate performance and enhancing shareholder value.

·

Compensation should reflect the value of the job in the marketplace. Compensation should be competitive with other employers that compete with us for talent so that we continue to be able to attract and retain highly talented employees.

·

Compensation should reward performance. Our compensation programs should deliver competitive compensation for excellent individual and corporate performance. Similarly, our compensation programs should deliver less compensation, including the possibility of no cash bonus, in the event that individual and/or corporate performance fall short of expectations.

·

Compensation should be equitable. We strive to achieve equitable distributions both for compensation of individual officers and between officers and other employees throughout the organization.

·

Compensation and benefit programs should be designed to attract, motivate and retain highly talented employees who are interested in building a career with us.

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   COMPENSATION DISCUSSION AND ANALYSIS   

 

What our executive compensation programs are designed to reward and how we determine the amount (and, where applicable, the formula) for each element to pay

Decisions regarding executive compensation are based on various subjective performance criteria, including corporate and individual performance.

Our Compensation Committee has established a number of processes to assist it in ensuring that our executive compensation program achieves its objectives. Among those are:

·

Consideration of various measures of corporate performance, including reviewing the extent to which strategic and business plan goals are met, levels of property acquisitions, performance of properties in our portfolio, gains or losses on property dispositions, levels of earnings, funds from operations, or FFO, dividends and maintaining shareholder value. Our Compensation Committee does not apply a formula or assign these performance measures relative weights. Instead, it makes a subjective determination after considering such measures collectively.

·

Consideration of individual performance. The members of the Compensation Committee meet with the Chief Executive Officer annually at the beginning of the year to discuss both individual and corporate priorities for the current year. At that same meeting, the members of the Compensation Committee meet to conduct a review of the Chief Executive Officer’s performance over the past year based on various subjective performance criteria, including his contributions to individual and corporate priorities, his contribution to corporate performance, the degree to which teamwork and corporate values are fostered and other leadership accomplishments. This evaluation is shared with the Chief Executive Officer and is considered by the Compensation Committee in establishing the Chief Executive Officer’s compensation. With respect to the other Named Executive Officers, the members of the Compensation Committee receive a performance assessment and compensation recommendation from the Chief Executive Officer. In establishing the compensation for each of the other Named Executive Officers, the Compensation Committee is not required to give specific weight to any particular criterion or performance metric. The Compensation Committee considers the performance assessment and compensation recommendation from the Chief Executive Officer and also exercises its own judgment based on various subjective performance criteria, including contributions to corporate performance, the degree to which teamwork and corporate values were fostered and other leadership accomplishments.

·

Comparison of our executive compensation programs as a whole and also a comparison of total executive compensation for each individual with the compensation practices of other companies in the real estate industry. Historically, the Compensation Committee has used the National Association of Real Estate Investment Trusts (NAREIT) Annual Compensation Survey for comparison purposes. To ensure that total compensation is competitive, the Compensation Committee uses the results of the comparison to establish general compensation guidelines. Our Compensation Committee does not apply a formula or assign the survey data relative weight. Instead, it makes a subjective determination for that individual after considering such results collectively.

·

Our stockholders approved each of the say-on-pay proposals in 2016 and 2017 by over 95% of votes cast.  The Compensation Committee considered this support level in its determination to maintain similar compensation policies and elements of compensation in 2018.

Each element of compensation and why we choose to pay each element

(a)   Base Salary

Executive officers are paid a base salary. We believe that a competitive base salary provides an important guaranteed element to compensation. We also believe that the payment of a competitive base salary is consistent with the compensation practices of other comparable companies.

(b)   Cash Bonus

Executive officers are eligible for a cash bonus based on various subjective performance criteria, including corporate and individual performance. The payment of a cash bonus is purely discretionary based upon overall performance and in some years there could be no cash bonus payments. We believe that the opportunity to earn a competitive cash bonus provides a monetary incentive that encourages both corporate and individual performance. We also believe that the payment of a competitive cash bonus is consistent with the compensation practices of other comparable companies.

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   COMPENSATION DISCUSSION AND ANALYSIS   

 

(c)   401(k) Matching

Executive officers are eligible to participate in our 401(k) plan. We offer all employees a 401(k) plan that, in 2018, allowed for salary deferrals of up to $18,500 per year (indexed for inflation), or up to $24,500 per year including catch-up provisions for individuals aged 50 or older.  We matched up to 3% of an employee’s compensation (up to a compensation cap of $200,000) for plan year 2018 and will match up to 3% of employee compensation (up to a compensation cap of $200,000) for plan year 2019. Employees make their 401(k) contributions through payroll deductions with pretax dollars. All employees are eligible to participate in the plan immediately upon hiring. The employee’s elective deferrals are immediately vested upon contribution to the 401(k) plan, and the employee has sole decision making authority as to the investment of funds. We believe that our 401(k) plan provides a vehicle for our employees to plan for their long-term security and that such a plan ultimately leads to improved job performance. We also believe that our 401(k) plan is consistent with the compensation practices of other comparable companies.

(d)   Change-in-Control Program

Except in the case of a change-in-control of Franklin Street Properties, we are not obligated to pay severance or other enhanced benefits to Named Executive Officers upon termination of their employment.

In February 2006, we adopted a change-in-control program for all our employees, including our executive officers. The program was adopted in response to merger and consolidation activity within the real estate/real estate investment trust industry and is intended to preserve employee morale and productivity and encourage retention in the event of an actual or rumored change-in-control of Franklin Street Properties. The program is also intended to align employee and shareholder interests by enabling employees to consider corporate transactions that are in the best interests of the shareholders and other constituents of Franklin Street Properties without undue concern over whether the transaction or transactions may jeopardize the employee’s own employment.

Although there are some differences in payment amounts depending on the employee’s job level, the basic elements of the program are comparable for all employees:

·

The program consists of two components: a fixed payment pursuant to a retention agreement between the employee and Franklin Street Properties and the potential for an additional discretionary payment pursuant to a discretionary plan.

·

The triggering event for both components is a change-in-control of Franklin Street Properties. A change-in-control of Franklin Street Properties, as defined in the plan, generally refers to a change in ownership or effective control of Franklin Street Properties or a change in ownership of a substantial portion of the assets of Franklin Street Properties.

·

Under the retention agreement component of the program, employees would receive a payment as soon as practicable following the closing of the change-in-control, but in no event more than thirty days following the closing of the change-in-control. Executive officers would receive payments equal to three years of their base salaries plus a bonus opportunity payment equal to three years of their base salaries. For purposes of the retention agreement component of the program, base salary refers to the base salary of the employee in effect at the time of the closing of the change-in-control. Payments under the retention agreements are subject to a possible reduction, if any, after the tax consequences of the payment are determined.

·

Under the discretionary plan component of the program, immediately prior to the closing of the change-in-control, our Board of Directors may (but is not obligated to) establish a discretionary pool of funds equal to 1% of the market capitalization of Franklin Street Properties immediately prior to the closing of the change-in-control less the total amount of payments to all employees under the retention agreement component of the program. Our Board of Directors would have complete discretion to award all, a portion or none of the discretionary plan pool of funds to any employees of Franklin Street Properties, including the executive officers. Payments under the discretionary plan component are subject to a possible reduction, if any, after the tax consequences of the payment are determined.

Prior to adopting our change-in-control program, management reviewed plans similar to our retention agreement component offered by approximately ten other publicly-traded real estate investment trusts and concluded that our triggering event was generally consistent with the peer group. Management did not review any plans that were comparable 

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   COMPENSATION DISCUSSION AND ANALYSIS   

 

to our discretionary plan but concluded that, on balance, the total potential payout amounts under our change-in-control program are generally consistent with the range offered by the peer group.

Our Chief Executive Officer has voluntarily elected not to participate in the retention agreement component of our change-in-control program.

(e)   Awards of Common Stock under our 2002 Stock Incentive Plan

Executive officers are eligible for awards of Common Stock under our 2002 stock incentive plan. The 2002 stock incentive plan permits our Board of Directors to award up to 2,000,000 shares of our Common Stock to eligible participants. Prior to our listing on the American Stock Exchange (now the NYSE American) in June 2005, our employees were not able to purchase our Common Stock, and we determined that it was necessary and appropriate to be able to compensate our employees with stock awards as a means of attracting, retaining and motivating key personnel and to align the interests of management and all personnel with those of our stockholders. All of our employees, officers and directors are eligible to participate in the plan. There have been no awards of Common Stock under the 2002 stock incentive plan since we started listing our Common Stock on a stock exchange in June 2005, as employees are now able to purchase Common Stock in the open market. As of March 1, 2019, 1,944,428 shares of our Common Stock were available under the plan. Although we have not made any awards under the 2002 stock incentive plan since 2005, we may determine in the future to grant stock awards under the 2002 stock incentive plan or a new stock plan in order to attract, retain, or motivate our executives.

How each element and our decisions regarding that element fit into our overall compensation objectives and affect decisions regarding other elements

Overview

The Compensation Committee believes that our executive officers worked diligently during 2018 on continuing to position the Company for long-term growth through leasing and balance sheet management.  More specifically, during 2018, we leased approximately 1,681,000 square feet, approximately 397,000 square feet of which was with new tenants.  The approximately 1,681,000 square feet that we leased during 2018 was a Company record.  We also continued to manage our balance sheet by reducing interest margins and extending maturity dates.  On August 2, 2018, we recast our $150 million term loan with JPMorgan Chase Bank, N.A. as administrative agent to, among other things, (i) decrease the interest margin depending on the Company’s credit rating and (ii) extend the maturity date from November 30, 2018 to November 30, 2021 (with two optional six month extensions).  In addition, on September 27, 2018, we recast our $220 million term loan with Bank of Montreal as administrative agent to, among other things, (i) decrease the interest margin depending on the Company’s credit rating, (ii) separate the existing $220 million term loan into two tranches, consisting of a $55 million tranche A term loan and a $165 million tranche B term loan, and (iii) extend the maturity date from August 26, 2020 to (a) November 30, 2021 with respect to tranche A and (b) January 31, 2024 with respect to tranche B.  Based upon its review of the compensation practices of other comparable companies, the Compensation Committee believes that total compensation for the executive officers is within the range of total compensation paid to executive officers with comparable qualifications, experience and responsibilities in the same or similar businesses and of comparable size and success.

(a)   Base Salary

In reviewing base salaries for 2018, the members of the Compensation Committee applied the principles described above under “What our executive compensation programs are designed to reward and how we determine the amount (and, where applicable, the formula) for each element to pay.” Based upon the recommendation of the Chief Executive Officer, the Compensation Committee approved annualized base salary increases of approximately 3% for each of the executive officers other than the Chief Executive Officer.  The above-described annualized base salary increases were effective on January 22, 2018.  However, at the request of the Chief Executive Officer, the Compensation Committee did not make any recommendation to increase the base salary for the Chief Executive Officer to our Board of Directors. The last time that our Chief Executive Officer accepted a base salary increase was in February 2015.  Our base salary amounts are generally lower than industry standard levels. Accordingly, compensation of these positions will be weighted proportionately greater towards year-end bonus amounts based upon corporate and individual performance.

(b)   Cash Bonus

As discussed above, the focus during 2018 continued to be on positioning the Company for long-term growth through leasing and balance sheet management.  In awarding cash bonuses for 2018, the members of the Compensation Committee applied the principles described above under “What our executive compensation programs are designed to reward and how we determine the amount (and, where applicable, the formula) for each element to pay.” Based upon the

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   COMPENSATION DISCUSSION AND ANALYSIS   

 

recommendation of the Chief Executive Officer, the Compensation Committee approved cash bonuses for each of the executive officers other than the Chief Executive Officer in the amounts recommended by the Chief Executive Officer.  In making his recommendations, the Chief Executive Officer noted, and the Compensation Committee made a subjective determination, that each officer’s area of responsibility and accountability (i.e., business unit) contributed to the Company’s performance during 2018, as a result of each person’s leadership and direction. It was further noted that each of these individuals was considered to be integral to the daily operations of Franklin Street Properties and of great value to Franklin Street Properties and firmly committed to doing what is in the best interests of our stockholders.

Except for the Chief Operating Officer and the President of FSP Property Management LLC, who each received modest increases in order to more closely align their bonus amounts with those of the other executive officers other than the Chief Executive Officer, the cash bonus amounts paid for 2018 were lower than those paid for 2017. The Chief Executive Officer recommended lower cash bonus amounts due to a variety of subjective factors, but primarily due to a decrease in the price of our Common Stock over the course of 2018. The Compensation Committee believes that the cash bonus amounts are within the range of total compensation paid to executive officers with comparable qualifications, experience and responsibilities in the same or similar businesses and of comparable size and success as the Company. The Compensation Committee believes that our overall and relative performance for 2018 was a direct consequence of the dedication and hard work of these individuals and their staffs.

The Compensation Committee also reviewed and evaluated the performance of the Chief Executive Officer during 2018 by applying the principles described above under “What our executive compensation programs are designed to reward and how we determine the amount (and, where applicable, the formula) for each element to pay.” The Compensation Committee recognized and appreciated the efforts made by the Chief Executive Officer during 2018 and noted that the Chief Executive Officer was firmly committed to doing what is in the best interests of our stockholders.  However, at the request of the Chief Executive Officer, the Compensation Committee made a recommendation to our Board of Directors that no cash bonus be awarded to our Chief Executive Officer in respect of 2018.  Our Chief Executive Officer believes that the Chief Executive Officer has the ultimate responsibility for the stock price and that, due to such responsibility, the Chief Executive Officer’s compensation should reflect the stock’s relative performance in the marketplace. The price of our Common Stock had decreased over the course of the year, with the opening price per share on January 2, 2018 at $10.69 and the closing price per share on December 31, 2018 at $6.23.  Ultimately, the Compensation Committee decided to honor our Chief Executive Officer’s request that he not be considered for a cash bonus for 2018 performance.

(c)   401(k) Matching

There were no proposals made to modify our 401(k) plan program in 2018.

(d)   Change-in-Control Program

Because we determined that our change-in-control program continues to satisfy its original intended purpose, there were no proposals made to modify the program in 2018.

(e)   Awards of Common Stock under our 2002 Stock Incentive Plan

Because we determined that we were able to adequately compensate the executive officers who make up the corporate management team with salary and cash bonuses in 2018, no Common Stock awards were made in 2018.

 

 

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   SUMMARY COMPENSATION TABLE  

 

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning total compensation for services to Franklin Street Properties for the 2016,  2017 and 2018 fiscal years, of (1) our principal executive officer, (2) our principal financial officer and (3) our other three most highly compensated executive officers who were serving as executive officers as of December 31, 2018 (collectively, our “Named Executive Officers”).

SUMMARY COMPENSATION TABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

    

  

  

    

  

  

    

  

  

    

  

  

    

  

  

    

  

  

Change in

  

  

    

  

  

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

 

Nonqualified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

 

Option

 

 

Incentive Plan

 

 

Deferred

 

 

All Other

 

 

 

Name and Principal

 

 

 

 

 

 

 

 

 

 

 

Awards

 

 

Awards

 

 

Compensation

 

 

Compensation

 

 

Compensation

 

 

 

Position

 

 

Year

 

 

Salary ($)

 

 

Bonus ($)

 

 

($)

 

 

($)

 

 

($)

 

 

Earnings

 

 

($) (1)

 

 

Total ($)

George J. Carter,

 

 

2018

 

 

$

300,000 

 

 

$

0  (2)

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

306,000 

Chief Executive Officer

 

 

2017

 

 

$

300,000 

 

 

$

350,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

656,000 

(PEO)

 

 

2016

 

 

$

301,154 

 

 

$

500,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

807,154 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John G. Demeritt,

 

 

2018

 

 

$

261,781 

 

 

$

385,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

652,781 

Executive Vice President,

 

 

2017

 

 

$

254,014 

 

 

$

460,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

720,014 

Chief Financial Officer and

 

 

2016

 

 

$

247,677 

 

 

$

470,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

723,677 

Treasurer (PFO)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey B. Carter,

 

 

2018

 

 

$

262,209 

 

 

$

378,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

646,209 

President and Chief

 

 

2017

 

 

$

251,489 

 

 

$

460,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

717,489 

Investment Officer

 

 

2016

 

 

$

209,782 

 

 

$

480,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

695,782 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott H. Carter,

 

 

2018

 

 

$

227,636 

 

 

$

375,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

608,636 

Executive Vice President,

 

 

2017

 

 

$

220,882 

 

 

$

450,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

676,882 

General Counsel and

 

 

2016

 

 

$

215,371 

 

 

$

460,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

681,371 

Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John F. Donahue,

 

 

2018

 

 

$

221,078 

 

 

$

360,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

587,078 

Executive Vice President

 

 

2017

 

 

$

212,239 

 

 

$

350,000 

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

$

6,000 

 

 

$

568,239 

and President of FSP

 

 

2016

 

 

$

179,477 

 

 

$

325,000 

 

 

N/A